Allentown, Pa., high-end retail and office development fills up with tenants. - Knight Ridder/Tribune Business News

By Kurt Blumenau, The Morning Call, Allentown, Pa. Knight Ridder/Tribune Business News

Nov. 28--After years of false starts and failed flirtations, Liberty Center has finally fulfilled its promise.

The five-story office and retail building at West Broad and Main streets, Bethlehem, has emerged as a bona fide upscale retail hub, a rare thing among Lehigh Valley downtowns.

National chains such as the Gap rebuffed early entreaties from developer Liberty Property Trust. The builder then turned to locally owned companies. It took four years, but Liberty Property Trust assembled a nearly full house, with tenants including Edge restaurant; the American Hairlines hair salon and health club; home-accessories shop Accessories Inc.; and custom cabinet maker Oberholtzer Kitchens.

Liberty Center has room for one more shop of 3,300 square feet, according to the developer. The building features 48,000 square feet of retail space on its first two floors, topped by 72,000 square feet of office space -- also almost fully occupied.

That's good news for Bethlehem officials and residents, who spent decades watching proposal after proposal for West Broad and Main come to nothing.

It's also good news for the tenants, who are reaping benefits from Liberty Center's growing cachet. Some hope the building will serve as a model for further upscale development in downtown settings.

'There's a lot of people here looking for high-end retailing,' said Dave McCormack, co-owner of American Hairlines, which moved into Liberty Center's first floor last month. 'Downtown Allentown would be a terrific lifestyle center.'

If Liberty Center is any example, though, bringing high-end shops to a downtown setting can be a challenge.

Prominent Bethlehem developer Lou Pektor took it on in the late '90s, proposing a $13 million project that would have included Tommy Hilfiger, Abercrombie and Fitch or similar national names. Pektor's proposal also included an upscale restaurant and office space.

The city committed to build a $10 million, 800-space parking deck next to the building. The garage was especially vital for Liberty Center because the building was displacing two 100-space parking lots.

Pektor's plans were thwarted in early 2000, when his original anchor tenant, a group of 27 doctors, pulled out. Pektor handed over the project to deeper-pocketed Liberty Property Trust, of Malvern, Chester County, in May 2000.

Within a month, the building had landed its first tenant, Fireman's Fund Insurance, which agreed to move more than 220 employees from a processing center in an industrial park in Hanover Township, Northampton County. The deal with Fireman's Fund filled two of the three floors of office space, giving the project a strong push forward.

Filling the street-level retail space proved more difficult. The Gap decided not to build at Liberty Center in April 2001, after slow company-wide sales forced it to scale back on expansion plans. Other national names, including coffee chain Starbucks, never committed.

The announcement last year of upscale mall plans in Bethlehem and Upper Saucon townships further drew those retailers' attention away from downtown, officials said.

'We held out and held out to try to get \[big-name tenants\], and realized they weren't going to come downtown,' said Bob Kiel, senior vice president of Liberty Property Trust.

Talks with the first retail tenant, Edge restaurant, were announced in September 2001. Edge opened in October 2002, followed by Accessories the next month. Accessories moved from a shopping plaza on Route 512, Hanover Township, Northampton County.

Gail Dunn, owner of Accessories, said her store has done well. Accessories expanded this spring, adding 5,934 square feet, bringing the store to more than 12,000 square feet. The new space is expected to open in February.

A law firm, Kolb, Vasiliadis & Florenz, took a small chunk of the first floor last year.

But Liberty Center's biggest push forward came in March, when American Hairlines announced a long-term lease for the remaining 14,442 square feet of first-floor space, moving from a nearby location on West Broad Street. The new store adds a health club, complete with exercise machines, to American Hairlines' established salon business.

The arrival of American Hairlines last month brought a well-known tenant with regular daily traffic to Liberty Center's last major retail vacancy -- high-visibility first-floor space, to boot.

'The corner is spectacular placement in downtown,' McCormack said.

Kiel said talks are under way to lease the remaining space, but nothing is imminent.

Some argue that Liberty Center represents the latest step in an established formula, rather than something new. Tony Hanna, Bethlehem's economic development director, said Liberty Center is the latest addition to a thriving downtown upscale area.

'That's been the story of the success of downtown Bethlehem,' Hanna said. 'You look down Main Street and Broad Street, and we have a lot of high-end retail, all local.'

Still, brand-new downtown buildings filled with higher-end stores are a rarity throughout the Lehigh Valley.

Allentown's Plaza at PPL Center, also a Liberty Property Trust project, might be a comparable building, Kiel said. That building, opened in spring 2003, has landed leases with a regional Mexican restaurant and Keystone Nazareth Bank & Trust. But the eight-story Plaza at PPL Center is predominantly an office building, with retail limited to the first floor.

Tenants at Liberty Center hope their success, hard-earned as it was, will inspire more such projects.

'It's good for everybody,' said Fran Mantz, general manager of Edge. 'People look at it as competition. But, the more the merrier.'

kurt.blumenau@mcall.com

610-820-6664

ORIGINAL INSERTION TIME: 11/26/2004 12:18:37 PM

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