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NEW YORK CITY-Manhattan’s overall asking rents for ground floor retail space are down 3% to $129 compared to a year ago, according to the fall edition of the Real Estate Board of New York’s semiannual report. However, the report notes year-over-year increases for several of Manhattan’s prime shopping corridors, and members of REBNY’s retail report advisory group said Wednesday they’re optimistic about 2009.

“What we see doesn’t look so bad,” said Joanne Podell, executive director in Cushman & Wakefield’s retail services group and chair of REBNY’s retail stores committee. Introducing the report during a panel discussion at a REBNY luncheon yesterday, she noted that despite the turmoil in the capital markets, “retail is holding up.”

Of the 17 retail corridors examined in the report, Fifth Avenue between 49th and 59th streets commands the highest average asking rent of $1,400 per square foot as of the end of Q3. That’s up 12% from an average of $1,250 in Q3 2007–and rents along that corridor range from $1,200 to $2,500 per square foot. Benjamin Fox, president of Winick Realty Group, noted that the higher figures usually represented smaller spaces.

Substantial year-over-year increases were seen for the Hudson Street corridor–up 62.5% from $75 to $120 per square foot–and West 34th Street between Fifth and Seventh avenues–up 38% from $464 to $643 per square foot. Slight declines were seen for the Third Avenue corridor between 60th and 72nd streets–down 6.3% from $305 to $287– and Fifth Avenue between 14th and 23rd streets–off 8% from $298 to $276. Steeper decreases were recorded for Broadway south of Chambers Street–off 16.6% from $301 to $251 per square foot–and Broadway between Houston and Broome streets–off 13.8% from $501 to $432.

“The report demonstrates mixed results, with some prime shopping corridors showing strong increases in asking rents and others experiencing declines,” says REBNY president Steven Spinola in a release. “While the retail market has slowed in the last few months, tenants are still leasing space and deals continue to be made.”

Fred Posniak, SVP of W&M Properties, noted that concession packages for credit retail tenants are on the rise, as are cash contributions from landlords. “We are not seeing a true drop in rents,” Posniak, a member of the advisory group, said yesterday. “But activity is stagnant.” Nonetheless, Posniak said he remains bullish about 2009.

Podell’s C&W colleague, executive director David A. Green, noted that unlike the stock market, retail leasing lags economic upheavals, partly because deals typically take three to six months from start to finish. Thus, the impact of current economic trends won’t be seen until after the holidays.

It’s also possible that even then, the effects won’t be felt as much in Manhattan as elsewhere. Karen Bellantoni, EVP with Robert K. Futterman & Associates, said comp sales are up year over year in many Manhattan neighborhoods, sometimes by upwards of 20%. “That’s not being shared nationally,”" Bellantoni said, adding that New York City is still seen as a necessity for retailers seeking space. Added Fox, “deals are continuing to move.”

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