In Q3 2025, New York’s retail market remained resilient despite challenges from recent large-format store closures and ongoing bankruptcies. Negative absorption continued from Q2 but was concentrated in malls and power centers, while smaller urban storefronts under 5,000 SF maintained strong demand, particularly in Manhattan corridors like SoHo, Fifth Avenue, and the West Village. Availability in prime urban locations remains near historic lows at 4.2%, driving competition and robust leasing activity. Asking rents rose 2% year-over-year, with high-traffic Manhattan streets commanding premiums above $500/SF. Suburban submarkets also saw steady demand and rent growth due to limited supply and strong household spending. Overall, Q3 reflects a market balancing short-term vacancy pressures with continued tenant demand and moderate rent growth.

 

Key Findings

• Leasing remains steady with $46.18/SF asking rents and 4.1% vacancy, though negative absorption of 5.8K reflects large-format store move-outs across malls and shopping centers.
• Retail construction continues with 957K SF under construction and 283K SF delivered, supporting limited new supply while keeping availability near historic lows.
• The market’s $1.3B sales volume highlights continued investor confidence despite retailer bankruptcies and moderated absorption.

 

New York Retail Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

New York Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.6%
• Current Population: 14.8M
• Households: 5.7M
• Median Household Income: $89,993

 

The New York metro area continues to regain strength post-pandemic, buoyed by population growth, economic diversity, and global influence. With more than 20 million residents, the region benefits from world-class institutions, robust finance and tech sectors, and a $2 trillion GDP, the largest of any metropolitan economy worldwide. Major infrastructure investments and a strong tourism rebound, 64 million visitors in 2024, are fueling urban vitality and retail activity. Tech and AI expansion, alongside steady gains in finance, healthcare, and creative industries, further reinforce resilience. However, persistent housing shortages and affordability pressures pose ongoing challenges to sustaining talent and retail momentum.

 

Population, Labor, & Income Growth

Source: CoStar Group, Inc.

 

New York Retail Construction

Unlike much of the U.S., New York’s construction slowdown is driven primarily by best-use considerations rather than financing costs. Limited development sites and local emphasis on housing have restricted sizable retail deliveries, while ongoing demolition of aging urban-core properties, about 6.8 million SF over five years, has tightened market conditions. Retail construction has moderated sharply, averaging 1.5 million SF annually since 2018, with less than 1 million SF anticipated in 2025. Currently, about 910,000 SF is under construction, mostly smaller pad sites, with only a few projects exceeding 100,000 SF. Future development is expected to remain modest, often part of larger mixed-use structures, minimally impacting occupancy.

 

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 over $5 billion in annual sales in each of the past two years, near the ten-year average of $5.7 billion. Through H1 2025, investment volume is on pace to slightly exceed last year’s totals. Cap rates have stabilized, averaging 4.5% for in-demand NYC properties and above 6% metro-wide. Investors are favoring fully leased, income-producing assets over value-add opportunities, paying premiums for stability. High-profile transactions, such as 2 Times Square and Hazlet Town Center, highlight confidence in both urban and suburban retail. Near-record low availability and steady leasing support continued investor activity.

 

New York Retail Sales Volume

Source: CoStar Group, Inc.

 

By the Numbers

Source: CoStar Group, Inc.

• Sales Volume: $1.3B
• Price Per SF: $431
• Cap Rate: 6.4%
• Vacancy Rate: 4.1%
• Rent Growth: 1.9%
• Asking Rent Per SF: $46.18
• Under Construction: 957K SF
• Delivered: 283K SF
• Absorbed: (5.8K) SF