THE REAL ESTATE BOARD OF NEW YORKMANHATTAN RETAIL REPORT | FALL 2018

MANHATTAN RETAIL REPORT FALL 2018 | 2

INTRODUCTION

Asking rents in the Manhattan retail leasing market continue to adjust after reaching unsustainable levels three years ago. Declines have been widespread across Manhattan’s top retail corridors since spring 2015 and our Manhattan Retail Report Advisory Group stated that the market still faces many challenges. However, owners and retailers have been increasingly responsive to the new retail environment.

As discussed in previous reports, the existing hurdles in the Manhattan retail leasing market have been a by-product of a natural fluctuation in the market as well as a changing retail industry. These issues will be resolved with shifting rents and lease structures, but time is required for this process to develop. Changes in retail markets take more time to manifest due to the impact of longer-term factors. Examples include a retailer’s timeline for strategizing a business plan, securing financing, and planning improvements to a retail space to fit their business needs.

With this long-term view in mind, it is worth looking at the market now and comparing it to where it stood three years ago. Currently, there are 15 corridors, out of 17, with lower average asking rents for ground floor retail space than what they were in the fall of 2015. The average overall decline in these corridors is 25 percent when compared to three years ago. Ten of the 15 decreases were over 20 percent and three were over 30 percent.

A natural correction in retail rents has been well underway over the past three years and both owners and retailers have been responding accordingly. Lease terms are more flexible, owners are accepting more short-term deals, improvement allowances are more generous, and retailers are trying different concepts for the new retail market before they agree to a long-term deal.

The Manhattan retail market’s orderly correction continued this fall with per square foot (psf) ground floor retail average asking rents declining year-over-year in 15 of the 17 high-profile corridors that the Real Estate Board of New York (REBNY) surveys bi-annually. There were four more corridors in decline in fall 2018 than in fall 2017, and this period marked the highest number of corridor declines in the Manhattan Retail Report’s history.

The two corridors with year-over-year increases were: Harlem’s 125th Street corridor, between Fifth Avenue and Morningside Avenue, where the ground floor retail average asking rent increased 14 percent year-over-year to $140 psf and the Upper West Side’s Broadway corridor, between West 72nd and West 86th Streets, where the ground floor retail average asking rent rose five percent year-over-year to $306 psf. These increases were caused by changes in the profile of available ground floor retail spaces along these corridors, not an upward revision of asking rents for existing supply.

The West Village average asking rent of $293 psf on Bleecker Street, between 7th Avenue South and Hudson Street, was a 17 percent decrease from last fall. This was the first period that the average asking rent in this corridor fell below $300 since we started tracking the corridor in the spring of 2008. Among the largest of these declines was the 37% drop of the average asking rent for ground floor retail space in the West Village on Bleecker Street, between 7th Avenue South and Hudson Street, from $468 psf in the fall of 2015 to $293 psf in the fall of 2018.

Upper Fifth Avenue, between 49th and 59th Streets, experienced a significant average asking rent decrease of 24 percent this fall leaving the average asking rent on the corridor at $2,973 psf. This drop was caused by increases in availability and the types of spaces available in the corridor. In previous periods, there were limited availabilities in the corridor and any available spaces were at the higher end of the market.

EXECUTIVE SUMMARY

MANHATTAN RETAIL REPORT FALL 2018 | 3

Average asking rents psf in the Eastside on Madison Avenue, between East 57th Street and East 72nd Street; in the Meatpacking District on West 14th Street, between 9th and 10th Avenues; and in SoHo on Broadway, between Houston and Broome Street, continued to decline this fall. The Madison Avenue corridor notched its seventh consecutive year-over-year drop to $1,160 psf. Average asking rents on the Meatpacking District’s West 14th Street and SoHo’s Broadway both fell for the sixth consecutive year-over-year period to $303 psf and $558 psf, respectively.

We must reiterate that the rents quoted in this report are asking rents for available ground floor retail spaces. The physical components and location of a retail space factor greatly into its rental value. Attributes such as street/avenue frontage, ceiling height, and presence of below and above grade space can also affect value. Consequently, in corridors with low availability, a high quality retail space coming to market can increase the average and median asking rents greatly. Also, in smaller corridors, a lack of available spaces may lead, in some cases, to adjacent blocks becoming of greater interest to retailers.

