May 18, 2016

NIZ Stock Depreciating

With National Penn having been acquired by BB&T,  Reilly and Allentown is losing more than just bank headquarters status.  Scott Fainor had been a long time center city booster.  Before Keystone merged with National Penn,  he placed a Keystone branch in the PPL Plaza.  He has been Reilly's primary banker, lending him $16 million start up for acquiring and tying up the lion's share of property in the NIZ zone.  Since then, National Penn has continued being Reilly's banker.  News accounts now say that BB&T will reduce staff at 7th and Hamilton by 87 positions.  Fainor was very good to Reilly.  Although, knowing the bank was reaching the asset point of sale,  he signed a 20 year lease with Reilly.  The location will now function as a regional center for BB&T.

In 2018, the Talen workers are scheduled to relocate to Jaindl's riverfront NIZ, but wait!!!! Rumor has it that Talen might be acquired, who then would be Jaindl's anchor tenant?  Meanwhile, back uptown, Reilly has put his mega project on hold, and is proceeding with his office condos.  The Morning Call will have its hands full spinning the decline as progress.  The cigarette tax loophole might become more and more important for the NIZ's future.


Jamie Kelton said...

"The best-laid plans of mice and men often go awry". - Robert Burns

The script is familiar. Allentown went into an economic decline beginning in the 1970s, slowly, surely, Hamilton Street lost its luster as a Central Business District and "For Rent" signs began to outnumber the Neon signs advertising businesses. So in response, various projects have been funded by the City in the hope of reversing the trend. One government plan has failed after another; the NIZ simply being the latest, and the most expensive

However, unlike "Field of Dreams", if you build it, they don't always come. No matter how much it tried. Basic economics will not be denied, even in this era of crony capitalism.

We all know what the result will be, it just has to be acted out in this third act of the Shakespearean tragedy.

michael molovinsky said...

jamie@6:08, since they build the arena and got rid of the undesirable merchants and their clientele on hamilton street, there are less people than ever, despite the new office workers.

alfonso todd said...

We "undesirables" were actually organic platforms that grew in spite and despite the circumstances. Many of us were moving forward and, if left to our own devices, I believe Allentown would have gone full circle with a solid foundation developed from valid entrepreneurs and investors without subsidies and scandals.

Alfonso Todd

Dave said...

Hamilton Street represented the population of the city. The stores that were in the existing buildings provided goods to the people that lived in the area. This isn't the All-America City any longer. People don't have as much money to spend, and they buy what they need. You couldn't open a Hess brothers selling designer gowns from Europe because the people of the city can't afford them.

However, all of this was considered to be "undesirable" by the Mayor who wanted to turn Allentown into Manhattan. That's why, as was mentioned above, there are less people there now with the new buildings than there were before with the old ones.

Jamie Kelton said...

I'm sorry, I don't normally post twice here but I was reading though the comments and something came to mind.

What Hamilton Street needed was something like The Promenade Shops at Saucon Valley. Go there you'll find green space, a variety of architectural styles, places to sit, and a diverse number of stores to shop in. Some have expensive products, sure, others are quite affordable. But its where people go to shop, be entertained, and its quite attractive.

Now what Allentown received downtown is basically a business park. If you've ever been in a suburban office park, it's a dead zone. People go there to work, but unless you have a reason to go there, you go elsewhere. Promenade Shops is like the mirror of what Hamilton Street should be, but it's not in what matters.

Parking is another issue. The commerce that would be generated by a real shopping area would subsidize the Allentown Parking Authority. Remember how Park & Shop worked? You bought something and you received free parking. Not getting your wallet emptied.

Whoever was responsible for the planning of the NIZ needed vision, which clearly was lacking.

michael molovinsky said...

jamie@1:40, was the NIZ intended to revitalize downtown, or really designed as a windfall for a few people? when the parking authority is willing to sell convenient surface lots to accommodate chosen developers, whose interest is being served, that developer or the public? to me these are rhetorical questions, when the cigarette tax loophole was disclosed, the corruption of the intent was clear.

doug_b said...

IMO, there's several reasons why the NIZ will not work in the long run.

#1. In the defense industry, sometimes us contractors need parts - that are on another project. Taking items from one project, to get the other one working is called 'cannibalizing'. That's what the NIZ is doing. A successful situation (like the Masonic Temple) is hijacked, that's not creative destruction.

#2. Downtown Allentown is surrounded by low-income housing. If the downtown were separated by a natural boundary (like a river) it could work. So what happens when you venture one or two blocks from Hamilton St? You're in the hood.

#3. Who is going to fill the office jobs in those shiny new buildings? Certainly not the residents of downtown Allentown.

George Ruth said...

Well, at least those former NIZers can take that high-speed train to new jobs in New York. Oh, wait.....

Unknown said...

I agree on the vision piece. I haven't pitched a business plan to the city, but it is remarkable how simplistic the development plan for Allentown seems right now. It almost seems like someone took a photo of Hamilton Street in 1955 and said "let's do that." Of course, that economy, and the large white-collar workforce that it needed, is long gone.

Some out there notably focused almost solely on "cheaper rents" as a business development plan. Businesses though make these decisions on a number of criteria beyond rent--like, are there any customers nearby.

If this is going to work at all, Allentown really has to take stock of its advantages and try to get some niche markets for itself, based on its geographic or other advantages. How's the cooperation with universities, particularly in medical sciences? Can Allentown's location offer something useful for off-site storage or back end support to the NY/PHL financial community (unlikely that Allentown will host a bank HQ for long)? What spin-off markets or business communities could be built from the Valley's emergence as a transportation hub?

Allentown shouldn't be hopeless, but it isn't going to turn around because one guy built some nice buildings.