Please ensure Javascript is enabled for purposes of website accessibility

Retail development could experience soft drop this year

The declining housing market, tighter lending practices and a decrease in retail spending will spur a nationwide slowdown in new retail development, according to an annual industry report by construction company analysts McGraw Hill Cos.

The declining housing market, tighter lending practices and a decrease in retail spending will spur a nationwide slowdown in new retail development, according to an annual industry report by construction company analysts McGraw Hill Cos.

All of that, coupled with the looming threat of a recession, means Central Pennsylvania will not be able to avoid the retail dip, several local retail developers said.

"I think (the national report) is more right than wrong," said Tom Porsch, director of development and construction for Caldwell Development Co., based in Wormleysburg, Cumberland County.

Caldwell develops grocery-store-anchored shopping centers. The company developed Parkway Plaza in 1998 in Lower Allen Township, Cumberland County, and several other centers throughout the region.

But Caldwell has moved its development efforts to suburban Philadelphia, Porsch said. Retail development is down all over, he said, but there are stronger demographics in the eastern portion of the state than there are in the midstate. Land availability is scarce in the region because so much has been built out, he said.

"There are fewer opportunities (in Central Pennsylvania) due to the maturity of the market. Retailers are being a lot more selective," Porsch said.

East Lampeter Township, Lancaster County-based High Real Estate Group also develops shopping centers anchored by grocery stores and a range of other centers, including community shopping centers anchored by national department stores and home-improvement stores.

Most of the company's centers are in the region, said H. Stephen Evans, senior vice president and managing director of High's retail division.

Evans said he expects retail development in the local area to slow down this year due to the extraordinary growth the retail sector has experienced nationally in the past five years.

"In 2008, I feel we will likely return to the more moderate, historical rates of growth in both retail development and sales," Evans said.

High has not had to scale back any of its projects in the wake of the housing slump and sluggish retail-market periods, Evans said. High has numerous retail projects under way, including two in Lancaster County: The Crossings at Conestoga Creek and Mill Creek Square.

Occupancy rates in the shopping centers High developed remain strong, Evans said. High Pointe Commons in Swatara Township, Dauphin County, and the York Town Center in Springettsbury Township, York County, boast occupancy rates of 95 percent or better, he said.

The shopping centers owned and managed by York Township-based Springwood Commercial Realty are well-leased, too, but consumer confidence may hurt retail this year, said John Birkeland, director of commercial services for Springwood.

Springwood's Northgate Shopping Center in York is 100 percent leased, and the Clearview Shopping Center in Hanover, York County, is hovering at a 95 percent lease rate, Birkeland said.

Springwood has lost some of the pharmacies that leased space in its centers, but that is because more pharmacies are beginning to build stand-alone stores, Birkeland said.

Of all the stores in the company's retail centers, the smaller, mom-and-pop-style restaurants are the ones that seem to be faltering the most, Birkeland said.

"People don't have the dining dollar or the disposable income," Birkeland said.

If customer demand exists, retail will stay strong in the right locations, some said. Spending money to revamp a center helps attract more customers, too, said Jillian Souza, marketing director for The Capital City Mall in Camp Hill, Cumberland County.

The mall boasts a 99 percent occupancy rate, Souza said. Philadelphia-based Pennsylvania Real Estate Investment Trust (PREIT) owns the mall. In 2006, PREIT remodeled the shopping center and gave it a brighter, more open atmosphere, Souza said.

The company moved the food court and extended shopping into the old food court location, Souza said. Walls and floors were replaced, and spending millions on the renovation already has paid off, she said.

"Since our remodel and redevelopment completed, we have seen an increase in stores that want to be in our center," Souza said. "We are the dominant shopping mall on the West Shore."

Business Events

Diversity, Equity and Inclusion Summit

Wednesday, March 29, 2023
Diversity, Equity and Inclusion Summit

Health Care Heroes

Tuesday, April 04, 2023
Health Care Heroes

Nonprofit Innovation Awards

Thursday, May 18, 2023
Nonprofit Innovation Awards

Women of Influence

Tuesday, June 27, 2023
Women of Influence