spring09 - real estate board of new york...title spring09.qxp author maryann created date 6/3/2009...
TRANSCRIPT
Spring 2009
Stephen M. Ross,Chairperson
Steven Spinola,President
570 Lexington Avenue / New York, NY 10022 / 212.532.3100www.rebny.com
revised 6/2/09
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Manhattan average asking rents for allavailable space declined 11 percent from
the Fall 2008 to $115. Each of the borough’ssix geographic areas showed a decline in theaverage asking rent for all available space,ranging from 6 percent in Midtown to 22 per-cent on the West Side compared to six monthsearlier. Double digit declines in the averageasking rent for all available space were reportedon the East Side (12 percent), Midtown South(14 percent), Downtown and Upper Manhattan(13 percent).
These declines in the average asking rent forall space are from market highs in the fall 2008.In most cases, the average rents for Manhattanand the borough’s six geographic areas are com-parable to asking rents from a year ago.
Since September 2008, the turmoil in thefinancial markets has reverberated through thereal estate industry and the retail market.Despite this uncertainty, our Advisory Groupreports that leasing activity is occurringthroughout Manhattan. More interestingly, newretail tenants are looking at store space in NewYork for the first time. No doubt decliningprices are attracting tenants for whom the city isbecoming more affordable.
The average asking rent for ground floorspace in many of the major retail corridorshighlighted in the report likewise showeddeclines compared to Fall 2008. MadisonAvenue declined 14 percent, Broadway on theUpper West Side declined 5 percent and FifthAvenue in the 50s fell 3 percent from Fall 2008.
In a few corridors, such as Fifth Avenue inthe Flatiron District and Broadway in SoHo, theaverage asking rent for ground floor spaceshowed a modest gain. Our Advisory Groupnoted that in this economy owners are uncertainabout what is an appropriate asking rent.Hence, they do not modify the asking rentwhich could have been set as much as a yearago. Instead, they would offer a longer freerent period and a more generous build outallowance. These economic incentives varyfrom owner to owner.
A few years ago, in our meeting to reviewour report, our Advisory Group began toexpress concern about the steep rise in askingrents. They believed that asking rent increasesin the major retail corridors in Manhattan wereoutpacing overall economic growth and ques-tioned the sustainability of these asking rentincreases. Accordingly, they see the recentdecline in asking rents as an anticipated marketcorrection in a market that was experiencingunsustainable rent growth.
In our tumultuous economy it is crucial toexamine all the asking rent information—aver-age, median and range of ground floor space—in assessing the market conditions of an indi-vidual major retail corridor and evaluating ask-ing rents for individual stores.
An emerging issue identified by ourAdvisory Group is the rise in sublet space. Inearlier reports, this sublet space was virtuallyindistinguishable from space marketed directlyby the landlord and was included in our reports.Going forward, our Advisory Group will beexamining the asking rents for sublet space list-ings. Those listings that reflect market condi-tions (comparable rent with a term of 7 years ormore) in a particular location will be included.In situations where there are sublet listings withshorter lease terms we will attempt to determineif these sub-leases are likely to be converted tolong-term leases with the participation of thebuilding owner. Those listings, however, inwhich the asking price reflects economic distressof the tenant and significantly lower than otheravailable space in the market will be omitted.
The goal of our report is to provide com-plete, comprehensive information—the majorneighborhoods and prime corridors inManhattan—on the retail market. With theinvaluable assistance of our Advisory Group,we have attempted to alert the readers of ourreport to factors that are not captured by therent data. This information is critical to under-standing the market.
We hope in these challenging times you findour report informative and useful.
