Progress on remaking the Gallery at Market East into an outlet-shopping mecca could be about to hit its stride.
Gov. Wolf's office is expected to award a $10 million redevelopment grant for the project Thursday, according to a state official who asked not to be identified ahead of the formal announcement.

Pennsylvania Real Estate Investment Trust of Philadelphia, which owns the property in a venture with Santa Monica-based mall operator Macerich, had been awaiting word on its request for up to $30 million in state aid for the $325 million-plus project.

PREIT chief executive Joseph Coradino has said the Redevelopment Assistance Capital Program (RACP) funds are needed to fully realize the transformation of the Center City mall into what will be called Fashion Outlets of Philadelphia. 

Plans call for filling the 1.5 million square feet with outlet shops of upscale brands such as Gucci and Prada, along with typical mall tenants such as H&M. The developers also have said restaurants will play a big role in the project. 

News of the RACP grant couldn't come too soon for PREIT, as it competes for tenants with other landlords in the rapidly revitalizing section of Center City known as Market East, said Larry Steinberga senior vice president in Philadelphia with commercial real estate company CBRE Group. 

"It's critical because tenants have been forced to look at alternatives just because they weren't real sure what the future would hold over there," Steinberg said Wednesday. "We have a saying in our business: Time kills all deals." 
PREIT spokesman Kevin Feeley and Mayor Kenney's spokeswoman, Ajeenah Amir, said they could share no details about the Thursday announcement in advance.
When City Council approved the Gallery's redevelopment and $55 million in aid for the project in June 2015, construction was expected to begin the following month, with completion anticipated in summer 2017.

But delays kept work from starting until the beginning of this year, when the Gallery's east end closed for demolition efforts. The project is "on track for a planned 2018 opening," Coradino said in a July earnings call with analysts, although a Macerich executive said in February that completion could come as late as early 2019.

Five Below Inc. chief executive Joel Anderson said Tuesday that it would continue operating its store in the Gallery's west section until sometime next year, when the location will be permanently shuttered in preparation for a reopening in the nearby Lits Building in 2018.

The mall's only other remaining shops are Old Navy and Burlington Coat Factory. Burlington Stores Inc. spokeswoman Lauren Flanagan said in an email that the Burlington store would remain open during construction. A message left with Old Navy-parent Gap Inc. yielded no immediate response.

Conshohocken-based investment firm Boenning & Scattergood said in a June research note that no announcements about tenants at the revamped Gallery were likely until state officials revealed whether PREIT and Macerich would receive the $30 million in RACP funds.

Coradino said in February that the result "won't be as dramatic" as originally planned without the state aid.