The retail sector’s national vacancy rate dropped to 5.9% in the final quarter of 2015 on the heels of posting a strong 20 million square feet of net absorption, according to a new retail real estate report from the CoStar Group. This scenario bodes well for rent growth in the year ahead in an increasing number of shopping districts in the U.S. and Philly retail space markets, the report said.

CoStar’s 2015 State of the U.S. Retail Market Review and Forecast said the last quarter of the year saw only 12 million square feet of new retail space come online, capping off the year’s “moderated pace” of shopping center development that has continued into 2016.

Construction in the U.S. retail market, including the market for Philadelphia retail space, remains fairly low in comparison to earlier cycles, but new shopping center space now in development stands at its highest level since the recession — 70 million square feet nationwide, CoStar reported.

Included in the new retail projects now underway are 21 malls and five outlet centers, but only 10 power centers, the report noted.  That is a significant drop in power centers than in the previous cycles, according to CoStar.

Grocery-anchored neighborhood centers, however, have increased considerably in the past two years, with 86 now underway, the report said.  Thus trend clearly indicates of the strength of smaller independent in-line tenants and also reflects the positive impact of the continuing economic recovery on local economic strength, CoStar reported.

CoStar also noted a changing pattern among developers who are focusing more on urban mixed use infill projects rather than following the population to build shopping centers in far-out suburban locations.

This trend was especially notable in supply-constrained markets as New York City, Miami and Honolulu, CoStar said, adding that between 1% and 1.5% of new retail inventory currently is being constructed in these three markets.  Among the major projects in these three cities are Miami’s Brickell City Centre, New York City’s shopping centers near the World Trade Center and Hudson Yards, and Honolulu’s International Market Place, opening in Waikiki this summer.

At the same time, retail markets such as Raleigh, Nashville, Houston and Charlotte that were previously high-growth markets but are not as supply constrained now are seeing lower levels of construction than the 2006-2008 real estate cycle, CoStar said.

Dallas, Raleigh, Fort Lauderdale, Orlando, and Austin, all of which have cleared out their overhang of vacant store space from the last cycle, had the strongest year-over-year demand growth in 2015, according to the report.

CoStar said rent growth in premier retail districts with at least $2 billion in spending power within a three-mile radius slowed in recent quarters and would remain good through 2016, but far below the explosive pace of the recent past.

For more information about Philadelphia retail space or any Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia retail space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia retail space for lease or sale through our Philadelphia commercial real estate brokerage firm.

Retail chains in the U.S., including those in the Philly Retail Space market, plan to open 42,506 new stores in the 12 months and 79,650 stores in the next 24 months, a jump of 4% and 4.2%, respectively in new store openings year to date in 2015, according to a new report.

The jump in planned chain store openings is being propelled by recent employment and retail sales growth, along with higher consumer confidence, the latest National Retailer Demand Monthly report from RBC Capital Markets says.

Retailers also have found increased confidence in the retail market from forecasts for sales of about 3.6% for the 2015 holiday season that, comfortably close to 2014’s healthy 4.1%, according to the consensus estimate of the National Retailer Federation, Deloitte and four other retail forecasters.

Lower gas prices also may be having a slow but noticeable impact on consumer budgets, potentially prompting greater nondiscretionary spending, RBC Capital Markets said.  Retailer are hoping to attract these extra consumer spending with more new store openings.

Despite 2015’s steady increase in new store openings so far, new construction for shopping center redevelopment and ground-up construction has trickled down as the year has progressed, according to RBC.

Rents and occupancy are expected to enjoy healthy increases in the near term as the result of the combination of higher consumer sales, increased demand for space among retailers, and a lack of  growth in new supply,  RBC said.

The CoStar Group’s latest retail real estate market data backs up the forecast for increased  demand for retail space, including Philadelphia retail space.  CoStar notes that the national retail vacancy rate is at the lowest point since it began tracking the market, now standing at roughly 5.9% according to preliminary third-quarter data.

The CoStar Portfolio Strategy indicates that absorption has outpaced new construction by almost a 2-to-1 margin over the past year, with the amount of retail space under construction now about 38.5% below the average amount that was under construction between 2006 and 2008.

Not all retailers are seeing a rosy future for their industry. Wal-Mart Stores, Inc., the world’s largest retailer, surprised the market by forecasting a 12% decline in net profits for 2016.  As a result, the retailer plans to reduce new store openings in the U.S. in the next fiscal year to between 135 and 155 stores, compared with the 354 stores it opened in the last fiscal year.

Despite strong net absorption, retail space rents are still 7% below their pre-recession peak — the only major commercial property segment where asking rents have not yet matched to their highs in the last cycle.  At blame are the struggling shopping centers, especially those in the outer fringe suburbs, that have leased space at lower rates to discounters, fitness centers and non-retail users, thereby offsetting the exceptionally strong recovery in urban retail properties.

For more information about Philadelphia retail space or any Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate broker that specializes in Philly retail space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate broker that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm that specializes in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philadelphia retail space with the Philadelphia commercial properties that best meets their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philly retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia retail space for lease or sale through our Philadelphia commercial real estate brokerage firm.

The familiar design of lifestyle centers and traditional malls is being rethought as commercial real estate developers look to attract tech-savvy millennials and affluent baby boomers by introducing office space and residential living space to retail centers, including Philly retail space.

A report from the CoStar Group notes that mall and lifestyle center developers are increasingly interested in signing anchor tenants such as multi-screen or IMAX cinemaplexes and Apple Stores as they are in infusing creative office space and apartments to their multi-million-dollar retail projects.

Their goal is to draw in the millennial generation’s 80 million consumers, who represent the largest and fastest-growing retail segment in the U.S. economy.  Baby boomers still possess the greatest buying power in retail, but millennials wield considerable  influence on the industry.

Retail developers, including those in the Philadelphia retail space market, are hoping to replace dollars lost to online shopping by creating a new income stream by incorporating office and residential space in malls and lifestyle centers.  And they’re hoping these mixed use project will appeal to the multi-tasking nature of millennials.

Millennials — a loosely defined generation of those born between the mid 80s and into the early 00s — are viewed as extremely social individuals who crave a walkable, mixed-use environment that allows them to participate in many activities in one outdoor place, including exercising, dining, shopping, visiting with friends, seeing a movie and more.

Several new projects underway have been described as mixed-use, open-air malls to which office space, residential units and even hotels eventually will be added.  While many projects are new construction, redevelopment of existing retail centers also is planned.

These new retail projects, potentially including Philadelphia retail space in the future, serve as both the commercial and the social and civic centers of the community, with an outdoor public space design that adheres to traditional urban planning principles, one developer said.

The determination as to whether a mixed use center or a more traditional lifestyle center is best for any given community is based in knowing what customers want and in understanding the community’s demographic and economic base.

The Urban Land Institute says 13 percent of Gen Yers live in or near downtowns, dispelling the myth that they are, as a group, hip urban dwellers.  In reality, most live in neighborhoods in cities or in the suburbs.

Older millennials — those now in their mid to late 30s — carry the most influence. They are now beginning to have children and create households, with about 35 percent now owning their own homes.

These evolving demographics also may be changing the look of the traditional suburban office park.  As office park tenants strive to attract new employees in their 20s and 30s in the face of an increasingly competitive job market, some landlords are looking to make the suburban workplace more appealing by incorporating residential living space and retail space into the office park.

For more information about Philly retail space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker with expertise in Philadelphia retail space.

Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.

Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking Philly retail space with the Philadelphia commercial properties that best meet their needs.  As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals.  If you are looking for Philadelphia retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.

Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.