Rents for retail spaces in New York City have fallen to historic lows as troubled retailers closed shop and vacancies soared, according to a report by The Real Estate Board of New York (REBNY).

The biannual report found that asking retail rents in Manhattan during fall 2020 declined by as much as 25% in all of the 17 corridors that REBNY tracks, including areas of the Upper East Side, West Village, and Downtown. Eight of the corridors experienced their lowest price per square foot averages in at least a decade.

In the most expensive retail district in New York City, along Fifth Avenue from 49th to 59th streets, the average asking rent declined 8% to $2,618 per square foot, REBNY found. This represents a 32% drop from the corridor’s peak rent in the spring of 2018, REBNY said.

Eleven of the corridors that REBNY tracks have witnessed an increase in available retail space, ranging from 6% to as much as 67%, year-over-year. This “reflects a substantial slowdown in Manhattan retail transaction volume and creates challenges in establishing overarching economic trends,” the report said. 

More than 1,000 chain stores across New York City have shuttered their doors over the past 12 months as COVID-19 caused shutdowns of nonessential businesses and prompted a change in consumer behavior. Several department stores and Main Street retailers have filed for bankruptcy during COVID-19, including Neiman Marcus, Century 21, JCPenney, Brooks Brothers, and J. Crew. 

These vacancies have put intense pressure on landlords to fill their empty storefronts. While asking rents dropped significantly, taking rents are reported to be even lower, with some brokers citing average differences between asking and taking rents around 20%.

REBNY said Manhattan’s retail real estate space is currently a “tenant’s market” as some property owners are making improvements and concessions for their tenants, including shorter lease agreements and percent-of-sales rent offerings in the near-term. “The current market provides ample opportunity for retailers seeking entrance to the Manhattan market and exemplifies landlords' increased flexibility during these uncertain economic times,” the report said.