Retail Rents Follow NYC Tourists

Bright forecasts for holiday season consumer spending are prompting some owners of retail properties in high-traffic Manhattan corridors, like Times Square, to raise tenants' rent. The latest biannual retail report from the Real Estate Board of New York (REBNY) indicates that many tourist-friendly businesses may have to pay more to operate because rents in areas with heavy foot traffic have gone up 107 percent from a year ago. Now, tenants can expect to pay an average of $1,700 per square foot for ground-level space.

“Asking rents that are lower than they were during the high point in our economy a few years ago are giving retailers the opportunity to locate in corridors that they otherwise wouldn't be able to break into, and many seem to be taking advantage of this,” said Steven Spinola, REBNY president.

Spinola and other REBNY board members said they hope the trend will eventually spread to other city neighborhoods, as some tenants continue to experience a dip in retail rents—6 percent since the spring for the Soho corridor—even though they are among the busier tourist destinations in the city.