Lancaster City/Township Consortium October 7, 2014 Randy Patterson City of Lancaster Marshall Snively Lancaster City Alliance Bob Shoemaker Lancaster City Alliance

Economic Development Strategic Plan for the City of Lancaster, Pennsylvania

Building on Strength: PLANNING FROM A POSITION OF ADVANTAGE

#BuildingOnStrength

Lancaster…A City on the Move!

Over $1.5 Billion in Investment since 2007

Office Growth

Between 2010 and 2014, businesses representing anywhere from 2 to over 400 employees have moved or announced a move or expansion in Greater Downtown - representing almost 1000 new workers

Housing Development

• Over 200 new market-rate residential units have entered the Greater Downtown area since 2011.

• Another 400 units have been announced or are under development throughout the City

Housing Development • With waiting lists for newer products, leasing rates are beginning to

increase ranging from $1.00 SF to as much as $1.80 SF

• Condo market strengthening with 60 units currently under development

Retail Growth In Greater Downtown Alone… • Over the last year – Almost 50 new or expanded businesses have or will

open (almost half of which are restaurants or cafes)- with only 12 closed during that time period

• Since 2007 a total of over 100 NET new businesses and almost 50 that

have expanded or moved within the City’s Downtown and Northwest

• Population of 60,000 and growing

• 40,000 employees and growing

• 8,000 College Students

• 1 Million visitors each year

• Over 300 merchants, services, restaurants & attractions in the greater Downtown area alone!

Vibrant City

• Over 160 Shops & Boutiques

• Almost 100 Places to Eat & Drink

• 90 Arts/Cultural Venues

PURPOSE OF THE ECONOMIC DEVELOPMENT

STRATEGIC PLAN The purpose of the Lancaster City Economic Development Strategic Plan is to both continue and expand the revitalization of the City through the creation of a “Community-owned” action plan. Succeeding the Lancaster’s Economic Development Action Agenda (LDR Plan) of 1998, which reacted to the need to stimulate economic development, this strategy will build upon the strengths and opportunities gained from years of strong economic growth of our City. Through assessing current trends, opportunities and community needs specifically centered on our commercial areas/corridors, the end result will be a broad, vibrant Economic Development Strategy with detailed goals and tactics that will serve to lead the City of Lancaster throughout the next decade.

Sept 29

PROGRESS UPDATE Phase I: Opportunities & Needs Assessment • May Kick-Off • June Working Group • July — Workshop #1 • August — Workshop #2,

Public Meeting#1 • September – Follow Up Phase II: Strategies Development • October – Strategies

Workshop

INPUT AND MARKET RESEARCH #BuildingOnStrength

What we are Hearing: Overview

Primary Input – Reoccurring Themes

• Connections • Transportation • Economic Development – Traditional and

Entreprenurial • Financial Challenges and Opportunities • Poverty / Housing / Skills Development • Image / Leveraging the Brand / Changing

Perceptions

What we are Hearing: Assets What does Lancaster have to offer? What does it do well in comparison to other communities? Competitive advantages for businesses? • Common sentiment of first time visitor: “I had no idea” • Incentive districts (CRIZ, KOZ, KIZ, TIF, LERTA, etc.) • Presence of Educational institutions • Rich history; heritage • Programming/Events bringing people downtown • Arts initiatives; strong, expanding beyond Gallery Row • Strong tourism in County • Diversity – population and neighborhoods • Headquarters/anchor institutions • Coordinating organizations (e.g. LCA, SACA, Assets) • Spirit of collaboration • Intact architectural resources • Locally-owned businesses

– Entrepreneurial spirit – Strong work ethic – Niche cultures (beer culture)

• Co-Working space • Authenticity; organic growth • Faith community support workers "wheels to work" program • Positive development experience with City* • Long-term commitment – many investors/developers • The “maker” culture

• Regional transportation connections - Amtrak • Strong branding in core, building an identity ("A City

Authentic"); use of social media, online presence; Establishing an image

• FIG is a “game changer” • Progressive government; implementation success • Fringe culture/entrepreneurial class • Informal networks; connectivity; collaboration • Concern for environment; green infrastructure • Workforce from large region • Unique and beneficial resources are available

– Assets – SCORE – Duke Street Business Center – Lancaster City Alliance – Bike ambassadors – Etc.

