Harrisburg, Pennsylvania — An Economic Profile

CENTER CITY DEVELOPMENT

CONSIDERING THE REAL ESTATE DYNAMICS THAT HAVE RESULTED IN THE RISE OF CENTER CITY’S IMPRESSIVE SKYLINE, IT IS HARD TO IMAGINE SO SUCCESSFUL A TURNAROUND FROM THE DEPRESSED URBAN CLIMATE THAT EXISTED IN 1980.

Beginning in the mid-1950s, Harrisburg started an economic free-fall that was in certain respects atypical and more serious than what later occurred in many northeastern U.S. cities. While downtown’s demise was the most visible area of business and tax-base loss, this decline extended to nearly every other area of the city as well.

Efforts to reverse the city’s decline were launched in 1975 and accelerated dramatically in the early 1980’s by community and political leaders; these efforts laying the groundwork that would revitalize Harrisburg’s central business district.

The City’s first steps were to declare a part of downtown an urban renewal area and create a nonprofit development entity to facilitate the development of key parcels of real estate. The City issued bonds to provide seed money for the start-up of the Harristown Development Corporation, and subsequently guaranteed over $120 million in Harristown bonds that would be used to construct new office and retail space.

Part of this strategy was to work with the Commonwealth of Pennsylvania in halting the northward growth of the State Capitol Complex that, over prior decades, had been expanded into residential neighborhoods. This expansion robbed downtown businesses of potential customers and depleted the city’s tax- base, since state-owned real estate is tax exempt under state law.

The State agreed to lease the space that Harristown built in the heart of the central business district; space that, as the City’s agent, Harristown would operate for 40 years as taxable real estate. Consequently, the first phase of the massive Strawberry Square complex and the 23-story, 333 Market Street building, together having over 1.3 million square feet of office space, were completed in the late 1970s. In the spirit of cooperative planning, Bell Telephone, now known as Verizon, agreed to lease 240,000 square feet of new space within Strawberry Square and establish its regional headquarters there.

With key office commitments in place, Strawberry Square was designed as a mixed-use facility with 100,000 square feet of first and second floor retail, office and museum space; it was Harrisburg’s first enclosed shopping mall. This space is now conveniently tied to Capitol Park by a walkway over Walnut Street which captures the state employee clientele. A second walkway links the facility to the 1,200-space Walnut Street Parking Garage to accommodate destination-oriented shoppers.

In 1982, the City affirmed its commitment to the future by completing the new City Government Center on Market Square. In 1983, its old municipal building was converted into 82 luxury apartments.

In 1982, major reform of city government was initiated concurrent with the City’s first citywide economic development program which established a variety of incentives for private investment. By late 1984, the City registered its first net gains in the number of businesses and private sector jobs following three decades of decline.

By 2000, over $2.65 billion in new, private investment in the city had been generated since 1982. The tax-base, long in decline, grew from $212 million in 1982 to over $2.2 billion. The number of businesses on the tax rolls increased from 1,908 to over 5,500. The unemployment, crime, fire and vacant property rates had been cut by more than 50%.

Today, Center City is anchored by a series of major projects all of which are physically interconnected by the enclosed Strawberry Arcade elevated walkway. These projects form the Strawberry Square/Hilton Harrisburg/Whitaker Center for Science and the Arts complex; a unique hotel/retail/office/museum and performing arts network. The $24-million, Strawberry Square Phase II project, completed in 1988, involved the union of Phase I with 10 adjacent historic commercial buildings which were rehabilitated and incorporated into the mall. This resulted in an additional 64,000 square feet of retail space and 107,000 square feet in upper-story office space. A Phase III component brought three more existing and long-vacant buildings into the complex with over $3 million in additional investment. The back alleys that once separated these older buildings from Phase I were glassed over with skylights and converted to lofty promenades.

The much acclaimed Whitaker Center for Science and the Arts, completed in 1999, is a 130,000 square foot, $52.7-million facility. It is the first center of its type in the United States where education, science and the performing arts take place under one roof. Representing the culmination of a twenty-five year, community based planning process, the Whitaker Center was designed to meet the established cultural and educational needs of the children and families of Central Pennsylvania. The building’s design is quite striking with dramatic sloped roof lines, central pavilion atrium tower and sandstone facade with decorative sconces and contains the 664-seat Sunoco Performance Theater, IMAX(r) Theater and Science Center with interactive exhibits (see “Culture” for more detail). The Center was formally commissioned by the Mayor with a City commitment of $6 million in 1995.

