Progress on remaking the Gallery at Market East into an
outlet-shopping mecca could be about to hit its stride.
Gov. Wolf's office is expected to award a $10 million
redevelopment grant for the project Thursday, according to a state official who
asked not to be identified ahead of the formal announcement.
Pennsylvania Real Estate Investment Trust of
Philadelphia, which owns the property in a venture with Santa Monica-based mall
operator Macerich, had been awaiting word on its request for up to $30 million
in state aid for the $325 million-plus project.
PREIT chief executive Joseph Coradino has said the
Redevelopment Assistance Capital Program (RACP) funds are needed to fully
realize the transformation of the Center City mall into what will be called
Fashion Outlets of Philadelphia.
Plans call for filling the 1.5 million square feet with
outlet shops of upscale brands such as Gucci and Prada, along with typical mall
tenants such as H&M. The developers also have said restaurants will play a
big role in the project.
News of the RACP grant couldn't come too soon for PREIT,
as it competes for tenants with other landlords in the rapidly revitalizing
section of Center City known as Market East, said Larry Steinberg, a senior
vice president in Philadelphia with commercial real estate company CBRE Group.
"It's critical because tenants have been forced to
look at alternatives just because they weren't real sure what the future would
hold over there," Steinberg said Wednesday. "We have a saying in our
business: Time kills all deals."
PREIT spokesman Kevin Feeley and Mayor Kenney's
spokeswoman, Ajeenah Amir, said they could share no details about the Thursday
announcement in advance.
When City Council approved the Gallery's redevelopment
and $55 million in aid for the project in June 2015, construction was expected
to begin the following month, with completion anticipated in summer 2017.
But delays kept work from starting until the beginning of
this year, when the Gallery's east end closed for demolition efforts. The
project is "on track for a planned 2018 opening," Coradino said in a
July earnings call with analysts, although a Macerich executive said in
February that completion could come as late as early 2019.
Five Below Inc. chief executive Joel Anderson said
Tuesday that it would continue operating its store in the Gallery's west
section until sometime next year, when the location will be permanently
shuttered in preparation for a reopening in the nearby Lits Building in 2018.
The mall’s only other remaining shops are Old Navy and
Burlington Coat Factory. Burlington Stores Inc. spokeswoman Lauren Flanagan
said in an email that the Burlington store would remain open during
construction. A message left with Old Navy-parent Gap Inc. yielded no immediate
response.
Conshohocken-based investment firm Boenning & Scattergood
said in a June research note that no announcements about tenants at the
revamped Gallery were likely until state officials revealed whether PREIT and
Macerich would receive the $30 million in RACP funds.
Coradino said in February that the result "won't be
as dramatic" as originally planned without the state aid.
Source: Philly.com
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