Since 2014, retail rents in Manhattan have fallen as much as 30%, according to a report from brokerage CBRE. This is just one more sign showing the New York retail market is in trouble. Rents rose nearly 90% from 2010 to 2014, but peaked in 2014 and have been on the decline ever since.
While Manhattan struggles, Edmonton has seen the opposite happen with retail real estate. Last year was the best year for retail in Edmonton since 2013 and it seems to be continuing in 2017. Some downtown development plans have come back to life due to the strength of retail in Edmonton.
Shorter Leases Become Popular in New York
With retail rents dropping in Manhattan and other portions of New York, many landlords have become a bit desperate. They have even started to consider short-term leases with some leases as short as a week. This is much different than the typical 10-year lease most locations require.
Pop-up stores have become the short-term replacement for retail stores throughout the city. With less of a commitment and lower rents, many retailers are using these short-term leases instead of signing longer leases. Landlords have to do what’s necessary as a short-term tenant is better than a vacant space.
Edmonton landlords are not accepting short-term tenants in the same way. With retail investment making up 25% of the first quarter investments in Edmonton, it’s simply not necessary. A dozen retail sales worth about $176 million were recorded before March 31st of this year, which puts the volume at four times what it was last year.
Even with lower oil prices and some economic issues throughout Edmonton, the retail sector has remained strong. It’s still attracting plenty of investors and landlords are not turning to desperation to fill space and pay bills.
Manhattan Struggles, Edmonton Thrives
It’s pretty clear that Manhattan’s retail sector is struggling. When landlords are willing to accept single-week leases for pop-up shops, it’s a sign that retail is struggling. Edmonton, on the other hand, has seen growth in the retail sector and landlords are not desperate to fill spaces.
Manhattan retail real estate is down, while Edmonton is on the rise. Landlords are taking any type of lease they can get and since peaking in 2014, Manhattan has seen rents decrease by as much as 30%. Edmonton has seen the opposite with growth in the retail sector, even though the economy hasn’t been as strong as it was a few years ago.