Almost a year after announcing their plans for the tallest building in the Lehigh Valley, the developers of the Ideal Tower are looking to lease space in the proposed skyscraper.
In October, Ideal Concepts revealed plans to construct a 21-story, 326-foot-tall skyscraper at the northwest corner of Eighth and Hamilton streets in downtown Allentown. The 330,000-square-foot building would mostly house offices. The project is estimated at $95 million.
The Valley’s tallest building, the PPL Building at Ninth and Hamilton, is 322 feet.
The proposed Peregrine Tower at Ninth and Walnut streets — also known as the “pencil tower” — is planned to be 420 feet tall. That project has changed developers and has been stalled in the planning process.
Phil Schenkel, executive vice president at commercial real estate firm JLL, said Ideal Concepts, an insurance marketing and technology firm, is waiting to secure tenants before beginning the project. JLL’s Schenkel, Matt Dorman and John Leubecker are marketing the property to corporate clients considering relocating to the Lehigh Valley.
“The building is designed to have 21 stories and Ideal Concepts, John Pequeno’s company, has committed to the first four floors in the building,” Schenkel told The Morning Call. “JLL has been brought on to fill up the remainder of the uncommitted floors, and once he gets to a level of leasing that is satisfactory from his financing perspective, the expectations that he’s set for the city, he’s going to be committed to breaking ground and getting this project started. But it does require a certain amount of preleasing, and that’s why we’ve been brought on.”
At the ground level, the lobby would feature ambient lighting, and a living wall with live trees and greenery. The entire second floor would be dedicated to co-working, featuring an auditorium space for hosting and collaboration as well as conference rooms and desks. The third floor would be equipped with a cafe serving coffee, smoothies and light bites in addition to a full-service restaurant with an outdoor terrace.
While the new owner of the PPL Building has plans for mixed commercial and residential , and plans for the Peregrine Tower are similar, the Ideal Tower would be mostly for company offices.
“The target audience is definitely going to be corporate America,” Schenkel said. “We’re looking for companies that have leases expiring in the next couple of years, because it’s going to take time to get the project off the ground. And we’re also looking outside of the market to attract other companies to the Lehigh Valley, to this project specifically.”
The search for potential tenants will be aimed at Philadelphia, northern New Jersey and New York. JLL is also promoting Allentown’s Neighborhood Improvement Zone, which allows developers to tap virtually all the state taxes created by their new projects to pay off construction loans.
“We have folks that are going to be kind of beating the bushes, so to speak, to drive interest in the project,” Schenkel said. “The target audience is going to be corporate, corporate clients that have an interest in high-end office space in a downtown environment.”
Despite a drop in office usage nationwide during and after the COVID pandemic, Schenkel said there is a need for office space in downtown Allentown and workers are gradually returning to the office. The largest landlord, City Center Investment Corp., is almost at capacity with its more than 1 million square feet.
“City Center currently has 25,000 square feet of office space available in Allentown,” said Jarrett Laubach, City Center’s director of real estate services and strategic partnerships. “Of our 1.2 million square feet of office space, more than 95% of it is leased.”
Nationally, Moody’s Analytics said last week the vacancy rate is at a record 19.6% and is the largest quarterly increase since early 2021.
The National Association of Realtors said the high rate is because of hybrid work and higher interest rates. The association expects the amount of available office space to increase for the foreseeable future.
The 800 block of Hamilton has been active with projects in recent years. The Da Vinci Science center opened its new facility at 815 Hamilton in May . The Dream Grand Plaza — formerly PPL Plaza — at 835 Hamilton will be converted from office space to luxury apartments .
Ideal Concepts, which originally had its headquarters on Union Boulevard in east Allentown, bought a five-story building at the northwest corner of Eighth and Hamilton streets in 2017 for $1.3 million, with plans to create up to 500 jobs at the site.
In October 2022, Ideal announced that it had moved its headquarters to the top four floors of the Butz Corp. at 842 Hamilton St. The company has grown to more than 400 employees, with almost half its staff in the Lehigh Valley.
Morning Call reporter Evan Jones can be reached at ejones@mcall.com .
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