Small Cities on the Rise

Business, government, and economic development leaders of Wilkes-Barre, Allentown, Scranton, and Wilmington share how they are planning for the future.

As businesses continue to invest in downtown districts and people continue to move back to cities, the question becomes, does this trend trickle down to smaller cities in tertiary markets and what are they doing to create their own downtown renaissance? We spoke with business, government and economic development leaders from several smaller cities in the region to find out how they were faring in their efforts and planning for the future.

Wilkes-Barre

Loft Apartments at 65 Public Square
Photo Credit: 65 Public Square Associates
Larry Newman, the Executive Director of the Diamond City Partnership, which is the economic development organization for Wilkes-Barre’s CBD, compared 19th century Wilkes-Barre to a modern-day Houston but, instead of oil, it was coal that was the economic driver. With the decline in the coal industry, Wilkes-Barre recognized a need to reinvent its local economy. Luckily, the city is home to two universities, Wilkes University and Kings University, on opposite ends of the downtown area that have both become economic engines for the creation of a mixed-use environment. Newman reported there are now more than 11,000 people working in downtown Wilkes-Barre and, given the large number of college graduates, employers are finding a ready pool of talent there. “If you are a start-up business, you get personal attention here. You are not anonymous, you are not lost in the crowd.” With new housing being built in the CBD, long-term commitments to the downtown area from companies such as Guard Insurance and local tech company Pepper Jam, proximity to major metropolitan markets, and a low cost of living, Newman feels Wilkes-Barre is in the middle of a renaissance. “We have a collection of assets that allow residents to have a fantastic quality of life and people are starting to notice.”

Wilmington

Over the years, Wilmington’s reputation as a corporate headquarters capitol has shifted from chemical companies to financial services. The loss of MBNA and reputation as a 9 to 5 city has seen Wilmington struggling with office vacancy. However, Rob Buccini of the Buccini/Pollin Group is a true champion for Wilmington’s success and is working to change the trajectory of the city. “Our goal is to have 5,000 people living in downtown Wilmington and at the riverfront by 2020.” With the addition of a strong residential community, Buccini reports, “the companies are following.” An example of this was the recent decision by Chemours to stay in Wilmington because of its central location to its workforce. Wilmington Mayor Mike Purzycki reports that over 50,000 people work in Wilmington every day. He is hopeful the renewed emphasis on expanding luxury residential options in the downtown (there are nearly 1,000 residential units being built now), will propel growth. He’s seen it happen before. As the former head of the Riverfront Development Corporation, Purzycki led the successful $1.5 billion redevelopment of the riverfront district and has seen more than 1,500 people move there in the last five years. He’s confident this can be replicated in other parts of the CBD and, as a result, an educated talent pool will follow. “The financial situation (here) is very good, business taxes are low, and we have a growing downtown residential and restaurant scene now.”

Chelsea Plaza, will connect Wilmington Mid-Town to Market Street
Photo Credit: CADRENDER

We expect to see the downtown and the riverfront melding into one by 2020.Rob Buccini, Co-President of The Buccini/Pollin Group, Inc.

One success has been The Mill, a premier co-working space that began with 10,000 square feet of space a year ago. Now it’s expanding to 45,000 square feet to accommodate the demand from entrepreneurs. Buccini/Pollin is planning a 12,000-square-foot industry-chic food hall and community space as well as a restaurant/brew pub with residential above. There are powerful advantages for businesses in Wilmington: the fastest internet speed in the country, the 11th busiest train station in the nation, a pro-business mayor, and invested private developers. The potential is here for Wilmington to rebound into the place of prominence it once was. “Wilmington is certainly not in the 9th inning but we’re in the 6th and have started to accelerate,” said Buccini.

