This is not an abstraction: buildings large and small are showing gaping vacancies. Storefronts are empty. Entire buildings sit waiting to be occupied. In Manhattan, retail vacancies have reached their highest rates since 2001. For the second quarter of this year, vacancies hit the absurd height of 12.4%, thanks to unemployment trends that won't quit and consumers reluctant to pry open their wallets.
Retailers are being hit just like the residential market.
Big box retailers are taking it on the chin, with places like Barnes & Noble (NYSE: BKS) and Circuit City (OTC: CCTYQ) closing locations. Of the 185 stores between E. 57th Street and E. 72nd Street on Madison Avenue, 15% are either vacant or about to be. In SoHo, 11% of 551 store locations are open for lease. In Times Square, available retail space hit 10%, up 7.3% from the year before. The situation isn't as grim on the Upper West Side, where 9% of 265 openings are either empty or headed that way. But, this neighborhood isn't the shopping destination that the Upper East Side and SoHo are.
If all goes as planned, rents could fall 23% by the last quarter of the year, with the trend continuing through 2010 based on projected unemployment and consumer demand rates. At the end of June, the average asking price for retail space was $109.09 per square foot. By the end of 2009, it could be down to $98.12.
Of course, you'd have to expect this in a city that's lost 91,200 private industry jobs (2.8% of the total) in the 12-month period ending in May. Overall, New York City's unemployment rate could ring in the new year at 9.5%, leaving 400,000 without gigs for the first time in 17 years.