Dir: +1 215 928 7505
Ten Penn Center
1801 Market Street
Philadelphia, PA 19103
Main: +1 215 925 4600
Fax: +1 215 925 1040
7535 Windsor Drive
Allentown, PA 18195
+1 610 770 3600
Eight Tower Bridge
161 Washington Street
Conshohocken, PA 19428
+1 610 684 1850
300 N. Second Street
Harrisburg, PA 17101
+1 717 730 3752
1317 Route 73
Mount Laurel, NJ 08054
+1 856 234 9300
300 Delaware Avenue
Wilmington, DE 19801
+1 302 425 4000
Shopping center leasing activity was strong during the first two quarters of 2016. Community, Neighborhood, Lifestyle and Power Centers all registered decreases in vacancy. Discount home furnishing and off-price department stores multiplied. There was also an influx of fitness and recreation operators. This ranged from small boutique fitness locations to larger laser tag and trampoline parks.
The bankruptcy of Sports Authority resulted in the closing of eleven regional stores ranging in the 40,000 to 50,000 square foot range. Dick’s Sporting Goods will be acquiring the Sports Authority brand and multiple store leases, but none of the locations in this region. The former Sports Authority stores will have a short-term impact on vacancy but there is likely to be demand from other retailers.
Multiple centers have redevelopments underway or planned, particularly those under new ownership. Demolition has begun at the Granite Run Mall beginning with the teardown of the former JC Penney store. The lower level of the former JC Penney location at the Exton Square Mall is being renovated to accommodate a new entertainment tenant and the former Kmart store is being demolished and replaced by a Whole Foods. The full gut and transformation of the Fashion Outlets of Philadelphia is underway but the opening has been delayed until 2018. Renovations are planned for the Coventry Mall in Pottstown and Palmer Park Mall in Easton.
The vacancy rate in Philadelphia County decreased from an adjusted 9.1 percent to 8.8 percent. Target announced plans for a fourth flexible-format store in Philadelphia.
Multiple mixed-use developments in Center City Philadelphia will be expanding the retail footprint and providing new opportunities. Wawa and other c-stores continue to expand with storefront and freestanding infill locations.
The vacancy rate for the four suburban counties increased from 7.6 to 7.1 percent. Only Delaware County had an uptick in vacancy.
A new Walmart opened at Valley Gate in Warrington, Bucks County. Delaware County has multiple projects under construction including The Shoppes at Brookhaven, Ellis Preserve Town Square, and The Promenade at Granite Run. In the third quarter, the King of Prussia Mall expansion is scheduled to open and the new phase of the King of Prussia Town Center will be substantially complete.
Demand for inline space has increased from boutique fitness operators, such as Soul Cycle, looking to be close to their target client base.
The overall vacancy rate in the three counties decreased from 11.3 percent to 11.0 percent. Camden County had an increase in vacancy, mainly due to the Sports Authority store closing in Cherry Hill. Two other Sports Authority stores closed in Burlington and Gloucester County, but these vacancies were offset by new activity.
Indoor trampoline park, Rockin’ Jump, opened in the newly renovated Williamstown Shopping Center. The former Tri-Town Plaza in Marlton is being demolished to make way for the Shoppes and Residences at Renaissance Square development. The former Greentree Commons office complex in Marlton is being razed and redeveloped as the View at Marlton, a multi-building retail complex with a proposed 45,000-square-foot LA Fitness. Lidl is considering a site in Burlington County for a 36,000-square-foot supermarket.
New Castle County’s vacancy increased from 7.2 to 7.4 percent. Although new retailers have opened in the Christiana area, there have been new announced store closings. In addition to the Sports Authority at Brandywine Commons II, Best Buy announced it would be closing two stores and consolidating to a new store in Christiana.
The next 105,000-square-foot phase of the Christiana Fashion Outlets is underway, however, the retail component of the Cavaliers Country Club adjacent to the Christiana Mall has been dropped.
The Lehigh Valley vacancy rate trended upward since the middle of 2015, most recently as a result of two Sports Authority store closings in Lower Nazareth and Whitehall. Even with these additional blocks of space, the vacancy rate is still only 5.9 percent.
Hamilton Crossings is on track for a summer opening. New projects are in the planning stages in North Whitehall and Whitehall Townships, East Allentown, Bethlehem City and Township, and around the new Route 33 interchange. Renovations/redevelopments to existing older centers will increase, particularly as new owners invest capital to make these centers more competitive.
The overall vacancy rate in the Central PA counties decreased from 7.2 to 6.8 percent. Lancaster, Lebanon, and York counties had slight increases in vacancy, while the other counties had stable or decreased vacancy rates.
Grocery chains were active. Giant signed on to take the former Gander Mountain space. California-based Grocery Outlet Bargain Market will be opening its second location in York County, and Lidl purchased a site in York County for its second supermarket there.
Click here to download the full report as a PDF.
In our Fall 2016 Knowledge Leader, we delve into the changing nature of work and how new trends are impacting commercial space.
Trends, Forecasts, and Perspectives in Commercial Real Estate
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