Tail Fattening in Practice

Some fun stuff:

A recent Strong Towns post tells us that (1) sales taxes are increasingly being used as DOT slush funds (due to excessive restrictions on local tax collection),

while (2) this table suggests there is a mighty overhang in retail in this country (made worse by the fact that such counts routinely undercount antifragile retail),

thereby (3) heading into the teeth of a likely large-scale retail downsizing,

which would (4) extirpate sales tax revenues in most locations--shrinking the size footprint of the transportation slush fund.

This is consistent with "tail fattening" (think Nassim Taleb)--especially the kind that, to reduce or mitigate risk now, kicks it down the road, compounding it when the interest's due.

The only real long-term solution is--as  I have said before and I will say again--conversion to a user fees-based system for access-managed roads, and massive reductions in maintained infrastructure for all general-access byways.

On Retail

Saw this at Zero Hedge.

Keep in mind the deep structural fragilities of the average four-anchor regional mall. There's the fragility resulting from the slow decline of the middle class, and this is what blogs like Zero Hedge focus on.

Then there's also a management fragility, a fragility that stems from the very design of the mall: To be healthy, it is dependent on the health of all four anchors. Mall dead zones are intensely correlated with closed (or "dead") anchors. Since the beginning of the '90s, there were basically five different entities that would anchor a mall:

• Sears
• J.C. Penney
• Federated (Macy's)
• May (Strawbridge's, Hecht's, Filene's, Kaufmann's, Marshall Field, etc.)
• Regional chains (Boscov's, Dillard's, Belk, Northern {Bon-Ton, Carson Pirie Scott, etc.})

Sector consolidation has been in full force since the '70s, when Macy's was semi-national and most regional malls had two regional chain options, with the loss of chains as large as Wanamaker's, Gimbels, Stern's, Hudson's, the Emporium, and Woodward & Lothrop, and as small as Hess Brothers, Lit Brothers, Bamberger's, Abraham & Straus, and countless other minor metro and secondary major metro chains.

The problem is that the four-anchor model matured just before this contraction: When malls such as Montgomery Mall, Neshaminy Mall, Oxford Valley Mall, Christiana Mall etc. were designed, REITs (mall developers) usually had a buffet of six or more potential anchors to court. A four-anchor mall was a nice tradeoff between mall developers and the anchors themselves, none of which would need to be in every mall to achieve market saturation. Failures such as Dixie Square in this environment were rare and more linked to demographic misprediction.

But the so-far culmination of the contraction in the 2005-6 Federated-May merger resulted in further anchor erosion, such that four-anchor malls could court only four anchors:

• Sears
• J.C. Penney
• Macy's
• Regionals

And since Federated (Macy's) and May duplicated each other in many, many malls, these malls were left with just three anchors. The growth of Target as a mall anchor has helped somewhat, but Target is independent in a sense that the older anchors just aren't. It isn't a coincidence that the inventory of dead malls began growing more quickly after 2006, as many malls with a merger-lost anchor saw themselves go obsolete, and lose more and more stores.

Either the collapse of Sears or J.C. Penney would catalyze the exponential growth of dead malls, a point Zero Hedge makes, largely because it would collapse the available anchor list for most malls from four to three (and keep in mind that hypermarkets e.g. Target generally make poor anchor candidates, as they're usually co-located in the same strip, just down the road), thereby creating large dead sections in most malls--and exacerbating dead sections of malls that still have dead sections left over from 2006. In fact, for the latter case, such a collapse spells a death knell, as, once a mall drops below a certain occupancy threshold, it generates inadequate rents to be self-sustaining.

A further issue is that more profitable malls currently cross-subsidize less profitable ones. This is why malls that obviously take massive hits on facilities maintenance, such as many of those featured on Dead Malls, can afford to stay open until Claire's, Gamestop, and Radio Shack are the only tenants left. Just the collapse of Sears or J.C. Penney harms the mall model overall, because the cross-subsidizer loses one of its major income centers (the wing it anchored), in turn reducing the internal cash flow to the subsidized dying/dead mall, forcing more dead malls to close etc.

Just the collapse of Sears or J.C. Penney makes the mall financially fragile.

The collapse of both wipes out whole wings, or halves, or--for malls still dealing with a 2006 anchor loss--more, of leased leasable space in 99% of all malls. Even the most financially robust malls see their balance sheets shrink to breakeven. Already dying malls are discharged. And for the typical challenged, already breakeven anchor mall, there is no white knight, no cross-subsidizer left. Only a truly slim subclass of malls--those with carriage trade anchors*--could possibly emerge from this for the better.

