This fall, Pope Francis, the Dalai Lama and the Forbes Under 30 Summit will descend upon Philadelphia, putting the city in a spotlight not seen in many years. Next July, it’s the Democratic National Convention that will come to town, bringing with it throngs of delegates and tourists who like to shop.
They’re in the right place.
Since 2013, 25 national stores have come to Center City Philadelphia and nine retail-driven developments have been built or are under way in Center City. In the next few years, more than 2.3 million new square feet of fresh retail space is expected to be added to what has already helped earn it the number-two spot on Condé Nast Traveler’s list of best cities and neighborhoods in the world for shopping and fashion, as chosen by the magazine’s readers, behind Barcelona. In 2014, national stores making a big splash included a 100,000-square-foot Century 21, a 39,000-square-foot Nordstrom Rack, and a 29,000-square-foot Uniqlo, which is the Japanese fast-fashion giant’s only free-standing flagship outside of New York.
But it wasn’t that long ago — 2007, to be precise — that Michelle Shannon, vice president of marketing and communications of the Center City District, sat around a table with brokers, developers and retailers wondering how they could attract more stores to plant a flag in the district.
The data seemed strong enough to entice businesses to come to town: Since 2000, population increased 16 percent downtown. According to the 2015 State of Center City report, Millennials (ages 19-34) now represent 40 percent of the greater Center City population and household incomes are hovering around $107,000.
But back then, brokers had a hackneyed image of the city.
“People thought Philadelphia was an old Rust Belt, blue-collar city that was unsophisticated and whose main diet consisted of cheesesteaks and soft pretzels,” said Shannon.
So she gathered a team that could show outsiders the “new Philadelphia story.” Shannon formed The Philadelphia Retail Marketing Alliance in 2008 to improve the quality and quantity of Center City’s retail offerings. PRMA started advertising in trade publications and chatted up the city at retail trade shows. A glossy promotional piece, with images of independent stores and restaurants along with testimonials was presented to potential leasees. A site was created, Philadelphiaretail.com, to highlight shopping; it has an accompanying campaign with the tagline “Be In On It.” Shannon brought fashion designers to the Eventi hotel in Chelsea to meet writers and tell them about the fashion scene in the city. She paired with partners visitphilly.com, the convention and visitors bureau, and the City of Philadelphia and held a press conference in New York to say “give us a look.”
Laura Krebs Miller, vice president of Cashman & Associates, a public relations and marketing firm, invited writers to check out firsthand what Philadelphia retail was all about. She took them on tours of top shopping neighborhoods, experiencing The Philadelphia Collection (Philadelphia’s version of fashion week) and visiting the design spaces of the Philadelphia Fashion Incubator at Macy’s, both initiatives that were outgrowths of the PRMA.
“Many hadn’t been to Philadelphia in seven to 10 years,” Miller said. “They couldn’t believe how incredible and lively the whole scene was — shopping and dining, arts and culture. Writers would often make comparisons — while shopping in the boutiques and designer co-op shops in Old City neighborhood, they’d say ‘This reminds me of Cobble Hill in Brooklyn, or The Village.’”
“The surge of Philadelphia’s retail offerings and commercial development over the past several years is a reflection not only of our city as a highly desirable place to live, work and visit, but also of the determination of the individuals on a civic level that work through the mechanics of the infrastructure to help make it happen,” said Mayor Michael A. Nutter. “There is heavy investment from the City in seeing these large-scale capital projects and marketing efforts through and we’re proud of how far we’ve come. It is a significant time for retail in Philadelphia.”
Over the past few years, national brands have flocked to Walnut Street and Center City West, one of the city’s prime shopping districts. One retail pioneer, Joan Shepp, long held a coveted spot on Walnut Street but when retail demand increased and rents rose there, she seized the opportunity to move to bigger digs at 18th and Chestnut, where she now has a 9,200-square-foot store with rooms of apparel and accessories, from buzzy to contemporary to edgy — J.W. Anderson, The Row, Maison Margiela, Moschino, Public School, Sonia Rykiel, 3.1 Phillip Lim, Dries Van Noten and Nicholas Kirkwood among them.
