Fifteen years ago, the news coming out of the Northeastern United States wasn’t good. While the rest of the nation’s retail thrived, sales reports showed that the Northeast was in a slump.
“The Northeast is the laggard economy, nationally speaking,” wrote Mark Zandi, chief economist for West Chester, Pa.-based Regional Financial Associates, in 1996. Consumer confidence in New York, New Jersey and Pennsylvania lagged far behind the national index, and job growth in New York was at about half the rate of the rest of the country.
But that was then. Today, the Northeast—which includes the mid-Atlantic states of New York, Pennsylvania and New Jersey, as well as the New England states of Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont, and perhaps Delaware and Maryland—is showing itself to be a post-recession star precisely because it hasn’t experienced the economic highs of its sister regions.
“The fact that the Northeast wasn’t a hot growth market a couple of decades ago, or even as recently as 2006, has allowed this region to remain steady over the last 18 months,” said Joseph Coradino, president of Pennsylvania Real Estate Investment Trust Services, LLC, (PREIT) based in Philadelphia. “When the dramatic growth curves in the South and West started to turn the other way during the recession, the Northeast didn’t change much,” Coradino said.
The Northeast has benefited from stable economies, housing values that have “experienced the lowest decreases for the most part and an unemployment rate that is no worse than the national average and, in some cases, better,” Coradino said.
And that is causing some positive movement in the retail industry. In fact, according to the most recent research by Marcus & Millichap, retail sales in the Philadelphia metro area grew 5.6% in the first half of 2010 from the same period a year ago.
In New York City, the news is even better. Marcus & Millichap findings showed that rapid expansion of the local work force will position NYC as one of the top markets in the country in terms of job creation this year and hasten the recovery in the retail market. Increased tourism activity continues to drive up retail sales, and research shows that retail sales growth will persist through the second half of 2010.
Core areas are leading the retail market out of the recession, according to the research. Along Fifth Avenue, Bedford Avenue in Williamsburg, the Long Island City waterfront and the Grand Concourse in the Bronx, improved occupancy levels have elevated competition for space among tenants, and rents will tick higher over the remainder of the year.
Certainly, there is still a long way to go, particularly in New Jersey where economic recovery is slowed by slashed budgets, but there clearly is cause for at least cautious celebration in the Northeastern quadrant.