Shopping Center Business

MAY 2016

Shopping Center Business is the leading monthly business magazine for the retail real estate industry.

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Page 256 of 358

HIGH STREETS 252 • SHOPPING CENTER BUSINESS • May 2016 "High-end retailers want flagship stores on Madison Avenue to define their brand, which helps them sell to wholesalers, me- dia and financiers," says Harris Bulow, senior director with Eastern Consolidat- ed. "They recognize that it's the only way to access that exclusive and discerning Upper East Side market, and they know there are tourists who see it as the only real place to shop like society folks." Rents were averaging $1,600 per square foot at the end of last year. These rates are consistent with Q4 2014; however, they mark a significant increase from Q4 2013, when the average rental rates were $1,356 per square foot, and Q4 2012, when they were $1,093 per square foot, according to Cushman & Wakefield's Manhattan Retail Market Statistics report. These rising prices have caused some long-time tenants to vacate their spaces. Crate & Barrel and DKNY, for example, made the decision to leave their prime, multi-level locations at the corners of 59th and 60th streets, respectively, in the last two years. It's also causing some new retailers to consider taking space north of 72nd Street, such as Aquazzura and Moynat, which have announced plans to open their first shops in the U.S. on the ground floor of the new 935 Madison Avenue mixed-use project, formerly known as the Whitney Brownstones, located at the corner of 74th Street. "If I look at any shopping street in Manhattan, the corridor is extending," Spiegelman says. "The boundaries of what were traditional shopping districts have expanded." Bulow notes that, even with high rates and vacant spaces, leases are being signed and exciting plans are underway for Mad- ison Avenue. "Since mid-2015, 16 new businesses have opened, such as ISAIA, a high-end Neapolitan menswear brand," he says, "Plus, several existing brands, such as Bottega Veneta and Jimmy Choo, are planning expansions." "The recent opening of The Met Breuer — the Metropolitan Museum of Art's new space dedicated to modern and contem- porary art — at the corner of Madison Av- enue and 75th Street is also adding to the allure and cache of upper Madison, where a few deals are being done at over $1,000 per square foot," Bulow adds. "Madison Avenue is strong," agrees Karen Bellantoni, vice chairman at RKF's headquarters in New York City. "Part of that draw is the density of very good hotels in the area, which send people to Madison Avenue to shop. Shoppers can spend the day strolling and see every de- signer and every jewelry store they want." TIMES SQUARE AND HERALD SQUARE/ WEST 34TH STREET Though Fifth Avenue and Madison Avenue have long been considered the premier high streets in Manhattan, retail activity is abundant — and rents are at re- cord highs — in many of the other shop- ping districts in the city as well. In Times Square, which centers around Submarket Fifth Avenue (49th-60th Streets)* Fifth Avenue (42nd-49th Streets) Madison Avenue Upper West Side Third Avenue Times Square Flatiron Meatpacking SoHo Herald Square/West 34th Street Lower Manhattan Q4 2014 Asking Rent $417 $517 $3,683 $1,203 $1,602 $397 $298 $2,507 $365 $823 $406 Q4 2015 Asking Rent $446 $541 $3,370 $1,231 $1,601 $381 $298 $2,336 $384 $818 $423 Q4 2014 Availability Rate 12.9% 13.7% 11.8% 23.1% 13.0% 8.5% 7.1% 15.6% 19.6% 10.7% 9.1% Q4 2015 Availability Rate 10.8% 20.7% 10.1% 29.3% 14.7% 11.3% 10.0% 15.5% 20.3% 19.0% 9.7% % Change 6.9% 4.6% -8.5% 1.9% -0.1% -4.0% 0.0% -6.8% 5.2% -0.6% 4.2% % Change -2.1% 7.0% -1.7% 6.2% 1.7% 2.8% 2.9% -0.1% 0.7% 8.3% 0.8% Manhattan Availability Rates, Average Ground-Floor Asking Rents The Flatiron submarket experienced a 6.9 percent increase in ground-floor asking rents, which include direct and sublease space, on a year-over-year basis during the fourth quarter of 2015. That was the highest asking rent increase of any Manhattan submarket. Similarly, Flatiron also experienced a 2.1 percent decrease in the availability rate during the same period, the biggest drop of any submarket *direct space only on asking rents for Upper Fifth Avenue Source: Cushman & Wakefeld

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