Chestnut Street is a desired locale for stores

With cheaper rent and wider buildings, the retail roster on Chestnut Street in Center City has been revitalized from its five-and-dime-store days.

The list of newcomers on Chestnut, between the 1500 and 1900 blocks over the last year and a half, is a variety of established national brands. They include American Eagle Outfitters, Uniqlo, Banana Republic Factory Outlet, Forever 21, and Nordstrom Rack.

More are coming. Bloomingdale's Outlet plans to open a 22,000-square-foot store at the Shops at Liberty Place at 1625 Chestnut before the end of the year.

Restoration Hardware and Design Within Reach are also looking at opening large stores on Chestnut Street, according to real estate sources.

"Chestnut Street is a reflection of the overall demographic change in Philadelphia to a younger, better-educated demographic that is earning more money," said John Usdan, president of Midwood Management Corp. of New York, which owns several Chestnut Street properties.

Many retail and real estate experts say Nordstrom Rack's 40,000-square-foot commitment last October at 1700 Chestnut, was the catalyst for the recent wave of retailers lured to the area. The retailers leased four floors on the coveted corner building owned by Pearl Properties and are paying more than $2 million in rent a year.

"Once they decided to commit to the street, other important, national retailers followed - Uniqlo, then Forever 21, Five Below, and Bloomingdale's Outlet," said Larry Steinberg, senior vice president at CBRE, who handled the Nordstrom Rack deal and several others on Chestnut Street.

"Nordstrom is widely regarded as the best retailer in the business, so clearly their commitment to Chestnut Street was the catalyst to encourage the other retailers to follow," he said.

Brokers and landlords say national retailers now recognize Chestnut Street as an alternative to the Walnut Street shopping corridor if they want bigger spaces at lower rents.

"They can take multiple floors and reduce their occupancy costs per square foot," Steinberg said. "The first floor commands the highest rents."

Five Below, for instance, also took basement and second-floor space at 1529 Chestnut St., the site of its new flagship store that opened last month.

"The ability to have a footprint over 10,000 square feet was most important to us," Joel Anderson, CEO of Five Below, said Thursday. "That size footprint is hard to find in a prime Center City location along Chestnut Street or Walnut Street."

Both streets started life as residential streets in the 1800s. But the blocks on Chestnut are much deeper than those on Walnut. On the south side of Chestnut, they reach all the way to Sansom Street, or about 200 feet.

On Walnut, the width is much less, about half, because of alleys on both sides of the street.

In 1976, the city built a transit way along Chestnut and eliminated car traffic from the street, which essentially killed customer traffic.

Not until 2000 did the city do away with the transit way and reopen Chestnut to cars.

With the recent revitalization under way, commercial rents on Chestnut Street have more than doubled. The price has gone from $30 a foot five years ago to $70 a square foot for first-floor space, Steinberg said.

For Chestnut Street corners, such as the space Nordstrom Rack occupies, the rate is $100 to $150 a square foot, he said. Five years ago, it was half that.

Andi Pesacov, senior director of the retail division at Cushman & Wakefield, said Bloomingdale's Outlet will take space on the first and second floors at Liberty Place. The store's entrance will face the corner of 17th and Chestnut Streets.

Pesacov said Walnut Street, with its A-list retailers, and Chestnut Street, with its growing array of name-brand discount stores and outlets, are working in tandem.

"You try to create high-end retail on Walnut and lower-end retail on Chestnut," Pesacov said, "and they are one block from each other.

"You try to get that customer who will spend $300 on a pair of jeans at Charlie's and $20 for a top at Forever 21," she said. "That's the customer in Philly."

Jeanette Fairley, 60, of Southwest Philadelphia, likes what she sees. Carrying two shopping bags, she headed toward the Shops at Liberty Place on Thursday, her favorite haunt along Chestnut Street.

"It's definitely gotten better," she said of the shopping. "I like it. You have a lot of choices here now."

Two Target Express stores announced plans for 1900 Chestnut and the 1100 block of Chestnut. Both are expected to open in 2016, along with a new Old Navy at 1622 Chestnut in the old Art Institute Building.

"Absolutely, there's been a lot of tremendous, positive momentum on Chestnut the last few years," said Jacob Cooper, managing director of MSC Retail, a retail advisory services firm in Center City, which has brokered many of the lease deals. "It seems like an announcement of a deal is being made almost weekly at this point."

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