Thank you for sharing!

Your article was successfully shared with the contacts you provided.

PHILADELPHIA-An estimated 3.5 million sf of new retail space was delivered to the local MSA this year, and less than 2 million sf will come online in 2003, according to research by the local office of Encino, CA-based Marcus & Millichap. “Philadelphia (retail) has certainly not escaped the effects of recession, but it has not suffered as badly as other cities,” says Jeffrey R. Algatt, regional manager of the M&M office here.

Retail vacancies rose from 8.5% in 2001 to 9% this year, and the report forecasts vacancies to peak at 9.3% next year. Meanwhile, “rents continue to grow at 2% over the past 12 months,” Algatt says, “and will enjoy further increases, given the lack of new inventory coming online.”

Algatt says the average retail rental rate is estimated to end 2002 at $16.80 per sf, up slightly from $16.61 per sf in 2001. In 2003, the average rental rate is forecast to rise by an additional 2%, to $17.10 per sf.

“Dollar sales volume was high, due to several large transactions of medium-sized shopping centers, and single-tenant net lease transactions have been plentiful,” Algatt says. “As of mid-2002, overall sales volume was on pace to exceed the volume of any of the last few years.

“The faltering stock market and low interest rates combined to attractcapital from stocks, bonds and other investments toward the bricks and mortar of commercial real estate,” he explains. “Sales volume in 2003 should be consistent with 2002 and investors will favor retail properties, as they will continue to outperform the office and apartment sectors.”

The report also suggests that home refinancing put more cash in consumers’ wallets, “keeping local retailers in the black.” Philadelphia-area retail sales grew at an average year-over-year rate of 3.8% from January 2000 through June 2002, according to the research.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information


Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.