Linking Strawberry Square and the Whitaker Center with the Hilton Hotel is the Strawberry Arcade; an overhead-enclosed walkway, which is considered the backbone of the multiplex. Also tying into the Arcade are the 250,000-square-foot, $25-million Vartan Parc office building, the Walnut Street parking garage and Center Stage Theater.

Opened in late 1990, the $44-million, 341-room Hilton Harrisburg, with 15 ballroom and meeting room components, represents a culmination of a decade of tremendous effort to obtain a large luxury hotel in downtown Harrisburg. Designed to exemplify the grand hotels of an earlier age, the Hilton attained a Four-Diamond designation in 1993, the only hotel between Philadelphia and Pittsburgh so honored. A second enclosed overhead walkway connects the Whitaker Center with the Hilton Ballroom. This allows the hotel to cater the numerous events held at the Center.

Center City’s second major hotel, the Crowne Plaza at Second and Chestnut Streets, in 2000 completed a $10.5- million renovation project transforming this 261 room high-rise into a grand and elegant facility. The City intervened by acquiring this facility to stave-off an auction under the former owners to ensure that it would be sold and developed under a quality flag name which would advance center city’s attractiveness as an overnight destination. Future plans call for the physical linkage of both the Hilton and Crowne Plaza Hotels by way of an enclosed overhead walkway system to an additional conference center to achieve greater efficiencies between the two hostelries in serving the rapidly growing conference and convention business downtown (see Hotels, Restaurants and Nightlife for further detail).

Another premier Center City development project is the $38-million, national headquarters complex of the Pennsylvania National Insurance Company, completed in 1997. The City aggressively and successfully lobbied the company to build its new corporate center downtown, rather than outside the city. The company’s decision was based upon creative financing incentives offered by the City and the ultimate lower cost of using the child care, recreational and restaurant facilities already available in the downtown area. This decision sent yet another message to the private corporate sector as to how Harrisburg can more successfully fulfill their site-selection needs. This 246,000-square-foot, 15-story tower, located on the northwest quadrant of Market Square, includes a 745 space parking garage one half block to the north. Some of the other larger downtown projects since 1984 are shown on this page.

Downtown Projects Since 1984

Project & Address	Type	Use	Cost
Keystone State Office Building	New Construction	State Government	$168M
Pennsylvania Place (3rd and Chestnut Streets)	Rehabilitation	300 Apartments and general offices in 25 story tower	$10.2M
Forum Place (5th and Walnut Streets)	New Construction	Government/Parking	$82M
Washington Square (Phase 1 & 2) (South 2nd Street)	New Construction	201 Unit Residential Community	$22M
Rachel Carson State Office Bldg. (300 Market Street)	New Construction	Government (PA Dept. of Environmental Protection)	$38M
Government Hotel Apartments (4th & Market Streets)	Rehabilitation	46-Unit Apartment Bldg.	$3.5M
Southgate Office Center (South 2nd Street)	Rehabilitation	Complex Pinnacle Headquarters & general offices	$4.5M
Brinjac, Kambic Bldg. (112-114 North 2nd Street)	Rehabilitation	Professional Offices	$2.8M
Keystone Plaza (Front & Market Streets)	New Construction	Financial Offices	$6.7M
Commerce Center (Walnut and Aberdeen Streets)	New Construction	PA Chamber Business & Industry	$3.5M
Nurick Building (100 Pine Street)	Rehabilitation	Law/Professional Offices	$2.8M
Flynn Building (305 North Front Street)	New Construction	Office Condominiums	$6M
M&T Bank Tower (One South Market Square)	New Construction	13-story bank/professional offices & parking garage	$22M
Old USF&G Building (20 North Second Street)	Historic Rehabilitation	Professional offices	$3M
Pennsylvania State Employee Pension System (10 North 5th Street)	New Construction	General offices	$15M
East Wing of the State Capitol	New Construction	Government (PA Legislative offices and galleries)	$138M
Colonial Theater Building (227 Market Street)	Historic Rehabilitation/New Construction	Professional Offices/Ground Floor Retail	$7.3M
Harrisburg Transportation Center (former Pennsylvania Railroad Station)	Historic Rehabilitation	Main-line Amtrak & Trailways Bus Service. Professional offices in upper floors.	$14.5M
Kunkel Building (301 Market Street)	Historic Rehabilitation	Professional Offices	$2.6M
Old Waterworks (North Front and North Streets)	Historic Rehabilitation	Professional Offices	$4.9M
Walnut Place ± 13 building retail district (4th and Walnut Streets)	Historic Rehabilitation	Mixed use office, retail and residential. Common rear courtyard.	$5.8

