In an effort to fill most of the office spaces developed in the Allentown Neighborhood Improvement Zone (NIZ), rents are subsidized with the tax money. The reduced rents will allow the office buildings in the downtown area tax-zone, to compete with the more affluent suburban parks.
When this was announced in 2010, many developers thought this would take business away from other sections in the city leasing office space in and around Allentown. This has not, however, proven to be the case.
In fact, many of the 30 developers in 2010 that were considering a lawsuit against the NIZ, have not only experienced a rise in rental rates, but also have many potential tenants waiting for vacancies and openings.
One of the reasons the market is not negatively effected is due many tenants pick office space based upon location and not which area has the lower prices.
Another reason is the Lehigh Valley commercial real estate market is growing; with many entrepreneurs being encouraged to have a more professional appearance and select office space. A fine example of this is the new Allentown incubator program.
Additionally, the growing downtown market with subsidized rents has not hurt the other areas of Allentown, because development is started after the tenant is already found and the lease agreement in place. Much of the new office development has tenants and is not looking to attract others from the rest of the office space leasing market.