Philadelphia, June 18, 2015 – Mayor Michael A. Nutter signed City Council approved legislation that paves the way for a $325 million redevelopment of the Gallery at Market East Shopping Mall and the revitalization of the Market East section of Philadelphia.
“With the passage and signing this legislative package, one of the most transformative developments in Philadelphia’s history can move forward,” said Mayor Nutter. “This overhaul of the Gallery at Market East will transform this property into a destination that will benefit the Philadelphians who have known and loved the Gallery for many years, as well as attracting many new residents and visitors from the city, region and beyond.”
The project will be managed through a partnership between the Pennsylvania Real Estate Investment Trust (PREIT) and The Macerich Company, and is expected to create more than 2,000 construction jobs and 1,000 permanent jobs in the city. In addition, the project will generate more than $435 million in tax revenue over the next 20 years, including nearly $200 million in new direct tax revenue benefits to both the City and School District of Philadelphia.
The redevelopment of the Gallery was envisioned in the City’s 2009 Market East Strategic Plan, which called for a more active retail presence on Market Street and whose recommendations are incorporated in the proposed redevelopment. The Gallery will undergo a complete redesign and renovation that will transform the 1.5 million-square-foot mall into a bright, contemporary space, which reconnects to Market Street, provides for a dynamic mix of uses including entertainment, sidewalk cafes, office space and digital signage and includes approximately 125 new stores.
“We are thrilled that City Council and the Mayor have enacted the legislation that will allow us to begin the redevelopment of The Gallery,” said PREIT Chief Executive Officer, Joseph F. Coradino. “This $325 million project will transform East Market Street and retail in Philadelphia. Our goal is to create a welcoming and exciting destination where all Philadelphia residents and visitors can shop, dine, work and be entertained. We are very excited about our transformative plans for The Gallery. And as a lifelong Philadelphian, I can promise you that our priority is to create a spectacular new shopping, dining and entertainment complex that is worthy of Philadelphia’s reputation as a world-class city.”
The two-year project will transform the Gallery into The Fashion Outlets of Philadelphia at Market East, attracting new retailers to Philadelphia, 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 required approval from both the School Reform Commission and the Philadelphia City Council.
“I am proud to have sponsored the legislation for the renovation of the Gallery and I am grateful to my Council colleagues for their unanimous support” said Councilman Mark Squilla. “This project is an important component of the Market Street East transformation, as it will connect City Hall to our Historic District. I look forward to the re-birth of the Gallery as an exciting retail and restaurant destination for Philadelphians and visitors alike.”
The legislative package authorized the creation of a Tax Increment Financing District to support the construction of the project; restructured the lease and mall maintenance payments from the City to PREIT and Macerich in a manner that saves the public sector more than $187 million over the next 43 years; and provided the necessary approvals for street encroachments and signage.