Retail rents in Manhattan have fallen again, this time before the holiday season, an ominous sign that consumer health is deteriorating. Maybe retail spending this holiday season will be somewhat disappointing; after all, President Trump was seen on Twitter on Monday asking his 66.5 million followers to spend more of their money as the stock market rose to new highs. Any time the government asks its citizens to spend money, it usually means trouble ahead.
Average asking rents across Upper Fifth Avenue, especially between 42nd and 49th streets, saw one of the steepest drops in retail rents in Q3, falling 25% YoY, reported Bloomberg, citing a new report from Jones Lang LaSalle Inc.
As shown below, Lower Fifth, Broadway, Madison Avenue, SoHo, and Herald Square retail rents over the same period were in free fall. This is a reflection of the weakening consumer base ahead of the holiday season. There were several outliers, Upper Fifth and Times Square retail rents over the same period marginally declined. Meanwhile, the Meatpacking district saw rents jump 7.3% in Q3 YoY.
Across Manhattan's retail industry, average rents plunged, on average, 8% in Q3 YoY.
Patrick Smith, vice chairman at JLL's retail brokerage, said declining rents in some of NYC's most popular shopping districts indicate declining consumer traffic.
A random walk down Manhattan and you'll find, nowadays, streets overwhelmed with vacant retail shops, as landlords begging for tenants slam rents lower.
Bleecker Street in Greenwich Village, once filled with a lively shopping district, is now littered with vacant stores.
The Real Deal has said Manhattan's Upper East Side is "facing a retail vacancy epidemic."
Manhattan Borough President Gale Brewer has said more than 188 vacant shops can be found along Broadway.
Douglas Elliman, a real estate brokerage, has said 20% of Manhattan retail is likely vacant, up 7% since 2016.
Manhattan's retail rents and retail vacancy problems could be a sign that the broader economy is faltering. If so, this would be terrible news for the consumer, which powers 70% of GDP. This could all mean a recession is ahead.