HARRISBURG, Pa. — Note: The video is from December 13.
Days after informing tenants of the Harrisburg Mall that they needed to vacate the property by the end of January, the Baltimore-based owner of the Swatara Township shopping center unveiled plans to demolish the 1 million-square-foot property and turn it into a mixed-used business community and retail space.
St. John Properties, Inc., the commercial real estate development and management company that acquired the mall in 2012, said the development strategy includes "an extended demolition program that is expected to conclude in 2025."
Once demolition is complete, the company said it plans to embark on the development of Swatara Exchange, a mixed-use business community containing single-story multi-use/flex commercial space, and supporting inline retail and retail pad sites.
The existing Bass Pro Shops and Applebee’s Grill + Bar Restaurant will remain operational, and the former Toys R Us building will be marketed for a new use, St. John Properties said in a press release announcing the redevelopment plan.
At full buildout, Swatara Exchange is expected to support up to 1,000 new jobs in its nearly 550,000 square feet of space, and contribute approximately $1 million in additional tax revenue annually, the company said.
The new development will include 12 new buildings, including two retail pad sites, St. John Properties said.
“When formulating our long-term strategy for Harrisburg Mall, we factored in trends occurring throughout the retail industry, changing consumer shopping patterns, the local real estate landscape, and the greater Harrisburg economic climate,” said Lawrence Maykrantz, president and CEO of St. John Properties. “It was extremely important that we satisfy Swatara Township residents, Dauphin County taxpayers, and the regional business community.
"After careful consideration, research, and planning, we believe we have arrived at a solution that leverages our company’s strengths and experience, and which will provide long-term value and benefits to the community.”
St. John Properties’ development plan includes the construction of 13,600 square feet of single-story office space and nearly 200,000 square feet of single-story multi-use space, which the company classifies as "flex/R&D."
This latter building type became a trademark of St. John Properties in the early 1970s in response to the real estate needs of a wide range of end-users, the company said. It consists of a “part office/part industrial” single-story building separated into bays which can be fully customized based on the users’ requirements.
The product, equipped with 16- to 18-foot ceiling heights, 30-foot-wide bays, 80- to 100-foot building depths, rear service courts for truck loading, and abundant parking, can be leased as a single-bay or in multiple bay units up to an entire building, according to the company.
"The space is easily adaptable to accommodate a wide array of end-users including professional services, medical, wholesale, light manufacturing and distribution, scientific research, and early childhood education," the company said.
St. John Properties currently develops and leases this flex/R&D asset class in nine states across the country.
The balance of the Swatara Exchange plan includes the development of nearly 50,000 square feet of complementary inline retail space and two new retail pad sites "that will be marketed to restaurants, financial institutions, medical providers, convenience stores and other users to support the daily needs of the surrounding community and Swatara Exchange tenant and employees," the company said.
The former Toys R Us building at 3405 Paxton Street is currently being marketed for sale or lease and is attracting interest from both retail and non-retail businesses, according to St. John Properties.
Demolition of the mall's remaining structures is expected to begin in March 2024 and to be completed in just over one year, the company said. Mass grading will follow, and is scheduled to be completed by late 2025.
Phase I building construction and tenant fit-out work will extend from fall 2025 to fall 2026, the company said.
"This activity coincides with PennDOT's ongoing capital project improvements, including the reconstruction of the Eisenhower Interchange designed to improve ingress and egress to Swatara Exchange," the company said.
The mall's redevelopment was made necessary by the nationwide decline of shopping malls, St. John Properties said.
The company cited a report by CapitalOne Shopping Research, which claims that of the estimated 1,150 malls currently operating throughout the United States, “there may be as few as 150 malls still in operation by 2032, and that up to 87 percent of large shopping malls may close over the next decade. Two million square feet of mall space was demolished last year, and the average vacant mall sells at 43 percent below its acquisition price.”
"Department stores, which traditionally served as the primary anchor destinations for shopping malls and occupied up to 25 percent of the total space, are struggling as consumers increasingly shop online," St. John Properties said.
When St. John Properties acquired Harrisburg Mall in a joint venture partnership in mid-2012, the mall was anchored by Macy’s, Bass Pro Shops and Great Escape Theatre.
"The company achieved significant leasing success at the regional mall by attracting national retailers 2nd & Charles and Destination XL in 2013, while also executing a $1 million renovation and improvement program that focused on the installation of new signage and exterior landscaping," St. John Properties said.
Macy’s added its Macy’s Backstage concept in 2016 but, as part of a national closure strategy, ceased operations in 2020.
Regal Entertainment acquired Great Escape Theatre and shuttered its Harrisburg Mall location in 2021, according to the company.
“While some retail shopping centers continue to perform successfully, the pandemic and rise of e-commerce have taken their toll on enclosed malls," Maykrantz said. "It has become apparent that the best use for this property isn’t pure retail, but rather a business community with a diversified mix of uses.
“Swatara Exchange will emerge as a long-term job generator and hub for businesses small and large. This redevelopment will add to the local tax base while contributing significantly to the economic health of the entire region. We are confident that this project will inject valuable amenities, services, and new vitality to the area.”