According to CBRE, with the reopening of indoor dining, malls, arts and entertainment and sporting events, as well as the rapid acceleration of vaccinations, Manhattan's retail market is finally seeing the light at end of the tunnel.
"After facing many challenges for over a year due to the global pandemic, retailers and consumers are finally seeing signs for optimism," said Nicole LaRusso, CBRE Senior Director, Research & Analysis. "The acceleration in vaccinations as well as the additional federal stimulus should reinvigorate in-store spending in Manhattan in the months ahead."
Among the largest retail leases completed during Q1 2021 were Gucci America Inc.'s 46,203-sq.-ft. commitment at 721 Fifth Avenue; Trader Joe's' 28,000-sq.-ft. lease at 121 West 125th Street; and Brooklyn Fare's 21,600-sq.-ft. deal at 75 West End Avenue.
While consumer confidence is slowly returning, leasing velocity in Manhattan decelerated again during the first quarter of the year, marking seven consecutive quarters of decline and the number of direct, ground-floor availabilities in Q1 2021 increased from 264 spaces to 275 spaces in the 16 prime retail corridors tracked by CBRE.
As a result of lackluster leasing, the average retail asking rent in Manhattan's prime 16 retail corridors dropped 13.4% year-over-year and 5.1% quarter-over-quarter to $618 per sq. ft. in Q1 2021.
"Savvy retailers are now taking advantage of the tenant-favorable market conditions, successfully negotiating enhanced tenant improvement allowance, free rent, flexibility on term length, and percentage-rent deal structures," LaRusso added.