With $24 million parking lot deal, Goldenberg Group mulls Market East development
The development was once dominated by the original branch of the now-defunct Gimbels department store chain, which was demolished in the late 1970s when the store moved to the then-newly built Gallery.
A co-owner of the massive parking lot at Eight and Market Streets in Center City has a deal to buy an adjacent parcel from the city's parking authority, with possible plans for a hotel, offices, and shopping at the consolidated property.
The Philadelphia Parking Authority voted Tuesday to sell the 30,100-square-foot lot on the northwest corner of Eighth and Chestnut streets to Blue Bell-based Goldenberg Group for $24.13 million, PPA executive director Scott Petri said in an interview.
The tract forms a potential development site of about 2.7 acres when combined with the larger parcel just to the north that Goldenberg controls in partnership with Pennsylvania Real Estate Investment Trust, owner of the former Gallery at Market East shopping mall across Market Street.
"Eighth and Market is one of the most significant intersections in the city," Seth Shapiro, Goldenberg's chief operating officer, said in an email. "It affords, and even demands, a significant, sizable, mixed-use development.
"While the feedback we get from the market is that it is not quite ready for a groundbreaking, forward-looking office, hotel and retail users are talking to us about an eventual development."
The development site formed by the two parcels was once dominated by the original branch of the now-defunct Gimbels department store chain, which was demolished in the late 1970s when the store moved to the then-newly built Gallery.
In the late 1990s, Goldenberg and PREIT had planned an entertainment and retail center with a Walt Disney Co. attraction known as DisneyQuest on the Market Street-facing side of the tract, while the PPA took on the Chestnut Street-facing side for a parking garage to support the attraction.
A later effort to build a casino at the site failed when the last remaining gambling license available to the city was awarded to a gaming resort project in South Philadelphia, instead.
Paul Levy, president of the Center City District business association, said it makes sense for Goldenberg to now be getting serious about developing the site for some other use, as it rides momentum from projects nearby. These include the PREIT's redevelopment of the Gallery into a revamped mall known as Fashion District Philadelphia, and National Real Estate Development's East Market shopping, office, and apartment complex a few blocks to the west.
"It's in everyone's interest to have both sides of the street improve," Levy said.
The deal with Goldenberg approved by the PPA gives the developer three years to close on the property, but requires it to pay a nonrefundable $500,000 for every six-month extension until that time, Petri said.
The arrangement also requires Goldenberg to pay $2.88 million to terminate an affiliate's existing contract for property that dates from when the casino project was being proposed.
Petri said the property was fetching a higher than anticipated price because of the value that Goldenberg apparently sees in combining the land with its existing parcel to the north.
"We're going to return to the city much more in dollars than this property is worth" on its own, he said.
PREIT spokesperson Heather Crowell said that the company retains an ownership stake in the Market Street-facing property, but that it did not participate in the acquisition of the Chestnut Street parcel.
"As the plan takes shape, the roles of the various partners and participants will evolve," Shapiro said. "We envision that both parcels would be contributed to this dynamic and exciting overall development plan for the block."