The net result would be a ripple contraction throughout the retail sector, as REITs merge to survive; inline stores contract locations and staff as they clear out of dying malls; and who-knows-what other consequences fall out of the vicious cycle.

Why does this matter? Aren't malls obsolete anyway?

To answer the second question first: Yes and no. Yes, the regional mall is an obsolete business model, but no, it's not online retail or lifestyle centers driving them out of business. For the former, I like to say that  Amazon is to us what the Sears catalog was to people living in the 1900s: that is, remarkably convenient, but not convenient enough to trump the bricks-and-mortar shopping experience. The numbers bear this out (Zero Hedge ibid.). And for the latter, lifestyle centers are just newer shinier malls, very occasionally with a prototype infrastructure of resiliency in them.

The thing that is really killing the mall is the return to relevancy of the very thing it displaced.

For the former question, this matters because--nearly all job growth in the last decade (or more) in any sector that doesn't require mastery of calculus has been in retail sales. And in most suburban markets, the highest job densities in this sector, after revitalizing Main Streets, are--in regional shopping malls. Just as the traditional setup cross-fertilized sales, so too did it jobs. Lifestyle centers replicate this to some extent, and hypermarket-driven power centers don't hold a candle. Of course, nearly all non-Main Street retail offers little more than servitor jobs, but even so...

The implication is clear. Concomitant collapse of Sears and J.C. Penney brings the mall to its knees. In doing so, it catalyzes the downsizing of almost every inline chain, as they scramble to locate or relocate to the remaining profitable malls. And in doing so, it catalyzes a major percentage cut in the retail jobs numbers. This, in turn, negatively affects mall patronization**, further weakening the remaining malls, further catalyzing consolidation, causing yet more cuts etc. in a vicious cycle. And of course, since retail jobs have been the only positive fudge for economists, a sector collapse would lead to significant wider economic implications.

The large-scale arc appears to be: The return of the (antifragile) entrepreneur, the Main Street retailer, and the failure of the (fragile) nationalized franchised chains. Bricks-and-mortar is resetting. But the path there will be ugly.
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* I.e. Barney's, Bloomingdales, Lord & Taylor, Neiman Marcus, Nordstrom, Saks Fifth Avenue, and a handful of regionals or one-offs such as Von Maur.
** Among other things, such as further stressing a stressed welfare state.

Franklin Flea

Franklin Flea

I checked out Franklin Flea this morning, and found out something surprising about Strawbridge's.

The elevator hall

A lot of people--especially people who were never in it before it closed (like me)--assume (like me) that its ground floor was a single large sales hall. This is not--nor was it ever--true.

The Food Hall, with purdy fixtures

In reality, Strawbridge's ground floor has several discrete parts: the 1928 structure is bisected on its latitudinal axis by its elevator core; the boar sits where the hallway that serviced this core crosses the one linking the entrance (cosmetics and accessories?) hall with the Food Hall. A secondary hallway runs between the end of the elevator core and the wall between the 1928 structure and the late 1800s-one on the west side. I am unsure, but I think the jewelry department may have run the length of that section's ground floor. (The Department Store Museum directory implies that part of the Men's Store was on the ground floor as well.) Compared to the open, warehouse-like layouts we expect at hypermarkets and yes, even mall department stores, nowadays, Strawbridge's layout is very difficult to work, and insisting that a single entity take over what remains of the ground floor selling space now that two office lobbies have been carved out of it surely ranks as an endeavor in fruitlessness. Indeed, it is hardly meet to insist that the Food Hall--reportedly being considered for an Eataly--be leased to whatever other entity/ies lease(s) the remainder of the ground floor*.

The Food Hall in Strawbridge's' last days

Leasing solutions?

So it appears that the there are three remaining halls and change off the store's central hallway (leading through the elevator lobby). If we assume that Eataly will get the Food Hall, as seems increasingly likely, this means that the rear portion of the 1800s structure, whatever remains of its forward part, and the entrance hall would be in play. The size of the older halls makes them ideal for inline stores, so let us focus on the entrance hall.

Scope of the entrance hall

There are no fewer than three entrances to this hall from Market Street, which implies that it could be split three ways. Two, if hall to Eataly via the boar were to be kept open. Or even four--it's that large. But of course, doing so would undermine, perhaps ruin the ground floor's grandeur. And to make things more difficult, the Food Hall does not have its own street entrance. But only a very large presence could fill up the Main Hall.

