THE REAL ESTATE BOARD OF NEW YORKMANHATTAN RETAIL REPORT | FALL 2019

MANHATTAN RETAIL REPORT FALL 2019 | 2

INTRODUCTION

The Manhattan retail market is evolving with an uptick in year-over-year leasing activity despite an increase in retail supply. Outlook remains positive with new operators entering the market and heightened interest in retail spaces. High asking rents have begun to drop, resulting in an uptick in leasing activity and a stabilizing market. Manhattan retail leases in the second half of 2019 were driven by e-commerce proof of concept uses such as food/beverage, service, and medical offices.

Despite traditional storefront retail lessening its footprint, other types of brick-and-mortar uses continue to be in demand as new retailers are becoming more innovative in their uses. Omni-channel retail is effective for digitally native brands that require showrooms to showcase their products/services, which act in conjunction with their e-commerce and marketing efforts. An increased presence of pop-ups and promotional spaces indicate that brands are offering unique in-person experiences to attract both online and in-store shoppers. Other uses such as bookstore cafes and daytime co-working spaces reflect that consumer demand is shifting in favor of modern storefront uses.

In fall 2019, average asking rents for available ground floor retail spaces decreased in 11 of the 17 corridors analyzed by REBNY in its bi-annual Manhattan retail report, compared to the fall of 2018.

In Lower Fifth Avenue, between 42nd and 49th streets, average asking rents declined 9% year-over-year to $852 psf. This drop is attributed to an increased amount of available spaces, as high-end apparel is leaving the corridor in favor of emerging downtown shopping strips. Owners are seeking to fill available spaces at a higher rate by offering short-term lease agreements with the hope of attracting more long-term tenants. Notable new leases include Lululemon, Uggs, Club Monaco, and PUMA. In Upper Fifth Avenue, between 49th and 59th streets, average asking rents declined 5% year-over-year to $2,838 psf. Comparing the two corridors, Upper Fifth Avenue is experiencing slower activity, as no recent deals have occurred. Asking rents are expected to decrease.

In Times Square on Broadway and Seventh Avenue, between 42nd and 47th streets, average asking rents increased 2% year-over-year to $1,889 psf. The retail environment in Times Square is adjusting as new leases primarily consist of food/beverage and experiential retail uses. Owners are willing to cover a greater share of improvements on retail spaces to make it worthwhile for quality tenants. Recent leases consist of Krispy Kreme, JD Sports, and Hard Rock Café.

On West 34th Street, between Fifth and Seventh Avenue, average asking rents declined 8% year-over-year to $528 psf. Compared to Times Square, Herald Square presents a more challenging retail environment with a lower absorption rate and more spaces available on the market. Despite the recent closings of Sephora, GAP and J. Crew, the outlook for Herald Square remains positive with the recent leases by Ulta Beauty, Abercrombie & Fitch, Famous Footwear, and the Century 21 pop-up signing a long-term agreement.

EXECUTIVE SUMMARY

MANHATTAN RETAIL REPORT FALL 2019 | 3

Average asking rents on Madison Avenue, between 57th and 72nd streets, declined 22% to $906 psf compared to the fall 2018. Out of the 17 observed corridors, Madison Avenue experienced the largest year-over-year decline. An increased amount of leases expiring has contributed to the high availability rates that has led owners to lower asking rents and offer more short-term lease agreements. Softening rents has led to increased absorption as recent leases consist of retailers relocating to smaller-sized storefronts with better co-tenancy. Notables tenants such as Akris, Mont Blanc, and Morgane Le Fay indicate that apparel tenants still dominate this corridor.

On East 86th Street, between Lexington and 2nd Avenue, average asking rents declined 11% to $327 psf. This drop is credited to a lack of available prime retail space as current availabilities are located along 2nd Avenue where asking rents are lower and foot traffic is more local. More expensive retail spaces along Lexington Avenue were recently leased by Old Navy and JP Morgan Chase that caused asking rents to artificially inflate.

On Third Avenue, between 60th and 72nd Street, average asking rents remained flat year-over-year at $233 psf. The retail market on Third Avenue remains stable with a large stretch of occupied retail space due to access to public transportation and major retailers keeping and renewing leases nearby. IKEA opening its first Manhattan location on Third Avenue has increased the corridor’s credibility and driven interest from new tenants entering the corridor. In order to fill vacant spaces, owners are becoming more flexible with a steady amount of deal-making occurring with new tenants such as Wells Fargo, TD Bank, and Tudor Salon.

