Manhattan's retail real estate market continued to outshine the rest of the country through the first three quarters of 2007, supported by steady employment growth and a stable housing market. The borough gained 49,400 new jobs this year, representing an increase of 2 percent, while the median condo price went up 5 percent, compared to 2006, to just more than $1 million.
As a result, Manhattan's vacancy rate remained at the same level as last year, with 3.9 percent, cites a third-quarter report from brokerage firm Marcus & Millichap Real Estate Investment Services. Asking rents averaged $109 per square foot. On lower Broadway, however, the main retail thoroughfare of the Financial District, rents currently average $160 per square foot, according to commercial real estate services firm NAI Global. That represents a 28 percent increase from the beginning of 2006.
As developers began to convert old office buildings in the area into state-of-the-art condominiums in the early 2000s, the district's population grew 30 percent, to 44,000 today, according to the Alliance for Downtown New York, a local economic development organization. As a result, a number of luxury retailers recently opened their first locations there, including Tiffany & Co. and Hermès.
Rents also continue to grow along Fifth Avenue in the 50s — currently the world's most expensive retail district. The average rental rate in the area reached $1,350 per square foot this year, an increase of 27 percent from 2006.
Meanwhile, Manhattan will see a limited influx of new space in 2007, as only 250,000 square feet of retail will be added to the market, according to Marcus & Millichap. In fact, the only large-scale retail property in the development pipeline — the 500,000-square-foot East River Plaza in Harlem — won't come on-line until 2008.