Commercial Real Estate News
Despite Covid, Manhattan Retail Market Gains Strength in Q4
Based on a new report by global property consultant CBRE, Manhattan's retail market showed signs of improvement in the fourth quarter of 2021. While the spread of the Omicron variant and short-term supply chain disruptions have raised some concerns, the city's economic fundamentals improved with recovery projected as vaccine efforts move forward and consumers adapt to the new norm.
Leasing velocity in Manhattan increased in the fourth quarter of 2021. Additionally, the number of direct, ground-floor availabilities in Q4 2021 decreased to 266 spaces from 282 in Q3, in the 16 prime retail corridors tracked by CBRE. The average retail asking rent in Manhattan's prime 16 retail corridors dropped a modest 1.2% to $597 per sq. ft. in Q4 2021. This marked the 17th consecutive quarterly decrease, and pricing remains at levels not seen since 2011.
Bright spots emerged in the fourth quarter as Chelsea Piers Management, Inc., Mansour Modern, and OKTA each signed new leases, with the latter two debuting their first brick-and-mortar locations in New York City. As the window for generous concession packages and flexible lease terms begins to narrow amid an improving economy, many opportunistic retailers have focused on a flight to quality strategy, taking advantage of the tenant-favorable market conditions to reposition themselves or penetrate new markets.
New York City Retail Deals in Q4
Retail leasing velocity increased in Q4 2021, as the rolling four-quarter aggregate leasing velocity, which measures total leasing (renewals and new leases) for the four prior quarters, rose to approximately 1.86 million sq. ft., up 17.4% from the prior quarter but 14.0% below the prior year.
SoHo recorded the highest leasing velocity in 2021 with over 202,000 sq. ft. leased across 42 transactions. Luxury brands were the greatest driver in this market in 2021 as the largest and most significant deal was the 15-year lease signed by the British fine jewelry brand Vashi, which took 11,000 sq. ft. at SL Green's 110 Greene Street. Additionally, the French luxury goods conglomerate Cartier, Inc. secured a new 9,300-sq.-ft. lease at 102 Greene Street, and the highend luggage brand Tumi, Inc. signed for over 9,100 sq. ft. for a new outpost at 513 Broadway.
For Q4, Madison Square recorded the highest leasing velocity thanks to the 55,000-sq.-ft. lease by Chelsea Piers Management, Inc., a major fitness and entertainment brand, which signed a 20-year deal as the first tenant in SL Green's recently developed office tower 1 Madison Avenue.
Flatiron/Union Square also recorded significant leasing velocity in the fourth quarter with over 39,000 sq. ft. across five transactions. The largest deal was signed by OKTA, a San Franciscobased tech company providing software for identity authentication, which plans a 9,200-sq.-ft.
Manhattan experience center--their first--at 920 Broadway. Additionally, the national apparel brand Gap, Inc. relocated to a new 9,000-sq.-ft. space formerly occupied by LOFT at 156 Fifth Avenue, while the sustainable clothing and footwear brand Allbirds, Inc. signed for the 8,100-sq.-ft. space recently vacated by Gap, Inc. at 120 Fifth Avenue.
The Food & beverage (F&B) category had a below-average quarter in Q4, with just over 24,000 sq. ft. closed. Still, F&B was the most prolific category in 2021, with over 346,000 sq. ft. leased across 98 transactions. Notable Q4 transactions include the sizable deal signed by Rick Bayless' fast-casual Mexican eatery Tortazo for a new 7,200-sq.ft. space at 10 Times Square. The second-largest F&B deal of Q4 was the French bakery Maman with a new 3,200-sq.-ft. location at 114 West 41st Street.
