Seeing Destination Maternity's departure as an opportunity

The Destination Maternity complex at Fifth and Spring Garden Streets occupies nearly eight acres, giving city officials a development opportunity.
The Destination Maternity complex at Fifth and Spring Garden Streets occupies nearly eight acres, giving city officials a development opportunity. (TOM GRALISH / Staff Photographer)
Posted: April 06, 2014

Philadelphia will lose more than 600 jobs when homegrown Destination Maternity Corp. leaves its headquarters at Fifth and Spring Garden Streets for South Jersey. But unlike other gloomy portraits of corporations defecting to the suburbs, this one may have a silver lining for the city.

Diverse proposals are emerging to buy the retailer's headquarters and distribution complex, a colossal parcel of nearly eight acres in an industrial-zoned enclave that has changed little as neighboring Old City and Northern Liberties grew into upscale residential communities over the last two decades.

With land of that size for sale so close to the thriving downtown and gentrifying river wards, city officials sense an opportunity: To spark the transformation of a bridge neighborhood brimming with potential.

"There has been a lot of interest," said broker Brian Knowles of Jones Lang LaSalle, who has been marketing the property for Destination Maternity and hopes to close on a deal this year. The company leaves for locations in Moorestown and Florence Township, Burlington County, starting in the fall.

"Every zoning you can think of is being contemplated," Knowles said. Multiple discussions with multiple potential buyers are underway, for uses as varied as retail, multifamily, and warehouse, he said. "It's kind of exciting."

City officials are pondering a change of zoning for the parcel and its environs from industrial to retail, office, or residential uses, said deputy mayor for economic development Alan Greenberger.

"You're removing a barrier to development" with the possibility of rezoning, Greenberger said, adding that any decision to do so was not yet final.

At least one proposal submitted so far would restore some of the walkability lost when intersecting streets were eliminated as the neighborhood became an industrial zone. (The property consists of a 400-space parking lot and a low-slung warehouse-like structure that spans hundreds of feet along the street.)

Officials have kept a lid on details. But Greenberger recently looked at a set of plans submitted to Jones Lang LaSalle that he described as mixed-use for the 7.65-acre property.

The redevelopment interest has been encouraging to officials dismayed in September when the company announced it had decided to leave the state.

Situated blocks from the Ben Franklin Bridge, Destination Maternity is on land that has been industrially zoned since at least the 1950s, when companies were cleared away from Independence Mall to help develop the historic district, Greenberger said. Firms were relocated to the neighborhood dubbed the "Callowhill Industrial District."

Today, the enclave's rough borders are Callowhill to Spring Garden Streets and Second to Seventh Streets, he said.

Founded in Philadelphia in 1982 and run for years under the name Mothers Work, the maternity retailer moved to 456 N. Fifth St. in 1996. The site housed corporate offices and factory operations, making it one of the few textile manufacturers left in the city at the time.

But several years ago, the publicly traded company's founders departed. Its manufacturing had moved overseas. And the Fifth Street complex (along with some space at the Navy Yard) housed corporate offices; its loading docks served merchandise distribution needs.

The company's staying power was notable. With $540 million in annual sales, Destination was one of only two major apparel retailers - along with Urban Outfitters Inc. - to retain headquarters in a city that was once a major textile hub.

When Destination Maternity announced it would leave, local officials expressed surprise and said they had not been given a chance to put their best offer on the table.

Destination Maternity officials have declined repeated requests for interviews.

Thanks to $40 million in tax credits, the company will move its corporate offices 12 miles away to Moorestown, and distribution and online shipping operations will head to a new facility in Florence that is twice the size of the 200,000-square-foot Spring Garden building.

The move will save an estimated $4 million a year after taxes, the company has told shareholders.

The new distribution center, at 406,000 square feet, is also close to a New Jersey Turnpike interchange and can expand an additional roughly 90,000 feet if needed - conditions nearly impossible to replicate in a modern-day urban center.

"You've got the Route 130 corridor, you've got Interstate 295, and a full New Jersey Turnpike interchange with all the connectors into Pennsylvania," said Richard A. Brook, Florence Township administrator.

"Headquarters projects are important projects," said Lauren Moore, acting executive director of the New Jersey Business Action Center, which helped win the relocation. They bring "higher-paying jobs. And typically, corporate headquarters, once they're here, tend to stay here."

Given the loss, redevelopment prospects represent a ray of hope for Philadelphia. But the property comes with some challenges.

The monolithic parcel runs an estimated 800 feet north to south without an intersection between Spring Garden and Willow Streets. Greenberger said the city was supportive of proposals to reintroduce streets there.

"One of the problems with that area is that you've got these insanely long streets," he said.

Greenberger said the city had three options: rezone the site, rezone the larger neighborhood, or simply grant a zoning variance to whichever developer wins out.

The property is in the district of Councilman Mark Squilla, who said Friday he would be open to all options regarding zoning and development.

"What we would want to suggest to the councilman is not simply a rezoning of the site," Greenberger said, "but potentially a rezoning of multiple sites in the area."

With Old City and Northern Liberties now zoned mostly for commercial and mixed uses, the move seems reasonable and consistent with a recent remapping of industrial land along the Delaware River to commercial-mixed use, Greenberger and Squilla said.


mpanaritis@phillynews.com

215-854-2431

@Panaritism

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