In order to ensure that Center City remains competitive as an office and retail center, a host of public and private major parking garages are in place affording over 8,500 parking spaces. Excluding State and County, these are:

Public
	Walnut Street	1,007
	Fifth & Market	849
	Chestnut Street	1,088
	Locust Street	628
	Market Square	565
	7th & Forster	1,200
	River Street	870
	Subtotal	6,207
Private
	Forum Place	1,200
	M&T	357
	Penn National	745
	Subtotal	2,302
TOTAL		8,509

At least one additional public garage is being constructed on Harrisburg City Island, to accommodate a rapidly increasing number of events and attractions held there.

In addition, Center City has undergone extensive site improvements, including the reconstruction of Market Square with the realignment of 2nd St.; and creation of four quadrant plazas, one of which is highlighted by a 14-foot, Victorian-style clock. Improvements also include the widening of sidewalks, planting of trees, establishment of handicap curb ramps and erection of antique-style streetlights. Also, colorful street banners and plants have been added to the lighting standards throughout the downtown.

Further initiatives include the creation, in 2000, of a Downtown Improvement District in which properties in a portion of the downtown are assessed for the purpose of supporting programs and services especially designed to enhance the district and resulting in such benefits as increased security patrols, street cleaning activity, street lighting, marketing and public relations as well as on-street hospitality and information staff. An important component of this initiative is the City’s lighting plan in which the rooftops of high-rises and important architectural elements of key buildings and structures will be creatively illuminated to accentuate the city’s attractiveness as a nighttime entertainment and cultural hub. Also, a comprehensive signage program has been initiated by the City for directing visitors to popular attractions.

Because Center City is so densely developed with increasing land values, office needs for lower-rise buildings requiring larger building “footprints” has stimulated the Seventh Street Corridor, just north of the Capitol Complex. The Pennsylvania Higher Education Assistance Agency’s $47.5 million, 385,000 square-foot headquarters building and adjacent parking garage join other office buildings in this area including the $5.5 million East Gate Office Center, the $2-million, 50,000-square-foot Capitol Associates Building; a $6.5 million, 1,000-car parking garage and the $7-million Hudson Building (all of which have been developed since 1988). Accordingly, the N. Seventh Street Corridor has quickly become an office expansion district of the downtown area. Plans are underway to widen Seventh Street from Reily Street north to Maclay Street to provide four-lane access from I-81 directly to the Capitol Complex and Center City.

Similarly, development is occurring south of Center City and I-83 at the old Phoenix Iron Works tract along the river including the Riverside Office Center, which houses the Pennsylvania Department of Transportation and its Motor Vehicles Division. The completion of the Shipoke by-pass in 2001 provides enhanced vehicular access to this area which is poised to attract additional development projects. Also planned is a major new southern gateway entrance to Center City from I-83 involving the extension of S. Third Street. This will create a new penetration route into the downtown thus relieving traffic congestion on Second Street as well as accessing presently land-locked parcels of undeveloped land for new construction.

Capitol Complex & Center City Office Buildings

(Over 10,000 Square Feet)

Sources: Dauphin County Tax Assessment Office, Pennsylvania Department of General Services; compiled by Jeb Stuart.
Note: of the 53 buildings listed above under Central Business District, 44 have either been substantially rehabilitated or newly constructed in the current renewal period.