“Rents in Center City District range from $30 a square foot on the residential corridors to $225 a square foot on Walnut Street, the city’s most highly sought-after shopping and dining high street,” said Douglas J. Green, principal of MSC Retail. “Over the past five years, rents have increased by 25 percent in some portions of CCD, to nearly 80 percent in others. This rent growth has been spurred by significant increased demand in residential growth and minimal new product added to the market.”
While Rittenhouse Square was the crown jewel of Center City retail, there is growth in so many neighborhoods now, according to Jacob Cooper, partner and managing director of MSC retail, a family-owned boutique real estate firm. “When you walk the blocks, there is an energy. There is so much construction going on. There are 60 colleges in the region, and [students] have never been interested in living in Center City. But now there is nightlife. It began with the election of (Mayor) Ed Rendell, who was interested in the renewal of the district. In the early Nineties, more businesses came here and in the late Nineties there was a resurgence on Walnut Street.”
Cooper added it’s never been easier to sell Philadelphia.
“Suddenly there was a whole gamut of retailers willing to plant a flag here — from luxury brands to fast fashion. There are store openings every week, it seems,” said Cooper. “Now there are Vince, Bloomingdale’s and Michael Kors.”
The retail footprint is expanding with the development of the area near The Gallery and the Market East area, which the late, renowned developer Tony Goldman started in the late Nineties.
Just last fall, Century 21 took over two floors of the former Strawbridge’s department store. C21 will become the anchor for the new Fashion Outlets of Philadelphia at Market East (formerly The Gallery). Eddie Gindi, executive vice president of Century 21 Department Stores, said his team spent a year visiting and researching Philadelphia while exploring several other cities for their first store outside of New York. “Philadelphia’s culture, wealth of like-minded consumers who align with our mission, combined with the city’s proximity to our operations hubs, ultimately drove our decision.”
The strength of the Millennial mind-set was also a contributing factor. In a year, C21 has seen strong sales in men’s and women’s European departments, women’s contemporary and European labels in the children’s and teen’s categories.
Right next door, construction is under way on the former Gallery. The City Council this summer approved a $325 million, two-year remake of the 1.4 million square-foot mall, built in 1973, which will be reimagined and called the Fashion Outlets of Philadelphia. The Pennsylvania Real Estate Investment Trust bought the mall in 2003; it owns nine malls in the region, 32 in the country.
“We definitely don’t want to create just another downtown mall. It’s important that the experience is curated,” stated Joe Coradino, chief executive officer of PREIT. “In addition to shopping, there will be dining, entertainment and events. I like to say we’re going to create a ‘gotta go’ experience, so people tell their friends, ‘When you go to Philadelphia, you gotta go see Fashion Outlets of Philadelphia.’ So we, and our partners, are focused on crafting the right mix of tenants to satisfy the diverse audiences we’ll have.”
Retail expansions are being seen in the suburbs as well. King of Prussia Mall is undergoing its ninth expansion in its 52-year history. This latest will feature 170,000 square feet of retail and restaurant space, according to Kathy Smith, director of marketing and business development. Twenty luxury brands will be in the new section, 15 of which are new to the Philadelphia area and to date include CH Carolina Herrera, Robert Graham, Mitchell Gold + Bob Williams home furnishings, Microsoft and a Burberry flagship. The mall currently does about $1 billion in sales a year and receives around 20 million visitors annually.
“Why expand now? There is a demand by tenants to be in the best malls in America,” said David Contis, president of Simon Property Group. “Good malls have a demand for space. “It is not just the luxury customer who shops here. It is young and old, wealthy and middle class.” Millennials are also a target audience Simon wants to appeal to. “They want to shop, walk to the movies and eat out. People want to gather and socialize, so will have five new restaurants. We want to create an environment where they want to stay longer and shop. “