Revitalizing the campus through retail: Urban IHEs are luring local and national retail tenants to drive campus and community revitalization initiatives

University Business, Nov, 2004 by Elizabeth Crane

It's not enough to add shops. It's not enough to build housing. As universities all over the country are discovering, university-led urban revitalization is all about creating an environment where an institution and its neighboring community cannot only coexist, but also benefit from one another.

The University of Pennsylvania has occupied several core blocks in West Philadelphia since 1870 and has steadily revitalized and expanded its 269-acre campus over the past 134 years. Until the 1950s and the advent of "urban renewal," West Philadelphia had been a thriving neighborhood of Victorian homes and small businesses. Then, it gradually slid into decay in the 1970s becoming dilapidated and dangerous. As little as 15 years ago, it was not uncommon for students to be warned against venturing into certain parts of West Philadelphia. "The 1992-93 year was rock bottom," recalls Omar Blaik, senior vice president for Facilities and Real Estate Services at Penn. A student was killed and a professor was stabbed. Local businesses were closing, and students had to be bused downtown just to grocery shop. "The neighborhood was empty," Blaik recalls. About that time, Penn made the decision to engage in urban renewal in its pure sense, recreating a neighborhood of local shops and homes.

First, Penn had to address its campus issues. The Ivy League campus was designed to face inward toward the central tree-Lined walkways and common areas and toward other campus buildings. "The buildings didn't even have street addresses. We were saying 'We're not part of this neighborhood," Blaik explains. Existing buildings were re-designed to have their main entrances on the city streets. The campus turned itself around and looked out over the neighborhood instead of turning its back on the streets. "We realized we cannot exist in a desert and imagine we are not part of what surrounds us," he says.

At the same time, the university put into effect its West Philadelphia Initiative, a five-pronged plan, developed with neighborhood input, to revitalize the struggling neighborhood and make it a livable, workable community. All five were implemented concurrently. The first issue was to make the environment cleaner and safer. The newly formed University City District, in partnership with other large entities like the University Hospital, began patrolling the neighborhood and organizing cleanup of graffiti and garbage.

To increase home ownership and decrease absentee landlordism, the university paid mortgage incentives of $15,000 to university employees who bought a house in the neighborhood, and $7,500 to homeowners who improved their existing property. By making ownership and beautification a priority, Penn hoped to increase the stability of the whole neighborhood and create a sense of pride in West Philadelphia instead of the perceived stigma. Penn also went out of its way to contract with local businesses for goods and services required by the university, such as laundry and catering. This policy of economic inclusion kept neighborhood money in the neighborhood, and went a long way toward convincing skeptics that Penn was sincere in its desire to do right by West Philadelphia.

"It took a lot of hard work to get the community to believe we weren't pulling a fast one," says Blaik. Building a new elementary school and turning it over to the public school district, while continuing to fund $1,000 per child helped, the cause. Creating a neighborhood where university employees would want to live goes a long way toward cementing the relationship between Penn and the neighborhood. "We live in the community. My kids go to the new public school I am the community," says Blaik.

Keeping Dollars in the Community

But the cornerstone of the entire approach was retail. In the 10 years since the initiative began, almost 40 new businesses have opened on Penn property. One development is located on what used to be the university border on West 40th Street, and the other is along the north side of campus, an outdoor urban shopping center called University Square. It contains the Hilton Inn at Penn above and shops like Urban Outfitters, Ann Taylor Loft, and Barnes & Noble below. The university funded and built the $100 million project, which it now owns and operates. The latest addition, Cereality, a new food-service concept that touts "all cereal, all day, all ways," is opening its first sit-down cafe in University Square in November. The university acquired money to construct the project by floating bonds, while acquiring debt. Fortunately, the revenue from the retail rent is helping to pay the debt service.

Also on 40th Street, a 24-hour grocery store, movie multiplex, parking and restaurants, surround Smoky Joe's bar, a campus landmark. "When we initially put out the red carpet to the big grocery store chains," says Blaik, "no one wanted to come. We had to build an independent grocery from scratch." Penn knew that the purchasing power of the population was bigger than it looked on paper.