PHILADELPHIA, PA— Steady construction activity and weaker consumer spending are causing Philadelphia’s retail market to moderate, with department stores and casual dining restaurants struggling the most, according to a third-quarter Retail Research Report by Marcus & Millichap, the nation’s largest real estate investment services firm.Looking forward, more stringent underwriting will likely increase the marketing times for many properties, as well as apply further upward pressure on cap rates.
“This year, investment activity with the Philadelphia retail market is expected to consist primarily of smaller buyers focusing on mid-tiered assets,” says Spencer Yablon, (top right photo) regional manag
er of the Philadelphia office of Marcus & Millichap.Following are some of the most significant aspects of the Philadelphia Retail Research Report:
· After 16,800 jobs were created in 2007, cuts are expected to total 8,000 workers this year, a loss of 0.3 percent.
· Developers are forecast to bring 1.9 million square feet of retail stock online in 2008, compared with 1.8 million square feet last year.
· Additions to stock this year will exceed tenant demand growth. As a result, vacancy is projected to push up 70 basis points by year end to 7.4 percent.
· Asking rents are expected to rise 1.8 percent in 2008 to $20.30 per square foot.
· Effective rents will tick up 0.6 percent to $18.26 per square foot.
For a copy of the complete Philadelphia Retail Research Report, as well as reports on other markets nationwide, visit our website at http://www.marcusmillichap.com/.
Press Contact: Stacey Corso, Communications Department, (925) 953-1716
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