Retail real estate recovering, Real Estate Board report says

Real Estate Weekly, May 22, 2002

A tentative retail real estate recovery has begun, according to the REBNY's fourth biannual Retail Report.

The survey covers 2,118 stores offered for rent throughout Manhattan. Between March 2001 and the end of September, the report finds, the amount of available store square footage rose from 10,573,173 to 11,333,587, then declined slightly to 11,158,883 by this March. At those intervals, the average asking rent per SF for stores went from $98 to $84 to $87. Asking rents climbed between September 2001 and this March in Midtown, Midtown South, Upper Manhattan and on the East Side, but slipped downtown and on the West Side.

"The significant variations within each market mean that overall figures for available space and asking rents can't, by themselves, provide a truly detailed portrait of the retail market," REBNY president Steven Spinola said. "For that reason, we've compiled asking rents and other data from major shopping corridors and included the 'Street Talk' column in our Retail Report. The column's summary of brokers' insights and their accounts of the sub-markets they know so well supplement and illuminate the numerical information we're presenting."

The "Street Talk" column focuses on the Lower Manhattan market whose comparable statistics show a variation in available square footage over that 12-month period of 1,330,401 in March 2001, 1,683,602 at the end of September and 1,712,603 at the end of this March. The average asking rent for stores downtown remained at $60 per square over 2001's second and third quarters but stood at $58 per SF on March 31.

Reported figures regarding downtown, however, mask signs of improvement in its retail sector, informed brokers say. The report's preface notes that store sales "are stronger south of Wall Street than they were" a year ago. Despite the whiplash effects of 2001's recession and September's assaults, the rate of increase in available downtown store space, which had climbed steeply following the attacks, has begun to diminish.

One broker advised that a recent store listing drew 550 inquiries, 38 of them unsolicited, which could indicate emerging demand, a scarcity of space of similar quality, or both.

The report attributes a "guardedly favorable" retail property outlook for Lower Manhattan and the rest of the Central Business District to a significant infusion of federal aid, the public sector's impressive success in clearing downtown's devastated section of debris and low enough inflation and interest rates to spark investment.

The Real Estate Board's Stores Committee Advisory Group prepared REBNY's Retail Report. Its members are: Larry Abrams, Robin Abrams, Benjamin Fox, David Green, Fred Posniak, Alan Victor and Chase Welles.