As the New York State Public Sector Co-Chair for the International Council of Shopping Centers (ICSC), I have the benefit of meeting and learning from a fantastic group of colleagues in the retail industry. This morning at the Eastern Division Committee Meeting, held during ICSC’s National Conference and Deal Making in New York City, State director’s representing 12 northeastern states and the District of Columbia came together to discuss trends in the market in each of their respective regions. Some interesting themes dominated, and a few trends suggest opportunities – as well as challenges – for those managing traditional urban commercial districts. Here are some highlights for those of you in these markets…
Pennsylvania/Southern New Jersey/Delaware
- The “new” “normal”: smaller and tighter (“less, less, less”) fewer retailers doing smaller and less stores. (i.e. we did 50 Target stores over the past 5 years in the region, there will be only 5 more!)
- There is no development spigot (it is not even dripping!)
- Existing “quality” in-line space is getting mopped up!
- Many states are passing or have passed tax fairness legislation, a major initiative of ICSC to ensure that brick-and-mortar retailers can fairly compete with on-line retailers.
- Notable retailers expanding include Wegman’s, Health clubs, Frozen Yogurt, Chef-driven restaurants, Darden, Pharmacies, TJX
- Shuttered locations (Borders, Filene’s Basement) have been mostly absorbed
- Relative to other major regions, Boston remains a top 5 market for retailer expansion nationally
- Urban core, densely populated, transit-friendly cities, like Boston, Quincy and Somerville, MA continue to experience steady retail growth/activity [personal comment – this was one of my favorite updates yet!]
- On-line sales are hitting apparel retailers less than they are hitting hardline products
- Hurricane Sandy hit the supply chain of retailers hard. Many final shipments to stores in advance of the holiday season were affected. If shipments were missed, retailers must either send products by expensive air freight, pay a penalty for late shipment of face canceled orders.
- The storm is expected to shave up to half a percentage point from growth in the fourth quarter.
- In Manhattan, average asking rents are at record highs. Downtown Manhattan rents grew 28 percent in the quarter, to $213/ per square foot.
- Fulton Street in downtown Brooklyn continues to lease with national tenants.
- In New Jersey, landlords left with large spaces vacated by retailers like Borders and Filene’s are finding creative solutions, like dividing space for gyms or re-positioning some space for medical or health uses.
- Leasing activity continues to be driven by average size retailers opening shops in the 1,000 to 5,000 sf range.
- A host of new retailers are entering the New Jersey market for the first time, including national and regional brands – Hobby Lobby, The Tile Shop, Harbor Freight, Fairway Market, Millers Ale House, Arhaus Furniture, Brio Restaurant, Dinosaur BBQ, Doctor Dental, Doctors Express, Lazzoni Furniture, Noodles & Company Restaurants, Pei Wei Restaurants, Quaker Steak & Lube.