PHILADELPHIA, PA, October 8, 2004
As Appeared in the Philadelphia Business Journal
Best Real Estate Deals Issue Oct. 8-14, 2004
– Elizabeth Bennett
The conversion of industrial sites to big box retail is a fairly common occurrence these days, especially in densely populated areas. So, it was only a matter of time before it happened at the old Whitmans Chocolates factory at Roosevelt Boulevard and Grant Avenue in Northeast Philadelphia.
Conversations about converting the site got started as far back as 2000, but it took the interest of an affiliate of the Goldenberg Group of Blue Bell, a retail specialist, to finally make it happen.
The new retail center will be called Whitman Square and its two anchor tenants are Lowes Home Improvement and Wal-Mart. Other stores include Michaels Crafts, Circuit City, Eckerd Drugs, Petco, Office Max and Famous Footwear. A few restaurants have also signed up, namely LongHorn Steakhouse, Champps sports bar, Chick-fil-A and Famous Daves Barbeque.
According to Robert W. Freedman senior vice president and general counsel for Goldenberg, the center is fully leased, the tenants started to open in September and by next spring it should be pretty much completed.
The property was up for sale for some time but had not been actively marketed, said Alice Crothers, the real estate facilities manager for 9701 Joint Venture, the partnership that sold the old factory site. Once Michael Dvorak, a broker with Realty Source Inc. of Conshohocken got involved, things moved a little more quickly.
I’m not quite sure how Michael got it to us, Freedman said. Were certainly one of the better known retail developers in the area.
Freedman said the Whitman site had all the elements they look for when gauging the possibility of success.
We analyze every property for, first, demographics, looking at the households within a one-, three-, and a five- mile radius in terms of number and purchasing power. Secondly, we look at the highway access, he said. What makes it attractive to retailers is to have a large volume of vehicles. Then the third factor we examine is the competition in the area.
Though there is a lot of retail along Roosevelt Boulevard, much of it is old and not of the highest quality, Freedman said. None of the centers along the busy street included the large national retailers who were eager to be in the market.
Leasing up the site went well, as did the work with the community to get zoning changes approved. The municipality was well-satisfied that the new center would bring jobs and tax revenue.
in order for us to get approvals, we had to change the zoning from industrial to retail, we went through the process of a zoning change with City Council and presented our proposal to the City Council and the planning commission and Councilman Brian ONeill and to the local community groups like the Greater Bustleton Civic League, Freedman said. In a center of this size, there will be over 1,000 permanent jobs created¬• over $2 million and year in new taxes. There weren’t a lot of people who wanted to keep it industrial.
The sale and redevelopment proceeded with no public funding involved, Freedman said. Crothers said that the key to the deal was Goldenbergs willingness to handle the zoning and deed issues.
While some may think an industrial site is a better use given the potential for higher-paying jobs, Dvorak explained that the facility was woefully underused.
For a brief period of time it was full, with about five tenants, but there was not a lot of employment. It was mostly inactive-type warehousing. &Someone might have 200,000 square feet and have four people driving forklifts. A lot of the tenants were using it for temporary storage and overflow storage.
Dvorak said the one active tenant had only 56,000 feet, or barely more than 10 percent of building.
The building had already become obsolete from and industrial standpoint. The ceiling levels were much lower than warehouses are today. The original part was built in the 1960s and then there were some additions in the 1970s and 1980s. &A lot of the physical plant was starting to need repair or replacement.