The Transformation of Independence Mall
In the 18th century Independence Mall was the city’s most vibrant neighborhood, bustling with vendors, artisans and shopkeepers. Its historic significance as the birthplace of American democracy is unmatched. Yet it took several decades and multiple chapters before the 15.5 acre site — spanning three city blocks between Walnut and Arch Streets and 5th and 6th Streets — regained its vitality as an active commercial district.
Today, historic and modern architecture blends harmoniously within the Mall’s three city blocks. Vast, open green space, mature trees and walking paths encourage visitors to linger. The neighborhood bordering the Mall is alive with new development, high-rise apartment buildings, boutique hotels, restaurants, beer gardens, and a robust shopping and arts district. Ultimately, a successful master plan for the Mall spurred renewed interest by private investors in the surrounding area. Philadelphia’s oldest commercial district has once again become a vibrant neighborhood attracting residents, tourists, visitors, 9-to-5ers, and weekend revellers.
Birth of the Vision
In 1945 the State approved funding to develop an urban renewal scheme that would provide an appropriate setting for the historic district. Between 1950 and 1967, demolition of existing buildings began to make way for a large plaza. In 1974 the Mall was transferred to the National Park Service (NPS) and the Liberty Bell was moved out of Independence Hall into a new pavilion opened to concur with the Bicentennial celebrations in 1976.
The Mall’s original design was ultimately unsuccessful. Fountains failed and trees died. The block north of Arch Street was rendered a field of weeds and concrete. The Liberty Bell Pavilion stood as an inadequate structure for the monument it housed. Federal deficits led to periodic shutdowns of the historic buildings and maintenance lapsed. The area bordering the Mall was a declining office environment with scant investment activity.
The project was not easy because it was 10 years before it was complete. Now it actually looks like the drawings. Although it’s a national park it’s also an important city park. This is really a livable city in a wonderful way.Laurie D. Olin, FASLA (Partner) OLIN
The Vision Revitalized
In 1997 the NPS announced a 10-year revitalization plan for the Mall to coincide with the construction of the National Constitution Center. To avoid what were perceived as mistakes of the past, an award-winning landscape architecture firm, Olin Partnership (now OLIN), was chosen to develop a master plan, while a public-private coalition was formed to secure financing and oversee the redevelopment. Numerous entities such as the Pew Charitable Trust, the city of Philadelphia, Friends of Independence Hall, the Philadelphia Parking Authority, and the National Constitution Center were involved in raising and contributing money for the project.
Although located on federal land, the National Constitution Center is a private, non-profit organization. Construction was finished in 2003 following the completion of what was deemed by critics to be a more suitable Liberty Bell Pavilion, and a new Independence Visitor Center. It appeared as though the NPS’s vision was coming to fruition.
A Preview of Coming Turmoil
It was the new millennium and the office market was headed for a bumpy ride characterized by corporate mergers, relocations and shaky loans. The Mall’s tourist corridor was doing quite well but the surrounding area was not.
In late 2007 the Penn Mutual Towers went into receivership. As the financial markets began to unravel in 2008, Wells Fargo acquired Wachovia. Wachovia had a substantial office presence in Philadelphia, including a half-million-square-foot building at 4th and Market Streets. Luckily, Wells Fargo did not immediately downsize at this location, despite other impacts to the market.
The merger of Dow and Rohm & Haas in 2009 resulted in the vacancy of over 200,000 square feet of office space, or roughly half of the building. The Lafayette Building at 5th and Chestnut Streets had been struggling with vacancy and was put on the market for sale. In 2010 Lippincott publishing moved from 135,000 square feet at Penn Mutual Towers to West Market Street, pushing that building’s vacancy to almost 20 percent. In 2011, The Public Ledger Building loan went to special servicing and the Curtis Center loan was put on a default watch list.
Private Investor Momentum
In late 2011 the market showed signs of recovery and renewed interest by private investors. A new wave of development ensued. By 2014-15 the market appeared to be stabilizing with new ownership taking control. During the last half of 2015 into 2016, investor momentum has shown no sign of slowing:
- The Lafayette Building was acquired by Kimpton Hotels, Hotel Monaco
- An investment partnership between Keystone Property Group, Mack-Cali Realty Corporation, and Parkway Corporation purchased the Dow Building.
- The Public Ledger Building went into foreclosure, and Rubenstein Partners and Fortress Investment Group acquired the deed for Penn Mutual Towers in lieu of foreclosure.
- Keystone Property Group and Parkway Corporation acquired The Curtis Center.
- Rubenstein began renovations on Penn Mutual Tower and renamed it One Washington Square.
- The American Bible Society announced it was moving from New York to 401 Market Street, taking the excess Wells Fargo space.
- Carlyle Development acquired the Public Ledger Building and announced plans to renovate the office space, add 40,000 square feet of retail/lifestyle space, and underground parking. Carlyle is exploring a mixed-use redevelopment plan to create condominiums and a hotel.
- Miller Investment Management purchased 401 Market Street.
- As part of the renovation of 100 Independence Mall, Keystone Property Group opened up the ground floor for retail use with La Colombe Café and the Independence Beer Garden, a 22,000-square-foot outdoor restaurant overlooking the Liberty Bell Center.
- MRP Realty acquired the controlling interest in The Independence Collection (The Bourse, 325 Chestnut Street and 400 Market Street). They plan to restore the facade and reposition the office and retail space in The Bourse and enhance 325 Chestnut and 400 Market Street with facade, common area, and amenity space renovations.
- Keystone Property Group purchased One Washington Square, its third building in the submarket.
- Scannapieco Development Corporation broke ground on a 26-story, residential, ultra-luxe tower at 500 Walnut Street. Twenty-one of the thirty-eight condominiums have sold prior to construction; the penthouse went for $17.8 million, the most expensive residence sold in the CBD.
- Keystone began a multi-million-dollar reinvention of The Curtis Center, under the new name, The Curtis, which will integrate office, retail, and residential space. P.J. Clarke’s will soon open a 200-seat restaurant there, and the upper floors are being converted to 66 luxury residences.
Independence Mall has become much more than a venue to honor the birth of our country. It is a place where tourists and Philadelphians alike can experience some of the best entertainment, dining, shopping and culture the city has to offer.Bill Glazer, President Keystone Property Group
The Vision Realized
The Independence Mall district has evolved from a tourist corridor to a vibrant neighborhood with a distinctive personality.
It is a showcase for the history of our nation — with 4.1 million visitors in 2015 breaking historical records — and a vibrant center for tourists, businesses, and residents alike.
Horse-drawn buggies trot along storied cobblestone streets abuzz with construction, renovation and restoration projects. Reactivated historic office buildings stand alongside new ground-up residential construction.
The result, which our founding fathers would certainly be proud of, is that the birthplace of our country has once again become a vibrant commercial and residential neighborhood.
ROSE PENNY serves as Market Research Director at Colliers International in Philadelphia and is a member of the Colliers International Research Council.