It might be too early to pop the Champagne corks, but Manhattan’s big-picture retail leasing scene shows strong signs of putting the pandemic carnage behind it.
Even before anyone heard of COVID-19, online shopping depressed demand for brick-and-mortar stores by perhaps 10%. Lockdowns made things worse.
Readers of this column know we’ve been skeptical about surveys claiming a big turnaround. Reliable data for retail is harder to come by than for offices. As JLL power-broker Richard Hodos drily put it, “It isn’t an exact science.”
But there seem to be reasons to justify landlords’ and brokers’ growing confidence in a healthier market.
Both JLL and Cushman & Wakefield’s third-quarter Manhattan surveys found significantly lower storefront availability — 14.7% and 13.9% respectively, compared with peaks in the mid- and upper-20% ranges in 2021.
JLL claimed the amount of available store space in the city “fell to its lowest level on record,” which is hard to swallow for anyone who’s strolled through the Flatiron District, which was rocked by the closing of several big-box stores.
It all depends on how and what you count. CBRE said retail leasing was actually down 25% compared with 3Q in 2023.
But more than enough recent transactions give credibility to the idea that the worst is over.
Cushman superbroker Joanne Podell said, “Activity in most trade areas is really robust. What’s interesting is, I think we are at equilibrium. I don’t think you can define what we are experiencing as either a landlord or a tenant market.”
Hodos said, “It’s been a good year in general for most retail corridors. Rents are lower than pre-pandemic and occupancy costs are more in line with operating costs.”
He noted that some areas in particular “are robust and thriving. In Soho, it’s very hard to find space on Greene or Prince Streets.”
We recently first reported major deals for Bonhams auction house (40,000 square feet in the former Steinway piano hall at 111 W. 57th St.); Italian fashion brand Moncler (24,000 sf in a sublease from UnderArmour, which never moved in, at the GM Building); Five Iron Golf (15,300 sf at Vornado’s 1291 Sixth Ave.); Socceroof (indoor soccer, 20,000 sf at Fosun’s 28 Liberty St.); and Carnegie Diner and an unnamed Greek cafe in the former NHL store at SL Green’s 1185 Sixth Ave.)
Now, as per other reports, sources and eyeball observations additions include:
• London-based clothing giant Primark will launch its first Manhattan store with 54,000 square feet at 150 W. 34th St. near Penn Station, replacing Old Navy.
• Popular eatery Rosa Mexicano is taking over the former Ed’s Chowder House space in the Empire Hotel on Broadway at West 63rd Street — 12,000 square feet, mostly on the second floor, that was dark for six years. Fast-growing Italian chain La Pecora Bianca will replace Rosa at its old home on Columbus Avenue nearby.
• Venerable menswear purveyor Brooks Brothers signed for a 9,500 square-foot store at L&L’s 195 Broadway — a vote of confidence that FiDi office workers and residents still want to dress up.
• In maybe the most surprising move, the elegant former home of Joseph Abboud at 424 Madison Ave. will soon be home to Bagizza! — a bagel/pizza restaurant concept in more than 4,000 square feet.
CBRE identified two 3Q trends.
“New-to-Market retailers leasing their first brick and mortar outposts in Manhattan” accounted for 21% of quarterly leasing volume, while “big fine art and experiential tenants” were major drivers of activity, CBRE said.
Among the new arrivals cited by CBRE will be a previously unreported launch of Chinese “fast-fashion” brand Urban Revivo’s first US store with 30,000 sf at 513-5155 Broadway. In the latter category: Arte Museum, an immersive art experience, at Chelsea Piers with 51,000 sf, and Monopoly Experience for 50,000 square feet at 11 Times Square, which developer SJP Properties has long struggled to fill.
Hodos noted that rents have recovered although not to pre-pandemic levels. “And that’s a good thing,” he said. “The asking rents on Madison Avenue for example were stratospheric and didn’t even come down after the pandemic hit.
“Now, the difference between bid and ask is much smaller.”