By Taylor Williams
Retail and restaurant operators looking to enter or expand within the Philadelphia metro area are increasingly looking at suburban locations, and owners of those properties and seasoned brokers within the market both say there’s more to the trend than a simple lack of availability in key urban retail nodes.
“The suburbs have been the preferred asset class — to some degree the first choice — for some retailers,” says Kari Glinski, vice president of asset management at regional owner-operator Federal Realty Investment Trust. “It started during COVID, when everybody was home, and with a lot of people living in the suburbs, we’ve seen strong demand. For well-located suburban properties, the leasing volume over the past three years has been at historical highs.”
“Even over the past 12 to 24 months, supply has absolutely been constrained and should be even more constrained going forward,” Glinski continues. “For well-located properties backed by demand, new development can work. But right now, with where the cost of capital is, there’s not going to be a huge pop in new supply, thus creating a scarcity of well-located retail space.”
Glinski acknowledges that since Federal Realty doesn’t operate many projects in the city, she has a limited basis for comparison. And to be clear, generally speaking, traditional retail districts in Philadelphia are, like those of most other major markets, benefiting from the combination of high occupancy and low supply growth.
According to CBRE’s second-quarter market report, there is only about 200,000 square feet of shopping center space — inclusive of strip centers, neighborhood centers and power centers — under construction in the greater Philadelphia area. The bulk of that new shopping center development (about 167,000 square feet) is in Mercer County, New Jersey.
“Philadelphia continues to deliver strong sales performances from retailers, and retailers continue to look for infill locations for modest expansion,” says Steve Gartner, executive vice president at CBRE’s Philadelphia office. “We’re seeing certain categories willing to pay very high rents, especially quick-casual restaurants and small-store retailers, just to get into the market.”
According to Gartner, “getting into the market” in Philadelphia in 2025 very much entails targeting suburban locations.
“Submarkets with good housing growth like Middletown, Delaware, are attracting retailers that maybe hadn’t considered a store in the Wilmington or Christiana area,” he says, adding that Target recently opened a new store in Middletown, which is about 50 miles outside Center City Philadelphia.
Market-wide retail vacancy stood at 8.1 percent at the end of the second quarter, per CBRE, following an opening quarter that saw more than 400,000 square feet of negative absorption. That period also coincided with a slew of bankruptcy announcements and store closings of national brands, which may partially explain the unusually high level of negative absorption.
In addition, 2025 has been, by any objective measure, a year of major geopolitical disruption and uncertainty. Yet sources say that tenants, especially in the food-and-beverage (F&B) and entertainment sectors, are still looking to expand in greater Philadelphia.
Many suburbs have the inventory of newly built centers, rehabilitated malls and retail-oriented mixed-use redevelopments — properties that are cultivating new identities and senses of placemaking — to support that growth. Sought-after operators have taken note and appear willing to gamble on areas with slightly less impressive demographics and less proven track records of retail success. And if they can get up and running faster and save a few bucks on rent in the process, so much the better.
“Certain tenants are flocking to premium developments in the suburbs. These are tremendous concepts, especially with regard to restaurants, that have started in [urban] Philadelphia and now want to leverage their brands by expanding into the suburbs,” says Peter Abrams, a longtime Philadelphia developer. He is the founder of Abrams Realty & Development, which earlier this year purchased the roughly 1 million-square-foot Exton Square Mall on the city’s northwestern outskirts from Pennsylvania Real Estate Investment Trust (PREIT).
Abrams says that the decision to close the Macy’s store that had long served the mall created “an opportunity to plan the project in a way that would realize maximum value.” The vision for the mall’s redevelopment hinges on the “town center” concept with high walkability, surrounding residential density and essential onsite services, including grocery and healthcare uses. The latter box is already checked via Whole Foods Market, and Abrams is now aggressively courting best-in-class merchandisers and restaurateurs with an emphasis on homegrown concepts, especially as pertains to F&B.
“The sum of the parts will be much greater than the individual components,” Abrams says of his vision. “We’ll have for-sale housing, about 270 apartments above the retail [space] and a 165-unit active adult complex. The J.C. Penney box has an entertainment user on the first floor — Round 1 — that’s probably going to stay, and we’re going to add a fitness and wellness concept on the second floor. Everything will be walkable and connected; it will be a place that if you live there, you never have to leave.”
