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NEW YORK CITY-Average asking rents for retail space in Manhattan have risen to $88 from $85 per sf in the past six months, according to The Real Estate Board of New York’s semi-annual retail report. During the same period, available square footage has decreased marginally by 0.5%. While the results revealed a broad stability, the lower Manhattan retail environment is continuing to suffer.

A breakdown of the data by market shows that asking rents for ground floor space in high-end retail corridors, such as Fifth Ave. between 48th and 59th streets and Madison Ave. between 57th and 67th streets, rose dramatically–22% and 38%, respectively. Overall, the average asking rent for ground floor space along the primary retail streets increased 4.9%.

“There were no real surprises in the report,” says Michael Slattery, REBNY’s senior VP, research. “It showed a certain stability in the marketplace. The numbers indicate that it’s not robust, but still positive.”

Average asking rents for all retail space in Midtown South declined 1.4%. Major retail corridors Downtown also fell. For instance Hudson Street in Tribeca had a 1.6% decline and Broadway in Lower Manhattan had a 7.4% decline for ground floor space. REBNY analysts suggest these declines Downtown reflect a continuing struggle in these areas to recover from the effects of September 11.

Slattery adds, “It’s not that anyone’s shying away. They’re making business decisions. The Downtown dip is a continual problem.” He anticipates there will be more activity Downtown within the next six months if the economy picks up and job growth is realized. “Hopefully in six months there will be a big change in lower Manhattan.”

While the report indicated vibrant tenant activity, it also showed that landlords have had an increased willingness to negotiate lease terms to help close the deal while holding average asking rents nearly constant. For example, many landlords have been willing to offer generous tenant work packages or less frequent base year rent increases for credit-worthy tenants who are prepared to sign a lease.

REBNY advisory group member Robin Abrams, VP at LANSCO, suggests favorable lease terms offered by landlords should be encouraging to tenants. “We have found that a lot of potential tenants have been hesitant to pull the trigger over the past few months due to uncertainty in the economy, the war in Iraq and tax increases in New York, among other factors. But, after some coaxing on the part of landlords, tenants can find a lot of opportunity out there right now.”

“The report shows a snapshot of a market that seems to offer opportunity for retailers looking to establish or expand their presence in New York City,” says Steven Spinola, president of REBNY. “There is premium space available on some of the most sought after retail venues in the world. Retailers should take note that while space is available, asking rents are relatively stable and, in some cases, edging slightly higher.”

The REBNY Retail Report is issued twice a year in the Spring and Fall by the REBNY Stores Committee. Findings are reviewed by an advisory group that distills and analyzes the data. The report provides comprehensive information about available retail space and asking rents in Manhattan. The report presents all available data on retail space by geographic area and focuses on the ground floor space on the major retail streets. It provides an objective and reliable source for discerning market trends.

Space information has been provided on a confidential basis by REBNY member firms including: Abrams Realty Corp., CBRE Retail Services NY Tri-State Region, Cushman & Wakefield Inc., David S. Kriss Realty Company Inc., Insignia/ESG Inc., Madison HGCD LLC, Murray Hill Properties, Newmark New Spectrum Retail LLC, Northwest-Atlantic Partners Inc., Robert K. Futterman & Associates LLC, Rockrose Development Corp., Rose Associates Inc., Staubach Retail Services, The Lansco Corp., Walker, Malloy & Co. Inc., Walter & Samuels Inc. and Winick Realty Group.

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