A nine-story office building that has stood next to the Cherry Hill Mall for decades is slated to be demolished in the coming months, reflecting a commercial real estate market that remains weakened by the economic impacts of the COVID-19 pandemic.
One Cherry Hill, built in 1968 and owned by mall operator PREIT, is expected to come down after the holiday shopping season, commercial development blog 42 Freeway reported. The area surrounding the building has been fenced off and demolition crews are already gutting the interior.
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The building at 1 Mall Drive is located behind the Cherry Hill Mall, which opened off Route 38 in 1961. The mall is one of PREIT's top-performing locations, but the company has weathered financial challenges in recent years and filed for Chapter 11 bankruptcy twice since the start of the pandemic.
In April, PREIT emerged from bankruptcy with a restructuring plan that includes transitioning from a public to a private company. It also negotiated an exit from Philadelphia's Fashion District mall, a joint venture it had entered with mall operator Macerich. PREIT now owns 17 malls in the United States, including six in the greater Philadelphia area.
PREIT did not immediately respond to requests for comment about the planned demolition. The company confirmed to the Philadelphia Business Journal that it will knock down One Cherry Hill, but did not share a timeline or future plans for the site.
The rise of remote work during the pandemic put lasting strains on office properties, sapping demand in many markets that were already oversupplied. The national office vacancy rate stood at 19.4% at the end of October, compared with a pre-pandemic rate of about 16.8%, according to Moody Analytics. Camden County has fared better than the national average, with an office vacancy rate of 15.9% in the third quarter, the Philadelphia Business Journal reported.
In recent years, PREIT has signaled plans to make land surrounding its malls available for residential development. At the Moorestown Mall, construction is underway on a 375-unit project that could be the first of several apartment buildings next to the mall in Burlington County. PREIT also has said it will explore selling land for housing developments nearby the Plymouth Meeting and Willow Grove Park malls in Montgomery County.