NRI is described as a snapshot analysis based on a series of 12-month forward-looking supply and demand indicators. Philadelphia's rise in the ranking is attributed to a forecast of stable vacancy and modest job growth that will allow this nine-county market to strengthen in 2003.
The market added just 1.6 million sf of new retail space in 2002, down from 3 million sf added in 2001. M&M predicts this trend will continue and that just 1.5 million sf are expected to come online by the end of this year.
Vacancy increased slightly to 8.7% in 2002. Despite the increase, however, rates remained low enough for owners to avoid widespread concessions. M&M expects vacancy to inch up to 8.9% this year before the local and national economies stabilize.
Overall retail rental rates in the area posted a gain of just 1% in 2002 and ended that year at $16.78 per sf. M&M forecasts a modest average increase of 1% again this year, similar to last year, to end 2003 at $16.94 per sf.
Investor demand here is strong and pushing up the price of retail properties. During 2002, the median sales price for multi-tenant properties increased 7%, to $88 per sf. Meanwhile, prices on single-tenant retail assets appreciated 7.5% to reach a median of $119 per sf.
Washington, D.C. retained its No. 1 spot in the NRI ranking, followed by Orange County, CA; San Diego, Boston, and Fort Lauderdale. Cleveland, OH dropped two notches to wind up at the bottom of the current ranking. Las Vegas made the biggest year-over-year jump, rising to No. 13.
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