By  on July 11, 2007

Retail rents in Manhattan's prime corridors maintained their upward spiral in the first half of 2007, with Madison Avenue passing the $1,000 per square foot mark and Fifth Avenue topping $1,500.

"Several high-profile deals being closed will set new benchmarks in the second half" of 2007, said Joseph Harbert, Cushman & Wakefield's chief operating officer for the New York metro area.

Harbert gave C&W's assessment of both the office and retail real estate markets in Manhattan at the firm's midyear market report on Tuesday.

Rents are being pushed up by strong demand for space and shrinking availability, Harbert said.

The biggest jumps came on prime Madison Avenue blocks, where rents reached $1,019 per square foot, up $134 from the same period last year, he said.

However, Fifth Avenue remains the most expensive retail street in the world, Harbert said, citing asking rents above 49th Street at $1,500 per square foot. Harbert believes Gucci's lease-signing at Trump Tower last year solidified Fifth Avenue as the foremost destination for luxury and world-class brands. 

Giorgio Armani's 40,000-square-foot lease at 717 Fifth Avenue was the most significant transaction of the second quarter, he said. Armani plans a multiconcept retail location at the Plaza District building, similar to ones operating in Europe and the Far East.

Gene Spiegelman, executive director of Cushman & Wakefield, said retailers were willing to pay higher rents along Madison and Fifth because some were attaining sales per square foot of upward of $3,000, compared with the $300 to $400 they average in malls. They are also driven to Fifth and Madison Avenue blocks because they view the venues as part of their branding initiatives, he said.

Joanne Podell, senior director of retail brokerage at Cushman & Wakefield, added she expected to see "much more in the way of foreign retailers coming in" to Manhattan.

She said another hot strip was Broadway in SoHo, between Houston and Spring Streets, where rents are above $400 per square foot, up from $275 two years ago.

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