Fifth Ave. Retail Rents to Hit $3000 Per Square Foot in 2012
MIDTOWN — Recession? What recession?
The asking rent on Fifth Avenue, from 49th to 60th streets, hit $2,338 per square foot in the fourth quarter of 2011, up more than 12 percent from the quarter before, according to Joseph Harbert, the Cushman & Wakefield COO for the New York Metro region, who added that these asking rents were "in the stratosphere."
For more than a decade, Fifth Avenue has ranked No. 1 as the world’s most expensive shopping street, and its asking rents have edged past $2,000 a square foot before. But the $3,000-mark would be a new high water mark and "an achievement," said Gene Spiegelman, Cushman & Wakefield’s executive vice president in retail.
"I think rents will approach $3,000 a square foot," he said. "It's a very specialized market. It's not about the rent. If you’re a retail brand and you’re looking at branding options and corporate expenses, relative to traditional advertising on television and billboards, it’s still a very good deal with the eyes of the world upon you," Spiegelman said, citing the city's most recent tourist figures of 50 million tourists in 2011.
"You have to look at it in the context of global business, not in rent," Spiegelman added.
There is still a limited supply of prime retail space on the avenue and enough demand to keep the prices high, experts said.
Asking rents on Fifth Avenue first hit $2,000 per square foot in the first quarter of 2008, then dipped to $1,763 per square foot a year later but were back at $2,000 per square foot in the second quarter of 2009 and have been above $2,000 per square foot since then, according to Cushman data.
Besides the splashy opening of Uniqlo on Fifth Avenue and 53rd Street in 2011, this corridor of Fifth Avenue saw several new high-end shops sign leases last year, including clothing stores Longchamp and Michael Kors at Rockefeller Center's 610 Fifth Ave., A/X Armani Exchange at 645 Fifth Ave. and Dolce & Gabanna at 711 Fifth Ave. Wempe Jewelers signed a lease for 665 Fifth Ave., Swatch is now in at 666 Fifth Ave. and Ghurka is now selling its luxe accessories and travel bags in the Sherry Netherland hotel at 781 Fifth Ave.
The pricey asking rents of this highly-coveted strip seem to have trickled down to what Cushman & Wakefield calls lower Fifth Avenue, from 49th to 42nd streets, where the London designer Ted Baker recently leased 12,000 square feet on the corner of 48th Street. This stretch had asking rents in the last quarter of 2011 spike 50 from the third quarter to a record $865 a square foot, according to Cushman's figures.
In terms of appearance, customer service, atmosphere and “behavior of passersby,” however, Fifth Avenue may not be so hot. In a survey of 30 major retail streets around the world, Fifth came in toward the bottom, at 26, according to Racked.
Asking rents on Madison Avenue, from 56th to 72nd streets, also saw an increase in the fourth quarter, according to Cushman data, up more than 13 percent from the previous quater to $908 per square foot.