Somera Road seeks up to $17.5 million in NIZ funding for Grand Plaza renovations, including food hall and outdoor improvementsNext article
January 20, 2020
The new owners of Grand Plaza in downtown Allentown will spend about $16 million upgrading the outdoor plaza, transforming a first-floor space into a food hall and making renovations to nearly 250,000 square feet of office space. The leaders of Somera Road Inc., a New York commercial real estate investment firm, presented its plan for the site, formerly known as PPL Plaza, Thursday to the Allentown Neighborhood Improvement Zone Development Authority, from which it’s seeking up to $17.5 million in financing.
Somera is working with ESSA Bank on a 10-year term loan with amortization over the remaining 22-year life of the NIZ. By 2025, it expects to generate $1.87 million in annual NIZ revenue.
Basel Bataineh, vice president of acquisitions, said the firm hoped to complete the food hall, lobby makeover and the outdoor improvements by June 13, when the Blues, Brews and Barbecue Festival will again put its main stage on the plaza at 835 W. Hamilton Street.
Somera, Bataineh said, has prospective office tenants interested in leasing the entire building to those interested in leasing as little as 2,000 square feet, with “everything in between.”
“It’s early, but if I put this in the context of the dozen or so other projects I’m working on, this is close to the top of the list as far as activity,” he said.
Leading those leasing efforts is a local team from commercial real estate services firm JLL. A project timeline included in its NIZ application assumes Somera will begin securing tenants by June. Somera estimates the project will create 143 construction jobs and more than 1,000 office and retail jobs over the next five years.
The re-imagined plaza will lose its fountain but feature grassy lawns, new trees, a variety of movable furniture and a “container bar” with seasonal offerings. Founder and Managing Director Ian Ross said it could operate as a beer garden in the summer and possibly a hot chocolate station in the winter. Ross envisions the plaza serving as a place where downtown residents and workers can congregate during all seasons.
“We see this as an extension of the food hall,” Ross said. “We don’t want the food hall to be tucked back away in the building — we want it to engage the plaza and offer an indoor-outdoor experience.”
The 6,000-square-foot food hall, dubbed will&co., is expected to feature six interior dining options, including a coffee shop and a full-service bar. An outdoor kiosk separate from the container bar will also offer a permanent vendor.
“With the resurgence of multifamily apartments and new office users downtown, we think there’s a great opportunity to add a food hall element,” Ross said.
Ross said Somera will transform the building lobby into “more of a lively community space” by removing security turnstiles, replacing furniture and making other aesthetic improvements.
According to a project narrative, a “significant portion” of the $16 million will be spent renovating office space for multi-tenant use. It was originally built in 2003 for PPL’s energy supply division.
The city planning bureau supports the project. In a review letter, Planning Director Irene Woodward noted that the additional green space, seating and plantings on the plaza will “help to break up the existing hardscape and make the space more inviting.”
A review by the architectural firm Goody Clancy also commended Somera for expanding opportunities to use the plaza for public gatherings.
Somera’s application for NIZ funding comes as it continues to fight the city in Commonwealth Court.
The previous owner sued Allentown and ANIZDA in 2017, claiming that the tax subsidies offered to competitors constituted a “de facto taking of the property for which just compensation must be paid.”
Talen Energy, spun off from PPL, in 2018 moved three blocks from what was then called PPL Plaza into City Center Investment Corp.’s Tower 6, where rent per square foot was up to 30 percent cheaper. The previous plaza owner, which defaulted on its mortgage in 2016, blamed the NIZ. While the property is in the special tax district, it can only tap a slew of state and local tax revenue streams through development or redevelopment.
Somera was one of the investors that sustained a considerable loss on the J.P. Morgan Chase commercial mortgage-backed security that previous owner’s loan was folded into. It acquired the mortgage note in Nov. 2018 and then the property at an April sheriff’s sale. In May, it took up the previous owner’s lawsuit.
After a Lehigh County judge had ruled against the initial claims, Somera appealed to Commonwealth Court. Oral arguments are tentatively set for March.
ANIZDA Executive Director Steve Bamford said earlier this month that the board would treat Somera’s application the same as any other project. On Thursday, a project review committee favorably advanced the application to the full board for a final vote. It next meets Feb. 5.