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<\/p>\nThe past year was very good to owners of retail space in New York’s hottest shopping districts. But everywhere else, the bite of sweeping tariffs is sinking in.<\/p>\n
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\n Demand for retail space in SoHo is still white-hot, but average asking rents are staying flat or declining on many of the city’s other prime retail corridors.\n <\/p>\n
New Yorkers are experiencing disproportionate cost increases compared to elsewhere in the country due to tariff policies, according to a\u00a0new report<\/a> from the Manhattan Chamber of Commerce<\/a>.<\/p>\n And even as average asking rents for retail space are\u00a0still rising in some prime corridors \u2014 like Fifth and Madison avenues and in SoHo \u2014 they are sliding\u00a0in the majority of\u00a0others, resulting in questions about whether the health of the city\u2019s overall retail real estate will hold up among economic concerns.<\/p>\n \u201cWe are seeing less absorption of space in more local areas, where you have local mom-and-pop operators,\u201d said Robin Abrams<\/a>, a retail broker and vice chairman at Compass<\/a>. \u201cEverybody is impacted, but they’re more directly affected by it and maybe not as able to take a long-term point of view and deal with it.\u201d<\/p>\n Tariff costs at every step, from construction materials for store buildouts to inventory, have added up to an extra $4.5B bill for the city\u2019s small businesses and an extra 21% to the cost of goods purchased in the state, the\u00a0chamber\u00a0found.\u00a0<\/p>\n Doing business in NYC always carries a high cost \u2014 it had the highest asking rents in the continental U.S. during the fourth quarter, according to Colliers<\/a> \u2014 but tariffs mean even more pressure.<\/p>\n \u201cThere is no question that small businesses are feeling the pinch,\u201d said Jessica Walker<\/a>, president and CEO of the Manhattan Chamber of Commerce. \u201cTariffs are the\u00a0No. 1\u00a0issue that we hear about.\u201d<\/p>\n Consumer spending has been mimicking the K-shaped recovery<\/a> seen in the broader economy, with well-off consumers continuing to spend on luxury goods<\/a>\u00a0while other earners tighten their belts \u2014 signaling that retail real estate\u2019s bifurcation<\/a> is likely to continue.<\/p>\n Consumer confidence hit its lowest point in a decade<\/a> last month, driven by increasingly negative sentiments about the economy and the job market. And in the Tri-State area, core inflation in 2025 was half a percentage point above the national average at 3.2%, according to the chamber.\u00a0\u00a0<\/p>\n \n Times Square has one of the heaviest concentrations of retail vacancies among NYC’s prime retail corridors.\n <\/p>\n Challenging economics \u2014 whether tariffs, a cold winter impacting foot traffic, or a recession \u2014 undoubtedly pile on to the mountain of obstacles NYC\u2019s small businesses face, Cushman & Wakefield Executive Vice Chairman for Retail Services\u00a0Joanne Podell<\/a>\u00a0said.<\/p>\n \u201cIt’s very hard to run a retail business. I was a retailer many years ago,\u201d she said. \u201cYou have to have enough financial strength to get through hard times.\u201d<\/p>\n But Podell\u00a0said the city\u2019s overall retail sector is\u00a0healthy: People haven\u2019t curbed their day-to-day spending in grocery stores or cut down on their medical appointments, she said, and the city\u2019s middle and upper classes are still eating out and buying luxury clothing.<\/p>\n \u201cI have never seen more people in restaurants. The city is packed,\u201d she said. \u201cThe absorption is the strongest I’ve seen in many, many years.\u201d<\/p>\n And in spite of\u00a0initial tariff jitters<\/a>, rents went up and availability went down in NYC\u2019s\u00a0premier\u00a0retail corridors in the second half of 2025, a\u00a0new Real Estate Board of New York report<\/a>\u00a0found.\u00a0<\/p>\n<\/p>\n