North Broad starting to see an emerging retail corridor take shape

More than 200,000 square feet of new retail space is slotted for North Broad Street that, for the first time in decades, will make inroads in establishing what could be a new, emerging shopping corridor in Philadelphia.

Some of the spaces that are planned are part of developments close to City Hall and the Pennsylvania Convention Center while others push north toward Temple University and areas just off of North Broad. The surge of proposed retail activity on what is one of Philadelphia’s main thoroughfares is a reflection of where development activity is headed in Philadelphia these days. It also shows how the residential scene is taking off in that part of the city and, as a result, creating a demand for retail space in an area where it has long been absent.

More than 5,000 residential units exist or are in the pipeline north of City Hall and in nearby neighborhoods that, by virtue of geography and transit, would lean toward shopping in an area defined by the North Broad Corridor. While a majority of those residences are now in areas flanking North Broad, new projects that will infuse the area with hundreds of apartments that are more or less right on the street include the Divine Lorraine, Hanover North Broad, 1300 Fairmount, Mural Arts Lofts, among others.

For Philadelphia developers such as Bart Blatstein, who heads up Tower Investments Inc., it’s a no-brainer to plant more retail space along the corridor.

“You have a lot of density and it is very, very under-retailed,” he said. “It’s time.”

Blatstein, who already has a substantial presence along North Broad, is planning 60,000 square feet of additional new retail space on two levels at Broad and Spring Garden streets and another 30,000 square feet behind his existing Avenue North development near Temple. Plans are still being formulated for Blatstein’s property at 400 N. Broad but it will likely have retail and restaurant components.

The sheer number of residential projects underway or being planned has helped to create a critical mass that hasn’t been seen before in that area and is helping to propel what has long been the last frontier of Center City forward.

“It’s not just one building being put in the middle of an empty corridor,” said Veronica Blum, a broker with MPN Realty. “There is an expanding Center City core that includes this area and extending up toward Temple. It has been a retail desert for while.”

Blum, along with colleague Ken Mallin, is marketing roughly 17,500 square feet of retail space at a new multifamily development being constructed by Hanover Co. of Houston and Parkway Corp. on two key corners at Broad and Callowhill streets called Hanover North Broad. It will have 339 units.

What is also contributing to this new retail scene is a significant day-time population that has been firmly established by the presence of Hahnemann Hospital, Drexel College of Medicine, Pennsylvania Ballet, Pennsylvania Academy of Fine Art, the convention center and others. This is something that retailers like to see.

“You’re not just depending on just the residents,” Blum said.

The area as a retail corridor is untested so there is some risk and some tenants will be pioneering.

“I think what is going to happen first will be service oriented,” said Larry Steinberg, a retail broker with CBRE Inc. who has few listings along North Broad including at the Divine Lorraine. “I don’t know that you will see soft goods yet but that usually follows.”

Restaurants, banks, drug stores will be the likely first suspects with restaurants, cafes and other stores to follow. Just off of North Broad, RAL Development Services and Amalgamated Bank are developing 1300 Fairmount, a project that will have 486 apartments and 84,000 square feet of retail space and they have committed to retaining a grocery store as an anchor.

Because there is limited retail space in that area, rents are a bit of a moving target. At the space Steinberg is marketing, first-floor rents range from $30 to $42 a square foot, which is dirt cheap compared with some of Philadelphia’s premier shopping corridors. Putting a price on rents can be a challenge.

“You’re not Walnut Street or Chestnut Street where you have established and comparable properties to draw from,” Mallin said. “You have to balance it with what is reasonable for a tenant and reasonable for an owner.”

Mallin likened the nascent stage at which North Broad retail is in to what is now known as Midtown Village. That pocket of Center City was in a similar, uncharted position 15 years ago when Tony Goldman came in, assembled a bunch of properties and created a retail market that hadn’t existed before.

“Once there was some momentum, everyone and their mother wanted to be there,” Mallin said.

Source: Philadelphia Business Journal