A report from the commercial real estate firm Colliers shows northern Delaware’s sales tax-free status is not preventing an increase in the retail vacancy rate.
According to the report, the vacancy rate in New Castle County has increased steadily since the end of 2017 to 7.7 percent at the end of the second quarter.
Spaces left by Sears, Kmart and supermarket closings have been slower to lease than in other regional markets., the report indicated. Work is underway at the former Sears store site at the Prices Corner Shopping Center west of Wilmington.
On the plus side, Wegmans is likely to open its first Delaware supermarket in the planned Barley Mill Plaza redevelopment, just outside Wilmington.
The Kmart-anchored College Square shopping center in Newark has been approved for a major redevelopment to include apartments. Kmart closed its store last year.
Colliers reported that one of the largest lease renewals in the Delaware Valley came with the Acme location at the University Plaza Shopping Center south of Newark.
The store has been the subject of speculation as to whether parent company Albertson’s would reduce its store count in the Newark area. Acme has stores in Bear’s Fox Run Shopping Center, College Square in Newark. The company also owns the last Safeway store in northern Delaware in Glasgow.
In the Delaware Valley and Lehigh Valley areas, a lull in big box store closings allowed the market to absorb vacancy during the first half of 2019, Colliers noted. The regional vacancy rate was 8.1 percent.
Payless, Dress Barn and Gymboree joined the list of retailers shutting operations, but these stores will not have as large an impact on vacancy rates, Colliers noted.
The report took noted that “backfilling of anchor and junior anchor vacancies by home furnishing retailers, fitness and entertainment operators as well as off-price grocers such as Aldi and Grocery Outlet. web-based auto dealerships have also been scouting larger blocks of space.”
Shopping center redevelopment has ramped up. This includes the demolition of existing structures as well as the construction of apartment and medical buildings.
One area of strength comes in restaurants and supermarkets, with new burger, brewpub, pizza and barbecue concepts expanding in the area. International restaurants and food markets are also popping up in Delaware and other areas, the report indicated.
Finally, medical marijuana dispensaries have been quietly opening, with north Wilmington expected to see a strip mall dispensary location.
The outlook for the second half of 2019 is cautiously optimistic, but largely dependent upon the stability of struggling retailers. “For the short term, demand is keeping pace with supply.,” Colliers noted.
