Revitalization efforts are pumping new life into the once-neglected cities and waterfronts of New Jersey, Pennsylvania, and Delaware, prompting new retail development throughout the region.

“We're now seeing a lot of interest in downtown areas, whether it be old downtowns like Newark coming back or specific neighborhood revivals like those in Flushing, Queens or 125th Street in Harlem,” explains James Schmidt, executive director and CEO of New Newark Foundation, a public/private group charged with making downtown Newark a residential destination. “Newark is an area that is under-served and retail opportunities will find their way there.”

“Redeveloping downtowns is a welcomed trend,” adds Marta Person, president of Square Foot, a consulting group specializing in downtown revitalization based in Long Branch, N.J., and acting director of the Business Improvement District (BID) in Newark. “Our state plan is directing developers back into the urban centers so we're seeing a lot more redevelopment as opposed to new development.”

New Jersey

As a result, the transformation of Newark's downtown, which began nearly three years ago, is gaining steam with a key mixed-use project recently unveiled by The New Newark Foundation. The large-scale, $180 million plan aims to revive a stretch of the city's blighted downtown by turning it into a round-the-clock neighborhood. The two-phased project calls for the development of 540 luxury apartments, 200,000 sq. ft. of retail, and street-level entertainment. At the heart of the plan is the renovation of the aging Hahnes department store, and the adjacent Griffith Piano Co. building located on the city's main downtown artery and across from the New Jersey Performing Arts Center.

“There is a desire on the part of cities and towns to fix themselves up,” agrees Lewis Gantman, president of Kravco Co. The King of Prussia, Pa.-based company recently acknowledged the significance of this trend by creating Downtown Works, a real estate services division that focuses on urban retail projects. “We are going back in to rebuild communities,” Gantman explains, “and that may involve establishing projects that have mixed uses.”

Kravco was chosen by the New Newark Foundation, along with Philadelphia-based Dranoff Properties and Universal Cos., to develop the Newark plan. Construction of Phase I is slated to begin in spring 2002. Phase II, which will include the construction of residential and retail on adjacent lots, is expected to begin in spring 2004.

This varied combination could prove key to the project's success. “When you get a good mix of uses whether it be commercial, cultural, residential or retail you present a dynamic situation,” notes Gantman. He adds that the mixed-use development will bring elements back into the community that are currently missing.

In the New Jersey suburbs, retail activity remains strong, says Richard Brunelli, president of Old Bridge-based Brunelli & Co. According to Brunelli, towns are slowly realizing that the best way to balance their residential tax base is with commercial ratables. This has translated into the welcoming of new retail projects by communities. “Since few office buildings are being built, retail is the only commercial ratable left,” Brunelli says. “But the whole process is agonizingly long. It can take two to four years to get a large center approved and under construction in the state.” Roughly half a dozen power centers are currently under development in New Jersey, Brunelli says.

“In Northern and Central New Jersey the competition is as tough as it gets anywhere in the country,” he adds. “As a result, retailers have to be sharper here.” Discount retailers such as Kmart, Bed, Bath & Beyond, and Wal-Mart are growing. Other retailers making an impact include Target and Lowe's Home Improvement, which is moving in to compete head-to-head with The Home Depot.

The region's low vacancy factor was given a jolt this year with the disposition of numerous Bradlees and Grand Union stores. Specifically, the demise of Bradlees has left more than 1 million sq. ft. of vacant space on the market in Northern and Central New Jersey. “The good news is that a number of those sites have been committed to stores like The Home Depot, Wal-Mart and Kohl's,” explains Brunelli. “Those are the names you hear most frequently.”

Pennsylvania

In Pennsylvania, urban development is evident in Philadelphia and Pittsburgh. For instance, Simon Property Group's dream to build an entertainment, retail and museum center on the Philadelphia waterfront is another step closer to becoming a reality. The Philadelphia Inquirer reported that the Indianapolis-based developer recently lined up a risk-sharing equity partner in an effort to move forward with the project. The Delaware River Port Authority is also a major participant in the $240 million Penns Landing project.

Downtown Pittsburgh is reaping the benefits of new and redevelopment projects. A major mixed-use development, SouthSide Works, is currently under construction on the riverfront. Pittsburgh-based The Soffer Organization is developing the $140 million streetscape project on a 34-acre site. Approximately 50,000 sq. ft. of retail broke ground this summer. When complete, the project will offer a retail, restaurant office, and entertainment venue.

“We're talking with some major national restaurant concepts,” says Robert Weich, vice president and director of retail leasing for The Soffer Organization. He says the phased build-out for SouthSide Works should be finished in five to six years, and notes the market is very healthy in Pittsburgh. Soffer's current strategy is to aggressively pursue opportunities for similar lifestyle center concepts around the country, Weich explains.

Revitalization efforts are also underway on Delaware's Christiana River. Three years ago the Riverfront Development Corp. began pumping new life into the riverfront in Wilmington, transforming a once-desolate industrial site into a thriving destination with numerous attractions, including outlet shopping, dining and cultural events.

The opening of the first phase of the Shipyard Shops in May 1999 was a major addition to the Riverfront's economic turnaround. The upscale retail center, comprising 100,000 sq. ft., is nearly 98% occupied and experiencing strong sales. As a result of the project's success, The Pettinaro Co. of Delaware is developing the second 100,000-sq.-ft.-phase on speculation and is nearing completion.

Nautica Factory Store is the first retailer to open in the second phase. “We're expecting to be leased out by year-end,” says Greg Pettinaro, president of The Pettinaro Co. The third phase is expected to begin in the spring 2002. When complete, the four-phase project will total 400,000 sq. ft. of outlets, restaurants and other retail shops.

“More big names are starting to open outlets,” says Lana O'Hollaren, marketing manager of the Rehobeth Outlets in Delaware, a project of Charter Oak Partners. “It's just another way for them to expand their market share.” The 560,000-sq.-ft. center located on the eastern shore offers more than 140 stores. New additions this summer included Brooks Brothers and Little Me.

The tax-free shopping at the Rehobeth Outlets has been a magnet for out-of-state shoppers. As a result, sales have been up every month this year compared with last year, according to O'Hollaren.

“We bring in so many people that we are a tourist attraction,” she says. “Our bus business is growing at 20% per year.”

Dora Johnson is a Tinton Falls, N.J.-based writer.