Preservation

Demolition Permits Issued for Historic Chestnut Street Arcade

April 29, 2024 | by Kyle Bagenstose

The issuance of a demolition permit for the century-old Chestnut Street Arcade at 1812-14 Chestnut Street sent a wave of concern through Philadelphia’s historical community this month. While sources familiar with the situation say the worst of the panic might be a bit premature due to a quirk of zoning policy, tax records suggest potential financial motivations for the current owner, the Philadelphia Federation of Teachers (PFT), to sell.

Historical records show the building was originally constructed as a department store in 1925 and only more recently was obtained by the PFT, the main union for the city’s public school teachers. The union also owns the building next door, 1816 Chestnut Street, which serves as the primary address for its headquarters.

A LoopNet listing by Savills, a real estate company with offices in Philadelphia, states the PFT has authorized the firm to sell both buildings, neither of which are listed on the Philadelphia Register of Historic Places, which would have provided some protection against the exterior alteration or demolition. The arcade building is listed as “contributing” within the National Register’s Center City West Commercial Historic District, but that designation provides no protection from demolition.

The current CMX-5 zoning for the buildings, the Savills listing notes, “provides the highest possible development capacity by right in the city of Philadelphia.” It states that the buildings as they stand today offer a combined 53,726 square feet of office and retail space, but are zoned to support “the addition of approximately 161,000” more square feet.

“In place rental income with the option to terminate,” it adds, likely a reference to Boyds department store at 1818 Chestnut Street, which rents storefront and storage space from the PFT in the adjacent buildings.

A zoning demolition permit was issued to Philadelphia Federation of Teachers, the owners of 1812-14 Chestnut Street. The building is listed as contributing on the National Register of Historic Places, which does not provide legal protections in Philadelphia. | Photo: Michael Bixler

While these details, along with an approved demolition permit from the city, seem to imply impending doom, the building’s physical deconstruction actually remains several steps removed. A PFT source, speaking on background, said that the union has not sold the buildings and currently only has prospective buyers. They characterized the demolition permit as part of an exploratory process that PFT has undertaken to appease potential suitors, who want to to know the full range of redevelopment possibilities before initiating any potential purchases. “Everyone is getting way out over their skis,” the source said.

Hillary Linardopoulos, a spokesperson for the PFT, similarly told the Philadelphia Business Journal that the union “has a buyer interested in the building,” but provided no further comment. Linardopoulos did not respond to questions for this story by deadline.

Paul Steinke, executive director of the Preservation Alliance for Greater Philadelphia, said his reading of the situation lends credence to the union’s statements. Steinke explained that there are actually two distinct kinds of demolition permits: a zoning demolition permit, and a building demolition permit.

The building demolition permit is the one that most people are familiar with, which authorizes immediate physical demolition of a building. On the other hand, “All a zoning permit for demo says is that the zoning for the site allows for demolition,” Steinke said. In other words, it flags to potential developers that they have the option to tear down a building if they want to. “It’s good for three years, but you need both before the bulldozers can swing into action,” Steinke added.

City records show the PFT has so far only obtained the zoning demolition permit and not the building demolition permit for 1812-14 Chestnut Street. “Bottom line is that the building is conceivably threatened, but that nothing is imminent,” said Steinke.

As this story was nearing publication, a significant additional development arose: On April 25, City records show the issuance of a second zoning demolition permit for 1816 Chestnut Street, the PFT’s headquarters next door to the Chestnut Street Arcade.

A Downtown Revolution

An advertisement from 1925 for rental space in Chestnut Street Arcade. | Image courtesy of Bob Skiba

An October 1924 edition of the Philadelphia Inquirer proudly announced a building boom for what is now the Center City and Rittenhouse Square. “Attractive Store Buildings Improving the Central Section,” a banner headline read, while another declared that, “Building in West of Broad Section Setting Fast Pace.” As the newspaper further explained, many large new buildings were going up in the city’s core, but development was particularly heating up west of Broad Street. The author of the  article was most impressed with smaller, well-designed retail buildings.

“Although the many large buildings erected in the course of construction in the central section of the city are impressive monuments to Philadelphia’s growth and business expansion, there are no more attractive improvements in the business district than the smaller store buildings which are constantly replacing time-worn business houses and dwellings,” the article declared.

Chief among these new announced developments was the Chestnut Street Arcade. To be erected at 1812-14 Chestnut Street at a cost of $750,000 (roughly $14 million today), the article envisioned that the new department store would be “one of the most artistic buildings of this type.”

By October 1925, one year later, it appeared the building had been constructed and opened, as an ad to rent the second floor of the Chestnut Street Arcade was published in the newspaper.

