As we approach the mid-point of 2015 and take stock of where we’ve been this year and where we are going, most people agree that the real estate market in the Northeast has slowly but surely turned the corner.
Before the collapse in the late 2000’s, there were 2, and sometimes 3, active retailers in each category of retailing. After the crash, and with the proliferation of on-line shopping, retailers fled the market, leaving in many cases only one 1 retailer in a category. Compounding the problem was that some of the survivors shrunk their footprints, leasing less space in centers.
Now, at the mid-point of 2015, the retail market feels vibrant again. We are not back to the go-go days, but exciting things are happening in our area. There are new players in the grocery store market actively and aggressively hunting new locations and redevelopment opportunities. Food markets attract co-tenants in community centers, often breathing new life in centers once thought dead in the water. Also, some larger format retailers are coming out with smaller stores in an effort to gain access to markets where their larger footprints are not feasible. Restaurants continue to fill spaces in shopping centers. New healthy-eating concepts are springing up as people try to balance the convenience of dining out with maintaining a healthy lifestyle. Finally, businesses not traditionally occupying shopping centers are now filling vacant retail spaces. Tenants such as urgent care centers, “doc in a box” tenants and laboratory uses are finding that shopping centers are ideal places to locate their operations.
The residential market is quietly gaining momentum. As you drive through the suburbs, new housing developments are more noticeable than in prior years. Multi-family is still the belle of the ball. Center City remains white hot for residential and apartment development, and the envelope around the City continues to expand. Cities and Townships now seem to be embracing the mixed-use concept. In prior years, municipalities discouraged residential development to prevent crowded schools and crowded streets. However, to stimulate development and the tax base, some of these municipalities are allowing residential development along with a commercial component.
The office and industrial markets are steady. The practice of extending leases in exchange for lower rents seems to has slowed and businesses are leasing space with newer confidence in the economy
Aiding the turning of the market is the lending environment. Nobody forgets the dark days quicker than lenders. All types of loans are back in the market, from local banks to CMBS securitized loans. The access to capital in the market continues to fuel acquisition, construction and redevelopment.
This summer marks the 50th anniversary and last shows of the oldest touring band many of us can remember. In such a year, it is fitting (at least in my opinion) that the market just keeps truckin’.