During a recent visit to the Lehigh Valley, a national economist shared why some office markets are performing better than others – because they have life around them.
While traditional nine-to-five business districts are struggling, some communities have been able to fill office space by intentionally planning them alongside housing and entertainment venues, often through private-public partnerships, said Thomas LaSalvia, Head of Commercial Real Estate Economics at Moody’s Analytics.
The “live-work-play” model is working, he told about 250 commercial real estate professionals on Sept. 30 at the Office and Industrial Property Summit of the Philadelphia chapter of the Society of Industrial and Office Realtors® (SIOR). The event was held at ArtsQuest at SteelStacks in Bethlehem.
“Those mixed urban live-work-play types of communities are seeing the greatest success from a leasing perspective within office, and that's again something else showing up across all of the metros within the United States,” LaSalvia said.
A prime example is located just a few miles from where he spoke – Center City Allentown. And while LaSalvia did not cite Allentown as an example, the city’s renaissance has been held as a model by others, most recently by Site Selection magazine.
An article in September shared how Allentown city leaders worked with private developers, including City Center Group, to create a district that includes 1.2 million square feet of Class A office space and about 1,800 apartments mingled with the 10,000-seat PPL Center arena, hotels, Archer Music Hall, restaurants, retail, and public spaces.
“Our strategy was to build complementary uses around PPL Center that would create a vibrant live-work-play environment,” Maggie Reilly, Director of Asset Management for City Center Group, told Site Selection. “After decades when relatively few people lived downtown, we knew that creating a true neighborhood meant giving people compelling reasons to call downtown Allentown home.”
The urban renaissance was driven by the creation of a unique taxing mechanism by the state Legislature, the Neighborhood Improvement Zone. It applies state and local taxes paid by businesses in the district toward debt service and bonds that funded the development. 
LaSalvia’s remarks about the success of such communities were part of a presentation about data trends in office and industrial development and the factors influencing them.
Lehigh Valley Economic Development Corp. (LVEDC) was a sponsor for the SIOR event, which was attended by commercial real estate brokers, developers, architects, and others in the industry, along with regional partners.
The SIOR event also included two panel discussions.
“The Office Market: Investment, Transformation and the Next Chapter,” examined the Philadelphia market’s current trajectory, with a focus on major transactions shaping the office landscape. Opportunities and challenges ahead were discussed as well.
Panelists were Brian Berson of Shepherd Real Estate and Gregory Webster of PMC Property Group, with the discussion moderated by Margo Mocarski of Lee & Associations of Eastern Pennsylvania.
“Bellwether District: Philadelphia’s Next Industrial Powerhouse,” explored the impact that the site along the South Philadelphia waterfront can potentially have on reshaping the area.
Panelists were Sam Browne, Andrew Chused, and John Tschantz of HRP Group, with the discussion moderated by Colin Flynn of The Flynn Company.
The Society of Industrial and Office Realtors® (SIOR) is the leading global professional office and industrial real estate association. It has more than 4,000 members in 50 countries. SIOR conferences are designed to help members connect, build strong relationships, and facilitate business deals while enhancing their knowledge of the latest trends in industrial and office commercial real estate.
(Photos courtesy of City Center Group)