Design within Reach scraps plans for big East Market project

Design Within Reach has cancelled plans for a 15,000 square foot showroom that was to be part of East Market Development.

Design Within Reach had big plans for a 15,000-square-foot furniture and accessories showroom in downtown Philadelphia as a tenant of the much-ballyhooed East Market project. It was also to mark the brand’s return to the city.

But those plans have been scrapped.  Instead, the retailer, known by the initials DWR, announced it would open its first showroom in Boston as well as a new outlet store in Oxnard, Calif., about 60 miles northwest of Los Angeles.

“A Philly showroom wouldn’t be profitable,” said a company representative in the New York Design Within Reach showroom, who spoke on condition of anonymity because he was not authorized to talk about the project. “The decision was made last month. The numbers didn’t add up.”

MSC Retail represented DWR for the site at 11th and Ludlow Streets, attached to the 4.3-acre East Market project, which has been heralded as a critical piece of the long-neglected corridor’s retail, office, and residential revival.

The pedestrian-oriented development is intended to revitalize an entire block, stretching from Market to Chestnut and 11th to 12th Streets, and include 175,000 square feet of office space, 322 residential units, and 130,000 square feet of retail and restaurant space.

MSC confirmed Design’s pull-out and declined further comment. Calls and emails to Design’s corporate headquarters in Stamford, Conn., were not returned.

DWR closed its Walnut Street location in 2010.

So it was a coup on March 2, 2016, when DWR’s president, John McPhee, announced that the retailer was returning to Center City and that it was looking to join the other East Market tenants, including LHE Design Center and MOM’s organic market, in “a transformative mixed-use development leading the resurgence of activity east of Broad Street.”

In the same news release, Dan Killinger, managing director for National Real Estate Development LLC, which is developing East Market, said Design’s commitment “affirms our vision to deliver a neighborhood at East Market that serves as that hub for creatives, innovators and young professionals who value design and creativity.”

In a text message on Tuesday, Killinger said he did not know whether a replacement tenant was in the works.

Some say the tough retail environment and the oversupply of stores in Center City may have forced DWR to change course and focus on other cities.

Herman Miller Inc., which owns DWR, also announced flat results for the fourth quarter ending June 3, 2017, with net sales of $577.2 million, a decrease of 0.9 percent from last year. New orders in the fourth quarter were down 6.3 percent from the previous year.

Last week, another key east-of-Broad project announced a name change and a new focus away from retail. The former Gallery Mall at Market East, scheduled to be renovated into the Fashion Outlets Philadelphia, will now become instead Fashion District Philadelphia, with more emphasis on dining and entertainment, and less on outlet shopping.

Over the last few months, competitors in the furniture sector have also moved in on upscale Walnut Street, where DWR used to be.

Last fall, Thos. Moser opened a showroom on 1605 Walnut St. Last month CB2, a younger, hipper version of Crate & Barrel, signed a lease for the 1422-24 Walnut St. space now occupied by Kenneth Cole, Lacoste, and a physical therapy office.

A recent Inquirer article found that retail real estate rents in Center City have fallen about 10 percent this summer from last summer after several years of growth, largely because of over-supply. Other factors include the continuing surge in online shopping and the many national chains closing stores, leaving vacancies along Walnut and Chestnut, the two streets that comprise the core of the Rittenhouse Shopping District.