• Regional location; proximity to major cities/airports • Rising workforce and college populations • Growing interest in Biking • Walkable core

What we are Hearing: Challenges What are the challenges that can limit economic development and investment success? • Pennsylvania’s Commonwealth system –

disinvestment in urban cores - sprawl • Availability of funding • Concentration of services in City • Multiple initiatives – need to connect the

pieces • Population trends – poverty/homelessness • Limited diversity in retail uses • Limited hotel rooms • Limited family entertainment • Not meeting basic needs of residents in some

corridors • Negative development experience with City * • Codes – Interpretation / inconsistent

enforcement • ADA Compliance • Aging infrastructure

• High construction costs relative to realistic rental potential/value

• Limited new/affordable housing • One-way streets / corridors -high-speed • Truck traffic (no n/s bypass) • Worker skills gap • Underutilized building/housing stock; vacant

upper levels • Pedestrian un-friendliness in some areas • Perceptions: safety, parking, schools, funding

recipients, challenges of building codes associated with historic architecture, parking

• Poor sense of arrival / no grand gateways into city

• Limited connections to train station

What we are Hearing: Opportunities What opportunities exist for enhancing or supporting existing strengths and addressing challenges?

• Celebrating the diversity of Lancaster’s population

• Build upon existing entrepreneurial spirit

• Clearing house for information

• Existing housing demand

• Increased density/height in core downtown

• Create “place” along corridors – make “neighborhood centers”

• Continue to cultivate a stronger image/brand; tell the story; change perceptions; consolidated marketing programs; celebrate cultural diversity

• Non-profits-lease from for-profits to generate tax revenue

• Creative financing; Connect money to opportunity

• Business-friendly city; permitting process, incentives, funding, etc. –facilitate development/rehabilitation

• Economic Review Board, or similar panel at city to evaluate economic impact of codes and legislation

• Business incubation; focus on small businesses; connect thinkers with doers—mentorship

• Build upon the assets – the region’s cultural center

• Larger undeveloped /underutilized properties

• Smaller infill sites

• Upper floor development

• Surface parking lots as development sites

• Maximize benefits of CRIZ Incentive districts

• Continued Historic revitalization

• Embracing and increasing tourism; visitor-friendly city

• Capturing conference visitor for future visits

• Filling business/retail/service gaps

• Attracting tech companies

• Continued strategic programming (e.g. art walks, taste of the town, nights out, etc.); simultaneous events

• Storytelling, carry knowledge through generations

• Expanding upon spirit of collaboration among all organizations/public/private

• Workforce development - skills/training programs

What we are Hearing: Threats

• Competition with surrounding municipalities • Continued concentration of services in City • Taxable vs. non-taxable properties preventing

resources from reaching communities – already "taxed to death"

• No changes to building codes / methods of enforcement

• Shortage of building/sites for large projects (i.e. to support incoming businesses with 400+ employees [tech industries])

• Not preserving key sites for the best long-term potential

• Conventional development around train station • Lack of collaboration with Manheim Township • Continued disinvestment, architectural stock

deterioration • Increasing racial/cultural segregation • Gentrification • Uncoordinated strategies

• Lack of housing choices to attract business/employees

• Poor or lack of marketing in general • Continued negative perceptions • Roadways/corridors continuing as barriers • Concentrated investment in one area • Competition between downtown core and

neighborhood centers

What political, economic or technological trends could harm the community and/or threaten the key strengths and opportunities identified?

What we are Hearing: Overview

Representative Stakeholder Input • “Supporting and sustaining existing businesses is as important as

attracting big new shiny stuff.”

• “There has been a lot of investment in core; this made sense. We now need to make the next jump beyond the core.”

• “The corridors need to function as economic units.”

• “Don’t forget that downtown belongs to everybody.”

• “People can go downtown and figure it out once they get there” (because there are so many choices)

• “The conversation was so different 15 years ago…we were terrified then.”

• “The task at hand: put together a blueprint for the future – give confidence to investors.”

MARKET ANALYSIS #BuildingOnStrength

Market Analysis: Market Definition

• Use zip code data to determine the market. This is particularly effective for retail market analysis.

• 28 merchants participated in survey. • In one week they recorded 2,292 customer visits. • 365 unique American zip codes were captured. • Visits from 35 states, 8 foreign countries, and four

continents.

Market Analysis: Customer Origin CONTD.

Demographic Analysis: Workforce 2012 3-Year Estimates, ACS Data Unemployment Rate: 9.8 (National: 6.5) Top 3 Leading Industries for Employment: 1.) Educational services, and health care and social assistance (23.4%) 2.) Manufacturing (16.4%) 3.) Arts, entertainment, & rec.; accommodation & food services (14.1%) Educational Attainment: 77.7% High school graduate or higher 17.4% Bachelor's degree or higher Estimated Median Household Income: $31,462 (National: $51,771)

Demographic Analysis: Workforce

20,877

33,300

5,505

Outflow

Inflow

Remaining

2011 Workforce Characteristics

92% of employees earning more than $3,333 each month are Non-Residents, despite that Non-Residents account for only 86% of Lancaster City jobs.

UPDATED WITH INCOME DATA

TAKEAWAYS: • High-paying jobs

disproportionately held by non-residents.

• Opportunity to recapture and better utilize skills of local residents.

