MAYOR NUTTER ANNOUNCES CITY HAS REACHED TENTATIVE AGREEMENT WITH PREIT/MACERICH ON REDEVELOPMENT OF THE GALLERY

Project to be presented to Philadelphia Redevelopment Authority, School Reform Commission and City Council for approval

 

Philadelphia, April 15, 2015 – Mayor Michael A. Nutter announced that the City of Philadelphia has reached a tentative agreement with Pennsylvania Real Estate Investment Trust (PREIT) and The Macerich Company on a $325 million redevelopment of the Gallery shopping mall, which will revitalize the Market East section of Philadelphia.  The proposed plan is subject to approval by Philadelphia City Council, the Philadelphia Redevelopment Authority and the School Reform Commission.

 

“This once-in-a-generation project has the potential to transform Market East, create more than 1,000 new permanent jobs as well as more than 2,000 construction jobs, and offer a new shopping and entertainment experience to Philadelphians and visitors to our city,” said Mayor Nutter.  “The time has come for the long-awaited redevelopment of Market East and I want to thank all of the partners involved for their years of hard work to make this proposal become a reality.  This new attraction will be a place that all Philadelphians can enjoy for decades to come.”

 

The two-year project will transform the Gallery into The Fashion Outlets of Philadelphia at Market East, attracting new retailers, creating exciting dining and entertainment experiences for visitors and residents, and providing job and business opportunities to local companies and workers.  The proposal includes $90.5 million in public investment from the Commonwealth of Pennsylvania and the City of Philadelphia through a combination of state grants, $15.5 million of which has already been committed, and a proposed Tax Increment Financing (TIF) District which would generate a $55 million investment from the City.  The TIF requires approval from both the School Reform Commission and the Philadelphia City Council.

 

“The Gallery project and the more than two thousand jobs that come with it are welcome developments in our effort to revitalize Market East,” Council President Darrell L. Clarke said.  “As our City moves forward with a grand vision for Market East, we must be mindful of the existing businesses and workers who made The Gallery such an iconic part of Philadelphia. I look forward to City Council’s deliberations of the redevelopment of The Gallery, which will be done with the participation of those who have a footprint in The Gallery’s past and a stake in The Gallery’s future.”

 

The redevelopment of the Gallery was envisioned in the 2009 Market East Strategic Plan published by the City of Philadelphia, which called for a more active retail presence on Market Street and its recommendations are incorporated in the proposed redevelopment.  The Gallery will undergo a complete redesign and renovation which will transform the 1.5 million square foot mall into a bright, new contemporary space which reconnects to Market Street, provides for dynamic mix of uses including entertainment, sidewalk cafes, office space and digital signage, and includes approximately 125 new stores.

 

“The redevelopment of the Gallery will revitalize an entire section of Center City, helping to create a seamless corridor between the Historic District and City Hall, with new retail and restaurant opportunities for visitors and residents in Philadelphia,” said First District Councilman Mark Squilla, who represents Market East area.  “Together with the development on the 1100 block of Market Street (East Market) and the presence of the New York-based retail brand Century 21, the Fashion Outlets of Philadelphia at Market East will rejuvenate this shopping destination that has served generations of Philadelphians.”

 

The City of Philadelphia, with the Philadelphia Redevelopment Authority and PIDC, has worked closely with PREIT to develop a proposal that maintains access to public transit during construction and provides for improved access upon completion; ensures economic opportunity for minority, women, and locally-owned businesses through an Economic Opportunity Plan; generates almost $200 million in new tax revenues for the City of Philadelphia and the School District of Philadelphia; and provides for a transformative redevelopment of a strategically important section of Center City Philadelphia.

 

“Due to the historic and strategic nature of Market East, it is critically important that we get the redevelopment of the Gallery right.  With this proposal, I believe we will do just that,” said Alan Greenberger, Deputy Mayor for Economic Development.  “If approved, this development will fill a major gap in our downtown with a high quality, well-designed retail environment which will bring renewed life to Market East.”

 

In addition to the proposed Tax Increment Financing District, the City will continue to make payments toward the operation, maintenance and repair of the common areas that provide access to the transit system.  These payments will now be valued at $58 million and will cap and reduce the City’s existing obligations under the current lease agreements from 61 years to 43 years, representing a savings in excess of $100 million.  For their part, PREIT and Macerich plan to invest about $234.5 million to fund the renovation, in addition to the $250 million already spent to acquire control of the three-block complex.  PREIT and Macerich have also agreed to release the City from all past and future liabilities related to the Philadelphia Redevelopment Authority’s ownership of this facility.

 

“Thirty years ago, the Gallery was championed as the best of urban retail development, designed to strengthen Center City’s retail market and to compete with Philadelphia’s suburban malls,” said Brian Abernathy, Executive Director of the Philadelphia Redevelopment Authority.  “For many years that vision was realized.  Today, if approved, this agreement will allow the Gallery to reclaim its important role in Philadelphia’s retail environment while ensuring transit access, creating jobs and sustaining Philadelphia’s continued growth.”

 

Posted in Mayor's Press Releases, Press Release
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