Paul Schwedelson Reporter - Philadelphia Business Journal
The 225,000-square-foot Richland Plaza is 90% vacant.
As tenants fled from the Richland Plaza shopping center in Quakertown, Velocity Venture Partners Founding Partner Zach Moore thought, “There’s got to be an opportunity here.”
At 90% vacant, Velocity acquired the 225,000-square-foot retail center for $16.7 million on Wednesday and plans to convert it into a multi-tenant industrial site. The entire project, combining the acquisition cost and construction costs would bring the project to $22 million, Moore said. He foresees a mix of warehouse distribution and specialty manufacturing tenants.
Bala Cynwyd-based Velocity has built its reputation on buying distressed assets and converting them to industrial space. The Richland Plaza purchase is particularly opportune because of certain elements already in place. It also represents the company’s first acquisition of a shopping center of this size.
“The most exciting component of this project for us is that it’s incredibly unique and we’re the first do it,” Moore said. “… Our competitors are focused on sourcing true industrial products. We continue to find ways to source deals creatively.”
Velocity contacted the family that owned the Bucks County property, which was already considering selling the former mall in an online auction. The seller was APS Associates LLC. The entity purchased the property for $13.475 million in 2010.
Prior to purchasing the 20-acre property at 733 S. West End Blvd., Velocity worked with Richland Township to change zoning to allow industrial uses. That set the stage for the company to buy the property, built in 1975, with plans to convert its use. That alone helped increase the property’s value, Moore said.
The building is also shaped as a long and narrow rectangle, similar to how industrial buildings are built. Velocity plans to take down the existing drop ceilings but much of the space already has exposed ceilings and polished concrete, up to an industrial standard. The shopping center has air conditioning and heat, which Moore said is rare in industrial buildings of this size. The building also faces Route 309, providing a rare signage opportunity compared with industrial buildings tucked away into less busy areas.
Those key drivers give Moore optimism in the property’s future.
“Our focus today is getting it in a position where it’s leasable from the redevelopment, construction perspective,” Moore said.
Moore lives in nearby Harleysville and Velocity has bought several properties in Quakertown. Vice President of Asset Management and Development John Fiore previously built several retail developments in the area and had experience working with Richland Township on zoning changes. That combination led to Velocity identifying the site as a valuable property and executing the deal.
Ollie's Bargain Outlet, Wells Fargo and Pearl Vision are the remaining tenants at the property. The 84,405-square-foot former Bon-Ton department store vacated the shopping center five years ago. A Redner's grocery store, the other property’s other anchor, closed in 2022.
“Over the last three years particularly, we’ve just seen that site crash from an occupancy perspective,” Moore said.
Velocity owns more than 8 million square feet of industrial space throughout the region spanning across 100 properties. About 60% to 70% of the properties Velocity has bought are existing industrial sites while the rest are a mix of office, retail and lab space. Velocity has bought retail properties around 20,000 square feet to 30,000 square feet. The Richland Plaza’s 225,000 square feet is a new type of property for Velocity.
Given how the retail and industrial markets have changed in recent years, Moore and co-founder Tony Grelli are looking for more opportunities to buy properties similar to the Richland Plaza.
“I think it’s going to be an incredible case study,” Moore said.
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