Recently, the Real Estate Board of New York (REBNY) released its Fall 2015 Manhattan Retail Report which showed a slight dip in the asking rents of the borough's premier corridors.
In 17 of the surveyed corridors, seven of them decreased their asking rents. However, none of the dips in rent were more than six percent.
On the other hand, the remaining ten corridors increased their average asking rent. Compared to the Fall 2014 quarter, their rent increase was only considered "modest."
REBNY pointed out that the decreases, especially the notable sx- percent dip in the Madison Avenue 57th to 72nd corridor, is not to be taken as a sign of weakness or loss of interest. The decrease was only a result of the combination of supply available in the said area. Because of the high supply, landlords found it wise to set lower asking rents to attract tenant interest.
A good example of this supply-driven drop was the four-percent decrease in asking rents in Broadway on the Upper West Side. As a matter of fact, the increase in supply served as a major factor in the rental dips of all corridors except for one.
Meanwhile, the landlords who opted to increase their asking rent changed their prices due to the residential development and a resurgence of neighborhood vitality within their area. For instance, in the Financial District, the corridors are now asking for higher rents.
This shouldn't come as a surprise as the Financial District has been seeing plenty of significant changes recently. There have been massive infrastructure upgrades including the Fulton Transportation Hub, new shopping areas, dining areas surrounding the World Trade Center and the construction of Brookfield Place.
As a result of this development, ground floor retail asking rents along the Broadway Financial District have increased. Landlords in the borough have implemented a 16 percent increase this quarter.
Both residential and commercial brokers are now feeling positive about the current market although they feel a certain level of uncertainty in the market six months from now.