Seeking an anchor

Perhaps the trickiest part of this endeavor is engineering ways to ensure that the entrance hall remains internally linked to the basement and second floor. My position is that until and unless we have a clear tenancy plan that would fill both parts, we should not--cannot--sacrifice these internal linkages. This implies that if (when) Eataly fills the Food Hall, we should seek a plan that links the entrance hall and the elevator hall together. But of course such a plan would cut the Food Hall off from its historical main entrance, in front of the boar. And it's entirely possible the Food Hall isn't as large as I think it is.

Another look at the entrance hall, from its SW corner.

But--the final note--with the persistent Gallery Bloomingdale's rumor**--and my own Circuitous and Serpentine post of a year ago--whose original concept now bears updating (though it is still valid)--the Gallery has space for three anchors, and if one of them is Bloomie's, that means that the other two just became that much more valuable. Could we be looking, in the near future, at a Gallery anchored by three of the following--?

• Barney's New York
• Bloomingdale's
• Lord & Taylor
• Neiman Marcus
• Nordstrom
• Saks Fifth Avenue
• Von Maur

A Gallery able to compete with King of Prussia for high-end inline retailers? Ah well, one can only wish.

___________________________
* BTW if anybody knows whatever happened to the original Food Hall fixtures, could there be any way of bringing them back for Eataly? 'Cause those look pretty darned cool.
** The fact that Bloomie's passed up on the Daffy's space (1700 Chestnut) because it's "too small" does not sound like an outlet concept to me. Outlets, like Saks Off 5th, Last Call Neiman Marcus, and eventual Daffy's lessee Nordstrom Rack are typically ~30k sf.

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.

Decline and Decay; Planning for Revitalization on Market East

Strawbridge's in better times. Courtesy Labelscar.

As has been reported, the Philadelphia Inquirer and Daily News are moving, from their historical home at 400 North Broad (over former Reading tracks, across from Terminal Commerce, and next to its former printing press) to 801 Market.

8th & Market back when it was bordered by half of the city's major department stores. Courtesy the Hagley Archives.

801 Market is, of course, the Strawbridge's building. At its peak, it had eight floors of retail, a bargain basement, and four floors or so of corporate offices on top; when Strawbridge & Clothier was sold to the May Company, these top floors were sold to a separate company and Strawbridge's continued operating in its space below.

The Gallery in its prime: Black Friday, 1980. Source: Temple University Urban Archives

In the '70s, Strawbridge's and Gimbels partnered with the RDA and mall developer the Rouse Company to build the Gallery, then conceived as the first element of a then-decade-old Market East redevelopment framework. The first section was completed in 1977; the second section, with J.C. Penney as lead tenant, in 1983. For the first decade or so, the mall was a major Philadelphia retail center; the high-end stores, such as Lord & Taylor and Saks Fifth Avenue clustered along the Golden Mile of City Line Avenue, but no mall could yet beat the great retail core of Market East.

Redevelopment is badly needed at the Gallery. This is the panorama one is treated to from Burlington Coat Factory's 3rd floor entrance.

This began to change in the mid '80s, though, as Simon brought King of Prussia upscale. Even if a major push had been made to bring these stores downtown, the zeitgeist was all in the suburbs. And so King of Prussia added the Court, anchored by Macy's, Bloomingdale's, and a short-lived Abraham & Straus (which was in short order replaced by Strawbridge's, which in 1995 moved to the former Wanamaker's); added to that, Neiman Marcus and Nordstrom--then the only ones in the region (Neiman Marcus still is)--and Lord & Taylor signed on to buttress Sears, Gimbels/Penney's, and Wanamaker's in the Plaza. The Gallery remained more or less stable, with the most change happening in the center anchor: after Gimbels' liquidation, it was replaced with Stern's, which, when it decided to pull out of the Philadelphia market, was replaced by Strawbridge's discount brand, Clover, which was then replaced by Kmart (now the Gallery's oldest anchor).

Kmart's Gallery II entrance. The shut, mural-clad third floor entrance (closed off ca. 1990) leads to converted--and vacant--office space. Reactivating it for retail may be a possibility.

2003 seems to have been a catalytic year for the Gallery, when Penney's pulled out and was replaced by Burlington Coat Factory; this seems to have set the stage for its 2000s tailspin. However, this increasingly downmarket perception was buttressed by its east end anchor--the last flagship department store left in Philadelphia.

Taken from the upper Kmart entrance to Gallery I. Vacancy and marginal stores rule the roost on the upper floors. The largest storefront--"How Philly Moves"--is a public mural studio.

