Target Corp. has selected the rapidly revitalizing Market East neighborhood for its next Center City store, a sign that the long-neglected enclave is catching the attention of national retailers sought by the area's developers.
The Minneapolis-based company plans to open a 19,000-square-foot shop at 12th and Chestnut Streets in July 2016, spokeswoman Erika Winkels said in an interview Wednesday.
Target's confirmation of its long-rumored plan to lease space at the site being developed by Brickstone Cos. follows its disclosure in June that it would open a store in the Rittenhouse Square area, where big brands such as Zara, Uniqlo, and Brooks Bros. already have an established presence.
The company's selection of Market East, which still hosts many of the "old, schlocky" down-market retailers that once dominated the area, is a vote of confidence in the neighborhood's redevelopment, said Jacob Cooper, a partner and managing director at MSC Retail Inc., a real estate advisory-services firm.
Brickstone's project, which involves almost an entire block of new construction and the rehabilitation of the site of the long-defunct Oppenheim Collins department store, includes 112 rental apartments and 90,000 square feet of retail.
Target will occupy the ground floor of the former department store and some of the newly built space, Brickstone managing partner John Connors said.
Larry Steinberg, a senior vice president at real estate brokerage CBRE, brokered the lease
Just to the north, Washington-based National Real Estate Development is working on the first phase of a $500 million development that includes 105,000 square feet of retail and restaurant space, scheduled to open in the summer of 2016.
A few blocks away, Philadelphia's Pennsylvania Real Estate Investment Trust and California-based mall developer Macerich plan a $325 million revamp of the run-down Gallery at Market East shopping mall.
"Those developments are going to attempt to attract not just wonderful local retailers that already have an eye for that part of the city," said Cooper, who was not involved in the Brickstone lease. "They're really going to go after many of the nationals," such as Target.
Target is entering central Philadelphia - along with densely populated parts of Chicago, the San Francisco Bay area, Brooklyn, N.Y., and other urban locations - with smaller versions of its big-box outlets, identified by the company until recently as "TargetExpress" locations. The planned Market East-area store will be about 14 percent the size of a typical Target.
The urban-focused stores are among several recent initiatives that helped the company beat analysts' estimates in its second-quarter earnings.
Target also benefited from a concentration on high-margin apparel, home, and beauty products, and investments in its organic groceries and other food selections that appeal to health-conscious consumers, chief executive Brian Cornell said in a conference call with analysts Wednesday.
The Market East-area Target will offer in-store pickup for online orders, part of an e-commerce push that Cornell portrayed as an effort to compete more ably with other retailers.
It also will have a pharmacy - included with the large number of area hospitals in mind - as well as a Starbucks cafe, Winkels said.
"We expect this will be a store for the neighborhood, designed to serve those who live and work in the area," she said. "We know there is a lot of growth in the area, and we're excited to be bringing Target to the community."