Circuitous and Serpentine

With the recent announcement that they are acquiring 901 Market from Vornado (a New York landlord's only significant Philadelphia holding) for $60m, PREIT has finally completed the onerous task of assembling the Gallery complex into a single ownership structure. To do this, they have had to acquire the former Strawbridge's and to make peace with the City and the RDA. And this had to be done before any significant modernization effort could get underway.

All this time, the Gallery has been declining; I documented its effects last fall. After withstanding the 1980s urban retail exodus, the first chink in its armor was cut in 1989, when Stern's (having replaced Gimbels) pulled out and the space was restructured for Clover and more office space. This became a new equilibrium through the 1990s (similarly-placed Kmart replaced Clover in the space) until 2006, when Macy's closed the flagship Strawbridge's, moving their operations to the Wanamaker Building, in a space that remains significantly undersized relative to shoppers' needs. Note to Macy's: Don't try to cram yourself into a Lord & Taylor space, it just doesn't work.

After 2006, the Gallery's fortunes accelerated on their downward track. Without Strawbridge's to anchor it, the east wing failed; the west wing has remained significantly stronger, but still weak. The profit margin-poor food courts have become the leading customer draw, further isolating activity on the concourse. Nearly all the Strawbridge's space has been turned into offices--State and City offices. And hotel guests at the Loews, Marriot, and Hilton Garden right next door are bussed to King of Prussia as the Gallery further weakens.

Two more announcements: (1) PREIT is planning on pumping $300m into the Gallery, totally repositioning it, and (2) Kmart is not renewing its lease.

This is good news! The Kmart space has long split the Gallery into two separate wings, and half the office space sits unused. Meanwhile, the Gallery is the key to Market East, and strengthening it will also strengthen the corridor.

What PREIT exactly has up its sleeve is still a mystery, but I would like to present my optimal Gallery redesign, based on a modification of the Westfield San Francisco Centre layout optimized for the much more linear Gallery corridor. Westfield, where they undertook a $440m renovation in 2006 completely replacing the interior of the former Emporium department store, also functions as a model for PREIT going forward.

Pink is offices, sky blue inline retail, blue anchors; orange the multiplex, yellow the food court. Brown is Market East's platform level.

In this model, I have retained three anchor spaces. The basement and first floor of Strawbridge's is one anchor space; the 2nd, 3rd, and half the 4th floors of the Gimbels the second, and the extant Burlington Coat Factory the third. In a nod to Chicago's former Carson, Pirie, Scott, I have placed City Target in the remnants of the Strawbridge's space; a Century21 is placed in the Gimbels space, becoming the complex's dominant anchor. A multiplex uses east wing third floor space, while the main food court is relocated to Strawbridge's atrium, the kitchen spaces along the party wall between the Gallery and the original Strawbridge's on the second floor. Cross-floor access is revamped, with the multiplex's main entrance being along the corridor leading to Gallery I's parking garage, and a secondary entrance being from the food court's new "Dining Porch"; the third floor on the bridge across 9th will be eliminated.

The large spaces left behind on the first floor will be subdivided as need be, with an optimal mix mixing medium-size "big boxes" (e.g. Toys "Я" Us, Barnes & Noble, Bed Bath & Beyond, etc.) and inline stores. The goal of this project is to attract budget fashion retail (Forever 21, H&M, Hollister, Aeropostale...) to the upper inline levels, while having casual eateries and at least one secondary anchor face the street. Redevelopment here will complement Girard Square, although the large anchor space in the latter complex does not currently have a tenant.

Finally, a major element of any Gallery project is to activate the three built-in pads. As Hilton now has two nameplates in proximity (Home2, Hilton Garden), I recommend a Hilton proper on the 1001 Market pad site, and rental apartments on the 1000 Filbert; currently, however, there is no good use for the east wing pad site.

Remember above all that the success of the Gallery, both internally and as cityscape, is crucial to the success of Market East as a whole. To make Market East a place people want to go to, the Gallery must be a place people want to go to; to see development on the un- and underbuilt parcels on Market East, Market East must be a place people want to go to.