Manhattan may be luring global brands to enter or expand in New York, but the largest U.S. commercial property market still falls short when it comes to filling thousands of vacant retail storefronts.
The city has seen some improving signs of a retail rebound, with vacancies declining from a peak level during the pandemic, according to a new study. But a rise in workers spending just some, or zero, days in the office since has been a key contributor to Manhattan remaining a laggard against its sister boroughs in its recovery.
The citywide storefront vacancy rate has declined for four straight quarters, yet some 5,300, or 14.2%, of Manhattan’s storefronts remained vacant in the third quarter, the worst of New York's five boroughs and above the city average of 11.1% among a total of 143,400 storefronts, the Department of City Planning said in the study. The report was based on data from Live XYZ, which lists and maps retail spaces across New York.
Brooklyn’s vacancy rate is the second highest at 11.9%, while the Bronx, Queens and Staten Island saw vacancy rates of below 9% each.
“Commercial vitality” is returning, and all neighborhoods are “faring far better than at the height of the pandemic,” but Manhattan and Brooklyn still saw “elevated” retail vacancy rates, according to the study.
Among neighborhoods tracked, the Financial District in lower Manhattan was the hardest hit with a retail vacancy rate of 24.2% that was more than double the city average, followed by Tribeca nearby at 21.1% and Chinatown at 20%, according to the study.
The “pandemic disrupted New York City’s economy and forced many storefront businesses to adapt overnight,” DCP said. “More than four years later, some neighborhoods have recovered while others face lingering effects from the pandemic. The rise of remote and hybrid work has transformed the economic landscape of New York’s neighborhoods and its storefront businesses.”
Remote work
With the rise of remote working, 13% of New Yorkers are now primarily doing their jobs from home, more than double the rate since 2019 and excluding hybrid workers who also report to an office, the study said. New York remote workers total at least 530,000 people — a group DCP said stays in their home neighborhoods during the day and spends money at local lunch spots and other businesses.
The greatest beneficiaries of this trend have been neighborhoods like Williamsburg and Park Slope in Brooklyn, where 26% and 29% of their respective residents primarily worked from home last year, DCP said.
A case in point, Williamsburg saw its storefront vacancy rate plunge to 11% in the third quarter from 43% during the pandemic peak and from 15% pre-pandemic. In Manhattan, residential neighborhoods that have large shares of remote workers also saw vacancy drop, including the Upper East Side, which saw its vacancy rate drop to 16% in the third quarter from 29% at the peak of the pandemic and flat with the pre-pandemic level.
On the other hand, storefront businesses in Midtown and Lower Manhattan that pre-pandemic saw incoming workers boost midtown Manhattan’s daytime population by more than 1 million continued to see reduced spending as more workers may be working remotely, DCP said.
As a result, while commercial areas outside of the central Manhattan business districts have seen foot traffic largely return or even top pre-COVID levels, foot traffic in midtown and lower Manhattan remains 20% lower than in 2019, the study found.
Downtown and midtown Manhattan have seen the largest increases in storefront vacancy since before the pandemic, while upper Manhattan and the outer boroughs that are less reliant on office workers have seen significant vacancy declines, DCP said.