A stretch of highway in Delaware has become one of the most dynamic retail markets in the mid-Atlantic, thanks to a growing presence of corporations and high-income residents driving demand. Known as Concord Pike, this section of U.S. Highway 202 — some 30 miles southwest of Philadelphia and running 10 miles due north out of Wilmington, Del., to the Pennsylvania state line — is demanding some of the area’s highest retail rents.
Of the 24 retail trade areas CBRE is tracking in the Greater Philadelphia region, Concord Pike has the third-highest asking retail rents for in-line space. According to CBRE, the Concord Pike submarket boasts an average retail rent of $28.60 per square foot, versus an average of $21.09 for the region overall. The median income for the Concord Pike trade area is $89,661 per household, higher than in most of the surrounding trade areas.
Concord Pike is the beneficiary of several factors, including a growing Philadelphia metro economy. “Better located peripheral trade areas such as Concord Pike are going to benefit as the larger economy and metro area continue to grow,” said Ian Anderson, CBRE’s director of research for the Greater Philadelphia region. “There is a higher concentration of white-collar, upper-income households in this general area that is going to support a more vibrant market,” he said “and you have national and global corporations that are located in the area which are supporting this, such as Astra Zeneca and JPMorgan.”
There is a tie-in here to the national trend of increasing demand for space among fast-casual restaurant chains, according to Anderson. “The rent growth in that market is really specific to the proliferation of fast-casual and casual-food concepts in the marketplace,” he said. “There is this heated race for Chipotle and QDOBA and some of the new health-conscious restaurateurs trying to get in the game. They are just paying a premium to gain market share.”
Entry barriers to new development are similarly putting pressure on the limited space supply and boosting rents, observers say. “It’s not easy to develop in Delaware, and Concord Pike has been developed for many, many years,” said Jim Creed, a first vice president at CBRE. “If there is new development, a lot of it is retrofitting old product. It’s ‘econ 101’: If there is more demand than supply, clearly, you’re going to get a premium if you have the right product. Demographically, the area has continued to pull in individuals or families with discretionary income, which certainly helps drive retail sales, and again: That drives the demand.”
Though ground-up development opportunities will remain scarce for the foreseeable future, redevelopment is a viable option. The Wilmington-based Buccini/Pollin Group is planning to convert Concord Plaza — one of the state’s largest office parks, located near Silverside Road and U.S. 202 — into 300 luxury apartments, including 40,000 square feet of ground-floor restaurants, cafés and stores.
“The trend that I see, especially in corridors like Concord Pike, is a focus on what the population needs — which is quick, easy, fast-casual, service-oriented retail,” said Creed. “You have to find product that may have run its course [and] run its useful life, and convert it and make it look attractive, provide outdoor seating, provide a place [where] people want to come.”