ExExecutivecutive Summare Summaryy
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Spring Spring Fall Fall Spring Spring % Change% Change % Change% Change20092009 20082008 20082008 From FallFrom Fall From SpringFrom Spring
20082008 20082008EASTSIDEEASTSIDEMadison Ave: 57 - 72 St $979 $1,143 $1,066 -14% -8%
Third Ave: 60 - 72 St $275 $287 $329 -4% -16%
East 86 St: Lexington Ave - 2nd Ave $400 $475 $450 -16% -11%
WESTSIDEWESTSIDEBroadway: 72 - 86 St $293 $309 $384 -5% -24%
Columbus Ave: 66 - 79 St $257 $300 $268 -14%
MIDTMIDTOWNOWNEast 57 St: 5 Ave - Park Ave $900 $600 n/a 50% n/a
Fifth Ave: 42 - 49 St $615 $550 $704 12% -13%
Fifth Ave: 49 - 59 St $1,631 $1,675 $1,958 -3% -17%
Broadway & 7 Ave: 42 - 47 St $941 $775 $809 21% 16%
MIDTMIDTOWN SOUTHOWN SOUTHFlatironFifth Ave: 14 - 23 St $285 $276 $401 3% -29%
Herald SquareWest 34 St: 5 - 7 Ave $508 $643 $656 -21% -23%
Meatpacking14 St: 9 - 10 Ave $417 $304 $462 37% -10%
DOWNTDOWNTOWNOWNFinancial DistrictBroadway: Battery Park - Chambers St $251 $251 $198 0% 27%
SoHoBroadway: Houston - Broome St $452 $432 $424 5% 7%
West VillageBleeker St: 7 Ave South - Hudson St $528 $362 $397 n/a 33%
UPPER MANHAUPPER MANHATTTTANANHarlem125th St. (River to River) $119 $125 $107 -5% 11%
AAVERAVERAGE ASKINGE ASKING RENTG RENT: SELECTED MAJOR RET: SELECTED MAJOR RETAILAILCCORRIDORS ORRIDORS AAvvailable Grailable Ground Floor Space Onlound Floor Space Onlyy
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Spring Spring Fall Fall Spring Spring % Change% Change % Change% Change20092009 20082008 20082008 From FallFrom Fall From SpringFrom Spring
20082008 20082008EASTSIDEEASTSIDEMadison Ave: 57 - 72 St $1,000 $1,140 $1,121 -12% -11%
Third Ave: 60 - 72 St $250 $300 $342 -17% -27%
East 86 St: Lexington Ave - 2nd Ave $400 $450 $450 -11% -11%
WESTSIDEWESTSIDEBroadway: 72 - 86 St $300 $316 $325 -5% -8%
Columbus Ave: 66 - 79 St $271 $300 $288 -10% -6%
MIDTMIDTOWNOWNEast 57 St: 5 Ave - Park Ave $600 $600 n/a 0% n/a
Fifth Ave: 42 - 49 St $506 $550 $455 -8% 11%
Fifth Ave: 49 - 59 St $1,561 $1,500 $1,958 4% -20%
Broadway & 7 Ave: 42 - 47 St $1,000 $775 $809 24% 29%
MIDTMIDTOWN SOUTHOWN SOUTHFlatironFifth Ave: 14 - 23 St $250 $271 $400 -8% -38%
Herald SquareWest 34 St: 5 - 7 Ave $500 $640 $672 -22% -26%
Meatpacking14 St: 9 - 10 Ave $400 $300 $467 33% -14%
DOWNTDOWNTOWNOWNFinancial DistrictBroadway: Battery Park - Chambers St $200 $200 $225 0% -11%
SoHoBroadway: Houston - Broome St $480 $400 $421 20% 14%
West VillageBleeker St: 7 Ave South - Hudson St $525 $304 $332 73% n/a
UPPER MANHAUPPER MANHATTTTANANHarlem125th St. (River to River) $100 $115 $92 -13% 9%
MEDIAN ASKINMEDIAN ASKING RENTG RENT: SELECTED MAJOR RET: SELECTED MAJOR RETAILAILCCORRIDORS ORRIDORS AAvvailable Grailable Ground Floor Space Onlound Floor Space Onlyy
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Spring 2009Spring 2009 Fall 2008Fall 2008 Spring 2008Spring 2008
EASTSIDEEASTSIDEMadison Ave: 57 - 72 St $700 - $1,200 $704 - $1,667 $600 - $1,538
Third Ave: 60 - 72 St $200 - $400 $184 - $503 $300 - $350
East 86 St: Lexington Ave - 2nd Ave $400 - $400 $325 - $781 $400 - $500
WESTSIDEWESTSIDEBroadway: 72 - 86 St $236 - $325 $168 - $450 $325 - $620
Columbus Ave: 66 - 79 St $162 - $325 $131 - $447 $150 - $348
