Friday, November 1, 2019

Lancaster Retail Market Remains One of Pennsylvania’s Strongest, Thanks to the Amish

The Amish, an ultra-traditional orthodox community of farmers, eschew nearly all the trappings of modern-day life and materialism. Ironically, they are the reason Lancaster, Pennsylvania, sports one of the state’s healthiest retail markets.

The county estimates that between six and eight million people have visited Lancaster County every year for decades, drawn by the peculiar Amish way of life, and these visitors spend about $2.2 billion annually. They support around 25,000 jobs, providing the firm base of demand needed to create a dynamic retail market.

That stands out in central Pennsylvania, which is largely a slow-growth, rural area where manufacturing still plays a key role in many local economies. Metro areas like Harrisburg, Reading and York certainly support retail markets that are dynamic in their own way, but many remain dominated by value-based chains, catering to a consumer base on operating on a budget.

This isn’t the case in Lancaster, and outsiders can be surprised by the area’s strong retail options. The city itself is vibrant, filled with boutique shops, hotels and restaurants, giving it an eclectic feel that is uncommon anywhere in Pennsylvania outside of trendy districts in Philadelphia and Pittsburgh. Demand is strong outside the city as well. The Tanger Outlets and The Shoppes at Belmont are anchored by chains like Whole Foods, which companion markets across central Pennsylvania cannot yet land.

What makes Lancaster retail all the more peculiar is beyond the horse and buggies, it’s not much different than its neighbors. Year-over-year employment gains slightly outpace nearby markets, but are below the national average. And while there are some large regional employers here, annual income levels of $68,000 are on par with figures in neighboring York, and not much higher than those in Reading or Harrisburg.

Around 550,000 people call the Lancaster metro area home – 35,000 of whom are strictly forbidden from supporting modern retail – and the latest census figures show population growth is below the national average.

But while the Amish are likely not shopping at Whole Foods, they bring in tourists who do.
Lancaster metro area’s occupancies are some of the country’s highest, even though construction here has outpaced all nearby markets over the past three years. The level of construction over the past decade is remarkable for a small Pennsylvania market, especially considering the struggles of the retail industry, which have limited construction and gains across the country.

"Lancaster isn’t immune to fallout of the industry’s revolution. The difference with Lancaster is demand is very high and fills the vacated spaces quickly."

"There’s been enough pent-up demand to quickly backfill vacant boxes, even large ones like former Kmart, with tenants like Aldi, At Home, Hobby Lobby, as well as fitness concepts, like Crunch Fitness and Planet Fitness. The majority of our new construction projects, like Shoppes at Belmont, Lime Springs Square and The Crossings are typically 100% leased, or very close before the projects are completed and ready for delivery."

Lancaster has been somewhat dormant for new retail development for many years, but Rohrbaugh believes the arrival of high-profile tenants like Whole Foods and Wegman’s boosted Lancaster’s profile.

"We have received attention from other national chains that would not have considered our market in the past, like PF Chang’s for example. Projects like these have placed us on the radar screen for all national retailers. We now have more tenants looking, than space available."

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