Philadelphia Retail Trends

By Douglas J. Green
Article

Nationwide, we see a flight to the urban core, and Philadelphia is reaping the benefits of this macro trend. Philly’s demographic is changing, and changing fast. We are a city with an economy centered around on “eds and meds”—education, research, medical, pharmaceuticals and health care—and that tends to yield a very youthful demographic. Our residential and working base is a young (18-35), educated individual with disposable income: professionals with extra cash to spend, undergraduate students with disposable income from parents or part-time jobs and graduate students who have often made money in the corporate world prior to heading back to school.

Given the youthful and educated demographic, we are becoming a more active city. The Schuylkill River Trail developments, the tremendous success of FlyWheel and Pure Barre, and the way we have embraced healthy food concepts such as Pure Fare, Hip City Veg and Honeygrow are evidence of this transition. This is a market trend you would not have seen 10-15 years ago when the demographic was…well, older.

It’s a perfect storm for growth. There is a confluence of incomes, high residential density, and a large young professional daytime population. The retailers and restaurateurs are trying to capture the core of Philadelphia’s residential and working base. Casual dining and fast casual restaurants are seeking to pull in the dollars of today’s spending youth: from the Honeygrows, Hip City Veg’s, the Shake Shacks, and the success of Federal Donuts, to Barbuzzo, Vernick, CookNSolo’s concept restaurants (such as Zahav), all the way to apparel such as Madewell, Intermix and Uniqlo.

Rittenhouse continues to be the most highly sought after neighborhood in the city. The high-end, luxury apartment market is on fire! Vacancy rates are incredibly low, rents are at an all-time high, and there is an influx of young individuals with incomes who are looking for the flexibility of renting. The rapid development of these new luxury residential buildings reflects the changing demographic of Philadelphia, and it is this new demographic that is compelling retailers to come to our city.

Center City has a captivating retail environment. The focus for national retailers continues to be Walnut Street from Broad to 18th. However, more and more retailers, as evidenced by Nordrstrom Rack, Uniqlo, Suit Supply, American Eagle, Knit Wit, etc., are realizing there are viable retail blocks other than Walnut and visible neighborhoods outside of Rittenhouse. Philly is such a walkable city with great connectivity between neighborhoods that you don’t have to be on Walnut to have a very successful and high profile business.