Outlets are out, H&M and movies are in, as Gallery redevelopers retool

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Artist’s rendering of redeveloped Gallery at Market East shopping mall, with Fashion District Philadelphia signage.

Farewell, Fashion Outlets of Philadelphia. We hardly knew ye.

More than a year before the planned opening of their revamped version of the Gallery at Market East, the site’s developers have retired the project’s Fashion Outlets moniker, along with their plan for an emporium of outlet stores.

The reborn Gallery will instead be known as Fashion District Philadelphia when it formally opens next year. The new name reflects a “more expansive mix of retail, entertainment and dining,” the project’s owners — mall companies Pennsylvania Real Estate Investment Trust and Macerich — said in a statement Wednesday.

Philadelphia-based PREIT and Macerich of Santa Monica, Calif., also shed some light on who those tenants will be: fast fashion retailer H&M, which will open its largest store in the region at the site; deep-discounter Burlington Coat Factory, which is moving to a new space from its current location in the Gallery’s western-most building; and a “dine-and-recline movie theater,” whose operator was not identified.

Further details included a deal with an affiliate of Philadelphia’s Vibrant Development Group to help create a “dining and entertainment” district along the property’s northern edge facing Filbert Street. Vibrant has worked on retail, dining, and entertainment projects at casino resorts including Atlantic City’s now-shuttered Revel, as well as sports venues, urban waterfronts, and other properties.

Clothing discounter Century 21, at Eighth and Market Streets, has stayed open throughout the redevelopment and will remain a tenant of the shopping complex.

Andi Pesacov, a senior director with real estate services firm Cushman & Wakefield’s retail business in Philadelphia, said PREIT and Macerich had seemingly struggled to find retail tenants matching their original outlet vision.

Nordstrom and Bloomingdale’s outlets would have been natural anchors, but they already have off-price shops in western Center City, while other retailers with outlet versions are spoken for at nearby centers such as Gloucester Premium Outlets in South Jersey and Philadelphia Mills, Pesacov said.

“We’re sort of inundated with outlets, so what’s the draw?” she said.

What sort of shopping experience the Fashion District will offer, however, is unknown, with the newly disclosed leases accounting for just a fraction of the mall’s 730,000 square feet of retail space within its complex of buildings running between Eighth and 11th Streets along Market Street in Center City’s Market East section.

H&M Hennes & Mauritz AB on Thursday plans to announce its lease there for a 38,000-square-foot store, nearly twice the size of a typical location, over three stories at 10th Street and Market, a spokesman said. The store, whose offerings will include the company’s line of children’s clothing, is scheduled to open in the fall of 2018.

Burlington Stores Inc. is to announce that it is moving from the three floors it occupies at its current location to a two-story space at Ninth Street and Market, according to PREIT and Macerich. Burlington said in a separate release that it would open in its new space this fall. A spokeswoman did not know when the store would cease operating in its 11th Street location, or how its new location would compare in size with the current one.

The Burlington-based retailer is said to have signed a long lease with options to renew when it opened as a Gallery anchor in 2003.

Taking over the third-floor space now occupied by Burlington at 11th and Market space will be the planned movie theater, which PREIT and Macerich said will feature power recliners, personal swiveling tables, food, and alcoholic beverages. The theater is expected to be joined in a nearby space by another “entertainment concept,” they said.

At ground level, along Filbert, Vibrant Leasing Strategies is being tasked with what the owners describe as the revitalization of the mall structures’ three-block-long northern edge, “animating the district by curating dynamic tenants that engage both the project and the street.”

Liz Holland, chief executive of retail-and-office investment firm Abbell Associates in Chicago and immediate past chairwoman of the International Council of Shopping Centers trade group, said the developers were canny to select a consultant with experience working at casino resorts, which excel at providing dining experiences she described as “eatertainment.”

Holland said the decision to seek a broader mix of tenants than the previously planned roster of outlet stores, meanwhile, is consistent with how an increasing share of consumers prefer to shop, hopping amid price points and store formats in search of bargains and special finds.

“The way the business used to be was very much like spumoni; the vanilla was very separate from the chocolate, which was very separate from the strawberry. You were either luxury, you were discount, or you were kind of middle-market,” she said. “People are very ‘high-low’ now. They’re very happy walking out of a Burlington store and into a fast-fashion like H&M and then into a pretty high-end kind of internet-startup brick-and-mortar retailer.”