It was in 2006 that Macy's merged with the May Company (now, recall, Strawbridge's anchor). Initially, it seemed that Macy's would retain the Strawbridge's and thereby maintain the Gallery's east end; however, some random proviso or another managed to work its way in and Macy's wound up occupying the former Center City Lord & Taylor--an undersized (for it) space in the Wanamaker Building--instead. The full 520k square foot girth of Strawbridge's fell vacant.

The Strawbridge's atrium. The uppermost level would be the entrance into the floor now to be occupied by Philadelphia Media Holdings. The upper floors of this whole atrium are largely vacant, with just four open stores: Dr. Denim, Foot Locker, and a new Mural Arts visitor center on the top floor, and an orphan Wet Seal on the second floor.

This was not the first Macy's Gallery near miss, either. Indeed, the first really major one* was when Stern's entered the Philadelphia market in 1986, by opening up a bunch of stores in former Gimbels locations (much as Boscov's attempted to enter the Maryland market exactly two decades later). During Stern's relatively brief tenure in the Philadelphia market, its parent company acquired Macy's', and over the next decade slowly merged operations together. (Stern's ceased existing in 2001.) 

An entrance never again to be used by retail.

However, while Stern's, during 1988-9, decided to leave the Philadelphia market, an opportunity was present--although never seized on--for Macy's, already established here through its acquisition of Bamberger's, to strengthen its own local market position by acquiring stores Stern's was vacating, e.g. at the Gallery, or for mall leasers to bring Macy's on. (Macy's did not go bankrupt until 1992; it emerged out of it mainly by merging with Federated in '94, one of whose nameplates was...Stern's.) They also had a chance in 1995-7 to locate in the then-former Clover, before it was leased by Kmart**; a plausible case can then be made that the third was when Penney's left, offering a large anchor position in Center City; this would make Macy's snubbing of the Strawbridge's space no less than the fourth chance, and near miss, the Gallery had to bring them onboard.

The new Mural Arts visitor center/store--the lone new addition in this part of the Gallery.

PREIT--by now, the Gallery's owner--responded first by trying to lure an uninterested Nordstrom. Nordstrom preferred Cherry Hill. Until 2007, in fact, nearly all national-level retail openings were outside the City proper, much less on Market East; the very urban-oriented recovery from the housing market crash is forcing reconsideration of store planning policies by those retailers who plan on surviving the recession***. Nevertheless--and despite the fact 2011 showed significant recovery, and 2012 is poised to, too--PREIT has not been able to find a retail tenant for Strawbridge's. Instead, it leased the top three floors of its ownership to the Commonwealth in 2007, and, what started this article, the third, and top concourse-accessed floor, to Philadephia Media Holdings, the parent company of the Inquirer, Daily News, and Philly.com.

Vacancies around the former Strawbridge's.

The master narrative of this move is that PMH wants to take part in Market East's "renaissance", spurred by the passage of a sign bill that allows more (and hopefully better) signs along this traditional retail center. Retail needs signs--always has. But, whatever the merits of the sign bill, it is not in itself a cause of Market East's revitalization: there could very well be billboards atop vacant ground floors.

Too many vacancies to be good...

No: it is an instrument, and (hopefully) a fairly good one^. Furthermore, it is an instrument primarily created in order to usher along a renovation and (mid- to upmarket) repositioning of the Gallery, as well as the development of more large urban commercial and retail, particularly above the Gallery and on the south side. This will all take time.

The Wet Seal that is--unbelievably--still holding on.

But PMH is right in that there appears to have been some progress in improving Market East over the past year. SSH has presented exciting plans for Girard Square, replacing the downtrodden tumorous toadstool sprouting out of what was once Snellenburg's with a large DC USA-esque development anchored by a (rumored) Target. If this is indeed true, then what about the remaining portion of the former Strawbridge's space?

At the Gallery--we accept food stamps. Is there any better a symbol for hard times?

Only three floors of Strawbridge's remain as leasable retail space: the basement, first, and second floor. These can be utilized in the same pattern as e.g. the Macy's in the former Jordan Marsh flagship, downtown Boston, or the generic three-story mall anchor, for that matter. The large size of the facility nevertheless allows it to be considered a "flagship" (Dillard's Norfolk flagship--a much younger store--has a comparable square footage to what's left), particularly when combined with the unique architectural class of the first-floor great hall, comparable with New York examples. All accounts agree that the bottom two (at the very least) must remain in retail use, but conversion of the second story to office use greatly endangers further viability of the Gallery's Strawbridge's atrium's upper half. Three options present themselves for this redevelopment.