Accordingly, we have provided information about the retail rent range as well as asking rent information from six months and 12 months ago to provide a rich, statistical context in order to evaluate current market conditions. In addition, we would like to note that the surveyed corridors in this report represent the top tier retail corridors in New York City. Rents on adjoining side streets may lease for considerably less than the locations we are profiling. Lastly, as we have learned over the 18 years that we have been preparing this report, retail brokers who are active in the market are an invaluable source of information and trends that cannot be fully captured by the numbers in our report. We attempt to provide an overview of the market at a particular point in time that is based on the available listings of our Manhattan Retail Report Advisory Group and Retail Committee members, which include all the major retail brokers and owners in Manhattan.

The REBNY Manhattan Retail Report Advisory Groupincludes:Robin Abrams, CompassKaren Bellantoni, RKFMatt Chmielecki, CBREAndrew Goldberg, CBREDavid A. Green, Colliers InternationalJordan Kaplan, CBREAndrew Mandell, Ripco Real EstateJoanne Podell, Cushman & WakefieldFred Posniak, Empire State Realty TrustJeffrey Roseman, Newmark Knight FrankCraig Slosberg, Newmark Knight Frank Alan Victor, The Lansco Corporation

REBNY would like to thank the following firms fortheir assistance in preparing the report:Brookfield Property GroupBuchbinder & Warren Realty GroupCBREColliers InternationalCompassCrown Retail ServicesCushman & WakefieldEmpire State Realty TrustJack Resnick & SonsJLLThe Lansco CorporationNewmark Knight FrankRipco Real EstateRKFRose AssociatesSCG RetailSholom & Zuckerbrot RealtySinvin Real Estate Walker Mall

Photo Credit by Luca Bravo on Unsplash

EXECUTIVE SUMMARY (CONT.) ACKNOWLEDGEMENTS

MANHATTAN RETAIL REPORT FALL 2018 | 4

Columbus Ave(66th St - 79th St)

Broadway & 7th Ave(42nd St - 47th St)

Fifth Ave (42nd St - 49th St)

$435

$510

$447

$390

$348

$384

$360

$300

$350

$400

$450

$500

$550

S-2015 F-2015 S-2016 F-2016 S-2017 F-2017 S-2018

Fifth Ave (49th St - 59th St)

$713 $733

$922

$329

$530

$646 $650

$250

$350

$450

$550

$650

$750

$850

$950

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

$2,390$2,363

$2,170

$1,930

$2,100

$1,938

$1,860

$1,750

$1,850

$1,950

$2,050

$2,150

$2,250

$2,350

$2,450

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

East 57th St(5th Ave - Park Ave)*No data avaliable for F-2017

$1,600 $1,600 $1,625

$1,438

$1,294

$975

$900

$1,000

$1,100

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Broadway (72nd St - 86th St)

$375

$405 $403

$344$338

$304$298

$250

$270

$290

$310

$330

$350

$370

$390

$410

$430

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

$430

$455

$428

$399

$450

$400

$367

$250

$300

$350

$400

$450

$500

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

$390

$361 $359

$341

$315

$291

$325

$250

$270

$290

$310

$330

$350

$370

$390

$410

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Third Ave(60th St - 72nd St)

$363

$335

$371

$340

$356

$261 $264

$200

$220

$240

$260

$280

$300

$320

$340

$360

$380

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Madison Ave(57th St - 72nd St)

$1,700

$1,613$1,644

$1,433 $1,446

$1,348$1,390

$1,200

$1,300

$1,400

$1,500

$1,600

$1,700

$1,800

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

East 86th St(Lexington Ave - 2nd Ave)

RETAIL AVERAGE ASKING RENTS PSF

MANHATTAN RETAIL REPORT FALL 2018 | 5

$171$167

$148 $148

$195

$157 $156

$100

$120

$140

$160

$180

$200

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

125th St (5th Ave - Morningside Ave)

$132

$138

$125$124 $123 $124

$140

$110

$115

$120

$125

$130

$135

$140

$145

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Bleecker St(7th Ave South - Hudson St)

$468$513

$471

$373$351 $332

$293

$0

$100

$200

$300

$400

$500

$600

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Broadway (Battery Park - Chambers St)

$308

$326

$369$362

$374$368

$338

$250

$270

$290

$310

$330

$350

$370

$390

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Broadway(Houston St - Broome St)

