Essentials for ICSC: The Latest Retail Market Stats From Dochter & Alexander
Retail is on our minds with ICSC next week, and our partner Dochter & Alexander Retail Advisors released its newest market report highlighting key retail market stats and trends across 16 submarkets. Here are some things to know before ICSC:
The State of DC Retail, Q1
The East End, M Street in Georgetown, and Downtown Silver Spring were big retail winners this past quarter, with strong leasing activity. M Street shadow (occupied but available space) ticked up to 56k SF, so there is still a lot of movement, though a big announcement is coming. East End vacancy dropped by 41% with leases from Nordstrom Rack and Saks OFF 5th at Dochter & Alexander’s listing. Downtown Silver Spring vacancy decreased 1.71% and shaved away shadow space as Guitar Center and Rue21 head for Ellsworth Place. Pictured: Dave Dochter and Matt Alexander.
Retail tenant improvement (TI) allowance is generous, as landlords look to create a sense of place and add an amenity in new developments. Average full-service restaurant TI is peaking over $100/SF on a citywide level. TI is also heavy in emerging retail markets—Capitol Riverfront is averaging $53 more in TI than an established node in the East End.
“We’re used to seeing higher TI packages in emerging markets and the additional contribution for full-service restaurants are helping chefs and restaurateurs create more competitive and unique dining experiences for their guests,” says Dave.
39% of tenants in the market for space need 2,500 SF or less, which is dampening some of the tour activity at larger blocks of space. Fast-casual restaurants are gaining on other retail categories looking for space, up 2.5% this past quarter. Outside of food & beverage, cosmetics, fitness and several new-to-market fashion concepts are leading the charge.
NYC, Europe, Philadelphia and LA, in that order, are the top four origins of recent new retail to DC that aren't homegrown, according to Dochter & Alexander data. “We’re seeing a strong mixed bag of new concepts from NYC, and 80% of new retail coming down from Philly is food & beverage,” Dave explains.
New emerging markets in DC are shifting food destinations to outside of the traditional downtown core. This is resulting in some massing of second-generation restaurant space availabilities. “Over 500k SF of second-generation or shadow restaurant space is available or could be made available,” Matt tell us. Strong operators with new concepts are expanding in DC, while some dated concepts and inefficient operators are exiting space. At the same time, over 350 restaurants have opened in DC in the past two years.
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