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Market Report

Philadelphia Retail Market Report

2024 Investment Forecast

Tight Retail Vacancy in Philadelphia Proper Prompts
New Leasing Strategies, Draws Investment

Low vacancy drives larger tenants to compromise on space. Local retail conditions have seldom been tighter, with the expected vacancy metric in 2024 verging on multi-decade lows. Neighborhoods in the city proper have been supported by improving foot traffic, as Philadelphia recorded the greatest decrease in remote-only employees among major U.S. metros from June 2022 to October 2023. The overall market has also seen a number of demolitions — which took 4.2 million square feet of retail space off the market in the past half-decade alone — in tandem with tapering construction. A lack of space is constraining big-box tenants, as the number of leases exceeding 50,000 square feet fell by half in 2023 from just five years prior, with the average lease shrinking roughly 20 percent in that span. With availability in some urban submarkets as low as 1.0 percent in late 2023, retailers may pivot to smaller floor plans and lean on omnichannel approaches to engage consumers. This trend should extend beyond the urban core, exemplified by Macy’s opening a small-format store in Mount Laurel this year.

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