$831 $824

$755

$812

$644

$595$558

$450

$500

$550

$600

$650

$700

$750

$800

$850

$900

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

14th St(9th Ave - 10th Ave)

$372

$348 $345$334

$323$313

$303

$250

$270

$290

$310

$330

$350

$370

$390

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Broadway (14th St - 23rd St)

$510

$447

$390

$348

$384

$360$378

$300

$350

$400

$450

$500

$550

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

$836

$890

$745 $734

$633$604

$573

$500

$550

$600

$650

$700

$750

$800

$850

$900

$950

F-2015 S-2016 F-2016 S-2017 F-2017 S-2018 F-2018

Fifth Ave(14th St - 23rd St)

West 34th St (5th Ave - 7th Ave)

RETAIL AVERAGE ASKING RENTS PSF

MANHATTAN RETAIL REPORT FALL 2018 | 6

AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

Fall 17 Spring 18 Fall 18

%Δ from Fall 17 to Fall 18

%Δ from Spring 18 to Fall 18

$298$338

Columbus Ave(66th St - 79th St)

12%▼

$304

$2100 $1938

4%▼

11%▼

$1860

Broadway & 7th Ave(42nd St - 47th St)

$1158 $1097

14%▼

19%▼

$939

Fifth Ave (42nd St - 49th St)

$3900 $3900

24%▼

24%▼

$2973

Fifth Ave (49th St - 59th St)

5%▼

29%▼

$1294 $975 $925

East 57th St(5th Ave - Park Ave)

5%▲

$306

6%▼ 2%▼

$291 $325

Broadway (72nd St - 86th St)

12%▼

11%▼

$261 $264 $233

Third Ave(60th St - 72nd St)

$1348 $1390

17%▼

14%▼

$1160

Madison Ave(57th St - 72nd St)

$450 $400

8%▼

19%▼

$367

East 86th St(Lexington Ave - 2nd Ave)

MANHATTAN RETAIL REPORT FALL 2018 | 7

$140$123

125th St (5th Ave - Morningside Ave)

$293 $332

12%▼

17%▼

$293

Bleecker St(7th Ave South - Hudson St)

$374 $368

8%▼

10%▼

$338

Broadway (Battery Park - Chambers St)

$644 $595

6%▼

13%▼

$558

Broadway(Houston St - Broome St)

$323 $313

3%▼

6%▼

$303

14th St(9th Ave - 10th Ave)

9%▼ 14%▲

$573

5%▼ 13%▲

$633 $604 $124

West 34th St (5th Ave - 7th Ave)

5%▲

2%▼

$384 $360 $378

Broadway (17th St - 23rd St)

$449 $422

7%▼

13%▼

$393

Fifth Ave(14th St - 23rd St)

AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

MANHATTAN RETAIL REPORT FALL 2018 | 8

APPENDIX

AVERAGE ASKING RENT PSF – GROUND FLOOR RETAIL

* NA denotes minimal availability for evaluation ** Statistics reflect availabilities on 10/15/18

Fall 18 Spring 18 Fall 17 % Spring 18 % Fall 17EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $367 $400 $450 -8% -19%Madison Ave (57th St -72nd St) $1,160 $1,390 $1,348 -17% -14%Third Ave (60th St - 72nd St) $233 $264 $261 -12% -11%

WEST SIDEBroadway (72nd St -86th St) $306 $325 $291 -6% 5%Columbus Ave (66th St - 79th St) $298 $304 $338 -2% -12%

MIDTOWNEast 57th St (5th Ave - Park Ave) $925 $975 $1,294 -5% -29%5th Ave (49th St - 59th St) $2,973 $3,900 $3,900 -24% -24%5th Ave (42th St - 49th St) $939 $1,097 $1,158 -14% -19%Broadway & 7th Ave (42nd St - 47th St) $1,860 $1,938 $2,100 -4% -11%

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $573 $604 $633 -5% -9%Flatiron5th Ave (14th St - 23rd St) $393 $422 $449 -7% -13%Broadway (14th St - 23rd St) $378 $360 $384 5% -2%

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $303 $313 $323 -3% -6%West Village Bleecker St (7th Ave South - Hudson St) $293 $332 $351 -12% -17%SoHoBroadway (Houston St - Broome St) $558 $595 $644 -6% -13%Lower Manhattan Broadway (Battery Park - Chambers St) $338 $368 $374 -8% -10%