Abrams also describes his project as a “little brother” to King of Prussia Mall, Simon Property Group’s 2.8 million-square-foot mega-mall located about 15 miles east of Exton Square. Abrams concedes that he might lose some deals to King of Prussia Mall, which he believes “may be the best retail submarket in the country.”
Retailers that have opened stores at King of Prussia Mall in the past 12 or so months include fashion chains Mango and Abercrombie Kids and jewelry concepts Grand Jewelers and Little Words Project. Women’s clothing retailer Evereve, as well as two lifestyle retailers — accessories provider Rothy’s and activewear brand Vuori — also debuted at King of Prussia Mall in 2024.
Those new merchandisers launched around the same time as a bevy of F&B operators: Vietnamese restaurant Saigon Eats, confectionary Neuhaus Belgium Chocolate, Chinese restaurant Nan Xiang Xiao Long Bao, New York-based Gregory’s Coffee and Chicken Guy!, a concept from celebrity chef Guy Fieri. Later this year, Netflix House will debut its new entertainment concept at the mall.
Past and future leasing activity notwithstanding, the ability of both projects to thrive within relatively close proximity to one another is a testament to the bigger appeal of Philadelphia’s suburban trade areas.
Abrams isn’t the only one who’s impressed with the goings-on at King of Prussia Mall. Larry Steinberg, senior vice president and head of the urban retail division at Colliers’ Philadelphia office, says that Center City has lost its share of high-end retailers to the suburban mall.
“We have a tough situation in competing with King of Prussia Mall, which has attracted many high-end stores and operators to that quadrant of the market,” Steinberg says. “So that’s where the higher-end shoppers now shop. Retailers like Coach and Burberry, luxury brands that are just below Gucci or Louis Vuitton and that were here a long time — those stores have all left Center City.”
Although he views the situation as much improved today relative to several years ago, Steinberg concedes that crime and retail theft had a hand in prompting the dislocation of high-end retailers from Center City. In addition, he says that tenant demand for small-shop space — call it 5,000 square feet or less — is still very strong in Center City. But in terms of its status as a destination, Center City is becoming less about traditional retail and more about residential and tourism-based attractions. The CBRE report identifies several experiential retail concepts that debuted in Center City in the first half of the year: F1 Arcade, Flight Club, Five Iron Golf and Sandbox VR.
“Center City is becoming more of a bedroom community as office space diminishes and is converted into more apartments and bedrooms,” Steinberg explains. “It’ll always be a great place to live due to the amenities, quick access to stadium complexes and huge amount of restaurant choices. But it’s unlikely that many [operators of] higher-end stores, which are doing well at King of Prussia Mall and don’t feel the need to be in this smaller market, will be coming back to Center City.”
Similarly, occupancies and rents are strong in other urban neighborhoods that are experiencing healthy residential growth. New multifamily developments typically contain ground-floor retail space, which theoretically adds needed supply to those submarkets. But Gartner of CBRE says that filling those spaces can be tricky, despite the fact that occupiers of those spaces seemingly have built-in pools of customers living right above them.
“Philadelphia has had a multifamily construction boom that has blossomed within Center City and the immediate first-ring neighborhoods like Fishtown, Northern Liberties and South Philly, and all of these new multifamily buildings are required to have, in some form, ground-floor retail space,” he says.
“These are great neighborhoods with strong demand drivers and compelling commercial businesses, but the retail product is a few thousand feet on the ground floor of an apartment building,” he continues. “If you have a dozen of these new buildings, it creates a softer market and a fair amount of vacancy within that small subset of very visible real estate.”
With retail growth in those urban areas geared toward food, nightlife and entertainment, the suburbs currently have the advantage with consumers when it comes to pure shopping-based experiences. But real estate trends are fickle, and retail does chase rooftops, so who’s to say the pattern won’t reverse course in the next few years?
“Good things are happening in the core,” Steinberg concludes. “We need the bodies coming into Center City to drive the need for more retail, and as we’re able to tell that story to retailers, they understand that their clients will be here. The more bodies we provide for them, the more likely it is that they’ll have the sales they need.”
