Average asking rents in the first quarter either remained stable or increased for 10 of Manhattan’s 11 major retail corridors.
This story first appeared in the May 21, 2013 issue of WWD. Subscribe Today.
That’s according to CBRE’s first-quarter recap, “Manhattan Retail.”
Andrew Goldberg, a broker at CBRE, said, “The market report for all neighborhoods is either trending up or flat off of last year’s highs. With spending exceeding 2007 levels, business in Manhattan is very strong.”
Goldberg represented Valentino in its long-term 20,000-square-foot lease at 693 Fifth Avenue, between 54th and 55th Streets, at what was known as the Takashimaya Building. Thor Equities acquired the 20-story building in 2010. The space leased by Valentino, with three floors of selling space plus the basement, will be home to the Italian firm’s largest flagship in the world. Set to open in summer 2014, Valentino will install a new facade, and British architect David Chipperfield will develop the look of the store.
According to Goldberg, rents along Fifth Avenue are averaging $3,000 a square foot. The high ranges up to $3,500 and the low at $2,400.
RELATED STORY: Demand, Rent on Upswing >>
One area seeing some activity is Madison Avenue. “For a while, there was a slowdown among the luxury brands that [have stores there]. There’s been pent-up demand, and now these brands are making commitments. It will continue, but the continuation is limited by the supply of space. There’s no shortage of demand, but there is a shortage of [available] space,” Goldberg said.
Right now, the average asking rents for Madison Avenue locations from 57th Street to 72nd Street are more than $1,500 a square foot, with the high at $2,000 and the low ask at $1,200. “A smaller retail space at the southern end of that market with good frontage would be at the higher end, while larger spaces with limited frontage would be at the lower end” of the asking rental range, he said.
SoHo has seen a huge increase in asking rents, Goldberg said. Rent averages $760 a square foot, but in the area along Broadway between Houston and Broome, a corner site can get $1,000 a square foot while locations in the middle of the block could see $600.
One growing area for fledgling brands entering the Manhattan retail market is NoLIta. Rents there range from $125 to $275 a square foot on Elizabeth Street; $125 to $225 on Prince Street, and $100 to $200 on Mott Street. Brands that opened their first retail space there before adding locations elsewhere include Tory Burch, Rebecca Taylor and Scotch & Soda. Other brands that have joined them include Steven Alan and Rag & Bone. Anthropologie is set to open in NoLIta later this year.
The blocks are smaller, and the store size representative of boutiques in square footage.
Goldberg said there’s also increased activity in rental space in Times Square. The interest is less from the luxury brands and more from international firms. As some discounters are moving out of Herald Square, he expects to see more mainstream retailers opening up larger stores. He’s also projecting that the area of Fifth Avenue between 42nd and 49th Streets is likely to see more fashion tenants down the road.