Workers returning to the office in New York City is not only positively affecting that particular asset class — but is benefiting retail as well.
Marcus & Millichap, in its third-quarter New York Retail Report, noted that the metro is seeing more office space occupied than at pre-pandemic levels seen in 2019.
"Stronger food-and-beverage demand helped vacancy fall 90 basis points to under 4 percent in Downtown Manhattan over the first half of 2025," Marcus noted.
Also, vacancy was particularly strong in the Midtown South submarket, where the rate sat around five percent. Marcus & Millchap attributed that to Disney's new headquarters in the area.
For the rest of 2025, Marcus & Millchap highlights several trends that NYC retail investors should keep an eye on. One comes from an almost $500 million investment and a rezoning for 9,500 dwelling units in August, which should "reinforce the area’s outlook," according to the CRE firm. However, in turn, a weaker appetite among travelers could impact Uptown and Midtown — submarkets where vacancy was over seven percent apiece in June. New York City Tourism + Conventions predicted this spring that the tourism decline would result in a direct spending loss of more than $4 billion.
That said, the fundamentals still look strong overall for 2025. Marcus & Millichap forecasts that retail vacancy will decline overall by 10 basis points annually in NYC to 3.9 percent, with asking rents climbing by 3.4 percent (a growth rate above the long-term average) to $64.25 per square foot. Plus, employment is expected to increase in the metro by 1.5 percent.
Additionally, Marcus & Millichap lists Brooklyn's growing population as a spot to watch, along with its lower entry costs for business, which brightens the borough's appeal. Add that to Northeast Queens, which "should attract investors after vacancy nearly hit an all-time low last year, ranking among the 10 least vacant submarkets nationwide with at least 20 million square feet of inventory," the Calabasas, California-based company noted.
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