PREIT, Macerich $107 Million Investment to Redevelop The Gallery
- Jul 30, 2014
The Gallery at Market East, one of Philadelphia’s largest urban malls located in the heart of the city, is about to get a major makeover. Pennsylvania Real Estate Investment Trust (PREIT), which owns the 1.4 million-square-foot property, announced this week a joint venture with Macerich to revamp the bleak mall into the city’s only multi-use property that will offer accessible luxury retailing in the Center City area.
As such, the California-based investment trust will invest nearly $107 million to redevelop the 40-year-old shopping complex located at 9th and Market Streets. Under the terms of the agreement, Macerich will acquire a 50 percent common ownership interest in The Gallery. Furthermore, the development, leasing and management of the mall will be handled jointly by the two partners, while the companies will also split the costs related to future development projects at the site.
Built in 1977 in an effort to encourage the urban shopping experience in downtown Philadelphia, The Gallery was designed by Bower and Fradley/Bower Lewis Thrower and Cope Linder Associates. Over the years it became a popular shopping and dining venue for visitors, office workers and city dwellers; however, according to Naked Philly, some voices went as far as to name it an “architectural failure” because of its unattractive, box-shaped design and bland façade. In 1984 the shopping complex expanded as Gallery I on the east side and Gallery II on the west, but the expansion did nothing to create the expected buzz for the corridor between the city’s historic district and all the hype in the downtown area.
PREIT purchased Gallery I from The Rouse Company in April 2003 in a $469 million bulk acquisition that also involved Cherry Hill Mall, Moorestown Mall and Exton Square Mall. One year later the real estate investment trust paid around $32 million for Gallery II, according to a report on the transaction by the Philadelphia Inquirer.
The Gallery’s current anchor tenants are Burlington Coat Factory, Old Navy, Five Below, and Modell’s Sporting Goods. Century 21, a New York-based discount designer department store, will officially join the mall’s anchor tenant roster in October when it opens its first flagship store in the city. According to the Philadelphia Business Journal, earlier in April the retail chain leased 100,000 square feet of space at the former Strawbridge & Clothier store at The Gallery.
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Images via Google Street View and The Gallery’s Facebook page