Center City shopping is starting to recover from the economic slump

Vacancies have diminished along Walnut Street west of Broad since 2009. New shops include Jack Wills (left).
Vacancies have diminished along Walnut Street west of Broad since 2009. New shops include Jack Wills (left). (CHARLES FOX / Staff)
Posted: October 26, 2012

So this is what investors mean by patience: Three years after a smoldering economy reduced Philadelphia's premiere shopping district to an avenue of stalwart retailers sharing space with suddenly vacant storefronts, the rebound is on. And it's hot.

The elegant old buildings that form the spine of a 4 1/2-block streetscape of shopping between Broad and 20th Streets are teeming with life.

Vacancies are few as reinvestment restores glitz to a promenade that aspires to be the city's gold standard of exclusivity but that a few years ago was down on its retail high heels.

"Philadelphia is a very strong business district that's only actually getting stronger," said Brandon Famous, chief executive officer of Fameco Real Estate L.P., which opened a Center City office in June 2011, as another heavy-hitting retail brokerage, Metro Commercial Real Estate Inc., also opened a Center City satellite office.

In just the last few months, Fameco has inked a lease to bring a 13,600-square-foot Ulta cosmetics store to the spot on the 1600 block of Walnut where Brasserie Perrier had been in operation as a restaurant. The deal ends a limbo in which suitors for the impossibly cavernous structure had been scarce.

Vacant since 2009, three-stories of the six-story building will reopen in the spring as Ulta's only Center City outpost, with renovations so extensive they will cost the landlord, Vesper Property Group, $6.5 million. Vesper bought the building in 2008 for $7.4 million, said Fameco's Larry Steinberg.

Fameco also is scouting for other big retailers, including Nordstrom Rack, with a deal close, though Famous would say little more.

"We're actively negotiating a deal for a space in the Rittenhouse area," he said.

The rush of new tenants has been building for more than a year. The frenzy, though, has grown in recent weeks.

Earlier this month, luxury shoppers were greeted to the opening near Rittenhouse Square of Intermix, a retailer that for years had drawn Main Line fashionistas to its stores on Madison Avenue, Fifth Avenue, and elsewhere in Manhattan.

After a decade of trying to find the perfect spot on Walnut, owner-brothers Khajak and Haro Keledjian opened their Intermix store a few weeks ago, selling $658 Helmut Lang blazers and $218 Rag & Bone jeans on the 1700 block, where Knit Wit had long operated before deciding in March to move to less-pricey Chestnut Street.

Business at the new store, Khajak Keledjian said, has been "way above forecasts."

On a recent morning, a customer waited for the doors to open at 10, and a steady stream of women followed.

"It's too early to celebrate," he said, "but the momentum is there."

The Keledjians had hoped to open back in 2001 but were derailed by the terrorist attacks that year. Another effort in 2007 was delayed by the economic downturn. Khajak Keledjian visited again in 2009, but "the vibe was as if it was going down," he said, and " 'Stay away.' "

A flagship Anne Klein opened in September on the same block as Intermix, replacing Jones New York.

And major renovations have been completed at Brooks Brothers on the 1500 block of Walnut, in a project so big that the store shut down in March and reopened only this month, said Metro Commercial president Steven Gartner, who helped broker the Intermix deal.

"The street has rebounded," Gartner said on a recent stroll with me, pointing to buildings slated for tenants and development plans.

Club Monaco, on the 1500 block of Walnut, was a hotbed of construction as we passed.

"Retailers don't renovate stores that are doing poorly," he said.

By Gartner's count, only five properties are unoccupied, and three of those are all but spoken for. A deal appears to be imminent to fill three adjacent vacancies on the southeast corner of 15th and Walnut.

A ground-up redevelopment plan there would be anchored by a chain restaurant akin to a Cheesecake Factory.

The turnaround has been stunning. When I last wrote about Walnut and now-up-and-coming Chestnut Street, in August 2009, wreckage of the economic crash abounded at sidewalk view.

A dozen retail properties on Walnut had gone dark, after the street had been fully occupied just two years earlier. I passed a mini-encampment of homeless youth in front of one empty storefront.

The story at the time, as told by merchants and brokers, was that with customers so gun-shy about shopping, few retailers were willing to fork over the high rents that landlords demanded. Stores remained empty as retailers waited for better days and landlords waited for the right deal at the right price for a nice long lease.

Today, the results are impressive. And the spillover of rejuvenation has even made its way to Chestnut, where lower rents have drawn not just Walnut Street apparel icon Knit Wit, but newcomers such as lingerie boutique Hope Chest.

Jennifer Rosen, 27, of Bryn Mawr, signed a lease with landlord John Ciccone at 1937 Chestnut after she decided to open her own downtown branch of the single-location Main Line boutique where she had worked as assistant buyer in Haverford.

She settled on the 1,200-foot store on Chestnut after concluding that rents on Walnut were "untouchable" - even for a store seeking to pair women with the perfect French bra or $150 chemise.

She opened in September, noticing in recent weeks customers walking with Intermix bags on their arms.

"That is a big deal," she said.


Contact Maria Panaritis at 215-854-2431 or mpanaritis@phillynews.com or @panaritism on Twitter.

comments powered by Disqus
|
|
|
|
|