• Opportunity to increase housing supply to meet demands of incoming workers.

Demographics: Population Growth

Expected Population Growth 2013-2018 City and combined trade area (CTA) comparison in context of regional

cities

0.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

Demographics: Population Growth

Expected Population Growth 2013-2018 City and combined trade area (CTA) comparison in context of local,

adjacent zip codes

-1.00%

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

Demographics: Population Diversity

2013 Population by Race

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other

Black

White

Demographics: Income

2013 Median Household Income Note: City falls below the CTA by over $20,000

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

Demographics: Age

2013 Median Age

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00

Preview Analysis: Web Survey Key Takeaways

• Survey still in progress… need to push for more responses.

• 76% agreed that the community continually works to grow the economy (22% strongly agree)

• 70% agree that the community works collaboratively (68% say there are redundancies though)

• Strong desire for independent businesses. 38% ranked small businesses/entrepreneurs at the top driver.

• Workforce development ranked number one in desire for most critical need in the next decade (27% ranked it 10)

• Concern about number of groups and clarity of their missions.

The Retail Market: Overview PTA • Retail sales in the City $296.9 million. • Retail expenditures $739.6 million. • Retail opportunity gap $442.7 million. STA • Retail sales $2.96 billion. • Retail expenditures $2.39 billion. • Retail opportunity inflow $579.2 million. Net Gain $136.5 million in sales.

The Retail Market: Conclusions • Opportunity to build on existing restaurant base. • Food presents an ongoing key retail opportunity

for Lancaster. (Mobile Markets) • Personal services/spa etc. represent a key

opportunity. • Ongoing focus on the arts and highly specialized

retail. • Need to continue fostering the visitor

connection. • Local and independently owned retail is key to

success.

Office Market: Overview • High Associates conducts annual market report for

community – excellent asset. • High Associates methodology tracks 2.48 million

square feet of space in the region (excluding retail) • 14 year average absorption is a positive 96,444

square feet per year. • Class A, Industrial, and Flex space has traditionally

had around 90% occupancy rate (exception in 2013) • Class B and office park space is lower at between

80-85% occupancy.

Source: High Real Estate Group Commercial & Industrial Market Overview 2013

Office Market: Conclusions

• Lack of class A space. • Rental rates are are below viability to

make City Competitive with suburban market.

• Vacancy Rates in the City are comparable to outside the City.

• Upper floor vacancies not adequately reflected in the numbers.

• Macro trends work in the City’s favor.

Hotel Market: Overview • Reviewed 37 properties in the

Lancaster Market – 10 non-flagged properties ranging from

budget to full service – 12 flagged with “budget” brands – 12 flagged with “value plus” brands – 3 flagged with “full service” brands

• 4 hotel properties in central area of Lancaster accounting for approximately 15% of the hotel rooms in the county.

Market Analysis: Hotel Market Lancaster County Annual Hotel Revenues

Hotel Market: Conclusions • Relatively high ADR’s in the City point

to an opportunity for continued growth.

• Increasing hotel revenue for the past five years.

• Major trend with new brands going into urban locations.

• Can Lancaster City catch the hotel trend before the capital dries up?

Residential Market: Overview • Zimmerman/Volk study provides rich

insight into the housing market for Lancaster County.

• Shortage of rental housing Countywide at all price points.

• Disconnect with building permits issued and the future demand for housing: decline in demand for single family detached.

Source: Zimmerman/Volk Associates, Inc.

“A continuation of current trends in Lancaster County—with the emphasis on new for-sale housing construction concentrated in single-use, single-family subdivisions, new rental construction largely limited to market-rate rents, and a lack of diversity in both housing types and affordability—risks economic stagnation and declines in housing values”

Source: Zimmerman/Volk Associates, Inc.

Residential Market: Overview

Residential Market: Conclusions

• The macro trends work in favor of Lancaster City.

• Projects are happening and capital is available.

• Urgent need for aggressive marketing strategy.

• Successful housing market = economic development.

EMERGING THEMES #BuildingOnStrength

» Need to make great gateways into community – currently not apparent

» Corridors need to function as “neighborhood centers”

» Transportation: need to continue moving beyond the automobile mindset

» Walkability and Bikeability

• Building on Successes: Opportunity Sites for Investment 1. Major Investment/Development Opportunities

2. Infill Investment/Development Opportunities 3. Connecting the Pieces

• From Tradition to Innovation: Classic Economic Development and the Growing Entrepreneurial Economy 4. Bringing the Regional Economic Opportunities to the City 5. Building on the growing entrepreneurial, creative class

• Community Development as Economic Development 6. Housing Strategies 7. Connecting residents to economic opportunity

• Leveraging the Lancaster Brand 8. Telling the Story of A City Authentic

DISCUSSION #BuildingOnStrength