Jones Lang LaSalle
Manhattan retail rents expected to jump 5.5%
by Julie Satow
June 20, 2006

Asking rents for retail space in Manhattan will jump to $109.25 a square foot this year, driven by the economy and tourism according to a new study. The asking rents for retail space in Manhattan will jump by 5.5% to $109.25 a square foot this year, driven by a solid economy, booming tourism industry and a strong housing market, according to a new study. "The local retail sector continues to show steady improvement as the economy generates job growth," says Mitchell LaBar, the regional manager of Marcus & Millichap, which released the figures in a national retail research report. Employers are expected to add 14,000 jobs this year, which is expected to drive down the overall retail vacancy rate in Manhattan to 4.2%, according to the report. While attention is traditionally paid to retail corridors on Fifth and Madison Avenues in midtown, new retail submarkets are emerging. In the Penn Plaza/Garment District, vacancy has dropped to 0.4% from 1% in the past year and demand for retail space in the Meatpacking District has led to a vacancy rate in Chelsea of 1.5%. Harlem's vacancy rate of 6% is expected to drop to 5.5% by year end. While vacancies are expected to decline, there is still 100,000 square feet of new retail space scheduled to hit the market this year. This figure does not include large projects expected to come online in the outer boroughs, including the Bronx Terminal Market, and the Atlantic Yards project in downtown Brooklyn.