What is Walgreen's missing? A mall concourse entrance, of course! Also, that Walgreen's is really grubby and skuzzy inside--much like the Rite Aid by the subway station--and it occupies a choice spot for much more upmarket options, like casual dining. Repositioning the Gallery will likely involve kicking them out.

1. Conversion of the entire site into a single anchor.
2. Conversion of part of the site into a main anchor, and the remainder into a sub-anchor.
3. Conversion of the great hall into a mall sub-court, e.g. the Pavilion at King of Prussia, flanked by basement and second story sub-anchors.

For both (1) and (2) a dominant department store must be found. Primary options are Boscov's, now healthy and expanding again; Bon-Ton, assuming they capitalize on current macroeconomic dynamics; J.C. Penney, whose new CEO was the former Apple Store kingpin; Sears, with Bon-Ton's caveat; Kohl's, which has no mall anchor stores in the Philadelphia market, or even penetration in the Center City market; Century 21, although its merchandising style (roughly equivalent to Daffy's and on-way-out Filene's Basement may not make it amenible to being a keystone in a strong branding strategy; and (less likely) Bloomingdale's or Lord & Taylor, both of who would likely favor space west of Broad (if available), or Dillard's or Belk, neither of whom have so far entered or even expressed interest in the Philadelphia market. Secondary anchors include Daffy's, T.J. Maxx, Marshall's, Kohl's (in its current Philadelphia-market format), Toys "R" Us, and any big-box anchor in the 50k sf range one can name. (Furniture showrooms are popular at the Pavilion).

The Black Friday view from higher in the post--today.

Option (3) includes the secondary anchors, and adds inverted inline through Strawbridge's main hall, possibly bounded by another secondary anchor. This formation, however, relegates anchorage to the Mellon Independence Center's retail--essentially, the Ross. (A later post hopefully treats this). It also loses the largest potential salable space in Center City--even if you were to empty out all the inline shops in the Shops at Liberty Place (again, later post) and replace them with a full-scale full-line department store, the total retail space would still be smaller (although perfect for a higher-end anchor, like Bloomingdale's or Neiman Marcus). It loses, in other words, one of the best department store sites in the City.

Mural Arts installs one of the first major examples of large signage on Market East. Another is 801 Market's leasing signs. Are any ads up on 1234 Market?

For these reasons, I favor attempting Options (1) and (2) before attempting (3); (3) is, in some ways, a sign of defeat. To me, the best option would be bringing Boscov's to the entire space, which is now down to a large full-line department store in size; with the Strawbridge's building fully occupied and Girard Square built, development attention would then focus on 800 Market (the original Gimbels, aka the Disney Hole) and 1301 Market. It may take some time for this--the Manhattan Mall is useful as a case study. For nearly a decade, from 2001 (when Stern's was folded into Macy's), to 2009 (when J.C. Penney moved in), the Manhattan Mall's primary anchor space lay vacant. And this was in New York--just off Herald Square, where Macy's flagship is!

This three-level skybridge links the Strawbridge's building with a large parking garage (facing Arch). It was originally built for both Strawbridge's and Lit's. Nowadays--assuming they are open at all--the top level enters the State offices, and next summer the middle level will link into the Inky offices. This will leave just the lower level to be linked into the retail mall. (As an aside, the former Lit's entrances all likely link into either hallways or office suites--if they are open at all.)

The Gallery could also stand to reposition its upper floors. For one thing, the current food court, down in the basement, is badly placed. Moving the food court to the top of the complex, and giving the dining area(s) great big south-facing windows would be a wise idea. With the conversion of Strawbridge's third floor to office space--why not put this in the top floor of the atrium at its concourse entrance?

Underutilized space in the Reading Terminal Headhouse.

The other major underutilized features are the parking garage entrances. One exists for each half of the Gallery, and the entrance to each is next to the west anchor. Gallery II's also features a rather serpentine pathway linking it with the concourse while bypassing said anchor (originally Penney's, now Burlington Coat Factory). This is a very odd layout by any standard; it would be much better to have the west parking garage skybridge entrance directly access the anchor instead, and utilize the serpentine corridor connecting the garage with the main concourse for either (a) an inline store (taking advantage of the available view, perhaps?), or (b) an anchor extension, possibly in terms of an in-store café or related amenity.

Bland blank walls fill this lower atrium. A service door, out of sight left, may be all that's left of a former subway access path.

