COVID-19 Causes Manhattan Luxury Shopping District Rent to Hit Lowest in 9 Years

[Image source=AP Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Amid the wave of bankruptcies declared by major department stores in the United States due to the COVID-19 pandemic, the rental prices of stores in Manhattan's luxury shopping districts have also plummeted to their lowest level in nine years.

According to global real estate service firm CBRE on the 2nd (local time), the average asking rent per square foot in the 16 major shopping streets densely populated with luxury brands in Manhattan fell 11.3% year-on-year to $688 in the second quarter. This marks the 11th consecutive quarter of decline.

This is the first time since 2011 that rental prices in Manhattan's major shopping streets have dropped below $700 per square foot.

The area with the largest drop in rent was Prince Street near SoHo, recording $437 per square foot, a 37.5% decrease compared to the same period last year.

Rental prices on Madison Avenue between 57th and 72nd Streets also fell 15.3% year-on-year to $882 per square foot.

The Plaza District on Fifth Avenue, home to the most prestigious luxury brands, maintained a rent of $3,000 per square foot, similar to the previous year, but saw a slight decline of 4.8%.

The number of first-floor rental buildings in the 16 major shopping streets of Manhattan reached 235, surpassing the previous record of 230 in 2013.

This is interpreted as being influenced by the sharp decline in travel demand and consumer spending caused by COVID-19.

According to Boston Consulting Group, global luxury sales are expected to drop by 29% this year.

CNBC reported that Manhattan's luxury shopping districts are being hit hard by the decrease in consumption due to COVID-19, with an increasing number of tenants failing to pay rent, leading to a rise in lawsuits.

This content was produced with the assistance of AI translation services.