Jim Landino, founder of JCL Development, has invested millions of dollars to revitalize downtown Sharon, Pennsylvania. And he has another $12 million of projects underway within a quarter mile of Penn State University’s Shenango campus on the Shenango River.
But that campus, along with six other Penn State satellite campuses — a college property portfolio encompassing about 400 acres and more than 50 buildings — is now on a path to close, giving reason for investors and communities across the state to reexamine their strategies. Landino, however, intends to stay the course.
JCL had planned to convert industrial properties not owned by the university into a community center and housing to support the neighborhood and the recruitment of students. The projects are among seven active redevelopments Landino has in Sharon, a city north of Pittsburgh near the Ohio line with a population of nearly 13,000. Undeterred, he intends to move forward though he’s facing the likelihood students will no longer be his target.
“Penn State might have given up on Sharon, but we have not. In our opinion they are bailing out at the wrong time," Landino told CoStar News. Referring to his own investment, he said, "Never has more private funding been put into action than right now."
Landino's situation shows how the closing of campuses can disrupt communities, giving a glimpse of the type of real estate fallout that could occur around the state. Late last month, the Penn State board of trustees voted to recommend closing the campuses after a two-year wind-down period. If the plan moves forward as expected, Penn State campuses in DuBois, Fayette, Mont Alto, New Kensington, Wilkes-Barre and York as well as Sharon would cease operations. Penn State’s main campus is in Centre County in the middle of the state.
The closings still must be approved by the Pennsylvania Department of Education and Gov. Josh Shapiro.
Shifting enrollment
Penn State justified the planned closings by saying each campus faces significant challenges, including long-term population and demographic shifts, declining enrollment, flat public funding and increasing operating costs.
Landino's projects originally were designed to be attractive to parents and students coming into town. "Now, our goal is continue to create destinations that are not present or available" in Sharon, he said.
He added that “though we are deeply disappointed to lose the campus, we are always prepared with a solid Plan B that becomes Plan A. Everything we have done recognized that Penn State might close."
The projects include: a 14,000-square-foot gym relocation; a 50,000-square-foot indoor/outdoor pickleball court and recreation center at 297 Shenango Ave.; apartments at various locations; 30,000 square feet of coworking space at 98 E. State St.; and two new restaurants.
In public comments to the board, Penn State Shenango faculty members argued against the decision to close, noting that the lack of housing had limited the campus’ growth, and that Landino was stepping up to provide that, a step the university system had failed to take.
Penn State did not respond to requests for comment from CoStar News.
Small campuses, big impact
Over the past 10 years, hundreds of colleges and universities nationwide have closed, with some reports pegging the number at over 500 private, nonprofit four-year institutions that have shut down. That is more than double estimates from the previous 10 years.
While exact percentages for all closed campuses being repurposed are difficult to pinpoint, evidence and reports suggest a strong trend toward adaptive reuse.
Closings, mergers and other forms of financial distress can have profound effects not only on students and employees but also on businesses — particularly in areas where colleges, universities, vocational schools and other training institutions serve as anchors of economic activity, according to a December study from the Federal Reserve Bank of Philadelphia.
Most institutions that have closed have median school enrollment of about 1,400 full-time students, the study said, making them significant employers in small- and medium-size communities, and often functioning as anchor institutions in those communities, the bank said. The report said the wave of closings is likely to continue.
Penn State DuBois is the smallest college recommended for closing, covering only 5 acres. Yet the campus has had a profound effect on the west-central Pennsylvania community.
“It is very sad news to hear that we will lose our local Penn State DuBois campus," Molly O'Bryon-Welpott, a residential real estate agent with Hoffer Realty in DuBois, told CoStar News.
“I don't have a crystal ball, but I would think another school would want to come in and utilize the beautiful property,” she said. “If another school does not take over, there will be vacant homes within the neighboring blocks that have been used over the years to house students, many of them Penn State athletes.”
Life after college
The Penn State colleges' closing could spur several potential outcomes for the campus properties, according to real estate professionals. Options include buildings being taken over by another college or repurposed into housing or commercial business space. They could also be used for government or healthcare, or a combination of those uses.
At Penn State Shenango, the enrollment of slightly more than 300 students feeds many of the businesses in downtown Sharon. Landino has his own thoughts on how the campus should be repurposed.
“Some of the campus is best served removed and then build ... housing for middle-income and above people who would value the river, sidewalks, walkability, cycling aspects the area represents. Currently, the city has the winning hand of having over 50 acres of attractive real estate on the river, with sidewalks, streetlights and a solid infrastructure."
The main lab and lecture halls on the campus could be reused as a technical school or training center, he added.
Penn State has previously identified portions of other campuses for disposal. Deals described in university records show the variety of potential for commercial buildings.
At Penn State Harrisburg-Meade Heights, the university is selling about 41.5 acres in Lower Swatara Township. Dermody Properties, an industrial developer, has expressed an interest in acquiring and developing the site as an industrial distribution center, the university said.
Dermody did not respond to a request to comment.
In Hershey, Penn State is looking to dispose of about 2.8 acres. American Water Co., the public water supplier of the College of Medicine campus, has a expressed a desire for an additional reservoir to meet the needs of the community now and into the future.
The university is also looking to dispose of roughly 5 acres at Interstate 99 and Innovation Park Boulevard in College Township, via a long-term ground lease structure, to develop an acute care rehabilitation hospital. Catalyst Healthcare and operator PAM Health intend to lease the property.