On Columbus Avenue, between 66th and 79th Street, average asking rents remained flat year-over-year at $298 psf. Columbus Avenue is a self-contained and a tight market with low availability. With high residential foot traffic, Columbus Avenue is labeled as a destination location for branded retailers with a diverse mix of tenants composed of smaller-sized storefronts.

In SoHo on Broadway, between Houston and Broome street, average asking rents declined 12% year-over-year to $491 psf. Broadway is composed of loft buildings with large retail spaces that are difficult to subdivide due to historic regulations. Further complications stem from restrictive zoning that places limits on food/beverage uses in SoHo. The decline in asking rents is attributed to post-recession asking rents nearly doubling to historic peaks, as flagship brands were considered ideal tenants capable of affording expensive large retail spaces. As asking rents continue to adjust, Broadway is witnessing increased activity by pop-ups and digitally native brands experimenting with retail space.

On Bleecker Street, between 7th Avenue South and Hudson Street, average asking rents declined 5% year-over-year to $278 psf. Asking rents on Bleecker Street continue to decline from post-recession all-time highs, as lesser foot traffic and a more neighborhood centric retail landscape has caused flagship brands to look for Downtown retail space elsewhere. Bleecker Street has gained new traction with Brookfield Properties filling in its new portfolio of 7 storefronts with a mix of digitally native and e-commerce brands, which has encouraged similar retailers to search for space along the corridor. Examples of new digitally native and e-commerce tenants include LoveShackFancy, Hill House Home, Slightly Alabama, and Bonberi.

EXECUTIVE SUMMARY (CONT.)

MANHATTAN RETAIL REPORT FALL 2019 | 4

The REBNY Manhattan Retail Report Advisory Group includes:

Robin Abrams, Compass Karen Bellantoni, RKF Matt Chmielecki, CBRE David A. Green, Colliers International Jordan Kaplan, CBRE Andrew Mandell, Ripco Real Estate Joanne Podell, Cushman & Wakefield Fred Posniak, Empire State Realty Trust Jeffrey Roseman, Newmark Knight Frank Craig Slosberg, Newmark Knight Frank

REBNY would like to thank the following firms fortheir assistance in preparing the report:

CBRECompassColliers International Cushman & WakefieldEmpire State Realty TrustNewmark Knight FrankRipco Real EstateRKF

ACKNOWLEDGMENTS

MANHATTAN RETAIL REPORT FALL 2019 | 5

Columbus Ave | (66th St - 79th St)Broadway | (72nd St - 86th St)

$403

$344 $338

$304 $298

$279

$298

$250

$300

$350

$400

$450

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

UPP

ER W

EST

SID

E

125th St | (5th Ave - Morningside Ave)

UPP

ER M

AN

HAT

TAN

UPP

ER E

AST

SID

E East 86th St | (Lexington Ave - 2nd Ave) Madison Ave | (57th St - 72nd St)

Third Ave | (60th St - 72nd St)

$125 $124 $123 $124

$140 $137

$151

$100

$125

$150

$175

$200

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$341

$315

$291

$325

$306

$273$263

$200

$250

$300

$350

$400

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$428

$399

$450

$400

$367 $365

$327

$300

$350

$400

$450

$500

$1,433 $1,446

$1,348$1,390

$1,160

$1,039

$906

$800

$1,000

$1,200

$1,400

$1,600

$340$356

$261 $264

$233$226

$233

$200

$250

$300

$350

$400

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019 F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

HISTORICAL AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

MANHATTAN RETAIL REPORT FALL 2019 | 6

Fifth Ave | (42nd St - 49th St)

Fifth Ave | (49th St - 59th St)

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

MID

TOW

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

$2,170

$1,930

$2,100

$1,938$1,860

$1,936$1,889

$1,500

$1,750

$2,000

$2,250

$2,500

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$3,484$3,324

$3,900 $3,900

$2,973$3,047

$2,838

$2,500

$3,000

$3,500

$4,000

$4,500

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$1,259

$1,163 $1,158

$1,097

$939

$878$852

$800

$950

$1,100

$1,250

$1,400

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$1,438

$1,294

$975$925 $944

$740

$700

$900

$1,100

$1,300

$1,500

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

Broadway | (14th St - 23rd St)

MID

TOW

N S

OU

TH

Fifth Ave | (14th St - 23rd St)

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

$745 $734

$633$604

$573

$613

$528

$500

$600

$700

$800

$900

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$390

$456$449

$422

$393$400

$348

$300

$350

$400

$450

$500

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$390

$348

$384

$360

$378 $372 $377

$300

$350

$400

$450

$500

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

HISTORICAL AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

MANHATTAN RETAIL REPORT FALL 2019 | 7

Bleecker St | (7th Ave South - Hudson St)