Finally, we have to consider the third level of the former Gimbels anchor and its relation to Gallery II's uppermost floor. Between Stern's and Clover's usage of the space, the top three floors were all converted to office use; the only tenant there today is a large methadone clinic occupying the topmost floor and half the fourth. The third is entirely vacant. Part of the leasing problem likely arises from two facts: (1) The upper three floors were converted from retail to office use ca. 1990, and seem to have been untouched since, and (2) the property is the sole Vornado property in the city. Vornado, being a New York firm, is likely trying to market this property at New York or Boston-type rent levels--no wonder, then, it is in a state of perpetual vacancy!

The Market East Station entrance from the Headhouse atrium appears to be the least-utilized of the three, despite its also being the cleanest, in an atrium surrounded by blank walls rather than commercial offerings.

901 Market (confusingly, both this building and the Gallery bear the address 901 Market) has a basement and five floors. With a strong Gallery, two anchors could be stacked on one another (an semi-example would be the way the Nordstrom in Westfield San Francisco is stacked on top of inline stores) or perhaps Westfield's own solution. Another key to this structure is how the fifth floor is used--this is the space currently filled by the methadone clinic (a very marginal use, by the way); it could be offices (Gallery offices? doctors' offices?), storage, a third floor of an upper anchor (either paired with a lower anchor, or with the current anchor floors converted to inline mall space, preferably with a new atrium hollowed out)--but all this assumes a retail conversion of the top half of the structure. What if an office tenant is found instead?

A strange door.  An old subway entrance? The Reading certainly once would have maintained a subway entrance to its station. One possibility to pursue would be (re)connecting it to the subway concourse, and enlivening the concourse along with the atrium. In the long term, closing the 11th and 13th street subway platforms and opening a new one at 12th needs to be considered (keeping the free transfer to the trolley platform open, of course); this would also strengthen what is a quiet little nook.

Enter Plan B. Finding an anchor, or anchor series, for the top half of that structure would strengthen Gallery II's top floor's position vis-à-vis inline retail; if none is forthcoming, however, the inline option should just be abandoned and the whole top floor converted to either a big-box sub-anchor or perhaps office space with an atrium view. This may be done by preserving the parking garage connection already discussed, and having it used to access the sub-anchor directly; office space conversion of the top level should also come with a sealing-off of the west anchor's topmost mall concourse entrance. (Office conversion should also make use of the built-in lobby space for the as-yet-unbuilt tower.) In all cases, however, having a direct entrance from the parking garage to the west anchor (currently Burlington Coat Factory) remains--or seems to--a good idea.

Closeup of the sign.

Final Gallery thoughts. The narrow serpentine mall corridor that parallels 10th St. should be eliminated; the newstand and, er, jewelry store along it moved to elsewhere in the mall. The corner parcel(s) so created can then be marketed to a casual diners: casual, chain eateries, particularly those with al fresco seating would have the triple purposes of (a) enlivening the Market Street streetscape, (b) catering to tourists' taste buds, and (c) encouraging people (tourists) to tarry (and therefore spend money at the Gallery). Halfway down the block, however, a new grand midblock entrance to Gallery II from Market should be called for; this will necessitate the closure of the Gallery II Payless as well as (probably) the wig shop above it. And if the Gallery is to be successful, it must link with the Marriot, Reading Terminal Market, and Convention Center in the Headhouse in such a way as to strengthen the links between all three--the opposite of the case today.

The Field House bar presents a certain quandry. For positives, it is an active use in an otherwise relatively moribund Headhouse; but for negatives, its space would be much better used bringing the Reading Terminal Market to the Convention Center and Gallery. The Headhouse could be a gate, a unique connector; today, it dispels everything from it at least as much as it connects.

Moving west to the Reading Headhouse, we have the problem of an underutilized and devoid space. The Headhouse is characterized by a large atrium, with each of its levels offering front-door access to major Market East features: the basement for Market East Station, basement and ground floors for the Gallery (ground via the concourse behind the Aramark Building lobby), ground floor for the Reading Terminal Market, and second floor for the Convention Center and Marriot hotel. But this atrium does not knit these attractions together, as it should; instead, poor design decisions and lethargic leasing actually repel them somewhat. Wayfinding is a bit of a problem; however, the key move to be made is to bring the Terminal into the Headhouse.

The current passage between the Headhouse and the Reading Terminal Market. A walk of pure boredom, followed by dodging traffic on Filbert. Certainly not a very inviting entrance to one of Center City's great destinations!

