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Q&A: WCI managing partner talks current, future Harrisburg development

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Alex Hartzler is managing partner of Harrisburg-based WCI Partners LP. Photo/Submitted
Alex Hartzler is managing partner of Harrisburg-based WCI Partners LP. Photo/Submitted

Since 2005, Harrisburg-based WCI Partners LP has been one of the leaders in redeveloping the capital city.

Its primary focus has been buying and renovating residential properties in the Olde Uptown neighborhood, which is near the Governor's Residence. The area is bordered by Muench, Maclay, Second and Third streets.

To date, WCI has sold about 50 homes and rented another 75, President David Butcher said.

The city-focused developer also has transformed two historic properties along North Second Street into office space and is in the process of wrapping up a 50,000-square-foot commercial office project at Second and State streets.

The smaller office spaces on North Second Street start at 125 square feet and cost $400 per month to rent.

The five-story Second and State project, approved under the city's tax abatement ordinance that expired in 2010, is near full occupancy with Buchanan Ingersoll & Rooney PC and First National Bank of Pennsylvania set to claim about 46,000 square feet in September.

The Business Journal earlier this week spoke with Alex Hartzler, WCI's managing partner, about the company's downtown projects, tax abatement renewal and the future of real estate investment in Harrisburg.

Q: Tell me about the final stages of construction on the Second and State project. Where does leasing of leftover space stand? What value do projects like this create for the city and other development?

A: Buchanan Ingersoll and Rooney should move in by Labor Day. First National Bank and Community Networking Resources also will be in by September. Until everyone is moved in, it will probably be mid- to late September.

After those three, there will be 1,500 square feet left out of 50,000. We're completing it as (speculative) space. We have an interested party looking at it. We may open full.

We're very pleased that we're going to have a LEED Gold building. It has 56 geothermal wells, specialty windows, lighting, et cetera. We think the building is a very handsome addition to the downtown. We think it will provide long-term value for our clients and also the community at large.

What we have found is that there is a place in the market for high-end commercial. It's visually interesting, it's innovative. We would say it's a regional-level, if not a state or national class building. We think that's a good sign for the market.

You recently created some new office spaces in Olde Uptown. What's the interest level been like and what more is WCI planning to do?

We still have two spaces available in 2023 (N. Second St.) and one at 2037 (N. Second St.).

That's a very different market from the downtown large user. This is all space taken by the small entrepreneurs who have some reason to be in the capital city or in the city in general.

We're trying to provide a complete office environment with fax, phone, cable Internet, shared conference spaces, common amenities and parking for a very cost-effective price. It really is almost like the Class-A type equivalent in a historic building.

There is opportunity for growth for the tenants. We've been leasing one or two every month since we started. By early fall, we'll be full. We do hope to bring a few more of those (niche office) buildings online.

We just bought a property on Cameron (Street). We're going to be opportunistic. We limit ourselves to the city because we feel like we know it as well as anyone.

Any time you have headline risk (in the city) and people are fearful or weary, that tends to produce opportunities. We are going to try to do it when there is demand. We are not going to do a lot of spec.

What does the current landscape look like for development or redevelopment projects in Harrisburg? Do you see that changing if the new tax abatement proposal gains any traction?

I was very encouraged that the mayor put forth a (tax abatement) plan. It shows leadership from the mayor's office and we're very appreciative that she is willing to consider bringing back tax abatement. It is absolutely necessary for any further development in the city.

The Second and State building was simply not possible without tax abatement. You won't see any large-scale development without some sort of tax abatement or subsidy. That's the nature of the economics in Harrisburg. The millage rates are high. Older buildings make up some of that with lower assessments.

On residential and small commercial, there is demand. I think there is underlying demand from young people who want to live and work in the capital city. They find it attractive for a variety of reasons. We need to provide the supply side. In order to provide the supply, it needs to be economically viable.

There is recognition in the mayor's office that it needs to be done. I wish it were a 10-year abatement. Philadelphia has had tremendous success with drawing residents and business to that city. I think the mayor is taking the first step. I am hoping the City Council, (county) and the school board will take her lead.

We have nothing right now. I think you will see little to no new projects until that is implemented.

What role do the city's finances play right now in real estate investment? Who or what is the biggest challenge for developers interested in city projects?

I think the global picture is that when businesses see political leaders fighting, it looks unprofessional, even to the point of being silly. The receiver is a reality. We need to accept that and move forward.

When businesses see that happening, it doesn't encourage anyone to invest or move here. It doesn't help matters. I view it as petty fighting on things that are already decided. You are just wasting our time and resources.

These are short-term things. Officials who do not serve the public's interest will eventually no longer serve the public.

In the long term, cities are where people want to live, work and play. We're going to build for that long term and carry on the best we can in the midst of petty political fighting. I was encouraged by Patty Kim's (primary) election to the state House. I think she will continue to provide solid leadership there. Patty Kim is for tax abatement and is for our schools. She is a pro-business Democrat.

I think our short-term problems will be solved and underlying trends (will prevail).

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Jason Scott

Jason Scott

Jason Scott covers state government, real estate and construction, media and marketing, and Dauphin County. Have a tip or question for him? Email him at jasons@cpbj.com. Follow him on Twitter, @JScottJournal. Circle Jason Scott on .

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