Future of East Market Street remains unclear

Posted: December 02, 2013

How to jump-start East Market Street has long been a burning issue for planners in Philadelphia.

Even as broader Center City has enjoyed a renaissance, the stretch of Market Street east of Broad has languished.

The Pennsylvania Real Estate Investment Trust (PREIT), a shopping mall company headquartered in Center City, hopes to help change that.

PREIT, over the last decade, has taken control of a key, three-block piece of the East Market Street puzzle. It owns all of the real estate that makes up the Gallery at Market East, which stretches from a Burlington Coat Factory store at 11th and Market to the former Strawbridge & Clothier store on Eighth Street, where The Inquirer is now a tenant.

Though it has been circumspect about its plans for the Gallery since buying the last piece (Kmart's home at 901 Market) for $60 million in April, PREIT continues to drop enticing hints about the mall's future.

Most recently, in an Oct. 29 earnings call, Joseph Coradino, PREIT's chief executive officer, promised to lure anchor stores that would be "transformative - not just the property, but probably for retail in Philadelphia."

"We anticipate delivering a project that is a focal point for the City of Philadelphia, drives the transformation of the retail landscape in the city and the evolution of the corridor into a vibrant shopping, entertainment, and dining district," he said.

Coradino said PREIT was in negotiations with "two impact retailers" that would define the project. Both would be new to the Philadelphia market, he said.

As for the direction of the project, he repeated something he said earlier this year while speaking to the National Association of Real Estate Investment Trusts (NAREIT).

"The possible strategies are really two," Coradino said. "One is a high-fashion anchor center utilizing one of the four high-fashion department stores. Another possible alternative is what we call 'fast fashion and food,' if you will, and that is to redevelop [the area] more consistent with some of the more trendy suburban mall tenants - like the Forever 21, the H&M, the Uniqlo."

Coradino told analysts last month the project's direction would ultimately be decided by which retailers PREIT can land before launching its redevelopment of the mall.

"This is going to be a tenant-driven redevelopment," he said.

While it has been chasing tenants, PREIT has also been negotiating financial incentives with the city and state, Coradino said.

"They have already made financial commitments to the project," he said. "We are in discussions to expand that commitment."

Finally, timing.

"One of the keys to being able to execute a plan is Kmart vacating their space," he said. "Their lease doesn't expire until August."



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