State College Borough and local economic development partners are about to embark on the first stages of plan to address vacant downtown retail space spurred by the student housing boom and exacerbated by the COVID-19 pandemic.
The borough’s Redevelopment Authority (RDA) hired U3 Advisors of Philadelphia in 2022 to help create a downtown business attraction and retention strategy, and on Monday borough Planning Director Ed LeClear provided borough council with an overview of the report and its recommendations.
Available retail space downtown has increased by 164% since 2013, according to the report. That year council approved a zoning change that allowed developers to construct additional floors of residential units if they built first-floor retail and second-floor office space.
Coinciding with the national student housing boom, the result in many cases has been several high-rise buildings with unfinished “gray-shell” space — just concrete walls and conduits —on the lower levels that the developers do not need to fill to turn a profit. Some have also been completed after the national retail landscape shifted in 2020 with the onset of the COVID-19 pandemic
Among the four high-rise buildings opened since 2017 (The Rise, The Maxxen, The Standard and Pugh Centre) and one due to open later this year (oLiv State College at the corner of Hetzel Street and East College Avenue), about 83,000-square-feet of commercial space is vacant, LeClear said. Another 12-story mixed use building is expected to be built at the corner of Sowers Street and East College Avenue, but since plans for that development were submitted, council has effectively halted any future student housing high-rises by repealing the incentive allowing construction of additional residential floors.
The increase in vacant commercial space has led local government and business development leaders to mull ways they could encourage those storefronts to be filled, and the RDA commissioned the study in partnership with the DSCID and business development organizations like Chamber of Business and Industry of Centre County and the Happy Valley Adventure Bureau.
The report was developed with nine guiding principles. Chief among them were to, most obviously, attract and retain high-quality businesses and to support local businesses.
“How do we empower those who are here? How do we help individuals who are looking to grow?” LeClear said. “Maybe they’ve [had] a food truck and now we’re trying to get them to a brick-and-mortar space, preferably downtown.”
Other principles include encouraging entrepreneurship while building off Penn State investments such as Happy Valley LaunchBox and the Eric Barron Innovation Hub and attracting and retaining residents and visitors, which has been a focus of the RDA-funded Rediscover State College marketing initiative. The plan also aims to embrace diversity, promote sustainable development, foster partnerships, create a feedback loop for ongoing improvement and preserve small-town charm.
“I always tell folks we’re a big small town and we have a charm and a culture that we want to protect,” LeClear said. “We want to use that as an asset that we want to encourage and cultivate and we don’t want to damage it.”
Strategic Initiatives
The report offers three short-term recommendations, and implementation of the first of those is getting underway this week.
DSCID is advertising a job listing for an experienced retail advocate. The position, which seeks someone with at least 10 years of retail experience, will be charged with attracting and retaining high-quality retailers, working directly with landlords to solve challenges and acting as a direct point of contact for prospective and existing businesses, property owners, brokers and regional entities.
The job will be funded, with financial support from the RDA, with $70,000 a year for three years and will require traveling to urban centers to find potential retailers and restaurants, working with existing tenants to identify expansion and new concept plans, managing pop-up and experimental retail, working with local banks on attractive business loan terms, assisting with succession planning for retiring business owners and recommending and encouraging best practices and improvements.
“We know we need somebody who is boots on the ground to focus on doing [filling empty retail space],” LeClear said, adding that the report studied other communities that have successfully utilized a retail advocate.
A hiring committee comprised of borough, RDA and DSCID representatives will help select the advocate, DSCID Executive Director Lee Anne Jeffries said.
After the hiring, the next recommendation to be undertaken is “activation” of vacant spaces, both inside and outside the building. Activities will include facade and window display improvements, pop-up retail and market concepts with rotating vendors.
“There’s a lot of examples around the country where this has been done successfully,” LeClear said. “We have one relatively prominent property owner downtown who we are working with to identify a couple properties that they’d be willing to use as a pilot on this.”
Council President Evan Myers pointed out that the State College Town Centre project, the planned hotel and commercial project on the 200 block of South Allen Street, is an example of the rotating market-type concept. The developer of the project, which does not have any residential component, recently confirmed he plans to incorporate a restaurant incubator in the commercial space.
