Philly tops list of 10 most affordable retail locations
Retailers who want a prime location but also one that’s affordable should check out Philadelphia, Chicago and Seattle.
That’s according to JLL’s inaugural City Retail report, which reveals the 10 most affordable and desirable prime urban retail corridors in the United States based on average asking rent per square foot. The districts have growing populations of working millennials, rising foodie scenes, and trendy mixes of up-and-coming retailers and well-known brands. These factors combine to create affordability and stability—the ideal scenario for retailers and investors that want to expand, according to JLL.
"In retail, store location is everything – pick the wrong corner and your brilliant concept can fail," said Naveen Jaggi, president of retail brokerage and capital markets, JLL. "We know that sometimes retailers want that prime main-and-main location, but just don't have the budget. So, we looked at core U.S. cities to find more affordable areas for retail expansion.”
According to JLL, prime rents in the following 10 prime urban retail corridors are the most affordable on a per-square-foot basis:
Market East, Philadelphia: Once home to vacant lots and failed fortress malls, Market East now attracts large-format retailers looking to tap into the swelling millennial and empty-nester population. Market East's average asking prime retail rent is $50 p.s.f., with annual rent growth of 25%.
Wicker Park, Chicago: This edgy, off-the-beaten path foodie destination is seeing an uptick in residential development, piquing international investor and retailer interest. Wicker Park's average asking prime retail rent is $55 p.s.f., with annual rent growth of 4.5%.
Pike Street, Seattle: Filled with a stable collection of apparel and restaurants, Pike Street serves Seattle's CBD and is expanding east toward Capitol Hill with new restaurants. Pike Street's average asking prime retail rent is $65 p.s.f., with annual rent growth of 18.2%.
Fulton Market, Chicago: Once a hub for industrial and meat distribution, Fulton Market in the West Loop submarket is known for its killer restaurant scene, but is now garnering attention from apparel retailers and investors as it becomes a growth market for corporate headquarters. Average asking prime retail rent is $75 p.s.f., with annual rent growth of 8.9%.
The Marina, San Francisco: This corridor has seen a spike of athleisure and boutique fitness studios, adding to its long-standing assortment of neighborhood retail and restaurants. The average asking prime retail rent is $85 p.s.f., with annual rent growth of 7.7%.
University Avenue, Silicon Valley: Palo Alto's tech boom is creating a retail sea change with more non-chain boutiques and home goods stores moving in to University Avenue. The average asking prime retail rent is $90 p.s.f., with annual rent growth of 7.9%.
Hayes Valley, San Francisco: Opportunities for investment and new storefronts in Hayes Valley is shrinking as housing values increase and entertainment venues play host to tourists. The average prime asking retail rent is $90 p.s.f., with annual rent growth of 4.7%.
Design District, Miami: Textile and furniture factories once lined the Design District, which is now a curated assortment of luxury retailers, art galleries and restaurants. Phase II of development will add 60 new tenants to the market. The average prime asking retail rent is $95 p.s.f., with annual rent growth of 2.2%.
Metro Center, Washington, DC: Well positioned between the White House and Chinatown, Metro Center is where people go to shop at well-known brands and discount retailers. The average asking prime retail rent is $100 p.s.f., with annual rent growth remaining flat.
Fillmore, San Francisco: It's been eight years since the transformation of the Fillmore corridor started, and today luxury lite retailers are dominating the retail scene. The average asking prime retail rent is $115 p.s.f., with annual rent growth of 13.6%. Prime Urban Retail Corridors are the New High Streets
"We expect the value of real estate in these select corridors to rise over the long-term, and retailers to remain vigilant in their expansions. But, as competition rises and consumer buying habits shift, retailers will search for opportunities to get more bang for their buck," concluded James Cook, director of retail research, JLL, which is the largest third party retail property manager in the United States with more than 1,000 centers, totaling 125 million square feet under management, lease and sale.
The top five breakout trends in shopping centers are…
There is a good chance that the shopping center as its exists today will look completely different 10 years from now.
That’s according to Michael Conway, VP of national accounts and retention for Phillips Edison, which released its insights on trending themes at ICSC’s RECon event in Las Vegas. As the face of retail continues to evolve, Conway and his team, who tracks emerging retail trends, attracts and retains new merchant relationships and fosters existing retailer relationships, believe there is tremendous opportunity for out-of-the-box concepts and creative retail strategies.
“The retail industry at large continues to step-up their game,” said Conway. “E-commerce and ease of delivery have encouraged brick and mortar retailers to innovate and improve their in-store experience.”
Phillips Edison identified a number of retail concepts that are breaking out this year. These include:
Grocery Technology–Grocery delivery programs, “click and pick” options and prepared meals are examples of how traditional grocers like Kroger and Publix have adapted and responded to consumer needs and also help compete against concepts like Blue Apron, Plated and Hello Fresh. Grocerants and restaurants within grocery stores are also becoming more prevalent.
Clicks to Bricks – Showrooms like Bonobos, Rent the Runway and BaubleBar will continue to emerge as online retailers find it as a way to achieve growth through brick and mortar locations. Even online power players like Google and Amazon are jumping on this trend with the opening of bookstores and grocery stores in metro areas.
Personal Fitness – As the trend of group fitness continues to grow, more studios like CycleBar, Soul Cycle, Core Power Yoga, Orange Theory Fitness, Pure Barre and Club Pilates will continue to add to tenant mixes and infiltrate shopping centers as an experiential retailer.
Health Conscious Fast Casual Restaurants – Quick service restaurant options are getting healthier and trendier with salad concepts like Grabbagreen, Chopt and organic/fresh ingredients options like Core Life Eatery, sweetgreen, BibibBob, Taziki’s and Newks.
Food Halls – By 2020, it is expected that there will be 200 food halls in the U.S., which is more than double the number open today. Millennials and the foodie culture have fueled this concept, so we will continue to see the planning and development of these projects. Eataly, the leading food hall developer, has 35 locations alone and plans for several additional food halls in the coming years.
Amazon’s newest book store planned for L.A.
The City of Angels has joined the growing list of cities that will feature an Amazon Books store.
Amazon submitted a building application to open a 5,227-sq.-ft. suite at the Westfield Century City mall in Los Angeles on May 9. The online retailer received initial plan check approval the same day, according to a record on the L.A. Department of Building and Safety website.
This is not a surprise, according to the Los Angeles Business Journal, which reported that the retailer has spent the last few months shopping around for retail space in Los Angeles. Amazon’s priority was finding property ranging between 5,000 sq. ft. to 6,000 sq. ft. of ground-floor space. While the company still awaits a building permit, if approved, Amazon Books will be considered a first-time tenant at Westfield Century City, according to the document.
Westfield Century City mall is in the midst of a $1 billion makeover. The space Amazon applied for is within one of the renovated storefronts.
This is not the first time Amazon has targeted property from Westfield Corp. Besides preparing to open a storefront in Westfield’s Garden State Plaza in Paramus, N.J., Amazon has a book store in UTC mall in San Diego, according to theLos Angeles Business Journal.
In addition to its San Diego location, the online company also operates book stores in Chicago, Seattle, Portland, Oregon, and in Dedham and Lynnfield, Massachusetts. Additional locations are planned to open this year in Garden State Plaza, Paramus, New Jersey; Shops at Columbus Circle, New York City; and two stores in the greater Boston area. It also recentlysecured a leaseat a 10,000-sq.-ft. space in the Georgetown section of Washington, D.C.