Scranton’s financial house may be in disorder, but the downtown residential boom continues to build momentum.
More than $11.3 million in three ongoing developments will add 74 apartments to Central City by next summer.
“Scranton is a hot commodity,” said Charlie Jefferson, an investor in the $8.6 million redevelopment of the Scranton Chamber of Commerce Building at Mulberry Street and North Washington Avenue.
Scranton’s municipal government is facing a credit crisis and recently borrowed $6.25 million to cover short-term financial obligations. City residents could face potential tax increases of 39 to 79 percent – or more – over the next three years.
But a downtown residential development trend that took flight in 2010 shows no evidence of interruption.
“I don’t think we are anywhere near saturated,” Art Russo, a Scranton building contractor and real estate developer, said as he strolled through an apartment complex he is constructing in an industrial building at 829-831 Adams Ave. “We have nothing empty. We can’t build them fast enough. If I had 20 more apartments, they would have been rented.”
There have been eight apartment developments in existing downtown buildings in the last 2½ years, Mayor Chris Doherty said.
“Are we challenged financially? Absolutely,” he said. “Economic stuff, you can get through. The downtown is truly a neighborhood now. Nobody could talk about things like this three years ago.”
Mr. Russo, one of the key figures in downtown apartment expansion, is part of a group investing $2 million in the renovation of a 45,000-square-foot structure about one-half block south of the Watres Armory. The Adams Avenue building housed a Bell of Pennsylvania plant for more than 50 years before a window and door manufacturer acquired it in the mid-1980s. A health- and beauty-products company leased the structure from 2007 to 2011.
Work on the site started in April, about two months after Mr. Russo’s group acquired the structure and an adjoining vacant lot for $400,000 from a Scranton property holding company. Twelve apartments already are occupied by students from the nearby Commonwealth Medical College and six others are under construction and will be occupied by medical school students in December, Mr. Russo said. Nine more will be built by next summer, he said.
Rents range from $750 to $1,250 monthly and tenants have free parking and free use of laundry facilities.
“The med school is a tremendous asset to the city,” Mr. Russo said as he sat in the building’s lobby and workmen moved through the complex. “In 10 years, you are not going to be able to recognize this neighborhood.”
Students from the medical school and the University of Scranton graduate school also occupy eight apartments Mr. Russo built this year in an ongoing $750,000 redevelopment at 217-219 Wyoming Ave.
Rents at the building, which includes six one-bedroom and two two-bedroom units, range from $700 to $1,000 monthly.
Mr. Russo’s group acquired the 13,000-square-foot structure, which housed John’s Bargain Store for many years, for $299,500 in June 2011. He expects the first floor to be used for offices and the renovation to be complete in November.
Residents will begin to move in November into the Chamber of Commerce Building, which will be called 426, its Mulberry Street address. The Greater Scranton Chamber of Commerce vacated the building in 1989 and relocated to 222 Mulberry St.
Rents at the 39-apartment complex will range from $725 to $1,500 monthly and 24 units already are leased, Mr. Jefferson said. He was part of group that invested $23 million in a redevelopment that created 89 apartment in the Connell Building in 2010.
“There is an attractiveness to the quality of life associated with the downtown,” Mr. Jefferson said. “It’s clean. It’s livable. It’s safe. It’s walkable.”
The state provided $3.5 million in grants for the renovation of the Chamber of Commerce Building, a landmark limestone Art Deco-style structure. The building will have five two-story lofts, three apartments with balconies overlooking a courtyard, second-floor flats with 20-foot ceilings and two units with fireplaces. Thirty-one of the units have one bedroom and there will be four spaces for street-level commercial tenants.
Hangover from the financial crisis may provide drive behind the rising demand for downtown living space.
“Young people can’t get mortgages,” Mr. Doherty said. “It’s part of the banking crisis.”
Different groups gravitate to different downtown locations.
Mr. Russo is drawing students to his new developments, while the Chamber of Commerce Building – like the Connell Building before it – is attracting young married professionals and couples, area natives returning to the city and mature residents who want to get away from property-ownership expenses.
“It’s not just one market we are looking at,” Mr. Russo said.
The growing residential population also improves the downtown commercial atmosphere.
“There’s been a heck of a lot of growth in the downtown in the last five years. I’m bullish,” Mr. Jefferson said.
“People living downtown not only are residents, they are consumers,” Mr. Doherty said. “One step leads to another. Next year, you are going to see the same amount of development, just in apartments.”
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