Why spas like Toppers are moving to higher ground in Center City
With skyrocketing street-level rents for Center City retail, smaller spas and fitness studios are relocating to higher floors. Toppers Spa/Salon moved to its new higher location in early October.
Sometimes you have to go higher to broaden your reach — especially when going after millennials.
That's the strategy behind Toppers Spa/Salon's recent move to the second floor of 1528 Walnut St. in ritzy Rittenhouse Square after 20 years of occupying street-level space at 117 S. 19th Street. said Toppers president and chief executive officer Kenneth Wyka
"What we were looking to do was meet our core clientele who've been with us forever, and at the same time appeal to a younger generation, and move to a more exciting and vibrant location," said Wyka, 46, who has been in the spa/wellness business for 25 years.
There was also a practical side: It's much cheaper.
"We couldn't afford $150 to $200 per square foot for ground-level retail," said Wyka, " so we began looking at spaces at a higher level to be able to position ourselves to be seen there and be attractive to the younger clientele. The second-floor retail approach became a no-brainer for us."
Retailers moving to higher ground started a few years ago in Center City, driven largely by cost. Retail rents have risen close to 90 percent over the last five years, according to a 2016 report by commercial real estate firm CBRE Inc., while office rents have increased by a fraction of that, roughly 2 percent to 3 percent annually.
Smaller spas, salons and fitness studios have been at the forefront of the change, brokers say. "This has become a very common trend as Center City retail rates have skyrocketed," said Chris "Pop" Shenian of the Shenian Co., a boutique real estate firm in Center City, who brokered the deal for Toppers at 15th and Walnut Streets. "Retailers are opting for prominent second-floor locations with rental rates in the mid-$20s range per square foot vs. $80 to $200 for first-floor retail space" in some of the city's most expensive neighborhoods.
"It's a great value proposition for many businesses, particularly when they can get prominent signage to the street-level pedestrian traffic," said Douglas J. Green, managing principal at MSC Retail, which recently brokered deals involving SLT Fitness, WeWork and House of Clarity, among others, to lease second level space.
Shenian, who also represents high-end furniture maker Thos Moser and restaurateur Susanna Foo, said, "In addition, office landlords are offering a construction allowance that makes this option very attractive. The [tenant] receives a generous office/loft fit-out vs. a retail vanilla box."
Examples of other brands/salons that have headed higher in downtown Philly with its booming millennial population – include Cheesecake Factory, Salon Royale Court, Jason Matthews Salon, Salon Vanity, and Orange Theory. Morton's the Steakhouse was an early adopter when it relocated to the second floor of 1411 Walnut St. more than 10 years ago.
Wyka, who lives in Northern Liberties with his wife Tara and 12-year old son Lucas, is used to taking chances. He started in the spa business as a receptionist at Toppers' corporate office in the mid-1990s. He took a break and returned to Temple University to get his MBA in 1999.
In 2003, Toppers owner Richard Keaveny turned over operations to Wyka, who was named vice president of finance back then.
That year, the company opened a Toppers Spa at the Galleria Mall in Marlton. Four years later in 2007, Toppers opened a location at Dover Downs Hotel & Casino in Dover.
Last year, a Toppers Spa opened on the second floor of a stand-alone building along Route 70 in Cherry Hill just for massages, skin care, and nails.
In 2013, Toppers began a monthly Passport Membership program that includes one service per month and allows discounted prices on other services such as massages. Another option – My Toppers Spa Experience, launched last December in the Cherry Hill location, incorporates the senses. A guest can pick the music, aroma, and lighting with a massage and need not be a member to purchase this option.
Gift cards sell well this time of year.
The modern space at 1528 Walnut is between 7,500 and 8,000 square feet – less than half of the former 19,000-square-foot location at the intersection of 19th and Sansom that took up four floors, including offices. Wyka is still working out of boxes at the old space. His new office on Walnut Street won't be ready until Jan. 15.
The full-service spa salon opened in early October.
Wyka said his team looked at many spaces – including several ground level options in different parts of the city, as well as nearby Chestnut Street — but there was something about the "Times Square-like" quality of Walnut and being part of the Rittenhouse shopping corridor.
"There's that `wow' factor," Wyka said.
It doesn't hurt that there are eight elevators on the second floor of their new home for easy access. Right below Toppers is an always-crowded Starbucks.
"We wanted to be a destination business and at the same time cater to people who work in the city who may want a quick manicure or a half-hour massage," he said. "By being on the second floor, you can pop in and out on your break vs. us being on the 12th floor.
"This is the time for us to hit the reset button and reinvent the spa/wellness experience in our new space."