|SQ. FT. Available||23,500|
Despite the obstacles facing traditional retailers throughout the U.S. created by e-commerce, New York retail fundamentals are better positioned given its unmatched density and concentration of wealth. That’s not to say the market is not seeing any effects of disruption as declines in vacancy have dissipated over the last two years. While several high-profile projects are expected to deliver in the near term, they are predominantly preleased which should keep vacancy levels flat. Rent growth has trended downward since 2015, and now sits in negative territory as of 19Q1, as the proliferation of new projects makes it difficult for owners to hike rents. Still, fundamentals are stable as a rise in jobs and earnings coupled with increased tourism pave the way for consumer spending.
Ground floor retail, specifically in Manhattan’s prime retail corridors, tells a different story. Storefront vacancies have risen considerably as retailers are conceding ground to e-commerce while rents can reach well above $3,000/SF in certain prominent corridors according to the Real Estate Board of New York (REBNY.) The fact that major names like Gap, Tommy Hilfiger, and Henri Bendel have vacated the Fifth Avenue corridor during a time when foot traffic from tourism is at an all-time high speaks to the challenges facing retailers. Brands are shifting away from large expensive flagship stores, opting to instead beef up their online presence while operating smaller shops designed to provide interactive customer-driven experiences. Owners are finally reacting in hopes of quelling the gains in vacancy, with REBNY reporting that the majority of ground-floor retail has witnessed annual declines in asking rents. Landlords have also offered short term leases and provided more capital to enhance tenant build-outs as a strategy to fill vacancies.
New construction in the metro outlines the shift toward more experiential retail as owners aim to drive foot traffic through a multi-layered customer experience, knowing that shopping today is increasingly done online. At 20 Hudson Yards, shoppers not only have access to traditional retailers but also 77,000 SF of online-only brands not found anywhere else to go along with a food and beverage component featuring an abundance of dining options. At the American Dream Mall in New Jersey, entertainment options include a theme park and an indoor snow park when the mall opens later in 2019.
New York was the first market where investors swooped back in and bid pricing back up to prerecession levels by 2013. Sales volume this year is off to a strong start with over $2 billion traded in 19Q1. Investment activity in 2018 marked the highest annual sale volume in the current cycle, eclipsing the previous year by roughly $2.5 billion. New York isn’t a market for investors seeking to beat the national major-markets average in total returns, as the current price per SF is at all-time highs and cap rates are among the lowest in the U.S. However, New York is still a strong choice for core investors given its desirability to retailers, unparalleled density, and history of above-average income growth.
Woodside is a residential and commercial neighborhood in the western portion of the borough of Queens in New York City. It is bordered on the south by Maspeth, on the north by Astoria, on the west by Sunnyside, and on the east by Elmhurst and Jackson Heights.
Brand new, beautiful retail & community space available for lease in brand new 5 story mixed-use building. This building has great corner visibility with fantastic foot traffic that is perfect for any national retailer. The second floor is wide open and can be used as a medical space. Woodside is a great demographic being that it has a strong residential community. The building is conveniently located right off the 7 train and is only a ten-minute ride into Penn Station for anyone working in Manhattan. The building tenants are currently coming in from Sunnyside and LIC, as well as Brooklyn. The residential units will have a community facility with a rooftop lounge and a view of Manhattan. The retail space lends itself to wide audience and the second-floor is perfect for any type of medical user. Please contact the KW Commercial Division with any Questions.
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