PREIT reveals the Gallery's new look

Everything about the decrepit Gallery at Market East may be about to change.

Under an intended top-to-bottom renovation, one of Center City's most notorious dead spots would be reborn as a gleaming glass-and-steel emporium - brimming with brand-name discount fashion shops, destination restaurants, and lively sidewalk cafés.

Even the name would be new. Welcome, shoppers, to the Fashion Outlets of Philadelphia.

Details of the plan were provided exclusively to The Inquirer in advance of a series of meetings by government agencies whose support is vital to the project. The news marks a grand unveiling of plans for the Gallery following years of uncertainty and speculation.

Executives with the Pennsylvania Real Estate Investment Trust, which has partnered with California-based Macerich Co., outlined a three-part approach for a dramatic transformation of the nearly empty mall. It's centered on a new retail strategy, bright architecture, and ample public funding:

Many tenants would be lower-cost outlets of high-end clothing retailers, brands such as Gucci, Prada, and Burberry. Other stores would be familiar mall stalwarts similar to H&M. While some restaurants would offer local fare, others would be attractions to draw both year-round residents and here-for-a-day tourists.

The fortresslike Market Street exterior of the mall would be broken down and replaced with glass storefronts, admitting shoppers and natural light. Glass railings and new escalators would add to an airy rejuvenation.

The city will invest about $113 million in the project over time, according to Deputy Mayor Alan Greenberger. That includes $55 million during the next 20 years under a plan that would let PREIT apply expected future property and other tax increases to Gallery upgrades. The city would pay an additional $58 million over the next 45 years in capital improvement and easement-maintenance costs.

The state is being asked to contribute $35.5 million, of which $15.5 million is already committed. The total project is worth $575 million, the company said.

The Philadelphia Redevelopment Authority - the Gallery's landlord - and the School Reform Commission meet separately Thursday and are expected to discuss the mall. An ordinance is to be introduced in City Council next week.

Nothing will happen without government approvals.

"This is the single best opportunity in decades to bring Market Street back to full strength," said Greenberger, long involved in efforts to revive Market East. "It's a very strong idea, and a very good project."

Greenberger said he was optimistic of approval - and that the city investment shouldn't be viewed as giving tax dollars to private developers.

In return, he said, Philadelphia will get at least 1,000 more jobs at the Gallery alone, and higher tax revenue over the long term. Equally important, he said, by getting out of the mall business, the city will let go of close to $200 million in potential liabilities, dues, and payments connected to the mall.

The agreement would see the city surrender control of the property that it helped develop nearly 40 years ago. Any deal would involve a large number of moving parts, multiple actors and players, and the streamlining of an enormously complicated lease agreement that governs the property.

PREIT CEO Joseph Coradino said renovation would take two years, during which large portions of the mall would be closed. The thousands of commuters who use the Gallery as a shortcut to get to work or to other transportation links would have to walk outside.

The Gallery is the main and most-complicated piece of a hoped-for revival on Market East. After decades of failed plans and promises, developers and government leaders believe the sagging eight-block stretch between City Hall and Independence Mall is poised for a renaissance.

For years the Gallery has been a struggling, half-dead mall, defined by dim lighting, old fixtures, and so-so retailers.

"Everything you see today, forget it. It's not going to be there," Coradino said. "We want to make sure when you come in this center, you say, 'Wow.' "

The awkward descending stairs at Ninth and Market Streets would disappear, replaced by a grand street-level glass entrance.

The mall's worn brown tile floors would be traded for light-reflecting white tile, part of brightening and recasting the main corridor. What's now an empty Kmart would be portioned into smaller stores.

A Century 21 discount fashion store has already opened on the east end of the property, inside the old Strawbridge & Clothier building, where The Inquirer is a tenant.

One big goal, said project architect James Grigsby of JPRA Architects in Michigan, is to create a mall that can "extend the day" - that is, entice some of the thousands of surrounding workers to delay catching trains home and stay downtown.

Elijah Anderson, a Yale University sociologist who has studied the Gallery, said not everyone will benefit from the mall's makeover.

For many working-class African Americans who travel there from outlying neighborhoods, the Gallery has been a place to get a cup of coffee, grab a meal, or sit and chat with friends. Retirees whiled away the day at the food court, and young people met there after school.