Broadway | (Battery Park - Chambers St)

Broadway | (Houston St - Broome St)

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

DO

WN

TOW

N

$345$334

$323$313

$303

$277

$345

$250

$300

$350

$400

$450

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$369$362

$374 $368

$338

$401$413

$250

$300

$350

$400

$450

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

$755

$812

$644

$595$558 $544

$491

$400

$525

$650

$775

$900

$471

$373$351

$332

$293 $294$278

$250

$325

$400

$475

$550

F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019F-2016 S-2017 F-2017 S-2018 F-2018 S-2019 F-2019

HISTORICAL AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

MANHATTAN RETAIL REPORT FALL 2019 | 8

Columbus Ave | (66th St - 79th St)Broadway | (72nd St - 86th St)

UPP

ER W

EST

SID

EU

PPER

EA

ST S

IDE East 86th St | (Lexington Ave - 2nd Ave) Madison Ave | (57th St - 72nd St)

Third Ave | (60th St - 72nd St)

125th St | (5th Ave - Morningside Ave)

UPP

ER M

AN

HAT

TAN

LEG

END

10%▲

8%▲

$140 $137 $151

7%▲

0%

$298 $279 $298

13%▼

22%▼

$1,160 $1,039 $906

Fall18 Spring 19 Fall19

%Δ from Spring 19 to Fall 19

%Δ from Fall 18 to Fall 19

$306 $273 $263

4%▼

14%▼

$367 $365 $327

10%▼

11%▼

$233 $226 $233

3%▲

0%

AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

MANHATTAN RETAIL REPORT FALL 2019 | 9

AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

Fifth Ave | (42nd St - 49th St)

Fifth Ave | (49th St - 59th St)

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

MID

TOW

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

7%▼

5%▼

$2,973 $3,047 $2,838

2%▼

2%▲

22%▼

20%▼

$925 $944 $740$939

1%▲

0%

$378 $372 $377$573 $613 $528

14%▼

8%▼

$878 $852

3%▼

9%▼

$393 $400 $348

13%▼

12%▼

$1,860 $1,936 $1,889

Broadway | (14th St - 23rd St)

MID

TOW

N S

OU

TH

Fifth Ave | (14th St - 23rd St)

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

MANHATTAN RETAIL REPORT FALL 2019 | 10

Bleecker St | (7th Ave South - Hudson St)

Broadway | (Battery Park - Chambers St)

Broadway | (Houston St - Broome St)

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

DO

WN

TOW

N

3%▲

22%▲

$338 $401 $413$303 $277 $345

25%▲

14%▲

5%▼

5%▼

$293 $294 $278$558 $544 $491

10%▼

12%▼

AVERAGE ASKING RENT PSF - GROUND FLOOR RETAIL

MANHATTAN RETAIL REPORT FALL 2019 | 11

APPENDIX

AVERAGE ASKING RENT PSF – GROUND FLOOR RETAIL

Fall 19 Spring 19 Fall 18 % Spring 19 % Fall 18UPPER WEST SIDEBroadway (72nd St - 86th St) $263 $273 $306 -4% -14%Columbus Ave (66th St - 79th St) $298 $279 $298 7% 0%

UPPER EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $327 $365 $367 -10% -11%Madison Ave (57th St - 72nd St) $906 $1,039 $1,160 -13% -22%Third Ave (60th St - 72nd St) $233 $226 $233 3% 0%

MIDTOWNEast 57th St (5th Ave - Park Ave) $740 $944 $925 -22% -20%5th Ave (49th St - 59th St) $2,838 $3,047 $2,973 -7% -5%5th Ave (42th St - 49th St) $852 $878 $939 -3% -9%Broadway & 7th Ave (42nd St - 47th St) $1,889 $1,936 $1,860 -2% 2%

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $528 $613 $573 -14% -8%Flatiron5th Ave (14th St - 23rd St) $348 $400 $393 -13% -12%Broadway (14th St - 23rd St) $377 $372 $378 1% 0%

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $345 $277 $303 25% 14%West Village Bleecker St (7th Ave South - Hudson St) $278 $294 $293 -5% -5%SoHoBroadway (Houston St - Broome St) $491 $544 $558 -10% -12%Lower Manhattan Broadway (Battery Park - Chambers St) $413 $401 $338 3% 22%

