ICSC Regional Conference in Philly Starts on Wednesday

PHILADELPHIA—As a major retail conference is set to get underway on Wednesday here, Globest.com recently chatted with industry veteran Nicole Johnson to gage the health of the Philadelphia regional retail market and some key prevailing trends impacting leasing and investment in the area.

The International Conference of Shopping Centers PA/NJ/DE Conference & Deal Making event and trade show is being held on Wednesday Sept. 11 and Thursday, Sept. 12 at the Pennsylvania Convention Center in Philadelphia.

Johnson, a SVP with CBRE’s Philadelphia office, will be a leader at a roundtable discussion on Wednesday entitled “Practical Leasing Issues” along with co-leader Jeff Fisher of Federal Realty.

She told Globest.com that the Philadelphia retail market is currently in an evolution phase that she says while creating some tumult for the industry is also creating opportunities for both property owners and retailers alike.

“The ‘live, work, play’ concept continues to be a hot topic and owners are looking for ways to implement that into their centers,” said Johnson, who joined CBRE in May of this year from Paramount Realty Services, where she served as vice president of leasing. “The vacancies that happen through anchors as they become available give us those opportunities and options to redevelop the spaces.”

Some of the new concepts that are now filling those spaces include: wellness, fitness, high volume new to market restaurants, entertainments and specialty grocers.

The introduction of concepts such as PREIT’s Fashion District Philadelphia, which is opening on Sept. 19, will definitely have an impact on the retail market in the region. She noted that PREIT has successfully redeveloped its suburban retail properties, including the Plymouth Meeting Mall where it converted a former Macy’s into a multi-tenanted space that includes Miller’s Ale House, Dick’s Sporting Goods and other retailers.

These new concepts are faring well, she notes and are “getting a good response from consumers and a good response from retailers.”

Another continuing source of growth for the evolving retail sector has been the food and beverage industry. Property owners or the tenants themselves are adding amenities aimed to reduce “consumer friction” such as pick-up parking spaces in the front of the establishments, as well as the addition of more drive-thrus and pick-up windows, she noted,

“The restaurants are recognizing that time is precious to the consumer and they are accommodating that,” Johnson said.

According to CBRE’s second quarter retail report on the Philadelphia region, the regional retail availability rose 10 basis points to 8.6%. Regional activity in the first half of this year was mixed. Availability rose 30 basis points to 8.3% in Eastern Pennsylvania, 160 basis points to 8.4% in Northern Delaware, but fell 110 basis points to 10% in South Jersey.

Inline space asking rents fell to $20.82-per-square-foot, while anchor rents rose to $14.91-per-square-foot, according to the CBRE report.

Grocers continue to invest in Greater Philadelphia with Arizona-based Sprouts making its debut in Marlton Crossing, NJ in June, while Lidl announced a new store opening in the Port Richmond section of Philly in the second quarter of next year. In addition, Aldi opened a new store in King of Prussia, PA in May and a new mixed-use development project—Prickett Run at Edgewood—will be anchored by a Wegman’s supermarket.

Other recent retail openings include Panera Bread in University City and PREIT announced a Yard House lease at the Willow Grove Park Mall. In addition, Factory Donuts has stated it will add four suburban locations in the region.

On the negative side of the ledger: department stores suffered in the second quarter of this year—only Dillard’s and Macy’s saw positive same-store sales growth. As Dressbarn liquidates, it will shutter its 13 Delaware Valley stores. Also, Zara exited Rittenhouse Row in the second quarter.