"That's what's going to be lost when the Gallery changes," he said. "Those people really have no place to go now."

Coradino said PREIT was ready to begin demolition immediately upon reaching agreement with Council and other controlling agencies.

Parts of the plan seem sure to prove contentious. The exterior of the new mall would feature several big lighted signs, similar to those that have provoked controversy elsewhere in Philadelphia. Likewise, the use of public money seems certain to become an issue.

For years, the middle blocks of Market East have been a low-rent, low-expectation locale, dominated by stores offering cash for gold, fast food, and bargain electronics. Addicts and homeless people roam the street.

A barrier to redevelopment has been the lease that governs the Gallery, where four different interests converge.

The Philadelphia Redevelopment Authority owns the land, the shell of the building, and most of the central corridor. PREIT holds a long-term lease on the interior spaces, which are subleased to stores, most of which have been booted in preparation for an overhaul.

SEPTA controls Jefferson Station, a main Center City rail stop, while the Girard Estate owns a portion of the mall at the west end. PREIT wants to consolidate its control through a long-term lease from the Redevelopment Authority.

"The moon is in the right house - it's Aquarius," Coradino said. "It is time to get it done."

PREIT's disclosures come weeks after its partner, Macerich, faced an unsuccessful takeover attempt from the giant Simon Property Group.

On Market East, a bloom of change has taken root. A different developer is building a $230 million, 322-apartment restaurant and retail complex, to be called East Market, at 11th Street. Just south on Chestnut Street rises a complex of shops and 112 luxury apartments.

PREIT has not signed a single tenant - and will not until reaching agreement with the city, Coradino said. But the company is in constant dialogue with retailers and has developed a strong list.

"We know who we can get," he said.

Coradino would not confirm that Eataly - the giant Italian restaurant and food store - would come to the new mall, saying only that the sides were "in discussions."

A movie theater is not a given, Coradino said. Theaters open only for limited hours, and depend on the shifting popularity of films. What is the value of a theater, he asked, compared with, say, a vibrant Italian restaurant with bocce courts and live entertainment?

Coradino said he wanted to fill the mall with places he described as having a "gotta go" level of appeal. That is, restaurants and stores so intriguing and fun that people say, "If you're in Philadelphia, you gotta go to. . . . "

One model for the new Gallery: The Fashion Outlets of Chicago, a two-level venue near O'Hare International Airport in Rosemont, Ill. That mall is anchored by Bloomingdale's the Outlet Store, Neiman Marcus Last Call, Saks Fifth Avenue OFF 5th, and Forever 21. Other brands include Gucci, Tory Burch, Michael Kors, Banana Republic, J.Crew, and Under Armour. That mall opened in 2013.

The initial part of the Gallery was immediately popular when it opened in 1977 as a $105 million redevelopment project. Gallery II opened as an extension in 1983.

But over time, the mall siphoned vitality off Market. Pricier stores moved out, anchor stores died or departed, and vagrants made themselves at home. The new proposal would change that.

"It's a complete transformation of three major city blocks. It's very, very exciting and long needed," said Paul Levy, president of the Center City District, the marketing and planning agency. "This will help trigger a lot of interest and demand on the rest of the street."

The Gallery never seemed to be able to take full advantage of its site - a place where mass transit, tourism, and employment converge. It's set between the Convention Center and Independence National Historical Park, atop SEPTA and PATCO rail lines, and in the midst of workers and tourists.

That those benefits failed to help the Gallery or prompt a Market East revival does not discourage PREIT.

Executives cite the rising number of young people moving to Philadelphia as a new advantage. Since 2006, no big city has seen a larger percentage increase in 20- to 34-year-olds, the so-called millennials, who are fueling demand for restaurants and stores in Center City.

Coradino believes the new mall will draw people from the suburbs into Philadelphia to shop - unheard of on Market East since the days of John Wanamaker and Gimbel Bros.

"Philadelphia shops in New Jersey right now," Coradino said, noting that city residents visit malls in Cherry Hill and Moorestown. "We're going to get people from the burbs to come spend money."

Source: Philly.com