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Best Real Estate Deals – Park West Town Center

PHILADELPHIA BUSINESS JOURNAL, October 10, 2008 Thinking about the project, looking at all the different factors that it took to bring the thing to fruition, Jim Burnett makes no bones about it. “The biggest challenge was the neighborhood,” Burnett said. To many observers, Park West Town Center seemed an unlikely concept, one too incongruous with its surroundings. “You’re talking about building retail and a suburban-style power center in a neighborhood that had only little corner stores. So you needed to convince not only the retailers but also the people who were going to finance the operation.” As executive director of West Philadelphia Financial Services Institute, Burnett did much of that convincing, along with Steve Palmer, senior vice president of finance and development at the Goldenberg Group. Together the developer and community organization overcame the challenges to bring something new to the neighborhood. The end product of their labors, Park West Town Center, opened early this year and has attracted a respectable mix of tenants, including a 171,000-square-foot Lowe’s, a 64,000-square-foot ShopRite, and more than a dozen smaller retailers. “We saw this property as a wonderful opportunity to do new things,” Palmer said. Located at the corner of 52nd and Jefferson streets, the shopping center fills a decade-long void. “Ten years ago this was an area in which there had been a lot of false starts,” Palmer said. Supermarkets in particular have been in short supply, with new stores reluctant to come into neighborhoods characterized by low incomes and high crime. The developer soon learned another reason why some were saying the project could not succeed. The original site was simply too small for the supermarket that was projected to be the anchor for the site. This lack of land has been a sticking point in other efforts to construct inner-city supermarkets. It took time, but WPFSI and Goldenberg eventually managed to expand the original land from 11 to more than 35 acres through the agglomeration of some 60 neighboring properties. This, in turn, created its own set of challenges. “We needed to have every one of these properties under agreement, which meant meeting with them and their representatives almost every day,” Palmer said. Eventually, 24 families were relocated, an effort that required more than just logistics. “You need to make them comfortable, and you have to feel in your heart that you are really going to do this project, if you are moving all these people.” To counterbalance these pressures, the developer found sympathetic voices among those who manage the money. In addition to financing through Wachovia Bank, the project drew tax-increment financing from the city, along with support through the state’s Business in our Sites program, a $300 million loan and grant pool. Federal brownfields money helped, as did federal New Markets Tax Credits. The city also helped develop the ShopRite under a supermarket development program. “From a financing perspective this was a perfect storm of what everybody could do,” Palmer said. “It was a perfect example of how all these agencies could come together and make something happen that could not happen otherwise.” What eventually happened was a $52 million deal giving rise to a 341,000-square-foot center. More than this, the project has added significantly to the stature of the community. As the largest retail project to be completed in any Federal Empowerment Zone in Pennsylvania, Park West Town Center created 420 construction jobs and 640 permanent positions, while 30 percent of profits are to be reinvested directly back into the community. In the early stages, when supermarket tenants were shying away from the space, the developer began courting Lowe’s, noting that there was no other home improvement store within five miles. After some initial conversations, things seemed to have stalled. In January 2004, the city sent down an ultimatum, Burnett recalled: Get it done, and soon, or make way for the Microsoft School of the Future. That same day a letter came from Lowe’s upper echelons, committing to the project. With an anchor tenant in place, and the Mayor John Street satisfied, the wheels began turning in earnest. As the project moved ahead, the developer extended its commitment to the community, among other things by setting an ambitious minority-participation goal of 30 percent, with a further commitment to hire 20 local talent and to bring in women-owned firms for 5 percent of the work. To that end the developer and community organizer worked closely with bidders in the early phases of contracting as well as with unions who pushed hard to ensure compliance. An economic implementation committee tracked the numbers month to month to see that the minority goals stayed on track. “We had to make a concerted effort to do it,” Burnett said. For Palmer, the project represents not just a deal done successfully, but also the welcome arrival of a near neighbor. He lives just three miles from the center, though on the other side of the tracks. “People here on the Main Line don’t go to West Philadelphia. City Line Avenue is a barrier for some people,” he said. “They don’t want to cross into the city to do their shopping, but now there are all these wonderful opportunities to shop that just were not there in the past. It is going to create a real destination.” Up Close Project: Park West Town Center Address: 52nd and Jefferson streets, Philadelphia Description: A power retail center in West Philadelphia. Developer: The Goldenberg Group Inc., Blue Bell Community partner: West Philadelphia Financial Services Institute, Philadelphia Architects: Ignarri-Lummis Architects and Planners, Cherry Hill; Albert Taus & Associates, Philadelphia Engineer: Langan Engineering and Environmental Services, Philadelphia Size of deal: 341,000 square feet Value of deal: $52 million