NYC’s Retail Market Outperforming U.S. as Availability Rate Nears Record Low

The availability of retail space in New York City has become increasingly limited as availability nears the all-time low of 4%. In contrast, the overall U.S. retail sector “observed its availability rate rise by 20 basis points, or 0.20% over the past year.” According to Costar data, of the approximately 264 million square feet of citywide retail space, about 12.7 million square feet, or 5% is available for lease, representing a decline of about 1 million square feet, or 20 basis points year-over-year. The lowering of available space is even more impressive since it occurred despite the closure of 35 Rite Aid stores throughout the five boroughs, particularly since they tend to be larger than most of the city storefronts. Manhattan continued to generate considerable demand, the availability rate of spaces below 5,000 square feet declined by 50 basis points, or 0.50% year-over-year as it approaches the all-time low of 4.2% according to the Costar article. High visibility storefronts in premier corridors such as Fifth Avenue, Madison Avenue, SoHo and the West Village are seeing heightened competition among retailers vying for space. Contributing to a strong level of retail tenant demand is improving foot traffic “as visitation figures rose 3.5% year-over-year, to 64 million in 2024.” High hotel occupancy rates, rising office attendance, and improving mass transit usage have also fueled retail tenant demand. However, over the next year, it is anticipated the demand level will moderate as “remaining closures from recent bankruptcies work through the process;” and while store locations in many neighborhoods of Manhattan and northern Brooklyn are likely to be backfilled quickly, remaining locations will struggle to find new occupants in near term.

Source:    https://www.costar.com/article/1516149677/space-crunch-underway-for-new-york-city-retail-space