New York Market Overview

Retail:

Most restaurateurs across New York City have sought to maximize their space under the city’s Open Restaurants rules, which allows eateries to place seating on sidewalks and in roadways. Landlords can, however, control and monetize the space on their property, and new tenants are gunning for as much outdoor space as possible.

Sears is set to close its final New York City location after 89 years on November 24th.

Jokr, aims to get consumers everything from a single ingredient to a full grocery haul within 15 minutes. To meet this logistical challenge, these companies need a lot of real estate close to customers in the markets they target.

Apple is opening its first location in the Bronx, a 10,391-square-foot store at the Mall at Bay Plaza, south of Co-Op City and between the New England Thruway and Hutchinson River Parkway, adding to the 10 it already operates in New York.

Overall retail purchases rose 0.7% in August, excluding automobiles, which are hard to get because of a microchip shortage. Sales looked even better with a five-month high 1.8% rise.

Retail purchases were buoyed by back-to-school purchases, as many students return full-time to the classroom for the first time in more than a year. The sales were also welcome news for retail landlords, given that July data showed a 1.8% decline in overall retail sales.

Non-national retailers saw encouraging rent payments. These retailers paid 89% of owed rent last month, just below the 92% recorded in 2019.

ABC Carpet & Home is to file for Chapter 11 bankruptcy. The filing was made with the company listing $50 million in assets and $100 million in liabilities.

Madison Avenue retail, stretches from East 57th to East 72nd streets, saw foot traffic at 71% of its 2019 level. The availability rate along the corridor is 39%, the highest in Manhattan, an indication that some landlords are looking for the high rents of yesteryear.

Despite the delta variant causing a new wave of restrictions on businesses, most retailers are paying their rent at nearly pre-pandemic levels. National chains have paid 95% of owed rent in August of this year. That’s just slightly below the nearly 97% paid during the same time in 2019. The report does not account for rent relief provided to retailers by their landlords.

Mom-and-pop stores paid 89% of owed rent, just below 92% in 2019.

Lululemon Athletica coughed up just 71% of collections, while Victoria’s Secret paid 69%.

Beauty supply stores have seen occupancy costs drop 13% since 2019. In the fast food category, occupancy costs fell 15%.

Sporting goods sales are up 68% over 2019 and occupancy costs down two-thirds.

Retail asking rents on lower Fifth Avenue, between 42nd and 49th streets, have declined 55% since their height in 2016 to $615 per square foot this spring.

Job growth in leisure and hospitality slowed to zero in August, pumping the brakes on an economic recovery that had been revving up all summer.

Including everything from restaurants and bars to hotels and casinos, the leisure and hospitality industry had accounted for half of private-sector job growth in July, when it added 380,000 positions.

Office:

A total of 1.46 million square feet of office space was leased in Midtown, or about 60% of Manhattan’s leasing volume for the month..

The Delta variant has forced a growing number of firms to reconsider their reopening plans .

The average office asking rent was $72.72 per square foot, the lowest in four years.

Leasing volume in the Midtown South and Downtown submarkets was 508,000 square feet and 473,000 square feet, respectively, both lower than the month before.

Microsoft planned to fully reopen its offices on Oct. 4, but has been forced to backtrack from that goal. The company isn’t setting a new return date, but is planning on giving a 30-day notice before reopening so employees can prepare.

Companies across the country, as recently as early in the summer, aimed to bring employees back to the office after Labor Day. The holiday has come and gone, however, the delta variant has left many desks unoccupied.

IWG is expanding its presence in Manhattan for the third time in the past few weeks, planning a location at 250 Park Avenue under the company’s Signature brand. There will be 58,000 square feet. IWG reached agreements for two other Manhattan co-working spaces, at 401 Park Avenue South and 14 Penn Plaza, increasing its portfolio by 91,000 square feet.

The long-term ramifications for the office market in major metro areas remain unclear, although the delays to in-person work likely spell trouble. Additionally, some companies are opening the door to permanent remote work.

Facebook is looking for more space, including possibly adding about 300,000 square feet at its Broadway and Astor Place location.

Uncertainty over work-from-home arrangements that have endured for longer than expected have hurt the office real estate market. it’s not a matter of if office buildings will re-populate, but when.

Hotels:

Hotelier Jason Pomeranc is opening a new hotel titled CIVILIAN at 305 West 48th Street, and will include 203 rooms, a restaurant, secret garden, guest lounge, library and rooftop bar. Although reservations are picking up, 100 hotels remained closed in the city as of July.

The occupancy rate in June was 63% for open hotels, but just 50% when accounting for those that had closed. In the summers before the pandemic, it was closer to 90%.