This would be done by a very simple move: move the Field House to wherever they so please, and open their space up as an expansion of the space-strapped Terminal. This would net them as much space as their current expansion project. (Closure of the 1100 block of Filbert may well also be desirable.) And let the Terminal Market flow down into the atrium and out the front door--perhaps as rotating display installations, punctuated by a weekly farmer's market (inside in the winter and inclement weather, outside otherwise). Such displays could be flowers for the Flower Show; buggies for the Car Show; festive Advent and Christkindl Nacht displays for the holidays; and so forth. Possibly even move key Terminal Market institutions into spaces surrounding the atrium. In other words, the Headhouse becomes the front door for the Terminal Market, which picks up the slack generated by the fact that none of the other institutions' front doors are in this building. It also better publicizes the Terminal Market and makes it effectively a Gallery anchor.

How much traffic does Filbert get here? Closure of the street and making the Reading Terminal Market one continuous facility may not be a bad move. A Market that extends from the Headhouse atrium to Arch would be larger and able to handle more stalls; it would also be more visible from Market, especially if it's allowed to spill out from the building.

Been talking too long. (This post took me four days to write!) I'll stop yapping now.

Filbert behind the Gallery. No fewer than three large parking garages, and a very low-slung bus terminal. Moving the bus terminal to a space off of the Gallery's service drive was an idea kicked around in the most recent Market East plan, filled with generally good ideas despite (or perhaps because of?) its being kludged together when Foxwoods-to-the-Gallery seemed imminent. If this is done, however, access to the bus bays from likely waiting areas becomes a major problem. On the plus side, it also opens up land the current depot sits on for development.

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* Stern's seems to have snapped the Gimbels lease right up.
** Had this happened, it is likely that the former Gimbels (whose retail space was curtailed to its bottom three floors, two of which were occupied by Clover and later Kmart, ca. 1990) would have either (a) been converted into a Men's or Furniture store (there are examples of both), or (b) lain vacant much as Strawbridge's has for the past five years.
*** This also makes Bon-Ton's shedding of its (historic) Carson's and Younker's downtown locations seem particularly short-sighted. Bon-Ton did develop a bad habit of vacating the downtown stores it acquired, starting(?) with Allentown's Hess's.
^ Which is partly why I helped found, and continue to maintain, the Concerned Citizens for Market East. The sign bill offered a useful instrument for reinvestment, and the policy line being held by SCRUB was definitely not going to do the job. Indeed, over the past two years they had made themselves look silly by protesting what was entirely reasonable large signage at 1234 Market and on the Thomas Lofts' party wall.

Death of a Retailer

The bankrupt bookstore, Borders, announced a couple of days ago that it will liquidate its remaining assets, after a deal with the Najafi Companies fell through. Borders was the second-largest bookstore chain in the U.S., after Barnes & Noble, with a presence in most of our larger cities and urban areas. (The third largest, Books-A-Million, is a long way behind, with locations primarily in the Southeast and a brand that lacks, um, gravitas.)

A lot of people, me included, grew up browsing the local library, Borders, and Barnes & Noble, picking something off the shelf that looked interesting, and learning about topics as disparate as high literature, philosophy, and cosmology. More so than any other bookstore, Borders was a place where you could just plop down and read and sometimes even doze. While that might have been a problem, in terms of business-model sustainability, it certainly made Borders feel like the center of a community--a private but publicly available information repository.

I grew up with Borders. My mom worked next to one, so whenever I had to wait for her I waited there. Whenever I found myself having to wait in Center City, I waited at the Borders at Broad and Chestnut. Most of the books I bought, I bought from Borders. They were always my favorite bookstore--the first one opening up in my area had been a revelation. I've never really felt at home in Barnes & Noble's stacks; I'll miss Borders.

So what's next? A big push by Books-A-Million? The company is far too small to compete with B&N--and even then B&N hasn't been having a good year? What about Amazon deciding to maintain a physical presence alongside a Web presence? (Its market is the descendant of mail-order, after all, and it would be following in the footsteps of brands such as Sears and Montgomery Ward.) American expansion by the Canadian chains Indigo and Chapters? (Kobo, because of Borders, certainly has some American presence.) Or of European and Oceanic firms, such as Waterstone's, W.H. Smith, fnac, Weltbild, Angus & Robertson, or some other established chain? Or a contraction of the publication industry in general? (I hope it's not that, I want people to read.) But there's the rub--despite the doom-and-gloom claims that Borders went bankrupt because its core business model wasn't sustainable (especially in wake of Amazon), the fact that so many other companies are successful in their fields, coupled with bad business decisions Borders made (most especially its early-2000s partnership with Amazon, which really served to poach Borders' customers), and the destabilizing effect of the recession, was more what brought the store down. The need to browse is human, and these big chain bookstores are consequently always stuffed with browsers. Browsing leads to impulse purchases: this creates a market bricks-and-mortar retailers can capitalize on that mail-order catalogs Internet retailers can't. This is why firms such as Sears and Ward's made the leap from the catalog to the showroom and physical store--and why the physical store will never die: because the psychology of the shopper changes subtly from the catalog (or website) to the physical store: the site feels more like a wish list ("what if?") while the store feels more concrete, more there, and easier to think about getting. Impulse purchases on Amazon are unlikely; at Barnes & Noble, they're a certainty.

