New York is home to some of the priciest addresses and this is true even in retail. Along the famed Fifth Avenue, especially on the sunnier side of the street, retail space is the second most expense in the world, beating out the Champs-Elysees in Paris and New Bond Street in London. According to the Real Estate Board of New York, $116 is the average retail price per square foot in Manhattan.
Sun is a critical factor in the price of retail real estate as shoppers tend to spend more time on the sunnier side of the street. Transportation and pedestrian traffic are also other critical factors. Retailers are also paying to be a part of an “in crowd” and set up shop close to their competitors or other highly regarded retailers. Uniqlo, for example, opened a 90,000 square foot store neighboring Zara and Hollister.
Now that the recession is over, retail rents are continuing to rise, especially in some of Manhattan’s “liveliest” retail districts.
Fifth Avenue- On the east side of 5th Avenue, between 49th and 59th streets, retail prices can be upwards of $3,500 a square foot. This stretch of retail includes Saks Fifth Avenue, St. Patrick’s Cathedral, Cartier, DeBeers, Tiffany, F.A.O. Schwarz and Apple. The west side of the street, while not as sunny, can still command over $3,000 per square foot. Uniqlo, Abercrombie & Fitch, H&M have all opened flagship stores on the west side of 5th Avenue.
Madison Avenue- Although Madison Avenue has a haute-couture mentality, its rents are far lower than 5th Avenue ranging from $1,300 on the west side and $1,400 on the east side. People know to go to Madison Avenue for luxury though. Chanel, Jimmy Choo, Hermes, Prada, and Ralph Lauren are just a few of the retailers on Madison Avenue.
34th Street-This is the hub for mass-market traffic due to the tourist destinations surrounding it, including Penn Station, Madison Square Garden, and the Empire State Building. H&M is opening its biggest store, at 63,000 square feet, on the corner of 34th and Broadway. This space will rent for $1,200 a square foot. Just last year, this space would have rented for $558 per square foot.
57th Street- Between 5th Avenue and Park Avenue, the north side of 57th commands rents of $2,000 per square foot. The south side may only get half of that, but mostly because there are fewer stores. The north side, however, offers retail brands like Louis Vuitton, Chanel, Dior, Saint Laurent, and Berdorf’s. Further along the western section of 57th avenue, Nordstrom will open a 285,000 square foot store in 2018 and a string of luxury hotels will open up on this section as well.
Bleecker Street- Bleecker Street offers a unique selection of boutiques. Rents on Bleecker used to go for $75 a square foot, but are now worth over $600 per square foot. Shoppers like the European feel and smaller scale of shopping on Bleecker Street.
The Meatpacking District- The Meatpacking District was a very popular neighborhood and destination for night life activity. High-end designers like Alexander McQueen and Stella McCartney tried to locate there, but moved out after the intrigue of the district diminished. Now, stores like Ugg and Patagonia are there. These are great brands, but not different from what you would find in most malls. Rents in this district still command over $300 per square foot.
Discussion Question:
What factors make retail locations more expensive than others?
SOURCE: Stephanie Clifford, New York Times, September 24, 2013