J.B. Reilly thinks he’s left the best for last: A 16-story, glass-and-steel office tower on a property he purchased more than two decades ago on Center Square in downtown Allentown.
The $100 million project, called 1 Center Square and unveiled Wednesday, is expected to be the last major office tower from Reilly’s City Center Investment Corp., which has dramatically changed Allentown’s skyline in recent years by constructing five office buildings on Hamilton Street, all between Fifth and Eighth streets.
The planned tower, which at 250 feet will be the tallest building City Center has developed, will mean the demolition of the interior of what’s now a Wells Fargo bank on the square’s southwest corner at 702 Hamilton St. However, Reilly said his firm plans to spend “a few million dollars” to preserve and retain the structure’s limestone-and-granite facade that originally belonged to Merchants National Bank.
“We always knew this was the strongest site,” Reilly told The Morning Call on Wednesday. “If we built too soon, we were concerned that we would have to compromise the design. By waiting, and being in a stronger position, because there’s more here, more confidence in what’s been created downtown, we’re able to build the kind of building this corner deserves.”
The office tower, which Reilly believes will be City Center’s signature building, centered in Allentown’s skyline, got a boost Wednesday evening when the Allentown Neighborhood Improvement Zone Development Authority approved plans for 1 Center Square.
The NIZ allows developers to pay for project debt service with state and local tax revenue generated by the project.
1 Center Square has been several years in the making, with City Center first sharing its plans in December 2017 for an office tower at the bank site. ANIZDA had previously approved an 18-story, 350,000-square-foot rendition, and modified existing loan and funding agreements. On Wednesday, ANIZDA again updated the funding agreement to reflect that the tower will now be between 200,000 to 300,000 square feet, with 11 to 16 floors. Because the authority OK’d the earlier version, City Center does not have to go through the authority’s entire project review process.
Reilly said he hopes to present the project to the city Planning Commission as early as January and begin construction on 1 Center Square in the fall.
The timeline, however, will be dictated by demand and lease commitments. Reilly is hoping to secure lease commitments from early anchor tenants next year for the 296,000-square-foot building, with the goal of initial occupancy in 2022. As it is, he said, there’s good activity in the market, with companies looking to grow in the area and some out-of-the-area prospects, such as a New Jersey company looking for a headquarters.
But right now, City Center doesn’t have space for a large company. Reilly said City Center has an open floor at Five City Center, at Eighth and Hamilton streets, but that’s about it. Elsewhere downtown, Grand Plaza, at 835 W. Hamilton St. and formerly PPL Plaza, is under new ownership and trying to fill its eight-story, 245,000-square-foot footprint with tenants. Across the street, Butz Corporate Center, built in three phases totaling 175,000 square feet, has 45,000 square feet available, the bulk at its 55,000-square-foot third phase.
“We have seen an uptick in interest the last few months, so there is definitely still a market for Class A office space downtown,” said Margaret McConnell, Butz marketing manager.
While the area’s lower costs are a plus versus a New Jersey, for example, Reilly said companies also want modern, collaborative workspaces filled with natural light to help attract and retain workers, especially younger educated people.
Two-thirds of Lehigh Valley employers are working in office space that is at least 30 years old, Reilly said, and the city’s one-of-a-kind NIZ has spurred development of the kind of office space many find appealing.
“Forward-thinking companies require the impressive space and top-notch amenities 1 Center Square will boast — they are critical to recruiting and retaining talented employees today,” Jane Heft, City Center’s vice president of project design and corporate branding, said in a statement.
A boost to City Center’s efforts is the presence of payroll company ADP, which is leasing the top 10 floors of Five City Center, a building completed this year. ADP, Reilly said, now has almost 1,200 employees in the building and continues to hire in a space that has the potential to house 1,600 people. That shows other companies, he said, that a Fortune 500 firm is confident it can find employees in downtown Allentown.
Some of those workers also live downtown in City Center apartments, serving as the feet on the street to support the retailers and restaurants that have bet on the downtown. Once 1 Center Square is completed, Reilly sees that area becoming even busier, with Five City Center, a 900-space parking deck and more than 200 apartment units at Center Square Lofts.
“All those users are going to be triangulating into this area, so we think this is going to be really, really active,” he said.
Landscaping and aesthetic improvements outside the proposed tower will complement an expansion of Center Square and improvements to the Soldiers & Sailors Monument to make the area more pedestrian-friendly, Reilly said.
Reilly has owned the bank building since 1999, when he bought it from First Union Bank. It was built in 1903 and was the home of Merchants National Bank from 1916 to 1993, when it was acquired by Fidelity Bank and then First Union (which was acquired by Wachovia and then Wells Fargo).
City Center’s offices were located on the second floor prior to the opening of Two City Center, kitty-corner at 645 W. Hamilton St.
The 1 Center Square project will force the relocation of businesses within the bank building, including the Wells Fargo bank itself.
Wells Fargo spokesman James Baum said the region’s largest bank does, however, plan to maintain a presence downtown.
“We’re thrilled to see the continued rejuvenation of downtown Allentown, and we plan to remain a part of this resurgence through a retail bank presence in the city center,” Baum said in an email. “We will have more details to share in the new year.”
Other existing tenants include RLB Accountants, the YWCA and TWG Security.
Reilly sees the planned office tower as the “last piece of the Center Square puzzle.” He also sees 1 Center Square as, probably, City Center’s largest remaining project.
That’s because the 30-year NIZ is nearly 10 years old. Reilly sees another five years or so of opportunity for large projects downtown, because developers need time to pay down debt.
Beyond 1 Center Square, Reilly remains interested in new apartment complexes and continues to target development in the 900 block of Hamilton Street. In October, City Center bought the Tucker Yarn building and two adjacent buildings at 950-956 Hamilton St. for $2 million. It has owned a vacant lot at 932 Hamilton since 2014.
In that block, Reilly sees an opportunity to do smaller-scale office buildings, more in the ballpark of 50,000-75,000 square feet. Specifically, City Center is hoping to identify some businesses that would be interested in an office ownership opportunity in the block, looking to use NIZ benefits and those offered within the federal opportunity zones.
“It’s a really attractive set of circumstances for the right business,” Reilly said.
But it’s unlikely any of those projects will reach 250 feet tall.
Morning Call reporter Jon Harris can be reached at 610-820-6779 or at jon.harris@mcall.com.
Morning Call reporter Andrew Wagaman can be reached at 610-820-6764 or awagaman@mcall.com.
