Mid Atlantic Real Estate Journal — 2013 Forecast — January 11 - 24, 2013 — 7C
www.marejournal.com
2013 F orecast
By Steven H. Gartner, Metro Commercial Real Estate Retail real estate: Finishing a strong 2012, and anticipating an even better 2013
T
he trouble with predict- ing the future is that if you are correct, all
convenience stores (Wawa), dollar stores, value mass mer- chants (Big Lots). So, while the traditional grocer is under the gun, never before have so many different segments been aiming for a slice of the pie. As we all know, this is a segment that also historically has the worst profit margins too, so it is quite a battle on multiple fronts for the same customer. For those that don’t want to cook, the most vibrant cat- egory continues to be the res- taurant industry. In the Phila- delphia region, it ranges from enterprising chefs striking out
on their own in a burgeoning neighborhood to casual din- ing concepts expanding in the suburbs. The challenge for some continues to be the lofty costs to build-out full-service restaurants, with kitchens sometimes costing upwards of $500,000. Large format restaurants continue to be at- tracted to regional shopping areas and Center City, where strong sales expectations can merit either the landlord or the tenant anteing up the build-out cost. Other broad-line national re- tailers are figuring out how to
continue to shrink their store footprint and lease smaller spaces. Best Buy and Staples have been notable examples of this. The positive residual effect has been that their excess spaces have yielded space opportunities for other retailers in often tight shop- ping centers. Geographically, there is a tremendous disparity in suc- cessful areas and struggling regions in the Philadelphia area. In Center City, the recent economic downturn seems to have missed the Quaker City, with new construction
continued on page 16C residential activity at almost a booming level. Retail on the dominant shopping corridors of Walnut, Chestnut, andMarket East are seeing thriving store sales and sharply increasing rents. The challenge will be if retailers expand the geography beyond the same traditional streets. Throughout the city of Philadelphia, shopping cen- ter space is in high demand, and there is virtually no new construction to tilt the supply line. The suburbs have a much spottier prognosis, with street front retail languishing as the
you get is a self-serving “told ya so”, and if you’re inaccurate, you ’ re for- g o t t e n a s just another soothsayer that missed
Steven H. Gartner
the mark. Therefore, most in our industry, and of late, simply predict “more of the same”. What a cop-out. At Metro Commercial, we are just finishing a strong 2012, and anticipate an even better 2013. Some of this is due to a funda- mentally strong home base in the greater Philadelphia area, others are from our national tenant advisory, which only focuses on the strong expan- sion of retailers throughout the country. At Metro, we have done our best to attract, hire, and retain a team of top- notch professionals, whose job is not just the practice of first class real estate services. It is to also understand the seismic changes in the retail real estate world are taking place right before our eyes, anticipate the changes, and devise creative solutions to the altering landscape. Some changes have been decades (yes, decades!) in the making, while others are just starting to appear. Retailers, which in our world include traditional shops as well as restaurants, fitness uses, retail financial institu- tions (banks), and other oc- cupants of stores, are facing challenges as well as opportu- nities they’ve never encoun- tered. Every category has its unique issues, but most are facing a world of zero-sum sales. Therefore, incremental sales must come out of the hide of a competitor, and now everyone is everyone else’s rival. In the Philadelphia area, as in much of the coun- try, traditional grocery stores are the business that most demonstrates the voracious overlap by stores. The follow- ing are all in direct competi- tion for the grocery business: Traditional supermarkets (like Acme, Shop Rite), luxury and healthy-choice grocers (Whole Foods, Wegmans), value gro- cers (Sav-A-Lot, Aldi, Bottom Dollar), mass merchants (Tar- get, Walmart), drug stores,
Looking ahead to 2013 and beyond!
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