Chestnut Street Arcade in 1939. | Photo courtesy of PhillyHistory.org

As local historian Bob Skiba explained in a 2019 Facebook post, the opening of such “shopping arcades” followed an international trend at the time. In London’s Mayfair section, Burlington Arcade opened in 1818 to great success. That led to worldwide replication, including in Philadelphia. “Over the 19th and 20th centuries, several covered, multi-business arcades appeared downtown. Four of them were on the city’s most fashionable shopping thoroughfare, Chestnut Street,” Skiba wrote. Those included a Philadelphia Arcade at 615-619 Chestnut Street, the International Arcade at 1430 Chestnut Street, the Mint Arcade at 1331-1337 Chestnut Street, and the Chestnut Street Arcade, which remains the only original building still standing today.

“By the second half of the 20th century, the downtown arcade concept had expanded to full scale, multilevel urban enclosed shopping malls. In an effort to compete with vast suburban malls, Center City gave birth to the Galleria on Market, the Shops at Liberty Place on Chestnut, and the short-lived Newmarket Mall near Head House Square,” Skiba concluded.

The Chestnut Street Arcade appears to have made it about 40 years before succumbing to market changes and finding a second life as a movie theater. A June 1967 edition of the Philadelphia Daily News announced “a welcome and needed addition to the midtown film scene,” with the opening of Theater 1812 in the arcade building at the end of that month.

Then-theater owners Robert Abel, Sidney Leventon, and Mel Koff told the newspaper they’d spent about $350,000 renovating the 500-seat theater, which they defined as a luxury operation with a large entrance court, foyer, and vestibule for waiting crowds. The theater’s first film was the British comedy-thriller The Jokers. According to the developers, they saw a need for additional theater capacity in a city where many “good films” couldn’t find a place to run. “Compared to New York, Philadelphians are second class citizens, film-wise,” Koff said at the time.

Transition to Teachers Union

Theater 1812 in 1968. | Photo courtesy of The Athenaeum of Philadelphia

According to the film-aficionado website Cinema Treasures, Theater 1812 later switched to adult films before eventually closing. Exactly when the teacher’s union took ownership of the building is difficult to ascertain. Cinema Treasures states that after the closure of Theater 1812, the PFT opened a meeting hall in the space, then leased it again as a movie theater under the Palace Theatre name until it was closed for good in 1992. A search of Philadelphia newspaper records show the earliest reference to the PFT listing its address as 1816 Chestnut Street was in July 1976. A more recent history of PFT’s ownership of the buildings becomes even murkier.

Technically, until 2021, both buildings were owned by 1816 Chestnut Street Corporation, an entity which federal tax records show is an arm of the PFT, “organized exclusively for the purpose of holding title of property for the PFT [Health and Welfare] fund and to collect rents and pay all expenses.”

Additional tax filings show 1816 Corp has held a $4.8 million loan from the PFT proper since at least 2011. That balance remained unchanged over the next decade. Over the same time span, tax records show 1816 Corp making about $188,327 a year in profits, improving its net assets from negative $3.1 million in 2012 to negative $1.3 million in 2021. Records show the bulk of its profits–about $1.3 million in 2019–are generated by rental incomes. Steinke noted that the PFT leases storefront window displays to Boyds department store, whose main entrance is at 1818 Chestnut Street.

Chestnut Street Arcade in 1983 after the Philadelphia Federation of Teachers acquired the building. | Photo courtesy of The Athenaeum of Philadelphia

In late 2021, something strange happened. City records show that in November of that year, 1816 Corp sold both 1812-14 Chestnut Street and the union headquarters next door to the PFT proper for a total of $7.8 million. The influx of cash bumped its total assets into positive territory at $5.2 million. However, the PFT then mortgaged the buildings back to 1816 Corp at a 6 percent interest rate over 30 years, which would cost a total of approximately $16 million to pay back over the loan’s lifespan. Just a few years later, 1816 Corp now appears to be seeking a sale of the buildings.

Tax records show the larger PFT union has been in the red financially during 8 of the past 11 years. Its net assets halved in that period, from approximately $72 million in 2012 to $36 million in 2023.

Questions sent to a PFT spokesperson inquiring about the nature of the recent transactions between the PFT and 1816 Corp, and whether or not they are connected to the potential sale of the buildings, did not receive a response by deadline.

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About the Author

Kyle Bagenstose is an independent journalist based in East Mt. Airy. Previously with USA Today, he writes primarily about environmental and urban topics.

2 Comments:

  1. Grittenhouse says:

    Ironically, we need this building as both an arcade and as a theater. As the one remaining theater building that could be restored to theater use, it should be preserved for that purpose, or at least as a home for small businesses otherwise priced out of the area. Foreign Bazaar is being forced out of their storefront after some 20 years there or more. It’s the only store where I can buy gifts and other items.

  2. Luis Ternera says:

    Great story, it is interesting to see how the adaptative-reuse concept have been present in the history of the building.

    I have to mention that there is a mixed-use project proposed next door in 1808-10 Chesnut St by Astoban Investments, that adds a “glassy” building on top of an historical building.

    Curious to see how that project will continue with this new properties for sale. Maybe the investment group is one of those interested buyers.

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