Some vacant space for pop-up retail and markets will require fitting out because of the gray-shell nature. The RDA has committed $500,000 over two years to assist with that work.
“There are some building code and safety issues that go with this kind of activity that we have to work out,” LeClear said, noting that implementation of this recommendation is in the “very early stages.”
The final short-term recommendation is to “elevate marketing and branding” through website design and online marketing, updated signage and wayfinding downtown and boosted social media presence and reach.
“We want to get somebody on the ground first, then we’ll move into the activation of spaces and marketing is further down the road,” LeClear said.
Long-term Recommendations
Through stakeholder interviews with 35 representatives of government, civic, cultural, educational and business organizations and market analysis, U3 identified challenges and recommendations for a long-term business recruitment strategy not only in the borough but also regionally.
They included investing in public facilities such as bike and pedestrian infrastructure, wayfinding, lighting, and façade/signage regulations; focusing on resident-targeted programming and events to attract families and local visitors downtown, including testing out a pedestrian-only Allen Street in the summer; creating a strategic plan for outdoor assets such as hiking and biking trails, fly fishing and skiing; and aggressively marketing the State College area statewide.
The report also recommends the possible consolidation of the Centre Region municipalities, an idea that has been explored in the past but failed to move forward.
“The fragmented COG structure is weakening the growth potential of the Happy Valley region by making it more difficult for new businesses, Penn State, residents and others to navigate multiple jurisdictions,” the report states. “A consolidated City of State College would allow for key strategies and investment in the innovation ecosystem, business recruitment, affordable housing and infrastructure. It would also allow for a stronger position within the state government and increased access to critical public funding streams. Regional planning and targeted investment will diversify and strengthen the Happy Valley economy and provide increased opportunities for existing residents.
Moving Forward
Council member Nalini Krishnankutty asked about involving Penn State as an active partner, and LeClear said university officials appear receptive to the idea. LeClear presented the report at a meeting of borough and university representatives in December and it was “received well by university leadership.
He added that the borough has had a long-standing good relationship with the university’s Invent Penn State entrepreneurship and economic development initiative.
“We’re hoping to take that next step and take that partnership with Happy Valley LaunchBox, etc., and sort of take those nascent businesses that are looking to maybe try some things out with a brick-and-mortar space and get them into this temp space,” he said.
Asked about encouraging diversity among businesses by council member Kevin Kassab, LeClear said there is an opportunity to combine public policy objectives..
“At the end of the day you could say ‘Listen, what else do we want to try to accomplish? Well we want to support women- and minority-owned businesses,” LeClear said. “So do we prioritize that, maybe provide additional financial incentives to help a specific subset of businesses? It’s challenging. You’ve got to be fair and you’ve got to do it the right way. We have other communities we can look to as examples of how to do it the right way. That’s something the RDA has definitely had conversations about.”
Council member Matt Herndon said he is “excited to see these empty stores filled,” but is “also a little concerned it sort of feels like we are spending public money to recruit tenants for private businesses,” asking whether the investment would be paid back through increased property taxes.
While LeClear said he would need an analysis from the county tax assessor to determine an exact figure, ultimately the property owner will pay more in taxes if the spaces are built out and valuation increases.
“One of the areas where there has been consensus, at least from the previous council… is to find a way to require the spaces to be at least fitted out to a vanilla shell,” LeClear said. “We’ve already done work legally on what that definition looks like. We’ve talked to the solicitor as well. There’s some challenges there but I think that we are definitely going to put our best foot forward on how to require that’s it’s not just gray concrete and conduit, but we get to the next level of fit-out.”
Myers suggested that the borough could offer some sort of affordable business program, similar to how it supports affordable housing initiatives. As an example, he said, Starbucks couldn’t benefit, but a small business owner who wants to open a coffee shop could.
“I think we need to get creative, get looking at what the different possibilities and I think you’ve touched on a lot of them here [in the report overview],” Myers said. “Anything we can do to help I think is a message probably most of us would deliver.”
