High Street Retail in SoHo: Up, Down or Sideways
David Tobin, Senior Managing Director
Up, down or sideways? What’s happening in Manhattan’s world famous SoHo neighborhood? Are rents going down? Watch to learn about the trends we see developing right now in the high-end boutique leasing market. Share this with anyone who follows Manhattan real estate.
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Real estate nerds like me love a great site tour. And there are no better sites to tour than High Street retail in markets like San Francisco, Santa Monica and New York City. While Manhattan sub-market rents in Meatpacking and Bleecker Street appear to be permanently lower, one market that is demonstrating resilience is the Soho District of Manhattan. The key high-end boutique corridor in SoHo is Mercer Street, home to the Mercer Hotel, the Fanelli Cafe, & many cutting edge boutiques.
Last dollar psf debt loads on certain retail condominiums in Soho have approached $4000 to $5000 per square foot. Because of this, we have seen a number of sub and non-performing loans secured by retail condominiums trade in the secondary market, particularly cash out refinance loans predicated on rents between $500 psf and $750 psf.
We walked on Mercer Street corridor to figure out what is fantasy and what is reality in the post Covid leasing market.
In addition to following reported leases, one way to read the tea leaves is to read the construction permits posted on the front of buildings undergoing retail tenant improvements.
Recent leasing activity includes Softbank-backed Vuori, a take on LuluLemon, with 6,000 sf at 95 Mercer and a new build out of an existing boutique by Tory Burch. Additionally, we were able to identify at least four more spaces that have been leased and are under construction totaling nearly 22,000 sf.
49 Mercer- 7,750sf – signed July 2021 -no rent or tenant listed
53 Mercer- 6,100sf – signed sep 2021 – $225 PSF – F.P Journe – 10 years
77 Mercer- 5,100sf – signed December 2021 – no rent or tenant listed
149 Mercer- 3,600sf – Signed Feb 2022 – no rent or tenant listed
These include 49 Mercer, 53 Mercer, 77 Mercer, 149 Mercer.
The reported rents on these new leases range from around $250 per square foot to north of $500 per square foot.
At the same time however, we noted signs advertising active pop-up retail leasing opportunities.
Retail is very block-specific in Soho so it remains to be seen whether the consensus rent in the $250 per square foot range becomes the norm or if key spaces continue to touch $500 psf. One factor is clear, basements don’t necessarily count anymore toward the headline rent per square foot figure.
Look for our compare and contrast analysis of occupancy on a block-by-block store-by-store basis from summer 2021 to summer 2022. We will try to figure out the macro trends in this micromarket.