Retail chains in the United States, including those in the market for Philadelphia retail space, will open 42,506 stores in the next year and 79,650 stores in the next two years, an increase of 4% and 4.2%, respectively, year to date in 2015, a new report says.
The spike in planned store openings has a direct correlation to recent improvements in both employment rates and retail sales growth, as well as higher consumer confidence, according to the latest National Retailer Demand Monthly report from RBC Capital Markets.
Sales forecasts for the 2015 holiday season also have bolstered confidence among retailers, with sales expected to come it at about 3.6%, which is close to 2014’s robust 4.1%, according to the consensus estimate of the National Retailer Federation, Deloitte and four other retail forecasters.
RBC Capital Markets also said lower prices at the gas pump may be slowly having an impact on consumer budgets, potentially encouraging more nondiscretionary spending. As a result, retailer are looking to capture those extra consumer dollars with more new store openings.
While 2015 has seen a steady increase in new store openings so far, new construction for shopping center redevelopment and ground-up construction has slowed as the year progressed, RBC said.
The combination of increased consumer sales, retailers’ higher demand for space, and inadequate growth in new supply indicates rents and occupancy likely will experience healthy increased in the near term, RBC said.
The latest retail real estate market data from the CoStar Group endorses RBC’s forecast for greater demand for retail space, including Philly retail space. Preliminary third-quarter data indicates the national retail vacancy rate now stands at roughly 5.9%, the lowest point since CoStar began tracking the market.
The CoStar Portfolio Strategy shows absorption outpacing new construction by almost a 2-to-1 margin over the past year. Retail space now under construction is about 38.5% below the average amount that was under way between 2006 and 2008, according to CoStar.
Bucking the trend, Wal-Mart Stores, Inc., the world’s largest retailer, has predicted a 12% decrease in net profits in 2016 and said it would reduce the number of new store openings in the U.S., dropping to between 135 and 155 new stores in the next fiscal year, from the 354 Wal-Mart stores that opened in the last fiscal year.
While net absorption is robust, rents for retail space have not performed as well as other commercial property types. Retail rents are still 7% below their pre-recession peak — the only major property segment where asking rents have not yet returned to their highs in the last cycle. Analysts point to struggling shopping centers, particularly those in the outer fringe suburbs, that have been forced to lease space at lower rates to discounters, fitness centers and non-retail users, a practice that has offset the exceptionally strong recovery in urban retail properties.
For more information about Philly retail space or any Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (jason.wolf@wolfcre.com) or Leor Hemo (leor.hemo@wolfcre.com) at Wolf Commercial Real Estate, a premier Philadelphia commercial real estate broker that specializes in Philadelphia retail space.
Wolf Commercial Real Estate is a Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
Wolf Commercial Real Estate, a Philadelphia commercial real estate broker that specializes in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly retail space with the Philadelphia commercial properties that best meets their needs. As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philadelphia retail space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.
Please visit our websites for a full listing of South Jersey and Philly retail space for lease or sale through our Philadelphia commercial real estate brokerage firm.