MIDTMIDTOWNOWNEast 57 St: 5 Ave - Park Ave $600 - $1,500 $400 - $800 $0 - $0
Fifth Ave: 42 - 49 St $432 - $1,333 $300 - $800 $325 - $1,333
Fifth Ave: 49 - 59 St $1,200 - $2,200 $1,200 - $2,500 $1,915 - $2,000
Broadway & 7 Ave: 42 - 47 St $622 - $1,200 $550 - $1,000 $618 - $1,000
MIDTMIDTOWN SOUTHOWN SOUTHFlatironFifth Ave: 14 - 23 St $200 - $400 $238 - $325 $300 - $556
Herald SquareWest 34 St: 5 - 7 Ave $475 - $550 $500 - $791 $450 - $830
Meatpacking14 St: 9 - 10 Ave $400 - $450 $250 - $400 $320 - $600
DOWNTDOWNTOWNOWNFinancial DistrictBroadway: Battery Park - Chambers St $100 - $400 $100 - $500 $75 - $400
SoHoBroadway: Houston - Broome St $333 - $550 $220 - $800 $275 - $600
West VillageBleeker St: 7 Ave South - Hudson St $393 - $667 $130 - $800 $265 - $600
UPPER MANHAUPPER MANHATTTTANANHarlem125th St. (River to River) $75 - $200 $80 - $222 $40 - $220
ASKINASKING RENT RANG RENT RANGE: SELECTED MAJOR RETGE: SELECTED MAJOR RETAILAILCCORRIDORS ORRIDORS AAvvailable Grailable Ground Floor Space Onlound Floor Space Onlyy
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AAVERAVERAGE ASKINGE ASKING RENTG RENT: MAJOR RET: MAJOR RETAIL NEIGHBAIL NEIGHBORHOODSORHOODSAll AAll Avvailable Spaceailable Space (Gr(Ground found floorloor, lo, lowwer Leer Levvel, Uel, Upper lepper levvel, mezzanine)el, mezzanine)
Spring Spring Fall Fall Spring Spring % Change% Change % Change% Change20092009 20082008 20082008 From FallFrom Fall From SpringFrom Spring
20082008 20082008
MANHAMANHATTTTANAN $115 $129 $111 -11% 4%
EASTSIDEEASTSIDE $168 $190 $164 -12% 2%
60th Street to 96th Street, Fifth Avenue to the East River
WESTSIDEWESTSIDE $116 $147 $123 -22% -6%
60th Street to 116th Street, West of Morningside Park
MIDTMIDTOWNOWN $152 $161 $145 -6% 5%
35th Street to 59th Street
MIDTMIDTOWN SOUTHOWN SOUTH $96 $111 $96 -14% 0%
15th Street to 34th Street
DOWNTDOWNTOWNOWN $95 $110 $103 -13% -8%
South of 14th Street
UPPER MANHAUPPER MANHATTTTANAN97th Street and higher, Fifth Avenue to the East River; $52 $60 $60 -13% -13%
116th Street and higher, West of Morningside Park
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MEDIAN ASKINMEDIAN ASKING RENTG RENT: MAJOR RET: MAJOR RETAIL NEIGHBAIL NEIGHBORHOODSORHOODSAll AAll Avvailable Spaceailable Space (Gr(Ground found floorloor, lo, lowwer Leer Levvel, Uel, Upper lepper levvel, mezzanine)el, mezzanine)
Spring Spring Fall Fall Spring Spring % Change% Change % Change% Change20092009 20082008 20082008 From FallFrom Fall From SpringFrom Spring
20082008 20082008
MANHAMANHATTTTANAN $83 $94 $77 -11% 8%
EASTSIDEEASTSIDE $125 $139 $125 -10% 0%
60th Street to 96th Street, Fifth Avenue to the East River
WESTSIDEWESTSIDE $88 $120 $100 -27% -12%
60th Street to 116th Street, West of Morningside Park
MIDTMIDTOWNOWN $100 $113 $83 -12% 20%
35th Street to 59th Street
MIDTMIDTOWN SOUTHOWN SOUTH $70 $85 $76 -18% -8%
15th Street to 34th Street
DOWNTDOWNTOWNOWN $80 $85 $80 -6% 0%
South of 14th Street
UPPER MANHAUPPER MANHATTTTANAN97th Street and higher, Fifth Avenue to the East River; $45 $50 $47 -10% -4%
116th Street and higher, West of Morningside Park
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New York City Employment (in thousands)
7
3,790
3,619
3,490 3,499
3,539
3,580
3,300
3,350
3,400
3,450
3,500
3,550
3,600
3,650
3,700
3,750
3,800
3,850
2008 2009 2010 2011 2012 2013
