Ritzy Madison Ave Saw City's Fastest Retail Rent Drop, Study Says

UPPER EAST SIDE, NY — The average retail rent on three of the Upper East Side's busiest commercial corridors decreased year over year, according to a study released this week.

Rents are, on average, down on Madison Avenue, Third Avenue and East 86th Street, according to the Real Estate Board of New York's annual retail report. The ritzy Madison Avenue corridor, noted for its high concentration of luxury boutiques, saw Manhattan's greatest decline in average rent from spring 2018 to spring 2019.

The average price per square foot for ground-floor retail space on Third Avenue decreased 14 percent from $264 to $226, for East 86th Street it decreased 9 percent from $400 to $365 and for Madison Avenue it decreased 25 percent from $1,390 to $1,039, according to the study.

Researchers concluded that Madison Avenue rents dropped due to prolonged vacancies on the expensive corridor and that East 86th Street rents declined due to new store openings west of Lexington Avenue and increased vacancies on the less expensive part of the corridor east of Lexington.

The Real Estate Board of New York found that retail rents dropped on 12 of 17 of the studied commercial corridors in Manhattan. REBNY frames the declining rents as a "self correction" of the retail market which has led to an increase in "deal making."

Manhattan’s continued natural correction in retail rents is spurring deal-making across the borough’s top corridors as retailers reconsider new and existing ground floor spaces," REBNY President John Banks said in a statement "Our Manhattan Retail Report Advisory Group members have seen declining rents fostering a healthier leasing environment as more space is being absorbed at a more affordable rate than seen in recent years."

Corridors that bucked the trend and actually saw year-to-year increases included West 125th Street in Harlem, Broadway between 42nd and 45th streets, West 34th Street and Broadway between 14th and 23rd streets in Midtown and Broadway between Battery Park and Chambers Street in Lower Manhattan.

REBNY compiles its annual study with the help of leading commercial listing agencies such as Cushman & Wakefield, CBRE, RFK and the Empire State Reality Trust.