Predevelopment, leasing issues delay outlet mall project
2/11/2016 | Real Estate Blog
In an earlier post we wrote about the way in which the Gallery mall’s transformation into an outlet retail center in Philadelphia is going to be funded. Securing the expected $325 million needed for the project is not the only matter that needs to be addressed for a development to be successful. Recently, additional information about the development made the news.
According to the developers, the project is expected to take longer to complete than originally thought. Rather than being completed the summer of 2017, it will likely not be finished until the end f 2018 or the beginning of 2019.
There are multiple reasons for the delay. The first is that the mall in its previous incarnation did not close until last month. That is more than six months later than originally anticipated. In addition, there have been some issues with predevelopment and pre-leasing of the property.
A spokesman for PREIT—the project’s other developer—indicated paperwork between city officials and the companies played a role in the delay.
On the leasing front, it also took some time to determine the balance between restaurants and shops. According to the executive vice president for the developer Macerich, securing leasing commitment was necessary before construction on the project could begin. It is unclear which businesses will be located at the new outlet mall and whether the delay will prompt other would-be tenants to look elsewhere.
According to the planning and development director for Philadelphia, the deal reached between the city and the developers provides the developers until mid 2020 to complete the development. In addition, she indicated the tax expectations from the project are not expected to be impacted.
Delays are a possibility in any development. While in this particular case there does not seem to be a negative impact, this is not always the case. Working with an attorney who handles commercial real estate matters can help minimize any negative impact that might otherwise arise.