East Side9.6
West Side4.4
Midtown28.8
Midtown South35.4
Downtown21.2
N. Manhattan10.3
26.2%
32.2%
19.3%
9.4%4.0%
8.8%
SELECTED MARKET DATASELECTED MARKET DATA
New York City CPI (1982-1984=100)
235.8 235.1
238.9
244.3
250.1
256.2
220
225
230
235
240
245
250
255
260
2008 2009 2010 2011 2012 2013
CPI
R
Manhattan Retail Square Feet by Area (millions of square feet)
Source: NYC Office of Management & Budget
Forecast of New York City Economic Indicators
Source: NYC Office of Management & Budget
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8
$420.8
$406.1 $406.1
$419.4
$437.1
$456.6
$380.0
$400.0
$420.0
$440.0
$460.0
$480.0
2008 2009 2010 2011 2012 2013
Personal Income (In Thousands)
$486.2
$427.8$419.8
$433.0
$457.7
$447.6
$380.0
$400.0
$420.0
$440.0
$460.0
$480.0
$500.0
2008 2009 2010 2011 2012 2013
New York City Gross Personal Income
New York City Real Gross City Product (billions)
SELECTED MARKET DATASELECTED MARKET DATA
Source: NYC Office of Management & Budget
Source: NYC Office of Management & Budget
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$133$138
$103$113 $111
$128
$143
$155$148
$160
$178
$161$155
$170$164
$168
$186 $190
$80
$100
$120
$140
$160
$180
$200
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$115$122
$107 $109 $110 $112
$121$125
$129 $132$138 $137
$156$152
$161
$128$133
$145
$80
$100
$120
$140
$160
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$103
$92 $92 $91
$100$104
$107
$136
$127$123 $122
$128
$135
$116
$147
$107
$123
$111
$80
$100
$120
$140
$160
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Midtown
Westside
96 98
8487 85
8892
97 97
103108 106 107
118115
129
102
111
80
100
120
140
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Average Retail Asking Rents PSFAverage Retail Asking Rents PSF
Eastside
Manhattan
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$67
$60 $60 $58 $59 $58 $58 $59
$73
$82
$90 $92
$98$95
$103
$95
$110
$85
$50
$70
$90
$110
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$51
$47
$53$50
$53$50 $51 $50 $50
$47$50
$52
$60
$48
$76
$60$56
$43
$40
$50
$60
$70
$80
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00
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Upper Manhattan
$79 $78
$70$74
$71 $70$74 $75
$78$73
$85 $85$89
$94 $96 $96
$111
$82
$60
$70
$80
$90
$100
$110
$120
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Average Retail Asking Rents PSFAverage Retail Asking Rents PSF
Downtown
Midtown South
The Retail Report provides objective, comprehensiveinformation about asking rents and market trends in
Manhattan.
Issued twice a year—Spring and Fall—the report is a project of the REBNY Retail Committee.
The report presents retail space information by geo-graphical area and focuses on the asking rent of theground floor space on the major retail streets.
Robin Abrams, The Lansco Corporation
Karen Bellantoni, Robert K. Futterman & Associates, LLC
Benjamin Fox, Winick Realty Group
Andrew Goldberg, CBRE
David Green, Cushman & Wakefield
Joanne Podell, Cushman & Wakefield
Fred Posniak, W&M Properties of New York, LLC
Jeffrey Roseman, Newmark Knight Frank
Alan Victor, The Lansco Corporation
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acknowledgementsacknowledgements
The REBNY Retail Report Advisory Group includes: