CBRE: NYC Office, Retail Markets Continue to Improve

NEW YORK CITY—CBRE Group Inc. reports that the Manhattan office and retail markets showed continued strength in the third quarter. Leasing activity increased in the Midtown, Midtown South and Downtown office markets, while the city's retail sector saw a number of major department stores announce their planned entrance into the Manhattan marketplace.

“We are seeing a remarkable and broad-based improvement in the Manhattan market,” says Peter Turchin, vice chairman, CBRE. “This improvement is no longer isolated to just Midtown South, but is equally strong in Midtown and Downtown.” CBRE's analysis of Manhattan's 18 submarkets showed that 13 of 18 had positive absorption year-to-date, with the three negative-absorption submarkets solely due to the addition of new blocks of space.

Year-over-year, Midtown's leasing activity increased to 12.64 million square feet in the third quarter of this year from 11 million square feet at the same time in 2013. Absorption improved to a positive 1.46 million square feet from a negative 590,000 square feet and the average asking rent in Midtown rose to $74.73-per-square-foot from $70.19-per-square-foot.

Over the same period, Midtown South saw leasing activity increase to 5.16 million square feet from 3.06 million square feet; absorption improved to a positive 510,000 square feet from a negative 950,000 square feet and average asking rents rose to $66.58-per-square-foot from $64.21-per-square-foot.

Leasing activity Downtown increased to 5.15 million square feet from 3.99 million square feet; absorption improved to a positive 980,000 square feet from a negative 250,000 square feet and the average asking rent rose to $50.78-per-square-foot from $46.96-per-square-foot.

In terms of the retail market in the city, CBRE Vice Chairman Andrew Goldberg says, “Luxury department stores are demonstrating new confidence in Manhattan. This is reflected in the recent announcement by Neiman Marcus that it will open its first New York City store at Hudson Yards, Nordstrom's purchase of store space at 225 West 57th Street and the opening of a Saks Fifth Avenue Downtown.”

Richard Hodos, CBRE executive vice president, says that the opening of Ralph Lauren's first Polo flagship store in Manhattan at 711 Fifth Ave. “is an exciting initiative for an iconic global brand that wants to create an 'experiential space' in the middle of one of the world's most exclusive shopping corridors.”