The landscape of the supermarket business in Philadelphia is changing at a dramatic rate. Larger store formats, such as Wegmans, Target and Walmart are having serious impact on smaller supermarket chains. Two other very tough competitors, Giant of Carlisle, Pennsylvania, and ShopRite, are also reshaping the market share of food dollars spent in the Philadelphia area. Recently Safeway purchased the Genuardi’s chain and sold off almost all the stores. Super Fresh and Pathmark closed many formerly high-producing stores with this new wave of competition. ACME Market, the former market share leader, has seen comp sales decrease dramatically. The newest entry to the market, Bottom Dollar, a discount grocer, hit Philadelphia with an onslaught of 20 new stores and is still growing. Divaris Development’s Village at Valley Forge, in Valley Forge, Pennsylvania, is one of the newer developments that has been on the boards for a while. The Wegmans there is getting ready to open, although additional retail has not been built at this time. Not far away, in Malvern, Uptown Worthington Center by O’Neill Properties is on track leasing a new lifestyle center, going after quality tenants to take advantage of the strong demographics of the Main Line and Chester …
Northeast Market Reports
The Philadelphia regional industrial market extends outward as the Pennsylvania Distribution Corridor, encompassing the Lehigh Valley, Harrisburg, Wilkes-Barre, and Scranton. This corridor is generally seeing an increase in activity in most categories, especially logistics. That is particularly the case for the largest industrial transactions — those of half-million square feet or more. For example, recent major leases have included Unilever’s 1.3 million-square-foot warehouse/distribution lease completed by Cushman & Wakefield in Newville, just south of Carlisle. Additionally, Crayola Crayons recently announced that it will be going into a new 800,000-square-foot facility to be constructed in the Bethlehem Commerce Center. A corresponding trend, fueled by the demand for big-box warehousing/distribution space, is construction of speculative developments of significant size. Five projects are already under construction: Liberty Property Trust is developing a 1.2 million-square-foot building within the Bethlehem Commerce Center in Bethlehem and a 972,000-square-foot facility in Carlisle; Trammell Crow and USAA formed a joint venture to develop a 700,000-square-foot facility in Mountain Creek Distribution Center in Carlisle; Griffin Lane is developing the 228,000-square-foot Lehigh Valley Tradeport in Lower Nazareth Township; and Exeter Property Group is building a 280,000-square-foot building in Palmer. There is more to come in the near-term. At least two …
Retail activity in Greater Pittsburgh will likely gain positive momentum through the remainder of 2012, with moderate growth expected in 2013. Grocery stores, local restaurants, fast casual national chain restaurants, medical retail, and upgraded locations for existing national tenants have led the way for recent retail activity in Pittsburgh. The general atmosphere at the annual ICSC RECon convention in Las Vegas was upbeat and optimistic regarding the retail sector recovery nationally. I believe that the ICSC convention is a strong indicator that retail growth is headed in an upward direction. The Pittsburgh retail markets are broken into four quadrants: North (Cranberry/Wexford), South (South Hills Village/Mt. Lebanon), East (Monroeville/Murrysville) and West (Robinson). The Cranberry/Wexford market continues to be the most active, with sales being driven by the new 500,000-square-foot McCandless Crossing Development. Tenants there include Lowe’s, LA Fitness, Hilton, Fidelity Bank and Cinemark. The Northern quadrant along the Route 228 corridor continues to develop with new projects, such as the relocation of Dick’s Sporting Goods to a new larger facility and the completion of the Cambria Suites project. Additional activity on the Route 228 corridor includes a new free-standing La-Z-Boy furniture store, GetGo gas and convenience store, and two additional outparcels …
In the last nine months, we’ve seen a re-energized national retailer base in the Connecticut market that’s seeking new opportunities and absorbing prime retail space. The national retailers never completely disappeared; however, from late 2008 through the spring of 2011 there was little momentum from this sector. This newfound activity has served to restore the confidence of both the landlord and the local retailer base, effectively stabilizing rents and reducing vacancy rates in prime retail corridors. There was a great deal of talk about the “flight to quality” during the economic downturn and that trend continues. We are seeing especially enlivened activity in the upscale retail main streets in Connecticut including Greenwich Avenue in Greenwich, Main Street in Westport and Elm Street in New Canaan. This is not only a local trend, but a global one, as rental rates on high street retail corridors around the globe experienced a 4.8 percent increase year-over-year and luxury goods have made a strong comeback with year-over-year growth of 8.5 percent for the 12 months ending in August 2011. This trailed only the wholesale clubs segment in terms of overall performance. U.S. luxury retailers are also the beneficiaries of a weak U.S. dollar that …
The Southern Maine retail market is rebounding. According to Malone Commercial Broker’s retail survey, Greater Portland’s vacancy rate was at a 10-year high of 10.8 percent in 2009 but dropped down to 6.24 percent in 2011. We are seeing absorption of some empty big boxes, and new retailers are entering Maine’s marketplace. Last year, Buffalo Wild Wings opened its first Maine restaurant in South Portland and then opened a second location in Auburn. Five Guys opened its first Maine location in Portland in 2011, and Elevation Burger opened in South Portland at the beginning of 2012. Despite national headlines that Urban Outfitters is struggling, in 2011 the trendy chain leased approximately 10,000 square feet on Middle Street in Portland. Other retailers new to Maine’s marketplace over the last year include Aveda, BAM! Books-A-Million, J. Jill and White House Black Market. In addition to new retailers entering Maine, some existing national and regional retailers are expanding. To name a few: ACE Hardware has opened a new location in Falmouth; Subway has opened additional locations in Scarborough, Westbrook, and Lewiston; and Verizon opened a flagship store off of Franklin Arterial in Portland. Maine banks and credit unions are expanding as well. Norway …
