What it would take to bring businesses back to Wilmington
In slow-growth America, beyond urban centers with their forests of cranes, attractive design of a shopping center isn't enough to create new businesses, replace jobs vanishing in mergers, or keep the bankers from the door.
/arc-anglerfish-arc2-prod-pmn.s3.amazonaws.com/public/UFWEQZRDQZGCJIJ2SQZOGGJ65U.jpg)
In slow-growth America, beyond urban centers with their forests of cranes, attractive design of a shopping center isn't enough to create new businesses, replace jobs vanishing in mergers, or keep the bankers from the door.
Consider Hercules Plaza, a half-million-square-foot pile of blue-glass boxes built by a now-vanished chemical company and upgraded with $20 million in recent and pledged improvements by owner McConnell Johnson Real Estate, such as an atrium, shops, and an "Innovation Center" for start-ups.
Hercules offers city and 'burb amenities: parking tucked away, shady plaza with rolling-stone-globe fountains, short walk to Wilmington's Market Street retail-cultural district, clear waters tumbling through leafy Brandywine Park out back.
So why isn't it full? Hercules Plaza faces "imminent monetary default," with rents not enough to cover payments on $65 million in past financing, writes New York commercial real estate tracking firm Trepp LLC, citing recent data from Fitch Ratings.
The building is 27 percent vacant. Its estimated value has fallen by half since the mid-2000s, Fitch says.
Downtown Wilmington, a longtime legal and finance center, shares the problems of other aging suburban and small-city centers: "We haven't had growth in this city in seven years," says Paul McConnell, partner in the local real estate firm that controls the building and nearby offices.
The city, whose population of 72,000 is less than 5 percent of Philadelphia's, lost headquarters and suffered mass layoffs as its largest banks, power company and Hercules Inc. itself were bought by out-of-state corporations since the mid-2000s. The once-dominant DuPont Co. moved its headquarters to the suburbs last year, and is cutting jobs as it prepares to merge with larger rival Dow Chemical. Spin-off Chemours Inc., still based in Wilmington, is stuck with rising costs from old DuPont factory pollution.
As Penn urbanist Ted Hershberg used to say, it's not just the employers that leave - it's the ones that don't replace them that make cities poor.
Wilmington used to be comfortable under its big corporate employers. McConnell says city government needs to update its approach if it wants to be seen as business-friendly: "They finally opened that dollar store around the corner. It took two years to get approval" from city agencies, he told me.
Voters are restless: Wilmington's closed-mouthed mayor and former police chief, Dennis P. Williams, who is African American, is trailing behind white candidates Kevin Kelley and Mike Purzyckiin this black-majority city, according to a poll last week by the News Journal.
Meanwhile, it's not surprising in Democratic-run Delaware that some local officials are looking for creative-sounding projects promising high-paying jobs.
Take, for example, the Delaware Board of Trade, a proposed emerging-company stock exchange, which collected $3 million in public funds authorized by New Castle County Executive Tom Gordon after former New York Stock Exchange chief Richard Grasso and other would-be private investors backed out.
Supporters of DBOT, whose organizers include former Cincinnati Stock Exchange official Nick Niehoff and ex-Philadelphia Stock Exchange trader John Wallace, say it will attract scores of well-paid traders, bucking the industry trend toward consolidation and virtual networks.
DBOT hoped to open last spring, then in July. As of last week, the organization is still "talking with the regulator," the industry-run Financial Industry Regulatory Authority, DBOT marketing director Al Brinkman, one of a few ex-Philadelphia exchange officials who have moved to DBOT, told me. "The idea is for these small companies to grow" so they can eventually be traded on mainstream exchanges.
A federal law, the Main Street Growth Act (HR 4636), sponsored by U.S. Rep. Scott Garrett (R., N.J.) would give local "venture exchanges" such as DBOT special protections, obliging new companies to be listed there in exchange for exemption from disclosure requirements targeted to larger companies, according to venture industry lobbyists. But the bill appears stalled in Congress.
A potential competitor, Cromwell Coulson, CEO of OTC Markets Group, an "exchange-like" SEC-regulated alternative-trading system in New York, told me he questions the need for government-protected and -subsidized regional exchanges.
Bringing local markets back while easing trading regulations for small start-up companies to sell shares "is a laudable goal," he told me. But he challenged the need for government support: "The history of America has been competition."
The Garrett law "would make it easier," but DBOT is preparing to do business as a trading system even without the special venture exchange status the law would grant, Brinkman told me.
You can say a town under pressure needs better government, or less. Economists can argue people will be better off if they let the free market do magic.
But I expect we'll see more, not fewer, demands for government support of local industries, wherever mergers and digital technologies seem to be wiping out employers faster than new ones are taking their place.
(215) 854-5194@PhillyJoeD