The Falling Price of Manhattan Retail Space, by the Numbers
The most sought-after real estate for luxury brands has seen prices plummet during the pandemic
Eighty percent: That’s the plunge below the peak price of retail real estate on the most desirable stretch of Madison Avenue in Manhattan, according to the Wall Street Journal. Specifically, the Journal points to the recent sale of three buildings for what works out to $1,340 per square foot — compared to $7,589 paid for a building six blocks away back in 2014. Data from brokerage firm Cushman & Wakefield displayed a similar trend: average Madison Avenue ground-floor rental prices in the second quarter of 2020 plummeted to their lowest rate since 2011.
Since the pandemic arrived in the U.S. in March, retail has been hobbled first by lockdowns, then by cautious consumers who have gotten used to doing more and more shopping online. For an international shopping destination like Madison Avenue, home to flagship stores for fashion brands like Hermès, Chanel, and Giorgio Armani, travel restrictions have hurt, too, drastically reducing vital tourist traffic. And New York’s overall real estate market has suffered as at least some city dwellers have decided to head for greener pastures, pushing apartment rental rates to their lowest level since 2013. Plus, the city’s unemployment rate is twice the national average.
Plenty of experts predict the city’s real estate market will come back, as it has repeatedly after prior falls during the city’s 1970s fiscal crisis, after 9/11, and through the Great Recession. It’s not clear just how long that comeback might take, and whether this market has hit bottom. But if you’re looking for glimmers of longer-term hope, it’s worth noting who is already making bets on Manhattan office space: Apple, Amazon, and Facebook have cumulatively bought or leased 1.6 million square feet in 2020.
The biggest bargain to be found on Madison Avenue these days might be the property itself.