Say My Name

 Any publicity is good publicity, they say. CCME got face time in the Daily News today. Check it out:

Temple student Stephen Stofka, who started the Facebook group Concerned Citizens for Market East, said that there's almost no signage on Market East now, at least none that you can see from Independence Mall.
"There's an invisible wall here," he said at 6th and Market. "Why would anyone walk up there? It looks boring."
Stofka walked around Market East and The Gallery for an hour one recent day with the Daily News, unable to hide his concern.
"It's not rocket science to know that this parking lot shouldn't be here - it's taking up valuable land," he said, pointing to a street-level lot at 8th and Market, also known as "The Disney Hole." (Disney's plans for an indoor amusement park at the site failed.)
The Goldenberg Group owns two acres on Market between 8th and 9th. Senior partner Robert W. Freedman said in a statement that the company is "continually analyzing retail, hotel, entertainment and office uses to sculpt a dynamic mixed-use project that will add vitality to Market Street East."

Ain't that nice?

Market East

I spent most of the day today (technically yesterday) at the Council meeting discussing the large signage bill on Market East.

I am in support of this bill because (a) legalizing any and all funding sources should provide stronger development financing and leveraging, (b) the outside of the Gallery looks like crap, and (c) it's in keeping with Market East's historic character.

Which is why I find the "historic" argument by the opposition so ironic and hilarious. Each opposition group repeats the same claim: Market East is a historic district. It is not. It is a smattering of historic buildings (Lits, Strawbridge's, Wanamakers, Reading Terminal, PSFS, etc.) in a fabric largely rebuilt between 1950 and 1980. The (lack of) density of the historic buildings doesn't merit historic district consideration. And furthermore, since so many of these buildings were built with retail in mind, they sported large signs from the very beginning. Robbing them of their signs robs them of their real historic nature and creates a false history, one in keeping with a mentality that the only things in Philadelphia worth keeping were built before 1800.

Market East's history is one of a retail and commercial heart of a city. It is like Boston's Downtown Crossing, New York's Herald Square, Toronto's Dundas Square, San Francisco's Union Square, Chicago's Historic Loop, Minneapolis' Nicollet Mall, London's Piccadilly Circus and Regent Street, and hundreds of other examples globally. Such centers have always been populated as signs as big and fancy as then-current technology allowed. To say otherwise countermands their history.

It is thus unsurprising that the most satisfying intersections on Market East are at 12th and 13th (especially when 1234 had that Dunkin' Donuts billboard in). This is because they are activated, and part of their activation is their signage. The Hard Rock guitar, an incised Marriot sign, the signs for Sole Food and Loews Hotel, the Convention Center, Macy's' display windows...all of this results in the skeleton of some reasonably lively corners. By Market East standards, they're positively tripping.

We must not distract from pedestrian amenities (or their lack thereof). But most the historic assets of Market East have been redeveloped, and further redevelopment needs to happen now on the multitude of underutilized properties (650 Market, the Disney Hole, 910-50 Market, 1000 and 1100 blocks of Market, 1301 Market...) that surround and besiege the historic properties. And to do that as many funding sources as possible must be tapped. Philadelphia's sign ordinance is, when enforced, among the most restrictive in the country. Maybe it's time to concede that, in Market East's case, it's too restrictive, and needs to be relaxed.

Our Retail History

I was a dinner party tonight when I noticed that the silverware was made in Sheffield, England, for John Wanamaker. Sheffield is no longer a manufacturing center and John Wanamaker's ceased to exist twenty years ago. The store is now another downtown Macy's, with far too much office space and far too little retail space.

Nearly all of our most important retail history over the past century--the most iconic brand names--John Wanamaker, Gimbel Brothers, Marshall Field, Filene's, Hecht Brothers, and so forth--have been lost. So many department stores lost...