"Building owners remain optimistic that the favorable market for retail leasing will continue despite the softening economy," says Steven Spinola, REBNY president, in a prepared release. "We are still seeing high asking rents in the selected retail corridors." He adds that the latest edition of the report has added new primary retail corridors "to correspond with interest by high-profile retailers in locating to these areas, including 86th Street on the Upper East Side and Columbus Avenue on the Upper West Side."

On major shopping corridors, the steepest increases have occurred on Third Avenue between 60th and 72nd streets, where asking rents for ground floor space were up 51% to an average of $329 per sf in the six-month period ending March 31, 2008 compared to $218 in March 2007. In the Flatiron District on Fifth Avenue between 14th and 23rd streets, asking rents were up 50% to $401 per sf, compared to $267 in March '07.

The highest asking rent for retail space is in the 10-block corridor along Fifth Avenue south of 59th Street, where asking rents average $1,958 per sf and climb as high as $2,000 per sf. Helping keep the rates high along that corridor is the virtual unavailability of prime retail space, according to REBNY. That helps explain why the low end of last year's range of asking rents along the corridor, $600, was nowhere in sight this year, as per-sf asking rents ranged more narrowly from $1,915 to $2,000.

One other retail corridor in Manhattan recorded asking ground-floor rents greater than $1,000: Madison Avenue between 57th and 72nd streets, although the average $1,066 figure recorded in March '08 was off from $1,158 a year earlier.

The Herald Square district—West 34th Street between 5th and 7th avenues—registered a 32% gain to $656 per sf. Further south, rents in SoHo's Broadway shopping area between Houston and Broome streets also increased 32% to $424 per sf.

The five new corridors added to the list of REBNY's Selected Major Retail Corridors include: 86th Street between Lexington and Second avenues, with an average of $450 per sf; Columbus Avenue between 66th and 79th streets, averaging $268 per sf; Fifth Avenue between 42nd and 49th streets, $704; Bleecker Street in the West Village, $397; and 14th Street in the Meatpacking District, $462.

Asking rents on 125th Street river to river, the largest retail corridor measured in the report, rose 4% to $107 psf. According to REBNY, one strong pocket of activity is the stretch west of Lenox Avenue where the highest asking rents are clustered.

While the volume of retail leasing activity throughout Manhattan remains strong, "we are seeing that tenants appear to be taking a longer time to make decisions and to complete deals," says Spinola in the release. He adds that "overall, the rising rents indicate a strong market and that retailers continue to have interest in coming to New York City."

The average asking rent per sf for all Manhattan retail space, including ground floor and otherwise, was up 3% to $111 compared to a year ago. The REBNY Retail Report is issued twice a year, in the spring and fall.

Instant Insights /

Retail: Rents Keep Climbing in Manhattan

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