News

Nov
27

Nearing Full Occupancy, KOP Town Center’s Doors are Closing to Restaurant Tenants

November 27, 2017

Source, Philadelphia Business Journal, Kenneth Hilario

A goal to create “the downtown for Upper Merion,” with the help of an impressive lineup of restaurants, is inching closer to completion as the King of Prussia Town Center prepares to open its last food and beverage tenant and look for another tenant type for the remaining vacancies.

The King of Prussia Town Center began to establish itself as a food and drink center in July 2016 when the first restaurant tenant, steakhouse Fogo de Chao, opened a year after the Town Center project broke ground in 2015.

A slew of other restaurants were announced and eventually opened, including healthy fast-casual concepts b.good and honeygrow and table service restaurants Davio’s Northern Italian Steakhouse and Paladar Latin Kitchen & Rum Bar, among others.

The most recent opening was California’s MidiCi The Neapolitan Pizza Company, which opened its doors on Nov. 17. Next up will be Washington, D.C.-based District Taco, which will open on Nov. 27.

The King of Prussia Town Center is about 89 percent to 90 percent occupied now, with retailers like Ideal Image, Nordstrom Rack and REI rounding out the remaining tenant mix.

MidiCi and District Taco are among the last to open and, with 10 percent availability remaining, further restaurants will likely be limited.

“We’re probably not putting many more restaurants in,” said Joseph Mancuso, managing director at CBRE Global Investors. “We have a great mix, but maybe one category, which probably will happen, is a sushi option.”
Restaurants signed for the Town Center will be organic and develop as opportunities open up.

“The only concept I see as a bit of a hold is sushi,” Mancuso said. “But if you look at it, we have other cultural and other types of eating covered.”

The rest of the focus will be service uses — like an optical shop or salon — that would compliment the food tenants and would attract the demographics that would shop at Wegmans or REI.

CREATING A DOWNTOWN
Developer JBG Cos. strategically chose the type of restaurants that opened at the King of Prussia Town Center, which is the retail component of the Village at Valley Forge, a 122-acre master planned, mixed-use development.

The original vision was to create “the downtown for Upper Merion,” similar to what Center City has become for Philadelphia, Tom Sebastian, JBG senior vice president of development, told the Philadelphia Business Journal in an earlier interview.

“We identified early on that King of Prussia was in need of an experiential outdoor center that would serve as a community gathering place and worked hard to make this vision come to life,” Sebastian said.

Many of the restaurants at the Town Center are new not only to the Philadelphia area but to Pennsylvania. Washington, D.C.’s Founding Farmers, and California’s MidiCi and The Habit Burger Grill are examples.

JBG eventually sold the Town Center earlier this year to CBRE Global for $183 million.

“The restaurant mix is one of the reasons why we were so attracted to this center,” said Mancuso, who said CBRE Global adopted JBG’s original vision and “made it our own.”

Founding Farmers “set the tone for the health-conscious, forward-thinking” mix at the Town Center, Mancuso said.

“You’ll notice we shied away from the restaurants you can find on every main route in every city in the country,” Mancuso said.

CREATING DESTINATIONS
The idea of town centers is nothing new; it’s an elevated version of the traditional strip center that go along with the place-making trend in the Philadelphia area.

Local town centers include the Main Street at Exton in Chester County and an upcoming project in Wyndmoor that will feature a new concept by the owners of Philadelphia pizzeria and wine bar Zavino.

“The idea is to keep the customer at that location for as long as possible with restaurants and shopping,” said David Fiorenza, economics instructor at Villanova University’s School of Business.

“This trend is continuing due to customers demanding the ultimate shopping experience for a day,” Fiorenza said. “That would be a one-stop shopping and eating experience in an eclectic environment.”

Tourism and its development are successful when there is either a critical mass of attractions or when there are concentrations of things for people to see and do.

It reduces the risk for the potential consumers.

“People don’t want to drive a ring road to go to a standalone restaurant,” CBRE’s Mancuso said. “If you’re coming here for dinner at Founding Farmers, you’re not eating dinner at the other eateries. You can watch a movie at Town Green, get ice cream or a drink.”

“You can walk to a few different places as opposed to a standalone, where it’s just one thing you do,” Mancuso said. “It’s more of the option of being able to have a different experience in one evening without driving around.”

CBRE also utilizes the green outdoor space, Town Green outside Davio’s, City Works and Paladar, for various uses, including movie nights, yoga and live performances.

“It’s artificially creating a new Town Center in the truest sense of the word,” Mancuso said.

Food and beverage operators are becoming the canaries in the coal mine; they are leading and redefining downtown Philadelphia.

Tenants in this industry made up about 48 percent of all retail leasing transactions in Center City between January 2016 and June 2017, according to a report by CBRE.

The trend also extends out into the suburbs; the number of food and beverage tenants in 35 malls and shopping centers in the region increased.

Food and beverage establishments in 1987 made up about 9 percent of malls and shopping centers, according to the report. They now make up about 14 percent within the same locations.

“This 14 percent figure is conservative compared to upgraded and newly-built shopping centers, such as the King of Prussia Town Center, Hamilton Crossings and Christiana Fashion Center, in which food and beverage tenants currently occupy 26 percent of space and growing,” the report reads.

The King of Prussia Town Center is a close drive to the King of Prussia Mall, which underwent its own transformation with a new 155,000-square-foot connector that included a new food court that added new restaurants like New York’s Melt Shop and Shake Shack, Los Angeles’ sweetgreen and Philadelphia’s Hai Street Kitchen.

Elsewhere in the mall, other eateries opened, including Outback Steakhouse and Yard House near Dick’s Sporting Goods and Primark (link), New Jersey’s mistral at the entrance between Neiman Marcus and Lord & Taylor (link).

And just outside of the mall, Phoenix-based True Food Kitchen opened in July this year.

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