Why big retailers like Under Armour are gaga about Center City Philadelphia

NEW YORK - Commanding a stage with MTV-like videos of athletes who exceeded expectations, Under Armour CEO Kevin Plank boasted of his company's growth to a packed room of developers, brokers, and retailers, and encouraged them not to settle for mediocre results.

The sports apparel and equipment firm has seen 26 straight quarters of revenue growth, rising from $17,000 in revenue in 1996 to $5 billion now with 550 stores and more than 14,000 employees.

"We're just getting started," Plank said at last week's New York International Council of Shopping Centers National Deal Making Conference.

And Philadelphia is part of the plan.

"We love the city," Plank said later. "The City of Brotherly Love absolutely fits the mantra of Under Armour."

The Baltimore-based company is one of 45 national retailers since 2013 that have opened shops in Center City and helped fuel a $1 billion surge in retail spending in the city over the last five years, according to a Center City District report released last week.

In August, Under Armour opened its fourth store in the Philly area, a 10,000-square-foot Under Armour Brand House at 1529 Walnut St. in the old Brown Brothers Harriman & Co. building.

The retailer's newest neighbors on Walnut Street are also national brands: The fashion icon Rag & Bone debuted Thursday; the eyewear company Warby Parker opens a retail store early next year; and the men's clothier Bonobos, which like Warby Parker began as an online-only firm, is growing its physical footprint nationally and opened a store Aug. 28. All three brands have flagships in New York City.

It's no wonder Philly-based commercial real estate firms sent their largest contingents ever to the New York confab this year. About 10,000 attendees, the largest in 25 years, converged at the Jacob K. Javits Convention Center for two days of deal-making. ICSC New York - like its bigger version in Las Vegas each spring - is where retail deals foment or progress to the next level.

At Booth No. 813, broker Jacob Cooper and 15 colleagues from MSC Retail were selling Philly's growing downtown millennial base, its restaurant scene, and, to them, reasonable retail rents for a Top 5 market.

"Our primary focus is to act as ambassadors for the city," Cooper said. "We find ourselves encouraging many of the retailers and national brokers to come rediscover the city, and educating them. Telling this story and building these relationships can sometimes take years.

"Sometimes it pays off with a retail deal or a regional rollout," he said. "Because Philadelphia is not a gateway city - like a New York, Los Angeles, Miami, or Chicago - we have to fight to convince folks to bet on the city."

Michelle Shannon, vice president of marketing for the Center City District, which authored the retail investment report, also had a booth. She said she too has felt a noticeable change at ICSC events.

"When we first began attending ICSC in 2009, our goal was to change outdated perceptions about Philadelphia as a city where cheesesteaks were our main cuisine," she said. "Now, when we meet with prospective retailers or developers, they know Philly is a world-class city with a hot residential and retail market, and our job is more to provide the data."

CBRE Inc., which has an office at Two Liberty Place, sent 50 brokers from the Philly region. They shared Booth No. 1102 with brokers from CBRE offices from all over the country.

Among her meetings Monday, Paige Jaffe, CBRE Philly's first vice president of advisory and transaction services, spent time with Joel Chace, vice president of real estate for Balducci's, a gourmet market based in New York.

Balducci's has seven stores, with two more to open in Westchester County, N.Y., and Reston, Va., by 2018. It wants to open multiple stores in Philadelphia as part of its East Coast expansion.

Coincidentally, it was Jaffe who brokered the deal on behalf of landlord Pearl Properties in 2014 to bring Under Armour to the Walnut Street location.

Last week she sat with Chace and said there was a lot of interest back home about landing Balducci's because of its clientele and higher price points.

The retailer had not yet started selecting downtown Philly sites, but Chace said he was keen on the city for having what he described as an "educated, sophisticated consumer" and a high number of eds and meds - universities and hospitals - all around.

"It's an underserved customer that deserves to be taken care of," Chace said. He cited DiBruno Bros. and Wegmans as competition. Balducci's will offer hot bars, Med bars (offering Mediterranean dishes), as well as prepared foods. A store typically has indoor seating.

"I've been meeting with several landlords and there are a lot of interesting opportunities for Balducci's to service Philadelphia," Jaffe said to Chace.

To which Chace replied, "I'm excited to meet and discuss these opportunities with the landlords."

In Booth No. 1A28, Joe Coradino, the CEO of Pennsylvania Real Estate Investment Trust, was pitching one of his babies - Fashion Outlets of Philadelphia at Market East, formerly the Gallery Mall - to prospective tenants.

He also spent considerable time sizing up potential replacement tenants for Macy's stores within PREIT's malls that are on the endangered list. Macy's Corp. plans to close 100 stores in early 2017 - part of the trend of department stores downsizing their physical footprints with the stunning growth of e-commerce.

PREIT spokeswoman Heather Crowell said the New York gathering "was important for PREIT's department-store repurposing efforts, as well as leasing its key redevelopment projects."

These include Fashion Outlets of Philadelphia, which is undergoing a $350 million renovation under PREIT and partner Macerich.

"The Gallery turned its back to Market Street and faced inwardly," Coradino told Kristina Bonesteel, an associate at Newmark, Grugg, Knight & Frank, who was looking at spaces for a candy-store concept.

As Coradino spoke, a video on a large LED screen streamed images of the old Gallery morphing into the new mall.

"The goal of the redevelopment plan is a four-sided project that will have the mall facing Market, Ninth, 10th, as well as Filbert Streets," Coradino said, narrating the video.

"Did you say it will have over 700,000 square feet of retail and three towers?" Bonesteel asked.

"That's right," said Coradino. "Up to now, it's all been interior work. But people will soon start to see the skin come off."

Bonesteel said she'd be in touch.

After the event's first day, it was time to let off steam at the JLL after-hours party at the Classic Car Manhattan Club - one of several parties going on for real estate firms to continue schmoozing clients and prospects.

Chicago-based JLL has an office in Philly that specializes in retail building sales throughout the region.

"A lot of retailers and developers outsource their retail real estate needs to us," JLL director of research James Cook said as waiters with hors d'oeuvres weaved around expensive vintage cars in the private club. "We try to find the perfect fit."

sparmley@phillynews.com

215-854-4184@SuzParmley