Retail leasing velocity in Manhattan decelerated again in the third quarter of 2020, marking five consecutive quarters of decline. Average asking rent fell for the 12th consecutive quarter to $659 per sq. ft., a 12.8% year-over-year decrease and 4.2% drop from the prior quarter.
Some bright spots on the Manhattan retail landscape during the third quarter included new leases by Greek restaurant Avra Estiatorio at 1271 Avenue of the Americas, luxury jeweler Chopard at 730 Fifth Avenue and online retailer Zappos.com at 19 Union Square West, deals that offer a much-needed vote of confidence in the market’s eventual recovery.
“The Manhattan economy remains on a course of steady, gradual reopening,” said Nicole LaRusso, Director of Research & Analysis, New York Tri-State. “Even with green shoots of recovery and the easing of operational restrictions, activity in most stores and restaurants remains significantly diminished from pre-COVID levels, as the daytime population in Manhattan is still far below historic norms.”
The Q3 rolling four-quarter aggregate leasing velocity, which measures the total leasing (renewals and new leases) for the four prior quarters, dropped below 3 million sq. ft. for the first time since Q1 2017, down 16.2% from the nearly 3.2 million sq. ft. in Q2 2020 and 31.2% from a year prior. Leasing velocity is likely to remain subdued through 2020, as there is ongoing uncertainty about when demand will pick up and when stores and restaurants will be able to operate at normal capacity.
Food & beverage (F&B) was the most active tenant category in Q3 2020 both in terms of square footage leased and transaction count. F&B tenants secured nearly 35,000 sq. ft. across eight leases.
The count of direct ground-floor availabilities tracked across Manhattan’s 16 premier shopping corridors increased from 235 to 254 quarter-over-quarter, an 8.1% jump and surpassing the previous peak recorded in the prior quarter. Mounting space additions will keep downward pressure on rents.
The Q3 2020 Manhattan Retail MarketView is attached.
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