Store closures have been the talk of the retail industry over the first five months of the year, with Sears-Kmart, JCPenney and Macy’s announcing more than 64 million square feet of combined closures since the start of 2017 and at least 10 leading in-line retailers filing for bankruptcy court reorganization or auction.
While most retail property in the commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – continues to perform well, the spate of department store closings has been largely confined to retailers’ under-performing locations, with the impact on centers that can least afford to lose them.
However, the vacancy rate also ticked up for malls in some of the strongest locations in the country, according to a recent survey by the CoStar Group research firm. The study also showed vacancy increases in power centers and specialty centers of U.S. and Philadelphia commercial real estate properties. As a result, first-quarter retail vacancies have started to increase in certain retail segments for the first time in five years.
This CoStar report on national and Philadelphia commercial properties is being offered through Philadelphia commercial real estate broker Wolf Commercial Real Estate, a Philadelphia commercial real estate brokerage firm.
“It is not just the C malls that are suffering,” said Ryan McCullough, managing consultant at CoStar Group, “as the bulk of mall closures are in B malls, to the tune of 17 million square feet. While these store closings have been generalized as Class C mall problems, our research indicates this is not necessarily a fair representation.
“Furthermore,’ he added, “about half of this combined square footage will impact non-mall properties, including power centers, community centers, and downtown storefronts.”
The latest financial results also show malls typically classified as B properties being the first in the U.S. and Philadelphia commercial real estate markets to be experiencing declines in net operating incomes.
CoStar Group analyzed net operating income (NOI) results on more than 2,400 commercial mortgage-backed securities (CMBS)-related loans with an outstanding loan balance of $38.6 billion. In a good sign for the overall retail property segment involving national and Philadelphia commercial real estate listings, those results show the most recent NOI is up about 0.16 percentage points from the last full year reported NOI.
However, one segment of the U.S. commercial real estate market – including Philly office space, Philly retail space and Philly industrial space – saw a decline in NOI: Retail properties with outstanding loan balances of $50 million to $100 million saw NOI decline by 0.05 percentage points.
The NOI analysis of CMBS-related loans among the U.S. and Philadelphia commercial real estate listings also found about 42 percent of properties had an improved debt service coverage ratio (DSCR), or the amount of money left to cover required monthly debt and principal repayments. These retail properties posted strong DSCRs, improving their ratios by about 25 percent. Only about 4 percent of these properties were in the $50 million to $100 million loan balance category.
For more information about Philly office space, Philly retail space and Philly industrial space or other Philadelphia commercial properties, please call 215-799-6900 to speak with Jason Wolf (firstname.lastname@example.org) at Wolf Commercial Real Estate, a leading Philadelphia commercial real estate broker that specializes in Philly office space, Philly retail space and Philly industrial space.
Wolf Commercial Real Estate, a full-service CORFAC International brokerage and advisory firm, is a premier Philadelphia commercial real estate brokerage firm that provides a full range of Philadelphia commercial real estate listings and services, property management services, and marketing commercial offices, medical properties, industrial properties, land properties, retail buildings and other Philadelphia commercial properties for buyers, tenants, investors and sellers.
Wolf Commercial Real Estate, a Philadelphia commercial real estate broker with expertise in Philadelphia commercial real estate listings, provides unparalleled expertise in matching companies and individuals seeking new Philly office space, Philly retail space or Philly industrial space with the Philadelphia commercial properties that best meets their needs.
As experts in Philadelphia commercial real estate listings and services, the team at our Philadelphia commercial real estate brokerage firm provides ongoing detailed information about Philadelphia commercial properties to our clients and prospects to help them achieve their real estate goals. If you are looking for Philly office space, Philly retail space or Philly industrial space for sale or lease, Wolf Commercial Real Estate is the Philadelphia commercial real estate broker you need — a strategic partner who is fully invested in your long-term growth and success.
Please visit our websites for a full listing of South Jersey and Philadelphia commercial properties for lease or sale through our Philadelphia commercial real estate brokerage firm.