STATE CAPITOL COMPLEX
Building Name	Address	Gross Square Feet
Capitol Annex	South Side Main Capitol	51,400
Finance Bldg.	North St. & Commonwealth Ave.	352,350
Forum Bldg.	Walnut St. & Commonwealth Ave.	257,390
Health and Welfare Bldg.	Forster St. & Commonwealth Ave.	287,100
Keystone State Office Bldg.	North St. & Commonwealth Ave.	845,000
Labor and Industry Bldg.	North 6th & Forster Sts.	462,620
Main Capitol Bldg.	North 3rd & State Sts.	363,750
Main Capitol East Wing	East Side of Main Capitol Building	300,000
North Office Bldg.	North St. & Commonwealth Ave.	200,610
Northwest Office Bldg.	Forster & Capitol Streets	101,984
South Office Bldg.	Walnut St. & Commonwealth Ave.	179,550
State Archives Bldg.	300 Block of North Street	64,800
State Museum of PA	North 3rd & North Sts.	228,080
Subtotal:		3,694,634
CENTRAL BUSINESS DISTRICT
10 North Fifth Street Bldg.	same	68,000
100 Chestnut Street	same	44,100
114 North Second Street	same	37,870
124 Pine Bldg.	same	32,088
227 Market Street Bldg.	same	67,142
333 Market	same	394,200
M&T Bank Building	One South Market Square	140,400
Barto Bldg.	3rd & State Streets	39,160
Bell Telephone Tower	3rd & Walnut Streets	240,000
BenMar Bldg.	116 Pine Street	54,600
Cameron Bldg. (2nd & 3rd Floors)	2nd & Walnut Streets	10,000
Capitol Associates Bldg.	7th & Forster Streets	50,000
City Government Center	10 North 2nd Street	126,000
City Towers (office component)	301 Chestnut Street	56,100
Commerce Bldg.	2nd & Pine Streets	60,900
Cranberry Court	212 North 3rd Street	13,100
Dauphin Co. Courthouse	S. Front & Market Streets	112,680
Dauphin Co. Human Services Bldg.	25 South Front Street	42,592
Executive House (office component)	201 Chestnut Street	140,000
Federal Bldg.	North 3rd & Walnut Streets	196,350
Flynn Group Bldg.	305 North Front Street	54,200
Forum Place (office component)	5th & Walnut Streets	326,102
Fulton Bank Bldg.	200 North 3rd Street	95,040
Gilbert Nurick Bldg.	100 Pine Street	94,990
Harris Savings Bank	North 2nd & Pine Streets	39,200
Harrisburg Transportation Center	4th & Chestnut Streets	17,000
Keystone Bldg.	22 South 3rd Street	46,000
Keystone Plaza	N. Front & Market Streets	30,000
Kunkel Bldg.	302 Market Street	51,168
Locust Court	Locust & Court Streets	77,350
Mary Sachs Bldg.	208 North 3rd Street	23,000
Mellon Bank Bldg.	2 South Market Square	86,140
Menaker Bldg.	17 South 2nd Street	33,800
Old Gannett-Fleming Bldg.	North 2nd & Liberty Streets	16,800
Old USF&G Building	20 North 2nd Street	16,500
Old Waterworks	N. Front & North Streets	16,000
PA Chamber of Business & Industry	417 Walnut Street	56,000
PA Contractors Assn.	800 N. 3rd Street	31,400
PA Higher Education Assist. Agency	1200 N. 7th Street	350,000
PA Mfg. Association Center	225 State Street	16,188
Penn National Insurance Tower	2 N. Market Sq.	246,000
PA Sate Education Assn.	400 N. 3rd Street	61,200
Patriot News (office component)	812 Market Street	60,672
Payne-Shoemaker Bldg.	N. 3rd & Pine Streets	51,204
Rachael Carson State Office Building	4th & Market Streets	440,000
Southgate Office Complex	409 S. 2nd Street	115,000
State Revenue Tower	4th & Walnut Streets	697,000
State Street Bldg.	N. 3rd & State Streets	38,461
Strawberry Square (Phase II)	N. 3rd & Market Streets	103,305
Vartan Parc	N. 3rd & Walnut Sts. (SW corner)	200,000
Veterans Memorial Bldg.	112 Market Street	47,040
Walnut Court	201 Walnut Street	15,000
William Seel Bldg.	319 Market Street	10,000
Subtotal:		5,487,042
GRAND TOTAL: 9,181,676 GROSS SQ.FT.