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Office:
New office construction continues to add new inventory into the Manhattan office market which will put downward pressure on Manhattan office rental rates. Last month, major office leases were announced from relocations and a few expansions. Meanwhile, small and midsize businesses are looking for short-term alternatives until covid abates.

Retail:
Manhattan’s retail is slowly making a comeback. Last quarter, leasing velocity increased to about 1.86 million square feet, up 17% from the prior quarter but still 14% below the prior year. Availability in the fourth quarter decreased to 266 spaces from the 282 recorded in the third quarter. On Broadway in SoHo, availability dropped 24% from 25 to 19 spaces.

Building Sales:
Forty-seven percent of new leases last year included rent hikes, with those rents rising by an average of 17% above 2019 levels. Another 28% saw decreases in rent, averaging 15%. Renewal rates were up compared with before the pandemic, with 64% of those who could renew doing so, up from 59% in 2019.

New York Market Overview

Retail:

Manhattan’s retail market is slowly making a comeback. Last quarter aggregate leasing velocity rose to about 1.86 million square feet. The figure is up 17% from the prior quarter, but still 14% below the prior year.The number of direct ground-floor availability in the fourth quarter decreased to 266 spaces from the 282 recorded in the third quarter, across the 16 retail corridors. On Broadway in SoHo, availability dropped 24% from 25 to 19 spaces.

The average retail asking rent in those 16 retail corridors dropped about 1% to $597 per square foot or 8% below the prior year. This marked pricing levels not seen since 2011.

Areas typically highly trafficked by tourists have seen greater rent declines. Average asking rents in Times Square fell to $1,189 per square foot, a 1% quarterly decline and 17% annual decline. Asking rent in the fourth quarter marked the first time that average pricing in the corridor fell below $1,200 per square foot since 2011.

At $641 per square foot, Fifth Avenue in Grand Central saw a significant decline in average asking rents, down 2% quarter-over-quarter and 16% year-over-year.

Retailers COS and & Other Stories’ renewed their shared 24,000-square-foot flagship store at 505 Fifth Avenue, but that was the corridor’s only deal transacted in 2021.

LARGEST RETAIL LEASES IN 2021:
  • Zeta Charter School signed a long-term lease to occupy 124,000 square feet at 400 West 219th Street. Bolivar filed plans for an eight-story school building that will serve students in pre-K through 8th grade and open in time for the 2023-2024 school year.
  • Wegmans leased 82,000 SF at 770 Broadway and came to an agreement with Transformco to buy out the lease at 770 Broadway, then signed a deal with Vornado for its first Manhattan location and is expected to open in 2023.
  • International Academy of Hope at 825 Seventh Avenue signed a 76,861 square feet for a 30-year leasehold for a commercial condo at 825 Seventh Avenue.
  • Chelsea Piers signed a 20-year lease to open a 55,780-square-foot fitness center on parts of the ground, second and two basement floors of 1 Madison Avenue.
  • Pearl Studios signed a 10-year lease for the third and fourth floors of the building at 500 Eighth Avenue, containing 46,000 square feet which it had previously occupied for more than a decade before shutting down in March 2020.
  • Bathhouse leased 34,328 total square feet at 7 West 21st Street. It is a converted parking garage.
  • Trader Joe’s signed a lease at 121 West 125th Street for 28,000 square feet for the ground-floor retail at the planned headquarters of the National Urban League.
  • Gucci inked a lease of 26,600 square feet for a pop-up shop at 446 West 14th Street.
  • The Museum of Broadway will lease 26,000 SF at 145 West 45th Street for the cellar, part of the ground floor and all of the second and third floors of the 12-story building.
  • Brooklyn Chophouse signed a lease at 253 West 47th Street for 25,000 square feet at the abandoned Buffalo Wild Wings, with an already completed $15 million build-out.

Office leases:

  • Chainalysis to occupy 4 floors at 78K sf at 114 Fifth Avenue.
  • Touro College and University System will occupy 243K sf at 3 Times Square. The university signed a long-term lease at the 30-story office building.
  • Morgan Stanley is about to sign a lease for 400,000 square feet at 55 East 52nd Street. The 15-year lease will replace BlackRock’s when they move to Hudson Yards next year.
  • Roku agreed to a long-term lease for 240,000 square feet at 5 Times Square. The lease gives Roku the top eight floors of the building, as well as control over the vertical sign on the building . Roku had been quietly negotiating the lease for six months and boosted its original offer by 100,000 square feet, boxing out other tenants interested in space at the building. The asking rent was in the $90s per square foot and Roku expects to move in by the fourth quarter.
  • Signature Bank is expanding its offices at 1400 Broadway by more than 168,000 square feet. The company already leased nearly 112,000 square feet, bringing its total to more than 280,000 square feet across 10 of the building’s 37 floors. The asking rent was $67 per square foot and the lease term is for 15 years.
  • HSBC is in discussions to lease about 250,000 square feet at 66 Hudson.
  • Tishman Speyer’s building at 66 Hudson Boulevard continues to reel in leases as the prized development comes closer to realization.
  • IBM is looking at leasing approximately 350,000 square feet at 1 Madison.
  • Franklin Templeton is reportedly in discussions for more than 200,000 square feet at One Madison.


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