By Ben Atwood CoStar Analytics
Last month, City Center began demolition work an aging hotel in downtown Allentown, Pennsylvania, in order to make way for a brand new 250-unit luxury apartment complex.
The local developer hopes to have The Hive completed by mid-2022, and the project is set to include a mix of studio, one- and two-bedroom units, with some retail space on the ground floor.
The Hive will be the group’s fifth multifamily development inside the heart of Pennsylvania’s third-largest city, with its most recent project coming online last October.
City Center is one of the most prolific builders within Allentown's Neighborhood Improvement Zone, a tax incentive plan unique to Allentown with which they hope to create a 24/7 live-work-play environment in the city.
The area had quite a bit of momentum before the coronavirus pandemic struck, but interestingly, the shutdown has not had any noticeable impact on Lehigh apartment demand. In fact, it might have boosted it.
Downtown Allentown's overall vacancy rate is near zero, and City Center’s most recent project is filling remarkably fast.
"Our last community, the City Center Lofts, was 75% preleased before it delivered in October," said Zack Sienicki, vice president of City Center Residential. "We were over 90% filled by the start of February and think we’ll be fully occupied by April."
Sienicki said that’s two months faster than what City Center projected when planning the project, and it speaks to a curious strength of demand for downtown Allentown living.
"We're seeing a lot of people move into the area and the city itself," Sienicki said. "It's almost like a tale of two cities with how well Allentown demand is keeping up compared to elsewhere."
The demand boost within is likely coming from the Neighborhood Improvement Zone. City Center has spent over $1 billion developing modern office and multifamily within the Hamilton District in the heart of downtown Allentown. These developments helped strengthen the city's retail scene before the pandemic and kept many chains afloat through stay-at-home orders.
But this is also a market sandwiched between Philadelphia and New York City, which is why the area is so hot for logistics. The massive suburbias of these two cities are filled with office tenants now reexamining how remote working might change their footprint in the coming years.
Many experts believe that a hybrid of remote/in-person working is how the office world will evolve, and if that happens, Allentown could become a natural landing pad for those looking for urban life on a smaller and more affordable scale.
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