Manhattan retail market tightens.

An ever tightening Manhattan retail space market could be re-energized with as much as a million square feet of newly constructed store space coming onto the market over the next 18 months, according to the Year End 1997 Manhattan Retail Space Report, recently published by Garrick-Aug Associates Store Leasing, Inc.

According to the study, the total amount of retail space currently available in Manhattan stood at 4,867,352 square feet at the end of 1997, down 5.6 percent from the amount available six months earlier. Average asking rents for Manhattan retail space, although leveling off somewhat by comparison with the last two reporting periods, rose by 3.3 percent during the second half of 1997 from $61 to $63 per square foot. Average asking rents have risen by more than 23 percent in the past 18 months.

"Available store space has been reduced by approximately 40 percent in Manhattan in the past three years," noted Charles Aug, chairman of Garrick-Aug. "With tourism rising, crime decreasing and construction of residential and mixed-use properties booming again, there couldn't be a better time for more retail space to come onto the market. Today's conditions present a terrific opportunity to attract quality space users for stores, restaurants and entertainment facilities throughout the city."

Recently, larger chain operations have been snapping up much of Manhattan's retail space. This trend is reflected by the sharp drop in total number of stores in the borough, even as total available space continues to decrease. Manhattan now has a total of 1,742 stores, a drop of eight percent from 1,893 in mid-1997.

"A total of 1,205,144 square feet of retail and retail support space was leased in the second half of 1997," Aug adds. "SoHo, Chelsea and Times Square showed especially strong growth."

Manhattan is an owners' market at the moment, Garrick-Aug's report suggests. Of the 155 retail leases the company negotiated in the second half of 1997, the average difference between asking rent and the final negotiated rent dropped 13.2 percent over the previous six months' figures.

Fifth Avenue continues to be the most expensive place to lease a store, according to the report, with an average asking rent of $188 per square foot. Madison Avenue is close behind, at $172. Fifth Avenue is almost fully leased - only 27 stores are available - but Madison had 72 vacant stores at the end of 1997. Columbus Avenue is still a relative bargain, at an average of $68 per square foot, but only 24 stores are available there. Broadway has the greatest number of vacant stores - 97 - and asking rents average $78.50 per square foot.

Finding a large block of space in a prime location will be a challenge for any retailer coming into Manhattan, according to the report. Only 71 stores of over 10,000 square feet are available. Smaller retailers will have an easier time finding space more than two-thirds of all available stores are less than 2,500 square feet - but the smaller the store, the higher the asking rent will be. For a unit of 1,000 square feet or less, the average asking rent is $84 a foot.