Other Suburban Activity
Nearly three years after selling its stake in Fashion District Philadelphia to its operating partner, Los Angeles-based Macerich, PREIT is wholly focused on redevelopments and enhancements of its suburban malls. Joe Aristone,
PREIT’s chief revenue officer, believes that this strategy is only logical in 2025 since the past few years have seen considerable consolidation within the area’s enclosed regional mall scene.
“What’s happened in the enclosed mall space coming out of COVID has been a flight to quality,” Aristone says. “COVID was an accelerant in some ways; Philadelphia had 18 or so malls at one point and is now down to about half a dozen really relevant malls. Then you dissect that even further, and there’s only three or four that are really market-dominant. Demand has been there for better malls, which has continued to push up occupancies and create a favorable imbalance from a landlord perspective.”
Like other sources interviewed for this story, Aristone unequivocally believes that King of Prussia Mall is one of the area’s premier regional malls. He said that he views the market as “bracketed by two dominant malls: King of Prussia to the west and Cherry Hill (New Jersey) Mall to the east.”
PREIT owns Cherry Hill Mall, a 1.4 million-square-foot development that has seen a flurry of recent leasing activity. Apparel retailers Zara, Lacoste, Columbia Sportswear and Mango all opened stores at Cherry Hill Mall in the past 12 months, along with the likes of Dr. Martens, Pop Mart, Coach and OFFLINE by Aerie. Other tenants that have joined the roster in recent months include Alo Yoga, Kendra Scott, Dry Goods, Rowan, Signature Workspace, The Inspiration Co. and Kooma Asian Fusion & Sushi Bar.
But it’s the 2026 opening of new anchor DICK’s House of Sport that may be the most symbolic and significant representation of Cherry Hill Mall’s evolution. The store, which will feature an array of interactive athletic activities, will be located on the site of a former office building and will also function as a new entryway to the rest of the mall.
“We opened one of the first DICK’s House of Sport at one of our properties in Scranton, and seeing the increased traffic and market pull, we started a full-court press to attract them to Cherry Hill,” Aristone says. “This store should play a big part of differentiating Cherry Hill Mall from the rest of the marketplace.”
Aristone also says that the deal with the Pittsburgh-based sporting goods giant is a reflection of how PREIT evaluates tenants in the enclosed mall space.
“There’s a whole cadre of tenants that have historically been near malls that have evolved and changed over time,” he explains. “When it comes to where we want to invest our capital and what retailers we invest in, we’re thinking about who’s really pushing the edge in terms of customer interface and who’s delivering the best interactive experience. We really try to think about it as experiences that increase time spent and shopper traffic.”
With Cherry Hill Mall delivering unique shopping, dining and entertainment experiences, PREIT has adopted a different vision for the repositioning of its Moorestown Mall property, located just five miles east in New Jersey. The signature piece of that project is a 175,000-square-foot “medtail” facility that is operated by regional provider Cooper University Health Care. Soon to join Cooper University’s health system will be a new 120,000-square-foot family entertainment complex that will offer indoor go-kart racing, bowling, roller skating, an assortment of arcade and redemption games and interactive experiences. Aristone says that this conversion play was again necessitated by the flight to quality by traditional mall tenants — there simply wasn’t enough demand for regional mall experiences in the trade area to carry both, hence the pivot.
On the other side of suburban Philadelphia, Federal Realty is nearing completion of its redevelopment of the old Lord & Taylor building in Bala Cynwyd. The project will convert the 120,000-square-foot former department store into a 217-unit apartment complex with 16,000 square feet of retail space. Completion is slated for early- to
mid-2026, and Glinski says that the project’s retail component is already attracting strong interest, especially among F&B users.
The company also broke ground earlier this year on the redevelopment of Andorra Shopping Center on the city’s northwestern outskirts. The center is already home to national brands such as T.J. Maxx, Five Below and Kohl’s, and 50,000- and 10,000-square-foot buildings are under construction for grocer Giant Food and childcare operator Kindercare Learning, respectively. Both new operators expect to open sometime next year.
— This article originally appeared in the August/September 2025 issue of Northeast Real Estate Business magazine.