The trend of diminishing retail lease sizes continues in the Philadelphia metropolitan area, spurred by the COVID-19 pandemic’s ongoing impact. In 2023, the average retail lease size shrank by nearly 20% compared to 2018. Simultaneously, major big-box retailers are adjusting their site preferences. While a dozen retail leases for spaces exceeding 50,000 square feet were signed in 2018, this number dwindled to just five annually in both 2022 and 2023.
This shift toward smaller retail spaces is primarily driven by the allure of lower operational expenses. Smaller stores typically entail reduced costs for rent, utilities, and staffing, fostering enhanced cost efficiency. This becomes especially advantageous for retailers navigating a fiercely competitive market, striving to maintain profitability amid challenging conditions.
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