Metro Volume and Pricing
Aside from the $1.25 billion ($572 psf) sale of a portion of the King Of Prussia Mall last September, retail investment sales have been slow in the Philadelphia area.* The deal aside, just 1.4 million square feet has sold for just $267 million over 12 months. The second quarter 2012 totals were nine deals for $51.6 million at a mean price of $305 psf, the second highest mean price (aside from the quarter when the mall sold) since the second quarter of 2009. The leading sale of the quarter, the 70,000-square-foot Devon Village Shops in Wayne, pulled up the average by selling for $409 psf ($28.6 million) in June. WP Realty, the seller in three of the top ten sales over the past four quarters, sold it to Kimco Realty Corp.
The King of Prussia Mall sale pushed Montgomery County to the top spot among submarkets in square footage sold, dollar values sold, and mean price per-square-foot over the past four quarters. Among the rest Chester County led in dollar value sold at $80 million and square footage sold at 538,586. Delaware County led in mean price at $400 psf.
Cap Rate Comparisons and Forecasts
The mean cap rate for second quarter deals in Metro Philadelphia was 7.5%, below the U.S. and Northeast region averages but the highest in a year locally. One would expect a low-risk, low reward market to have a below average cap rate, and that has generally been the case here. The rolling 12 month cap rate is 6.5%, up slightly for the fourth consecutive quarter. It is forecast to change direction and trend down to 5.6% rate at year-end 2015.