Retail futurist says to keep Market East a shopping destination
Is Market East’s role as a regional shopping center firmly in its distant past? Should city officials and planners be figuring out how to turn the historic retail district into more of a mixed-used neighborhood, with a lot more housing?
That’s the opinion of many people who spend their time thinking about the corridor’s future.
“We need more places to live and work on the upper floors of buildings, driving demand for animating places to play and gather on the ground floor,” wrote Prema Katari Gupta, CEO of the Center City District, in a recent Inquirer article.
Not everyone thinks so, however.
It’s perhaps a minority view, but there are a few voices out there suggesting that Market East can still flourish as a primarily retail destination. Mayor Cherelle Parker may be among them; last fall she said Philadelphians should be able to access “quality retail… right here in our city and on Market Street like we used to.”
More middle-market chain stores?
Another is retail futurist Michael Berne, of MJB Consulting, who has analyzed and written about Center City’s retail environment.
He says high-end retailers who are looking for space are more likely to head to the Rittenhouse Square area, but middle-market and value-oriented stores still stand to do well on Market East by serving residents of neighborhoods just outside downtown, as well as tourists.
“Tourists like shopping and chains where they go on vacation. It’s not necessarily a bad thing,” he said in an interview. “The retail mix along Market East can be tweaked, can be expanded, but I don’t have a problem with it [as it is now]. Nor do I necessarily think there’s a tremendous amount of opportunity in trying to make it something else, something that it’s not.”
Berne is even a fan of the Fashion District, which is often panned as a failure but which he says serves a need and is doing fairly well compared to similar shopping areas elsewhere.
As of a year ago, it had an 80% retail occupancy rate, he said. That’s well below the national mall occupancy rate of about 95%, but much better than places like State Street in Chicago, which is reportedly half empty.
Across Market East, retail occupancy is roughly 83%, according to the Center City District.
“Downtowns, to me, are crossroads of the entire city and should not be islands of affluence,” said Berne, who is based in New York and the San Francisco area. “It’s OK to have middle-income retail on Market Street. I think a lot of Philadelphians are quite happy to have those businesses there.”
Competition for tenants
About half of the Fashion District was supposed to be demolished to make way for 76ers Place, and its future is now unclear.
Its owner, the giant California-based mall operator Macerich, has been selling off its less-profitable properties, and Berne said the question now is whether the Fashion District is purchased by a “second-tier” or outlet mall-type company, or goes to a “bottom-dwelling” owner who lets it languish.
Some, like Harris Steinberg, executive director of Drexel University’s Lindy Institute for Urban Innovation, have described the inward-focused mall as one of the corridor’s biggest redevelopment challenges and said it may need to be torn down.
Another challenge for the mall is that it may be competing for tenants with other large retail sites like the Wanamaker building at 1300 Market, Berne said. With the building’s flagship Macy’s set to close in March, developer TF Cornerstone reportedly intends to subdivide the space for several smaller stores.
“Presumably, Fashion District has already reached out to some of these same tenants that Wanamaker’s might be offered to, so maybe it will come down to whether they can just get a better deal now at Wanamakers,” he said. “There’s only so many tenants that are looking for larger floor plates right now.”
TF Cornerstone owns the Macy’s space and is in the process of purchasing the upper floors, which it plans to turn into loft apartments, as it has done in several New York buildings, and other uses. The company said in a statement that it’s committed to the building’s transformation and “the revitalization of East Market Street.”
“While the Sixers’ decision to remain in South Philadelphia changes the dynamics of the area,” the company said, “TFC looks forward to working with the City and other stakeholders to reimagine and reinvigorate this important corridor.”
Editor’s note: The article has been corrected to note that TF Cornerstone owns the Macy’s space and is purchasing the upper floors.
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