Scranton

The Scranton Electric Building is considered to be Scranton’s first skyscraper.
Photo Credit: Lindsay Barrasse

For many years, Scranton was known as the home of Dunder Mifflin, the fictional paper supply company where the hit comedy “The Office” was set. The small industrial city enjoyed national exposure during the show’s run and a boost in tourism. These days the Electric City (America’s first electric-operated trolley system was developed here), is getting national attention from outside investors and the town undergoes what some are calling a rebirth. Amy Luyster of the Greater Scranton Chamber of Commerce, sees this up close and personal. “We’re getting national exposure and an increase in investment coming our way from out of market.” Scranton still struggles with office vacancy but has seen an explosion of healthcare activity in their downtown and growth in the eds and meds sectors. The city is home to the University of Scranton which offers one of the leading pre-med programs in the country. The Geisinger Commonwealth School of Medicine opened in downtown Scranton several years ago and continues to attract young professionals to the area. Developers have sensed opportunity here and at the forefront of this renaissance is developer Charlie Jefferson of Jefferson-Werner, LLC. He took a risk when in 2010 he redeveloped the Connell building on Washington Avenue into a mix of 89 apartments with three floors of office and retail space. Jefferson points to the pro-business attitude of the state and local government and various tax credits for making projects like this feasible and successful. More importantly, he emphasized there has been a snowball effect, “one project leads to another and to additional developers and business owners looking for opportunities in the Scranton CBD.” The Chamber of Commerce is busier than ever and is on target to have over 5,000 jobs created and retained within the next three years. In early 2017, the city of Scranton made national television again. One of their local incubator tenants, DARTDrones, was selected to pitch their drone training school concept on the reality television show “Shark Tank.” The pitch was a success and the business is one of many small entrepreneurial companies thriving in Scranton today.

One project leads to another and to additional developers and business owners looking for opportunities in the Scranton CBD.Charlie Jefferson, Principal, Jefferson Werner, LLC

Allentown

Few cities have seen as dramatic a turn-around in their downtown district as Allentown. Much of this transition is due to the implementation of the Neighborhood Improvement Zone (NIZ). The NIZ was created in 2009 by the Pennsylvania State Legislature and, as Steve Bamford – Executive Director of the NIZ District Authority explained, “It’s a unique financing tool that is only available in Allentown. Certain state and local taxes that are generated by existing and new businesses can be applied to debt service on capital improvements in the zone.” The amount of taxes is rebated to tenants resulting in drastically reduced rental rates. As Bamford reported, the NIZ “has experienced over half a billion dollars of development completed in the last several years.” This has attracted Lehigh Valley companies who were tenants outside the NIZ and who are now experiencing significant savings by relocating within the zone. Major companies such as BB&T Bank and the Lehigh Valley Health Network were early proponents of the NIZ and, most recently, Talen Energy announced they will relocate within the city in order to take advantage of this opportunity. J.B. Reilly, CEO of Center City Investment Corporation, has been the prime driver in the creation of the NIZ. “Everything we are doing in terms of planning is really about creating a place where people want to be.” Reilly’s company has constructed over 300 new apartments in the CBD with plans to have over 1,000 units within the next five years. This activity, coupled with a new hotel, new restaurants, retail spots, and a multi-purpose arena proves downtown Allentown is quickly emerging into a vibrant city that has become a model for the “live, work, play” philosophy. While expanding the renaissance beyond the NIZ remains a challenge, Reilly is bullish on the city and proud of the hope and optimism that is permeating throughout the CBD.

One City Center & PPL Center
Photo Credit: Marco Calderon

Everything we are doing in terms of planning is really about creating a place where people want to be.J.B. Reilly, CEO of Center City Investment Corporation

Significant challenges abound for any urban community trying to develop neighborhoods around the central business district. As rents in the larger metropolitan markets continue to rise, additional demand will likely spread to tertiary markets. These cities are poised for growth. They demonstrate a genuine collaboration between local and state government, the business community, and the real estate community; and a healthy sense of optimism that the best days are ahead. This requires patience and a willingness to take risks. The cities we analyzed are in different stages of success, but they are positioned to introduce the downtown districts to a new generation of businesses and residents.


JOHN SUSANIN, Senior Vice President, Colliers International

Widely recognized as a top broker in Pennsylvania, John Susanin has completed multiple tenant representation assignments for regional, national and international clients.