Major Retail Corridors See a Rise in Rents

The market for retail space in areas that lagged after the terrorist attacks of 2001 is rebounding with lower vacancies and higher rents, according to a report released this week by the Real Estate Board of New York.The report, which surveyed asking rents for available retail space from March through September of this year, showed increasing demand for space around Manhattan, particularly in the major retail corridors in SoHo, TriBeCa, on Broadway in Lower Manhattan, and also on the East Side.Overall, the amount of available square footage of retail space in Manhattan dropped by about 13.5% in the past 12 months, with fewer vacant stores available and asking rents higher by about 5%.The president of REBNY, Steven Spinola, said that retail franchises were drawn increasingly to New York this year because of promising long-term economic prospects.Mr. Spinola said an increase in the number of tourist this year could have played a role in stronger retail markets in Soho, TriBeCa, and Midtown, but he said areas with less tourist traffic, such as the Upper East Side and Midtown South, were still showing growth.The chairman of retail leasing for Prudential Douglas Elliman, Faith Hope Consolo, said 2005 was the best year for retail since 1999, in terms of the number of transactions and the higher rents. Ms. Consolo said a favorable exchange rate has encouraged Europeans to shop in New York’s luxury stores.“The comeback story of 2005 was SoHo. A lot of the vacant space was leased this year,” she said. “There is a different kind of dynamic. It’s not just fashion. There are families and people walking over from TriBeCa.”Ms. Consolo said retailers are undeterred by the high rents in New York, which she said were about five times the national average.“The only spot we are not sure about is downtown. The financial district still has to find itself,” she said.A senior vice president of the Corcoran Group, Neal Sroka, said several brokerages, including his own, are seeking to open offices near ground zero and TriBeCa to take advantage of the expected demand.“The World Trade Center is going to be the most visited historical landmark for the next 20 years,” he said. “Everybody is waiting to see it built. The traffic will be there, so retailers are going to start to move in. There is a lot interest, but no deals yet.”Mr. Sroka said higher rents are changing the makeup of retail tenants.“You see more and more national retailers come in. I think it is difficult for entrepreneurs to come in and start up,” he said. “Landlords will much rather sit with a vacant store than take a tenant that they don’t think will make it.”A vice president for CB Richard Ellis retail services, Gary Trock, said new residential development was attracting retail tenants in neighborhoods where retail was traditionally sparse.Mr. Trock named Midtown West, Chelsea, the area around Madison Square Park, and the Lower East Side as neighborhoods that have grown strong retail segments to cope with new, denser residential growth.“The retail market is stronger than it has ever been,” he said. “There are not a lot of vacancies. If there is something good, there are several applicants.”Mr. Trock also said national bank chains and pharmacies are competing for corner storefronts and driving up rents.

Major Retail Corridors See a Rise in Rents

Major Retail Corridors See a Rise in Rents

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