In a sea of negative real estate reports and news, JLL is reporting that Manhattan's retail sector has seen a sharp decline in availability. There are several reasons for this reduction, as people continue to move to Manhattan despite the rents and sale prices. Additionally, tourism in New York City, another key driver in retail sales, has had a meaningful recovery since COVID.   

More importantly, this could be an indication that more people are returning to the office. We know that office vacancies in New York are unsustainably high. Many once fully occupied office buildings are seeing vacancies of over 50% which, when coupled with high interest rates, has led to loan defaults by borrowers and the transfers of properties to lenders. A large percentage of retail traffic in Manhattan is driven by employees commuting to their offices, and then eating, drinking and shopping once in the city. More employers and employees may be realizing that, while working from home offers conveniences and flexibility, employees working together in an office has many advantages, including comradery in the workplace, mentoring of younger employees, and collaboration among workers, all of which lead to an increase in production.  

This retail news should be welcome news to the NYC office market.

Manhattan Retail Market Achieves Historic Low Availability (therealdeal.com)