Is this the mall version of the phoenix rising?
Defunct Granite Run Mall in Middletown Township, Delaware County, which closed in the summer of 2015, has gotten a new lease on life as the Promenade at Granite Run.
Developer BET Investments of Horsham, run by Michael Markman and Bruce Toll, cofounder of Toll Bros., is taking the mall in a new direction -- think entertainment, apartments, walking paths, and even health care -- under a $120 million mixed-use redevelopment plan.
For subpar malls that are closing throughout the country, converting them into a mixed-use development is a growing trend, real estate experts say.
In its resurrected form, the mall will have retail on the first level, a Frank Theatres CineBowl & Grille – a combination movie theater, dine-in restaurant, and bowling alley on the second level -- as well as 400 apartments and a 7,000-square-foot Children's Hospital of Philadelphia pediatric office, among its features.
"I would call it a new beginning," Markman, who is BET Investments president, said Thursday, in revealing the project for the first time. "The redevelopment of the former Granite Run Mall represents the first major transformation of a tired, old suburban mall into a vibrant mixed-use entertainment, restaurant, shopping, and residential complex in the Philadelphia region."
The mall sits on 85 acres of an all-developed tract. Markman said the square footage of the new mall will be smaller, going from about one million square feet to about 820,000.
"But we are adding 400 apartments," he said.
The one- and two-bedroom units will average around $1,750 per month.
The first floor will house traditional retailers – junior anchor tenants that Markman said he will be announcing in a few months. The site is nearly 85 percent leased, he said.
In total, the mall will offer 350,000 square feet of retail.
The retail will debut to the public in the first quarter of 2018, and 176 of the 400 apartments will open in the fall of that year.
Markman said walking paths between the retail and residential areas are being added.
"We are putting a trail around the perimeter and the township is calling it a 'spoke' to connect different parts of the township," such as the township building and library. "We are even putting in an overpass between Acme and the apartments so food shoppers can get their groceries without getting rained on."
The mall will run a shuttle from the mall apartments to BET-owned new apartments in downtown Media, along with its train station and shops, he said.
The conversion fits into BET's wheelhouse. The company owns 4,000 apartments, six million square feet of shopping centers, and one million square feet of office space in 14 states. Most of its apartments are in the Philadelphia suburbs, such as the Dublin Terrace Apartments in Upper Dublin.
The Media mall fits the profile of the quintessential C-level mall that declined due to competition from newer shopping centers and e-commerce.
"Half of the mall tenants were already gone, and the other half were not performing well," Markman said, when his group took over.
Simon Property Group, which owns King of Prussia Mall, bought Granite Run Mall with Macerich for $150 million in 1998. And Simon deeded the mall back to the lender in 2011.
BET Investments acquired it in the fall of 2014, and the mall closed its doors in June 2015.
BET, both developer and owner of the new Promenade mall, began demolition in September 2015.
The addition of Frank Theatres CineBowl (also the owner of the Revolutions bowling alley in Fishtown) gives shoppers new options, Markman said. "After a movie and dinner, they can shop the property. We're the only suburban combined movie theater and bowling alley in Philadelphia."
Markman said Boscov's and Sears (two of the three original anchors) stayed on, while JCPenney was asked to leave.
An Acme and Kohl's, described as strong performers on the site, also stayed.
The 68,000-square-foot CineBowl will sit where the JCPenney was and the apartments will be above the Acme market, while the CHOP pediatric office will front the Kohl's on a free-standing building facing Baltimore Pike.
Markman, who formed BET Investments with Toll in 1998, said "mall retailers are more selective on where they want to go. Super-regional malls are where they want to go," not malls like Granite Run's former incarnation.
"You need more experiential type of retail going into a regional shopping center," he said. "A mall needs more entertainment, restaurants, and apartments, and this project really fits into that."
This project, he said, "should serve as a future template for repositioning outdated malls."
Rob Cooper, senior vice president at Metro Commercial, the site's exclusive leasing agent, added: "Mall owners today have to bring in extra entertainment, medical uses, and fitness [facilities] and really have to think outside the box and have a greater vision for these properties."
Jerry Hoffman, of Lincoln, Neb.-based Hoffman Strategy Group, advises owners on shifting properties to mixed use redevelopment. He said such projects were becoming more pervasive across the country.
"Property owners are faced with strategic choices about the highest and best use of the property," he said. "As retail 'right-sizes,' these other uses help to unlock that value."
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