A developer on Wednesday unveiled detailed plans for a $50 million office complex that would include a 570-space underground parking garage and could attract more than 700 mostly white-collar office workers to downtown
One City Center, to be built by J.B. Reilly on a Seventh Street parking lot south of the Soldiers and Sailors Monument, is billed as the first phase of a plan that will bring thousands of new workers and hundreds of new upscale homes and apartments into Allentown's struggling downtown.
City officials hope it will be followed by a parade of development piggy-backing on a 130-acre Neighborhood Improvement Zone created to finance the downtown hockey arena.
Reilly said he's still negotiating with tenants and will need to sign a lot more, but he expects to fill the five-story, 200,000-square-foot building with legal, accounting and financial firms.
"The goal is to transform Allentown into a 24/7 environment that becomes the urban core of the Lehigh Valley," said Reilly, of Upper Saucon Township. "Our focus is to re-create the financial district that used to be here 20 years ago."
The glass, steel and brick complex is scheduled for construction by next summer. It's to open in September 2013, around the time Allentown's 8,500-seat arena at Seventh and Hamilton streets is tentatively scheduled to start hosting the Phantoms, the Philadelphia Flyers' top minor league affiliate.
The building mirrors the look of the arena, with its entrance diagonal to Hamilton Street, but it will have a three-story parking garage reaching nearly 40 feet underground. With a handful of retail shops on the first floor, the building's Walnut Street rear exit will stretch across what is expected to be a green, park-like roof over the parking deck.
Reilly, who bought the lot at Seventh and Hamilton streets in 1999, said the latest plan will succeed where many others have failed for one reason: the Neighborhood Improvement Zone.
The NIZ funnels new state and local taxes generated by the project's tenants back into paying the construction costs of the project. Reilly wouldn't estimate how much of his $50 million investment will be offset by NIZ tax money, but acknowledged it could cover 25 percent to 50 percent. That will enable him to offer office space that typically costs $18 per square foot for as little at $10 per square foot.
The zone doesn't tap local real estate taxes, and Reilly said the privately owned building would add to the city and school district's property tax base.
"The whole intent of the [zone] is to spur economic development in an area that is suffering distress," said Reilly, who in September changed the name of his downtown Allentown development company to City Center Investment Corp. "Without the NIZ, no way we could be here."
Lisa Pektor, who as regional president of PennCap Properties manages 32 Lehigh Valley office buildings that will be competing with One City Center for tenants, doesn't begrudge Reilly the help he's getting from the NIZ.
"With the stigma that goes with downtown Allentown, that kind of incentive is needed," Pektor said. "I commend the city for offering it. I wish them luck. Any new economic development in the Valley helps us all."
Not necessarily, according to some real estate experts. While the zone will help revitalize a downtown that's been in decline for more than two decades, if it only attracts businesses from the Lehigh Valley and Pennsylvania, it is a net loss for the state. Stephen F. Thode, a professor of finance and real estate at
, likened it to rearranging the deck chairs on the Titanic.
Reilly and his newly hired chief operating officer, Jim Harbaugh, don't see it that way. Harbaugh said the early tenants will likely be transplants from Valley suburbs, but that will prompt interest from out-of-state businesses. Harbaugh, a former
executive who spent the last 17 years with New York-based
, was brought in specifically to recruit out-of-state firms.
Reilly said the lease rates will be attractive to companies in places like Princeton, N.J., and along Interstates 78 and 287.
Harbaugh said he's most excited about what happens after One City Center and the arena both open.
"If we bring jobs, retailers follow — people will want coffee, they'll want lunch, they'll want shoeshines," Harbaugh said. "Then residential will follow."
Reilly said he hopes One City Center, which is launching citycenterlehighvalley.com this week, will lead to a Two and perhaps a Three City Center.
To make way for future development, City Center has bought 21 properties near the arena this year for $5.4 million, using a $20 million credit line provided by the Allentown Commercial Industrial Development Authority. The loan will be at least partially retired using state and local taxes paid by new NIZ businesses.
All of that depends on whether Reilly can lure more than 700 workers into an urban district that has a reputation for deteriorated storefronts and crime.
"If we can't lease the space, we get nothing from the NIZ, and we still have to pay off the loans," Reilly said. "If it was as easy as some people think, we'd have 10 developers down here doing it."
There's no rush of developers, but Reilly won't be alone in his leap. Alvin H. Butz last week announced it would expand its 840 Hamilton St. headquarters with a six-story, $10 million office complex that would use NIZ money and a $3 million state Redevelopment Capital Assistance Program grant to attract 200 workers.
Reilly said he expects other developers to follow, and in the next decade, Allentown will change from a struggling downtown trying to recapture its decades-gone heyday, to one of trendy shops, a vibrant night life and hundreds of new homes occupied by young professionals.
"It's a risky endeavor. There are no guarantees," Reilly said. "But we think it's worth the risk."
One City Center
Square feet: 200,000
Employees: 700+ (projected)
Underground parking: 570 spots
Construction cost: $50 million
Estimated completion: fall 2013