Philadelphia Retail Market Report
2023 Investment Forecast
Job Gains and Narrow Supply Pipeline Bolster Retail;
Uncertainty Pushes Buyers to High-Credit Tenants
Labor market resilience backstops consumer spending amid urban comeback. Having entered the year at record staffing counts, Philadelphia firms will continue to boost totals across diverse sectors, including well-compensated positions that should help insulate consumer spending in a time of increasing uncertainty. The metro is also well-poised to withstand incoming macroeconomic headwinds on the retail operations side. At 4.9 percent, marketwide vacancy at the start of 2023 was tighter than the immediate pre-health crisis equivalent. Despite an uptick expected this year, solid leasing activity into late 2022 should meter availability decompression moving forward. Upcoming move-ins are a promising sign that some of the region’s districts are still steadily recovering from the aftermath of the pandemic, as several of the largest leases beginning next year are located within Philadelphia proper. Furthermore, according to Center City District figures, CBD foot traffic from residential sources had reached nearly 120 percent of the 2019 level by October of last year. Returning office workers should facilitate an additional source of demand in Center City and adjacent locales as the year continues.