For Immediate Release
4Q17 Retail Report: East of Broad Redevelopment Continues to Draw National Retailers to Philadelphia CBD
Cushman & Wakefield Expects Market’s Total Retail Sales to Increase by 4.7 Percent in 2018 PHILADELPHIA, Feb. 6, 2018 – As unemployment in the Philadelphia MSA declined to 4.7 percent in the fourth quarter of 2017, total retail sales increased by 4.3 percent year-over-year, according to Cushman & Wakefield. The commercial real estate services firm’s Philadelphia research team released its fourth-quarter 2017 Retail MarketBeat report, which also projects the continued migration of national retailers to the downtown market through 2018.
“Total retail sales in the Philadelphia market rose by 60 basis points from the fourth quarter of 2016, a continuation of the upward trend we saw in 2016,” said Jared Jacobs, Cushman & Wakefield research manager. “Despite a forecasted decline in national consumer confidence, we expect the downtown Philadelphia market to perform contrary to this trend with total retail sales projected to increase by 4.7 percent by year-end 2018.”
Redevelopment efforts in the East of Broad submarket helped fuel this strong performance, drawing ongoing interest from larger national retail tenants in the market for space. The East Market redevelopment continued to take shape in 2017, with the opening of an 18,000-square-foot store in September marking MOM’s Organic Market’s entrance into the downtown Philadelphia market. Multiple national tenants also announced they would be establishing locations in 2018 in the $600 million master-planned development, which is creating a total of 105,000 square feet of retail space in a dynamic mixed-use urban environment. New store openings will include City Fitness for 27,000 square feet, TJ Maxx for 22,300 square feet, Iron Hill Brewery for 8,450 square feet and Wawa for 6,200 square feet.
Additional store openings in the East of Broad submarket included PetSmart with 20,000 square feet at 1112 Chestnut Street and Five Below with just over 15,000 square feet at 701 Market Street.
In the West of Broad submarket, prime rental rates on Walnut Street declined to an average value of $125 per square foot in 2017, down from $135 per square foot at the end of 2016. Despite the decline, 2017 activity was healthy on Philadelphia’s prime retail street. The largest lease signing of the year was CB2 taking 12,000 square feet at 1422-1424 Walnut Street. Designer eyewear retailer Warby Parker opened a 2,360-square-foot location at 1523 Walnut Street, Red Wing Shoes signed a 2,800-square-foot lease at 1505 Walnut Street and Aesop opened a small 700-square-foot shop at 1528 Walnut Street. On the 1600 block, UNTUCKit opened a 1,850-square-foot store location at 1611 Walnut Street and SLT Philadelphia occupied 2,500 square feet at 1625 Walnut Street.
On Chestnut Street, fourth-quarter rents also experienced a slight decline year-over-year, from $85 per square foot in 2016 to $75 per square foot in 2017. The most notable activity occurred early in the year, with the arts and crafts chain A.C. Moore opening a 30,000-square-foot store at 100 South Broad Street in early 2017.
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