Source, Philadelphia Business Journal, Natalie Kostelni
Simon Property Group is looking to transform the vacant J.C. Penney property at the King of Prussia Mall into a mixed-use project that would involve apartments, a hotel and “outdoor work-play space.”
The project has been in the planning stages with the Upper Merion planning department for the last year or so and continues to be a work in progress. During a conference call with analysts to cover third quarter results, David Simon, CEO of Simon Property, said such a project could help boost the mall’s value to $3 billion-plus from $2 billion and likened it to a version of “Hudson Yards for wealthy King of Prussia.”
The J.C. Penney just didn’t fit with the other anchors at the mall such as Neiman Marcus, Nordstrom, Lord and Taylor and Blommingdales, Simon said.
“The center…it’s very big and we didn’t need another department store,” he said. “We could have done traditional [retail] but the fact of the mater is the pivot of what is the front and what’s the back of the center has evolved over time and we have ability for a hotel, apartments, office and complimentary retail with outdoor work-and-play space that is gong to be unbelievable for that community… we got to get it done. We got to open it. A lot folks are missing those kind of opportunities.”
How much the project would cost wasn’t divulged, but Simon said it would be a “significant investment.”
In a recent report in Bloomberg and with the Indianapolis Business Journal, Simon Property said that the proposed development would also include not only the former J.C. Penney space, which went dark in July, but the adjacent parking lot. Combined, that creates a 17-acre site the company has to work with for a mixed-use project.
What would also enhance a project such as this is the potential for a new train line that would run from the Norristown Transportation Center and, at this stage, includes two stops at the mall that could not only ferry shoppers and workers to the site but residents living in apartments.
“We will continue to add different uses to our centers where we see the opportunity to generate returns,” Simon said on the conference call.
Simon isn’t the only mall owner incorporating apartments and other uses beyond retail into their projects. Pennsylvania Real Estate Investment Trust, which is redeveloping the Gallery, has entertained developing apartment towers above the future outlet center. In its third quarter call with analysts, Joe Coradino, CEO of PREIT, said that engineering work and discussions were underway on that front.
“That’s something that would be a real benefit to the project,” Coradino told analysts, saying that apartments create built in customers for the retail center that is now referred to as Fashion District Philadelphia. “Nothing like that exists in Philadelphia.”
The King of Prussia Mall is a crown jewel in Simon Property’s mall portfolio. What has made it so successful is that it attracts a range of shoppers including those who prefer to spend $12 on a shirt at Primark as well as those who want to plunk down $1,200 on a blouse at Neiman Marcus.
Since taking total ownership of the mall, Simon (NYSE: SPG) has plowed tens of millions of dollars into it. The biggest investment was a $150 million project to connect both ends of the mall. The 150,000-square-foot project brought the property’s total square footage from 2.65-million-square-foot mall to 2.8 million square feet. It also involved a four-story parking deck with 1,200 spaces. The expansion brought the total number of stores from 450 to 470 and added more restaurants including Outback Steakhouse, True Food Kitchen, Mistral and Yard House. A restaurant called Eddie V’s Prime Seafood is set to open next year.