CRE Players Call For Public Investment In Struggling Market East
Market East remains a sore spot for Philadelphia’s CRE landscape, and major players say it needs to be improved.
Retail vacancy and public safety concerns have been barriers to development in the city’s historic commercial core, industry executives said Wednesday at Bisnow’s Philadelphia Power Players Summit, held at the Ballroom at the Ben.
“It’s an experience, but it’s not the type of experience you want,” Hersha Hospitality Trust Chief Financial Officer Ashish Parikh said of the neighborhood.
Many stakeholders had pinned their hopes for Market East on the Philadelphia 76ers replacing part of the Fashion District shopping mall with a new arena at 12th and Filbert streets. A new path forward for the area has remained elusive since the team pivoted away from that proposal late last year.
The mall, which was known as The Gallery before it was redeveloped by PREIT and ultimately taken over by Macerich, dominates the corridor. But real estate executives say it isn’t much of an asset.
“The real issue there is what’s going to become of the Fashion District,” Alterra Property Group Managing Partner Leo Addimando said. “I don’t have a good answer for that, but I think it’s going to take a lot of money.”
While he and other panelists stressed the need for public funding, Post Brothers co-founder Matthew Pestronk said market forces are better equipped to redevelop the neighborhood.
“Public money is somewhat needed, but I think the more the private sector can do, the better,” he said, highlighting the industry’s success revitalizing Fishtown and adjacent neighborhoods.
Owners have plans to redevelop several properties between Seventh and 12th streets, but Pestronk said “someone has to go first” to kick off a wave of revitalization.
A big part of the problem is vacant retail and a lack of foot traffic in the labyrinthine tunnels that connect Southeastern Pennsylvania Transportation Authority rail stations to the Fashion District and several other buildings.
A similar passageway connects Suburban Station to Alterra’s office-to-residential conversion at 1701 Market St.
“They were quite vibrant 20 years ago. They might have even been vibrant before Covid,” he said.
But that is no longer the case.
“Is not a pretty sight. … I don’t know that I’d want to be there at night,” Addimando said. “It’s going to take a lot of public and private money to reinvest in those spaces to make them welcoming.”
Parikh mourned the Sixers’ pivot and drew comparisons between his aspirations for Market East and the neighborhood around Penn Station’s new Moynihan Train Hall in New York City.
“The whole Penn district has some of the highest rents,” he said of the area flanked by Times Square and Hudson Yards. “I can come into Moynihan, I feel safe, I can have dinner at one of the restaurants, I can go to Madison Square Garden.”
Part of Mayor Cherelle Parker’s response to the Sixers’ pivot was the creation of a revitalization committee for Market East, helmed by Brandywine Realty Trust CEO Jerry Sweeney.
Few updates from that group have been shared with the public since, but executives at the Bisnow event said they still had faith in the mayor.
Addimando commended Parker’s focus on public safety and affordable housing.
“The current mayor has done a really good job of reempowering the police and making the core of Center City safer,” he said. “All the crime stats are staggeringly low.”
Pestronk said Parker is “excellent” but has been dealt a hand that makes it politically challenging to implement business-friendly policies.
Addimando highlighted what he characterized as a lack of political sway from the Philadelphia Department of Commerce as an important part of this, but the agency’s deputy commerce director, Dawn Summerville, disagreed.
“It can be redeveloped and reimagined,” she said of Market East. “We’re happy to meet with any of you at any time.”