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $140 $124 $123 13% 14%

MANHATTAN RETAIL REPORT FALL 2018 | 9

APPENDIX

MEDIAN ASKING RENT PSF – GROUND FLOOR RETAIL

* NA denotes minimal availability for evaluation ** Statistics reflect availabilities on 10/15/18

Fall 18 Spring 18 Fall 17 % Spring 18 % Fall 17EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $375 $400 $450 -6% -17%Madison Ave (57th St -72nd St) $1,160 $1,361 $1,247 -15% -7%Third Ave (60th St - 72nd St) $225 $275 $275 -18% -18%

WEST SIDEBroadway (72nd St -86th St) $325 $325 $295 0% 10%Columbus Ave (66th St - 79th St) $280 $276 $300 1% -7%

MIDTOWNEast 57th St (5th Ave - Park Ave) $800 $900 $1,250 -11% -36%5th Ave (49th St - 59th St) $2,600 $3,900 $3,900 -33% -33%5th Ave (42th St - 49th St) $909 $1,000 $1,200 -9% -24%Broadway & 7th Ave (42nd St - 47th St) $2,000 $1,975 $2,000 1% 0%

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $650 $625 $650 4% 0%Flatiron5th Ave (14th St - 23rd St) $418 $400 $409 5% 2%Broadway (14th St - 23rd St) $350 $343 $328 2% 7%

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $300 $300 $300 0% 0%West Village Bleecker St (7th Ave South - Hudson St) $268 $319 $371 -16% -28%SoHoBroadway (Houston St - Broome St) $547 $587 $600 -7% -9%Lower Manhattan Broadway (Battery Park - Chambers St) $325 $375 $400 -13% -19%

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $130 $130 $130 0% 0%

MANHATTAN RETAIL REPORT FALL 2018 | 10

APPENDIX

RANGE OF ASKING RENTS PSF – GROUND FLOOR RETAIL

* NA denotes minimal availability for evaluation ** Statistics reflect availabilities on 10/15/18

Fall 18 Spring 18 Fall 17EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $250 _ $475 $300 _ $500 $450 _ $450Madison Ave (57th St -72nd St) $720 _ $1,700 $720 _ $2,000 $520 _ $2,135Third Ave (60th St - 72nd St) $165 _ $300 $140 _ $400 $165 _ $300

WEST SIDEBroadway (72nd St -86th St) $200 _ $450 $147 _ $500 $105 _ $500Columbus Ave (66th St - 79th St) $178 _ $458 $225 _ $500 $176 _ $500

MIDTOWNEast 57th St (5th Ave - Park Ave) $800 _ $1,175 $800 _ $1,200 $1,175 _ $1,5005th Ave (49th St - 59th St) $2,000 _ $4,000 $3,900 _ $3,900 $3,900 _ $3,9005th Ave (42th St - 49th St) $590 _ $1,744 $635 _ $1,600 $700 _ $1,600Broadway & 7th Ave (42nd St - 47th St) $1,000 _ $2,350 $1,800 _ $2,000 $1,800 _ $2,500

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $314 _ $750 $371 _ $800 $314 _ $1,000Flatiron5th Ave (14th St - 23rd St) $285 _ $511 $285 _ $555 $285 _ $750Broadway (14th St - 23rd St) $311 _ $500 $311 _ $445 $286 _ $540

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $195 _ $450 $150 _ $700 $195 _ $700West Village Bleecker St (7th Ave South - Hudson St) $182 _ $465 $200 _ $450 $200 _ $450SoHoBroadway (Houston St - Broome St) $300 _ $900 $341 _ $1,000 $444 _ $1,000Lower Manhattan Broadway (Battery Park - Chambers St) $125 _ $500 $160 _ $600 $160 _ $600

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $76 _ $230 $76 _ $145 $76 _ $145

MANHATTAN RETAIL REPORT FALL 2018 | 11

CORRIDOR MAPS

125th Street

E 86th Street

Mad

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Ave

nue

Broa

dway

Broa

dway

Broa

dway

Bleecker Street

14th Street

Broa

dway

7th

Aven

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Stre

et

E 57th Street

Broa

dway

Col

umbu

s Av

enue

5th

Aven

ue

W 34th Street

Third

Ave

nue

UPPER MANHATTAN

EAST SIDE

DOWNTOWN

MIDTOWN SOUTH

MIDTOWN

WEST SIDE