January Retail Leasing in Manhattan: A Mixed Reality
January is typically a hopeful month for Manhattan’s retail leasing sector. Big brokers and business improvement groups want to convince us that long-empty storefronts are being filled at a rapid pace, and that tenants who wait too long might miss out.
However, the reality seems a bit less optimistic than the agencies suggest.
JLL reports that “the prime retail market ended 2025 with the tightest conditions on record, seeing inventory drop to a historic low of 13.7%.”
Interestingly, JLL’s definition of “prime” isn’t strictly about location or how suitable a space is for retail. Instead, it focuses on neighborhoods like Upper 5th Avenue, Herald Square, and SoHo. Among these, SoHo has the fewest vacancies. But should we really celebrate a citywide vacancy rate of “only” 13.7%?
In fact, a closer look reveals a bleaker picture compared to London, New York’s top competitor. The vacancy rate in the UK capital is only 6.8%, as stated by Avison Young.
Previously, before online shopping changed everything, New York had relatively few vacant storefronts. There were some overbuilt new retail spaces, with developers spending a fortune to create spaces where there was declining demand.
So, is a 13.7% vacancy rate truly “historically low”? If we glance at old images of Fifth Avenue and Times Square from the 1980s, we’d hardly spot any “FOR RENT” signs.
Today, CBRE has noted New York City’s in-store vacancy at 15%. They were quick to mention, of course, that this is better than during the pandemic’s peak.
Like JLL, CBRE has pointed out that many of its significant new “retail” leases are for non-traditional businesses. “Food and fitness brands are likely to boost the market,” they stated.
But, to put it more accurately, it’s primarily food, fitness centers, laser salons, and pet clinics that have helped stave off disaster for the market.
Retail agents are working hard amidst these challenging conditions and deserve more support.
On CBRE’s list of top “retail” leases for 2025, there’s just one brick-and-mortar store, which isn’t a new opening but a renovation from Victoria’s Secret on East 86th Street.
JLL’s findings are similarly sparse, including just one physical store, Aritzia at 115 Fifth Avenue, while the rest are a mix of event spaces, gyms, charter schools, restaurants, and even a fertility clinic.
Patrick A. Smith, vice chairman of retail at JLL, remarked, “The retail fundamentals in Prime New York are quite robust, driven by ongoing demand and a persistent lack of quality supply. In key areas, well-located spaces are quickly leased, and pricing remains resilient, with tenants making more strategic decisions as they compete for fewer options.”
This could give the impression that retailers need to act fast to secure spots. Yet, there are still many large vacant lots on East 50s along Fifth Avenue and throughout FiDi.
In places like Sixth Avenue, just north of 42nd Street, there are noticeable vacancies despite the surrounding businesses and foot traffic.
For example, the former Gap location at 1212 Sixth Avenue has sat empty for six years, despite being in a prime area.
Interestingly, the leasing agent is JLL itself—the same organization that is touting retail’s comeback.
Meanwhile, H&M has closed two stores in Manhattan, leaving noticeable gaps in places like the World Trade Center and the Upper East Side. The Center for an Urban Future points out that 18 national chains are set to shut down a total of 112 stores in the city in 2025. Many were larger stores such as Staples and Old Navy. A new Dunkin Donuts branch won’t offset these losses, and it’s unclear how Sachs Global’s upcoming Chapter 11 filing could further affect the area.
Cities will manage to cope with retail challenges, but being honest about the situation might not be beneficial. It could just lead to more expensive developments without guaranteed tenants.
