NEW YORK CITY—Conditions are ripe for retail success in Manhattan, and asking rents reflect this. That's the key take-home from a pair of reports issued Monday by the Real Estate Board of New York and CBRE Group, which cited double-digit increases year-over-year along a number of retail corridors.

REBNY's semiannual Retail Report found that ground-floor retail space in all but one of 17 Manhattan corridors experienced Y-O-Y growth in asking rents. “Our retail advisory group reports asking rents stabilizing in some areas; retailers both international and domestic continue to show interest and are making deals in the city's most highly trafficked shopping destinations on Fifth Avenue, Madison Avenue and in Times Square,” says REBNY president Steven Spinola. “What our report found is that the steepest increases in asking rents were in other popular shopping destinations, some of which have concurrently seen an uptick in residential development.”

Fifth Avenue between 49th and 59th streets, traditionally Manhattan's most expensive corridor, maintained that standing in REBNY's report while asking rents increased 4% Y-O-Y to $3,683 per square foot. Another pricey corridor, Madison Avenue between 57th and 72nd streets, also saw an increase, with the average asking rent per square foot up 3% to $1,700 from the spring of 2014.

It was in other parts of town, though, that more substantial gains were seen, according to the REBNY report. East 57th Street between Fifth and Park avenues saw ground-floor rents surge 60% to $1,600 per square foot, while on Third Avenue between 60th and 72nd streets, they rose 39% to $363 per square foot. For the Broadway corridor between 72d and 86th streets, asking rents were up 37% from a year ago to $390 per square foot, while along East 86th Street between Lexington and Second avenues they increased 19% to $456 per square foot.

REBNY also cites the Fifth Avenue corridor between 42nd and 49th streets, as does CBRE, although the two reports differ on how much of an increase the corridor experienced. For ground-floor retail, REBNY says this corridor saw a 17% increase in asking rents from the first quarter of '14; using a different yardstick, CBRE puts the same corridor's growth at 23.2%.

In terms of annual rent growth, CBRE ranks it at the top of the 11 corridors it surveys. Eight of those corridors experienced growth from a year ago; four of those grew by 15% or more. The others were Herald Square's 34th Street from Fifth to Seventh avenues, up 22.4%; Upper East Side's Third Avenue from 60th to 72nd streets, up 19.8%, and Upper West Side's Broadway from 72nd to 86th streets, up 15%.

The retail rent growth is a reflection of broader economic trends. “The economic circumstances that support retail activity in the city are very strong,” according to REBNY's report. “The April release of the University of Michigan Consumer Sentiment Index, a longstanding respected survey intended to convey the propensity of consumers to spend, shows consumers are upbeat. The April release shows the measure is at its second highest level since the end of recession. Consumer sentiment levels this high have not been reached since 2007.”

Growth in both jobs and tourism also helps to spur the retail sector. REBNY notes that private employment in the city has grown 3% Y-O-Y, while construction employment has grown close to 14%. Regarding consumer demand from overseas, “the city has never had more international visitors,” according to REBNY's report. Not only did international tourism reach a new high in 2014, but Y-O-Y growth in occupancy rates at the city's hotels show that the momentum has continued into 2015.

Instant Insights /

NYC Retail Mirrors Broad-Based Gains

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