According to Cassidy Turley's U.S. Retail Report published in May, the average retail asking rent in the Philadelphia region is hovering around the $19-$20 mark. The good news, my colleagues of brotherly love of CRE, is that we are the median when taking in the whole enchilada...smack dab in the middle. Manhattan is boasting the highest asking rents at a rate of $57. Dayton, OH is bringing up the rear at $11.
Retail trends in our region - Consumer spending is in this driver's seat, people. So in these days of attempted recession recovery, we will see:
- Big boxes are going down a shoe-size
- Mid-priced retailers are being hit the hardest
- Leasing up, Sales down
- Capital investors are out there looking for deals
- New concepts with smaller footprints will prove to be more appetizing to private financiers
- Grocery expansions rampant, especially organically-focused stores and discount groceries
- Dollar stores, drug stores and small convenience stores expanding their grocery offerings to attract more traffic
Some items of interest and trends that I have observed:
- Many consumers are reduced to budgets which allow needs and very little wants. Designer brands and fru-fru fashion has been replaced by big-box store brands at a fraction of the cost. Here we are, well-seated in reality 2012. Welcome, Mr. Gap CEO and Ms. Victoria's Secret CEO. We're happy you could make it. The average middle-income family will not be buying your $59 - $69 jeans when they can buy a pair at Target or Old Navy for $20. Yes, drink it down. Reality tastes good. (Ok, my rant is over.)
- Luxury Department Stores - You've had a good run. Unfortunately, the economy sprained your ankle and now you will limp at best.
- Small service related business: Rejoice - it is your time to shine!
- Destination Retailers - Have you seen what the price of gas is lately? I fear for your future.
- Strong tenant mixes are key in a successful recovery
- Pockets of new retail construction continue, mainly driven by user-demand. The octane booster is the expansion of several retail mainstays.
- The dynamic of every local market determines the temperature of their market and the rate of their recovery
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