The delayed return to offices due to the spread of the Delta variant has been a blow to the retail recovery in Manhattan.
As of this summer, nearly 30% of the storefronts in Manhattan’s two most important “office-dependent” retail corridors — Grand Central area and Midtown East — were vacant, according to a report from the Real Estate Board of New York. (The next highest vacancy rate was on Madison Avenue, at 28.4%.)
“This is significantly higher than the vacancy rate in the surveyed residential neighborhood in Manhattan and roughly twice as high as the vacancy rates in surveyed residential neighborhoods in Brooklyn and Queens,” the report stated.
Historically, the Grand Central and Midtown East areas have maintained a retail vacancy rate of between 10% and 15%. In addition to higher vacancy, Grand Central and Midtown East also have many more full-block vacancies and a plethora of corner and flagship opportunities. The vacancy rate for these areas compares to a vacancy rate of 20.9% in a surveyed residential retail corridor (Upper East Side) and 28.4% rate in a surveyed high street retail corridor (Madison Avenue).
“Midtown clearly has been the hardest hit of any of the areas of Manhattan,” said Jeffrey Roseman, a veteran retail real estate broker with Newmark, in a New York Times report. “If you think of other office-centric areas, whether all the way downtown or Flatiron or Hudson Yards, there is a lot of residential surrounding those areas that helped sustain those markets. Midtown, for the most part, is a one-trick pony It’s mostly offices and hotels, which also took a hit from the downturn in tourism.”