The retail leasing market in Manhattan has shown a remarkable recovery from the pandemic, according to a comprehensive report by the Real Estate Board of New York.
In the latter half of 2025, the 16 primary shopping corridors monitored by the board recorded a noticeable drop in vacant storefronts compared to the first half of the year. Notable areas like SoHo, Flatiron, and Upper Madison Avenue defied the trend of stagnant or decreasing rents.
However, this improvement might not be obvious at first glance. The areas with the highest vacancy rates, including bustling neighborhoods like Times Square, Herald Square, and parts of Fifth Avenue, give off a misleading impression that the rental market is weaker than it really is.
Many of these shifts are being felt across various parts of Manhattan. Julie Stein, the executive director of the Union Square Partnership, mentioned that her district ended 2025 with an impressive 91% storefront occupancy. She describes the area as a top destination for brands looking to combine local charm with global tourism.
According to REBNY’s report for the latter half of 2025, there’s been a strong demand from international luxury brands, along with expansions from local favorites, food and drink outlets, and a significant rise in health and wellness establishments to fill in gaps left by traditional retail.
“Regardless of some challenges, Manhattan’s retail market shows broad appeal,” said Keith DeCoster, vice president for market data and policy.
He further noted that retail is likely to flourish as more people return to offices and residential locations.
Joan Podell, executive vice president at Cushman & Wakefield, expressed her positive outlook. She stated that brands continue to see the city as a key location to set up shop, launch new ideas, and strategically grow their presence.
REBNY’s report mentioned that average asking rents remain about 32% lower than the peak over the past decade, although some pockets have seen increases. For instance, on Broadway in SoHo, asking rents surged by 24% compared to the first half of last year.
Store inventory is particularly scarce in SoHo, Upper Madison Avenue, Flatiron, Lower Fifth Avenue, and the West Village. For example, there are just 13 available stores along Madison Avenue between East 57th and East 86th Streets, down from 35 two years ago.
Nonetheless, the report noted some inconsistencies in demand across high-profile areas, with several vacancies still lingering without much interest.
Upper Fifth Avenue, Times Square, Herald Square, and the Financial District make up a relatively small segment of Manhattan’s overall retail inventory. However, these areas account for 60% of all available retail spaces and host the highest number of vacancies for large stores of 10,000 square feet or more.
Currently, there are 11 storefronts for sale on Fifth Avenue along East 49th to East 59th Streets, including one at 697-703 Fifth Avenue that has been empty for over a year.
DeCoster mentioned that quick changes aren’t expected since many stores will need significant planning and effort from retailers before reopening.
“Upper Fifth Avenue is undergoing a major rethinking,” he noted, adding that some vacancies stem from consolidation within the luxury retail sector. Despite the downward trend in rents, brands like LVMH and Gucci are investing in their own properties—indicating a long-term commitment to the area. Plus, Rolex is set to open a new store in its nearly completed headquarters at 665 Fifth Avenue.
Times Square is filled with fast-casual eateries, yet physical leasing activity remains sluggish. “It’s in a bit of a transition,” DeCoster said, noting that it’s still figuring out its identity.
Herald Square has been particularly impacted, with 25 empty shops, the highest among the areas surveyed. Average asking rents dropped by 14%, falling from $447 to $383—marking the lowest levels in a decade.
However, with new leases like TJ Maxx’s 40,000-square-foot space at Herald Towers, there’s a sense of life reinvigorating the area, though it was reported too late to be included in the main findings.
Other key insights from the study include:
- Fitness and wellness companies signed some of the largest leases recently, largely due to the city’s removal of special permit requirements for businesses like gyms and licensed massage clinics, leading to significant leases from chains such as Equinox and Lifetime.
- As inventory tightens in crucial downtown spots, smaller retailers are moving into neighborhoods like Noho, Nolita, Union Square, and Madison Square Park, while those needing larger spaces are opting for Chelsea, Hudson Square, and Tribeca.
- In SoHo, Abercrombie & Fitch has moved into the previous Lululemon location on 520 Broadway, while Jacob Cohen has taken over the former Michael Kors store on Upper Madison.
- Restaurants continue to lead the market, with STK leasing a 12,000-square-foot space at 412 W. 15th St. for its fourth Manhattan location.
