Retail Vacancy In Greater Philadelphia Is Dropping Despite Big-Box Closures
Philadelphia's retail leasing market remains resolute through the first half of this year even as the sky seems to be falling for big-box stores nationwide.
Despite Bon-Ton's closure of 15 stores in Eastern Pennsylvania and Toys R Us' liquidation, retail vacancy dropped relatively sharply to 8.5% in Greater Philadelphia in the second quarter, according to a CBRE report. It is the lowest vacancy rate for the area since the end of 2016, coming on the heels of Q1's two-year high.
As many of the leases signed were in top-class space, the average inline asking rent declined from the first to second quarter. Anchor space asking rent hit a two-year high even as availability dropped following two quarters of rising vacancy, further underscoring the region's surprising strength in pivoting away from outdated department stores.
Restaurants and fitness once again led the charge for retail's strength in the second quarter, as several local restaurateurs announced second locations and Australian gym chain F45 opened two locations in Bryn Mawr and Ivyland, with eight more planned by the end of the year. Two of those locations will be within city limits.
As the year goes on, Philly's occupancy strength will be tested. Over 1M SF of retail space is scheduled to deliver in the fourth quarter, including Fashion District Philadelphia and more of East Market in Center City, as well as the Promenade at Granite Run in the Media area.