Friday, April 17, 2015

PREIT, Macerich Reach Deal to Redevelop Center City Mall

Pennsylvania Real Estate Investment Trust (PREIT) and The Macerich Co. reached a tentative agreement with the city of Philadelphia to partially finance the redevelopment and re-branding of the Gallery, a shopping mall and transit center in Center City.

If approved by the city council, the Philadelphia School Reform Commission and the Philadelphia Redevelopment Authority, PREIT and Macerich plan to begin a two-renovation to rebrand the property as the Fashion Outlets of Philadelphia at Market East. The total project is expected to cost an estimated $325 million, with the developers agreeing to cover $234 million along with tax increment financing for the project from the city.

Redevelopment plans call for opening the site to Market Street and redesigning the shopping, dining and entertainment space for tourists, commuters, office workers, and residents.

"We believe that the proposed redevelopment will position The Gallery as the next great urban marketplace in the United States, capitalizing on its central location where mass transit, tourism, the residential population and employment bases converge," said Joseph F. Coradino, CEO of PREIT, in a statement announcing the tentative agreement.

The project, which is patterned after other recent Macerich mall renovation projects, most notably the Fashion Outlets of Chicago.

The city funding must be approved by city council and the School Reform Commission and the transaction must be approved by the Philadelphia Redevelopment Authority.

Under the proposed redevelopment plan, the Gallery will undergo a top-to-bottom redesign that will reconfigure the 1.5 million-square-foot, mixed-use facility by reconnecting it to Market Street with open storefronts, sidewalk cafes, a new streetscape, digital signage and graphics, all complementing the existing office space. Inside, the plan calls for a three-block corridor containing approximately 125 new stores, including dining and entertainment options. The highlight of the newly-reimagined space will be a new glass-walled Center Court at 9th and Market.

If all goes as planned, the rebranded complex will reopen in spring 2017 after a two-year construction schedule.

The developers have promised to maintain access to public transit during construction, with commuters able to gain access through street-level entrances at 8th and Market, 10th and Filbert, 11th and Filbert, and the Reading Terminal Headhouse at 12th and Market streets.

"We have worked for more than a decade to reach this point, and we are excited to move forward with a project that will make Philadelphia proud," said Coradino. "The time is right for Market East, and we can't wait to get started."

PREIT purchased The Gallery in 2013 for $60 million and brought Macerich in as a partner for the project in July 2014.

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