"The Manhattan retail market has operated in a vacuum," said Joseph Harbert, COO of the New York Metro Region for the firm. "Regardless of what's going on with the macro economy, our retail market is strong, and we're seeing record-setting deals."
At year-end, Manhattan retail rental rates escalated to new heights in all submarkets. Retail rents for prime spaces, which posses both location and branding, set records, and Harbert noted the trend is expected to continue.
"We've seen particular markets – including Times Square, 34th Street, Fifth Avenue and Soho – that are rapidly escalating in terms of rents," said Harbert. "Each new deal sets a new benchmark."
The record-breaking rental rates lifted up the entire retail market, with average rents for the Manhattan retail submarkets increasing significantly year-over-year. Rents on Madison Avenue, one of Manhattan's priciest corridors, increased more than 14 percent, from $954 to $1,091 per sf at the end of 2007. On the Upper West Side, rents also rose about 14% year-over-year, ending 2007 at $336 per sf.
Activity is not expected to slow in the first half of the year, Harbert said.
"Manhattan's retail market is an anomaly," he said. "Bonuses are on the way, the residential real estate market in Manhattan has not faltered and we still have the benefit of the international consumer."
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