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $151 $137 $140 10% 8%

MANHATTAN RETAIL REPORT FALL 2019 | 12

APPENDIX

MEDIAN ASKING RENT PSF – GROUND FLOOR RETAIL

Fall 19 Spring 19 Fall 18 % Spring 19 % Fall 18UPPER WEST SIDEBroadway (72nd St - 86th St) $260 $250 $325 4% -20%Columbus Ave (66th St - 79th St) $287 $248 $280 16% 2%

UPPER EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $330 $365 $375 -10% -12%Madison Ave (57th St - 72nd St) $900 $1,000 $1,160 -10% -22%Third Ave (60th St - 72nd St) $225 $225 $225 0% 0%

MIDTOWNEast 57th St (5th Ave - Park Ave) $750 $900 $800 -17% -6%5th Ave (49th St - 59th St) $2,500 $3,050 $2,600 -18% -4%5th Ave (42th St - 49th St) $888 $800 $909 11% -2%Broadway & 7th Ave (42nd St - 47th St) $1,800 $1,800 $2,000 0% -10%

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $507 $600 $650 -16% -22%Flatiron5th Ave (14th St - 23rd St) $325 $400 $418 -19% -22%Broadway (14th St - 23rd St) $388 $375 $350 3% 11%

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $375 $262 $300 43% 25%West Village Bleecker St (7th Ave South - Hudson St) $300 $270 $268 11% 12%SoHoBroadway (Houston St - Broome St) $475 $544 $547 -13% -13%Lower Manhattan Broadway (Battery Park - Chambers St) $411 $413 $325 0% 26%

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $125 $125 $130 12% 8%

MANHATTAN RETAIL REPORT FALL 2019 | 13

APPENDIX

RANGE OF ASKING RENTS PSF – GROUND FLOOR RETAIL

Fall 19 Spring 19 Fall 18UPPER WEST SIDEBroadway (72nd St - 86th St) $166 _ $409 $166 _ $410 $200 _ $450Columbus Ave (66th St - 79th St) $150 _ $458 $125 _ $458 $178 _ $458

UPPER EAST SIDEEast 86th St (Lexington Ave - 2nd Ave) $200 _ $475 $225 _ $475 $250 _ $475Madison Ave (57th St - 72nd St) $350 _ $1,502 $800 _ $1,600 $720 _ $1,700Third Ave (60th St - 72nd St) $185 _ $300 $160 _ $300 $165 _ $300

MIDTOWNEast 57th St (5th Ave - Park Ave) $650 _ $800 $800 _ $1,175 $800 _ $1,1755th Ave (49th St - 59th St) $1,750 _ $3,750 $2,000 _ $4,000 $2,000 _ $4,0005th Ave (42th St - 49th St) $600 _ $1,176 $500 _ $1,500 $590 _ $1,744Broadway & 7th Ave (42nd St - 47th St) $1,425 _ $2,350 $1,500 _ $2,350 $1,000 _ $2,350

MIDTOWN SOUTHHerald SquareWest 34th St (5th Ave - 7th Ave) $400 _ $800 $447 _ $850 $314 _ $750Flatiron5th Ave (14th St - 23rd St) $300 _ $415 $295 _ $550 $285 _ $511Broadway (14th St - 23rd St) $325 _ $425 $325 _ $410 $311 _ $500

DOWNTOWNMeatpacking 14th St (9th Ave - 10th Ave) $150 _ $700 $195 _ $375 $195 _ $450West Village Bleecker St (7th Ave South - Hudson St) $142 _ $379 $150 _ $584 $182 _ $465SoHoBroadway (Houston St - Broome St) $250 _ $733 $300 _ $978 $300 _ $900Lower Manhattan Broadway (Battery Park - Chambers St) $150 _ $785 $150 _ $625 $125 _ $500

UPPER MANHATTANHarlem 125th St. (5th Ave - Morningside Ave) $100 _ $250 $90 _ $250 $76 _ $230

MANHATTAN RETAIL REPORT FALL 2019 | 14

CORRIDOR MAPS

125th Street

E 86th Street

Mad

ison

Ave

nue

Broa

dway

Broa

dway

Broa

dway

Bleecker Street

14th Street

Broa

dway

7th

Aven

ue 5th

Stre

et

E 57th Street

Broa

dway

Col

umbu

s Av

enue

5th

Aven

ue

W 34th Street

Third

Ave

nue

UPPER MANHATTAN

UPPER EAST SIDE

DOWNTOWN

MIDTOWN SOUTH

MIDTOWN

UPPER WEST SIDE