New York’s retail market continues to show resilience, with leasing activity steady and availability near historic lows despite a more volatile macro backdrop in 2025. Market momentum softened over the year, driven primarily by move-outs of large-format tenants in malls and shopping centers, as recent retailer bankruptcies translated into store closures and weighed on the big-box segment.

 

Urban retail remains the key driver of performance, particularly storefronts under 5,000 SF, where availability continues to tighten. Suburban markets, especially in northern New Jersey, are also seeing improving fundamentals, shifting modest leverage toward landlords. While absorption and rent growth are expected to moderate, limited new supply and low vacancy should allow New York to continue outperforming the national average despite near-term risks tied to store closures and softer consumer demand.

Key Findings

• Vacancy remains tight at 4.2% despite negative absorption, as large-format move-outs in malls and power centers are offset by strong demand for small-format urban retail, particularly in prime Manhattan corridors.
• New supply is effectively constrained, with construction totaling just 0.1% of inventory, as zoning limits and residential redevelopment continue to suppress retail deliveries.
• Rent growth has moderated to 2.3% year-over-year, with landlords showing increased pricing discipline amid retailer bankruptcies and big-box and pharmacy closures, even as prime locations maintain pricing power.

New York Retail Supply & Demand Dynamics

Source: CoStar Group, Inc.

New York Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.6%
• Current Population: 14,873,898
• Households: 5,733,207
• Median Household Income: $90K

 

Despite ongoing post-pandemic adjustments, the New York metro retains structural advantages few global cities can match. Recent census data point to renewed momentum, with population growth in 2023 and 2024, outmigration falling to its lowest level since 2013, and New York City adding 87,000 residents last year. A large, diverse economy remains a core strength, with finance, technology, healthcare, education, and tourism supporting resilience and driving a regional GDP exceeding $2 trillion.

 

Growth in high-paying sectors, particularly finance and technology, continues to attract talent and investment, while expanding infrastructure, global connectivity, and rising tourism reinforce the metro’s long-term appeal. However, housing supply continues to lag demand, posing an ongoing affordability challenge that could constrain future growth.

Population, Labor, & Income Growth

Source: CoStar Group, Inc.

 

New York Retail Construction

Unlike much of the U.S., where elevated costs have slowed development, New York’s retail construction slowdown is driven by best-use considerations. Limited sites, a policy push toward housing, and continued demolition of aging inventory, roughly 7.0 million SF over the past five years, have constrained new retail supply. Retail starts have fallen sharply from an average of 3.5 million SF annually between 2013 and 2018 to about 1.5 million SF in recent years, with less than 1.0 million SF expected in 2025. With just 930,000 SF currently under construction, largely in small, mixed-use projects, new supply is expected to have minimal impact on occupancies despite moderating demand.

 

SF Construction Starts

Source: CoStar Group, Inc.

 

SF Under Construction

Source: CoStar Group, Inc.

 

New York Retail Sales

The New York retail investment market remains steady, with more than $5.0 billion in sales recorded in each of the past two years, in line with the 10-year average. While 2025 transaction volume is tracking slightly below last year’s pace, improving capital availability has helped align buyer and seller pricing expectations, with cap rate expansion appearing to stabilize. Metro-wide cap rates hover just above 6%, while in-demand New York City assets continue to trade closer to 4.5%.Rising borrowing costs have shifted investor focus toward stabilized, income-producing assets, reinforcing premium pricing for fully occupied properties, particularly in New York City. Improving retail fundamentals and low availability across the broader metro are also supporting investment activity in suburban locations, where high-occupancy centers continue to attract capital.

 

New York Retail Sales Volume

 

By the Numbers

Source: CoStar Group, Inc.

• Sales Volume: $1.2B
• Price Per SF: $441
• Cap Rate: 6.3%
• Vacancy Rate: 4.1%
• Rent Growth: 2.0%
• Asking Rent Per SF: $47.86
• Under Construction: 869K SF
• Delivered: 277K SF
• Absorbed: 80K SF