At year-end 2002, the overall vacancy rate was 9% and rental rates averaged $16.89 per sf. Both figures represent a slight increase over 2001, when the vacancy rate was 8.5% and the average rental rate was $16.61 per sf.

This year, Marcus & Millichap anticipates a continuation of that trend. The company expects the overall retail vacancy rate to crest at 9.3%, while rental rates rise 2% to an average of $17.10 per sf.

The vacancy rate in the Philadelphia County submarket, however, is expected to decline from 7.7% at third-quarter 2002 to an estimated 7.2% by the end of this year as the submarket tightens due to fewer new deliveries in comparison with the western suburbs.

Even the western suburbs will have fewer construction completions this year, the research projects. This will allow vacancy rates to peak there late this year, and decline in 2004, depending on the timing and extend of the regional economic recovery.

An estimated 3.5 million sf of new retail space came on line in the Philadelphia MSA in 2002. Less than two million sf are expected to come on line this year as retailers and developers postpone plans, awaiting the return of economic stability.

Jeffrey R. Algatt is regional manager of Marcus & Millichap's local office. Adam P. Weber, senior market analyst of the company's national market analysis group, prepared the research.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM Digital Member, you’ll receive:

  • Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
  • Educational webcasts, white papers, and ebooks from industry thought leaders
  • Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

Leasing
Retail