It’s not just apartment rents that are skyrocketing in the Big Apple.
Retail rents in Manhattan have surged over the last year, according to a report Monday, with ground floor locations on Fifth Avenue between 49th and 59th streets reaching a record high of $3,550 per square foot.
According to the spring retail report by The Real Estate Board of New York, the price was a 16% jump from the same period last year, when the average rent was $3,052 per square foot. An increase in tourism and a growing economy have sparked the higher rents.
“There is a great deal of optimism as part of that,” said Michael Slattery, the senior vice president at REBNY. “An improving economy makes those stores want to be there even more.”
Times Square stores have also seen record rents with an average monthly cost for ground floor spaces hitting $2,407 per square foot, an 11% jump from last year. Madison Avenue between 57th and 72nd streets, meanwhile, saw average rents go up 24% between last spring and this spring with $1,643 per square foot.
Slattery said inventory in Manhattan is very tight but the corporations behind the stores, which are mostly chains or high end shops, are savvy enough to succeed.
“Those are the locations where marketing matters for you,” he said.
The report added that the rise in rents shows Manhattan’s retail real estate continues to make major rebounds from the 2008 recession. The overall average asking rent for retail space in the borough was $139 per square foot, a 20% jump from spring 2013, the report said.
The overall average rent in the borough 2010, by comparison was $113 per square foot.
“Low interest rates and high demand among retail tenants is leading to a more vibrant and desirable tenant mix,” REBNY president Steven Spinola said in a statement.
Slattery acknowledged that the rents make it harder for smaller stores to set up shop on Fifth Avenue, but other parts of the borough provide better opportunities.
“The smaller stores are looking for locations that have the elements that work for their businesses, like foot traffic in SoHo,” he said.
At the same time, the board said increased business from tourists helps, since visitors spend more time and money in those midtown neighborhoods.
“We have ways for the city and national economy to improve and I do see retail picking up in these areas in the near future,” Slattery said.