More vacant big box retail space is on the market in the Greater Philadelphia as industry bankruptcies pick up steam, according to a report from CBRE.
The asset class in the city saw the number of available spaces rise to 70 from 65 in the second half of 2024 versus the previous six months. Also, the 5.6 million square feet recorded represented an eight percent increase. That marks the first time since the pandemic that availability in the big box sector has risen. The highest amount of space available is in Southeastern Pennsylvania, with 1.55 million square feet, followed by South New Jersey at 1.08 million square feet. The scarcest is in Delaware, which only has 328,451 square feet that's available.
CBRE attributed spike in vacant space to a "recent onslaught" in retailer bankruptcies. This included Big Lots, which brought more than 200,000 square feet of abandoned space to the market. Add that to the nearly 900,000 square feet that's set for new construction. While that all might sound like a concerning trend, the demand at least seems to be still be high. In the second half, new store openings surged by 57 percent.
"In 2024 alone, 235,000 sq. ft. of newly constructed retail was completed and opened, including a 147,000 sq. ft Target anchoring the Northside Shopping Center, Middletown, DE’s newest retail destination, a prime example of a market starved for new retail," CBRE said.
As we head into 2025, CBRE expects retail bankruptcies in Greater Philadelphia to continue. However, that does not mean that every brand or concept is vulnerable. The CRE firm noted that retailers are focusing on a new consumer experience that's spiking in popularity today. That's combining the shopping with entertainment, in some cases known as shop and play.
"Simply put, the strong will survive and retailers that are able to adapt to changing consumer behaviors in an evolving market are flourishing," CBRE wrote.
One future development in Greater Philadelphia that might satisfy the new innovative retail offering is Dick's House of Sport in Cherry Hill at 2000 Route 38. When completed, it's expected to span 120,000 square feet.
Previously, Dick's set a goal of opening between 75 and 100 House of Sports, which offers physical activities such as batting cages and rock climbing walls, by 2027 across the nation. Also, a Dick's House of Sport in Wilmington, Delaware expanded its space to 100,977 square feet in the second half of 2024.