The recent performance of the Philadelphia apartment market offers evidence that a sustainable recovery is taking hold. Vacancy returned to a normal level, while property owners continue to realize greater success in raising rents. Newly employed residents and recent graduates of local colleges and universities will further stoke tenant demand in the quarters ahead. As would be expected following several quarters of solid performance, the recovery is initiating a new construction cycle, as heralded by the start of construction in the first quarter on a 319-unit rental in Center City. The pipeline of planned projects has also increased, but the potential impact on property operations will likely be modest as these projects represent 3 percent of existing stock. In addition, developers appear to be focused on adding rentals in areas where tenant demand is the greatest, placing a large concentration of their projects in Center City and Main Line submarkets, including Bala Cynwyd. Minimal additions to market-rate stock have moderated vacancies. During the 12 months ending in the first quarter, only the 97-unit 600 on Broad in Center City came online. Developers are becoming more confident, as 6,500 market-rate units are planned, an increase from 4,100 rentals 6 months ago. …
Overall, the first quarter of 2012 brought improving market trends to the office sector in Philadelphia and Delaware. The number of tenants in the market has increased, although this has not translated into a significant increase in occupancy. Some tenants are growing, but it is still common for companies to make lateral space moves or take smaller, more efficient offices. In CBD Philadelphia, occupancy decreased slightly during the first quarter from 88.6 percent to 88.4 percent. The main reason for the loss in occupancy during the first quarter was due to banking sector tenants Citizens and Wells Fargo consolidating space in the Market East submarket. The Lehigh Valley also had a decrease in occupancy, mainly due to the closing of a 100,000-square-foot T-Mobile call center. On the other hand, the Pennsylvania suburbs, Southern New Jersey and Northern Delaware all registered low, but positive absorption for the first quarter. Numerous large tenants are looking in the market. However, many of these leases are likely to be renewals or moves without significant additional occupancy. With the exception of a rumored 145,000-square-foot Capital One lease in Wilmington, Delaware, which is a new requirement, none of the deals in the market are anticipated to …
Recovery was the name of the game in 2011 for many major retail corridors in Manhattan. SoHo and the Flatiron District were among the most significant rebounding areas. SoHo has benefited from international retailers’ expansion into New York and the city’s record-breaking tourism. New York City welcomed more than 50 million tourists in 2011, including 10.1 million international visitors — more than any other year in its history. The city generated $32 billion in visitor spending and $48 billion in economic impact, according to Mayor Michael Bloomberg and NYC & Company. And SoHo is a major stop on any tourist’s path. Broadway, Spring and Prince streets have long been the market’s primary retail corridors, and rents on these streets are nearly back to 2008 peaks, with very limited vacancy. In 2011, more tenants, especially European retailers, saw value and opportunity on the interior streets — Mercer, Greene and Wooster — which are one-third to half the rent of Broadway, Prince and Spring streets. The interior streets had suffered from higher-than-normal vacancy levels during the recession; now, they are flush with some of the biggest names in retail and are commanding higher rents than ever before. The Mercer Hotel and early …
The multifamily market in New York City picked up steam in 2011 and is continuing to thrive during the first quarter. Multifamily building sales citywide jumped 33 percent in 2011 compared to 2010 as institutional investors drove the year-over-year jump in dollar volume up by 43 percent. Our company’s research report, the Multifamily Year in Review: New York City 2011, shows that citywide there were 436 multifamily transactions in 2011 consisting of 589 buildings totaling $4.23 billion in gross consideration, compared to 2010, which had 392 multifamily transactions with 442 buildings totaling $2.949 billion in gross consideration. Manhattan south of 96th Street and Brooklyn posted the strongest gains in 2011 versus 2010. Each saw a 25 percent increase in multifamily transaction volume and around 50 percent increase in building sales. Year-over-year multifamily building sales in Northern Manhattan and the Bronx rose 25 percent and 23 percent, respectively, but declined 7 percent in Queens. The pricing environment has shifted dramatically in favor of sellers and prices are ticking up as a result of several fundamental value drivers. Rents have now recovered to pre-financial crisis levels and tenant concessions have all but disappeared. Interest rates for cash-flowing multifamily assets have hit all-time …
In the central Connecticut market, owner/users are beginning to seek fair priced industrial facilities that can be financed by mostly local community banks using SBA and some conventional loans. Also we are seeing companies come up from Fairfield County (Bridgeport and Stamford) to take advantage of Waterbury Development Corp. loans and some forgivable grants. One 35,000-square-foot user put up their equipment as collateral to obtain a $500,000 loan for modern space where they could become more productive at a much lower cost of occupancy and expand their workforce. One landlord is buying large vacant industrial facilities at $20 per square foot and rehabbing and subdividing for re-lease programs. We are also seeing some new construction and facility expansions in industrial parks that offer Enterprise zone incentives. Municipal and state Department of Economic and Community Development incentives are driving transactions. These incentives include the Urban Jobs program, Enterprise Zones and Corridors, SBA 504 loans, and tax abatements and other enhancements. Waterbury has four industrial parks and at least five business parks surrounding the city, including Watertown, Plymouth, Naugatuck, Cheshire, Oxford and others. The city of Waterbury offers many perks, and the others offer lower taxes and suburbia. The Naugatuck Industrial Park …