Manhattan Retail Leasing Rebounds Amid High Vacancy Rates in Prime Areas

Manhattan's retail leasing market has shown significant recovery from the impacts of the COVID-19 pandemic, as reported by the Real Estate Board of New York (REBNY). The second half of 2025 saw a notable decrease in vacancies across 16 prime corridors, including Soho, Flatiron, and upper Madison Avenue. However, high-profile areas such as Times Square, Herald Square, and Fifth Avenue above East 49th Street continue to struggle with substantial vacancies, creating a perception of a weaker market overall.

Manhattan retail lease rebound continues — but prime storefronts remain vacant

The REBNY survey highlighted that while the overall storefront occupancy rate in Manhattan improved, certain districts still face challenges. For instance, Union Square Partnership reported a robust 91% occupancy rate, driven by demand from international luxury brands and local businesses. Despite average asking rents being 32% lower than their previous peaks, some areas, like Broadway in Soho, experienced a 24% increase in rents compared to earlier in the year.

Manhattan retail lease rebound continues — but prime storefronts remain vacant

Conversely, the report noted "inconsistent" demand in high-profile areas, where vacancies have persisted. Upper Fifth Avenue, Times Square, and Herald Square, which represent a small fraction of Manhattan's retail inventory, account for 60% of the borough's available storefronts. Notably, several storefronts on Fifth Avenue have remained vacant for over a year.

Manhattan retail lease rebound continues — but prime storefronts remain vacant

The report identified a shift in tenant types, with fitness and wellness businesses signing significant leases due to the removal of special-permit requirements for gyms and similar establishments. This trend has allowed brands like Equinox and Life Time to expand their presence in the city. Additionally, some luxury brands, including LVMH and Gucci, have made long-term commitments by purchasing properties, indicating confidence in the market's future.

Manhattan retail lease rebound continues — but prime storefronts remain vacant

Despite the positive trends, challenges remain. The REBNY indicated that many storefronts will require extensive renovations and commitments from retailers before they can be leased. Areas like Times Square are still undergoing transitions to redefine their retail identities, while Herald Square reported the highest number of vacant storefronts in the survey, with average rents dropping to their lowest in a decade.

Manhattan retail lease rebound continues — but prime storefronts remain vacant

• “Despite its challenges, Manhattan’s retail market continues to demonstrate a broad-based appeal,” — Keith DeCoster, Vice President of Market Data and Policy, REBNY

Manhattan retail lease rebound continues — but prime storefronts remain vacant

• “Upper Fifth is going through extensive re-imagining,” — Keith DeCoster, Vice President of Market Data and Policy, REBNY

Manhattan retail lease rebound continues — but prime storefronts remain vacant

• “Brands continue to view the city as the premier market to establish a retail presence, introduce new concepts and strategically grow their business,” — Joanne Podell, Executive Vice Chair, Cushman & Wakefield

Manhattan retail lease rebound continues — but prime storefronts remain vacant

As Manhattan's retail landscape evolves, smaller retailers are increasingly moving into neighborhoods like Noho, Nolita, and Union Square, while those requiring larger spaces are gravitating towards Chelsea and Tribeca. The ongoing recovery, coupled with shifts in tenant demographics, suggests a complex but promising future for Manhattan's retail market as it adapts to new consumer behaviors and preferences.

Manhattan retail lease rebound continues — but prime storefronts remain vacant