With a need for affordable housing in the Lehigh Valley, Wednesday’s groundbreaking for the Walnut Square Apartments in downtown Allentown was a welcome event for officials who gathered under a sunny sky.

Cortex Residential plans to build a three-story, 44,010-square-foot building with 38 units at Eighth and Walnut streets, a block south of PPL Center. It will replace a parking lot and parish house next to Life Church at 40 S. Eighth St.

Jonathan Strauss, co-founder of Cortex, said the project will give residents a chance to live within walking distance from many downtown offerings. The private company specializes in affordable apartments financed by state and federal tax credits.

“When thinking about Walnut Square Apartments and thinking about the impact that this project can have and the vision that we wanted to have with this project,” he said, “it was important to us to basically check the boxes. We wanted to make sure that we were building in an area of need, and we wanted to make sure that it was in an area of opportunity.

“And what I really mean about opportunity … is an opportunity for the residents,” he said. “We wanted to build an urban core that had accessibility to urban amenities like public transportation, social services, health care, so on and so forth. And most importantly jobs.”

Strauss said rents will be based on the Area Median Income, an index calculated by the U.S. Department of Housing and Urban Development that represents the midpoint of a region’s income distribution. A one-bedroom apartment will start at $275 a month, while a three-bedroom will go for about $1,300.

Broken down, Walnut Square will feature 29 one-bedroom, three two-bedroom and six three-bedroom apartments. Four units will serve households at or below 20% of AMI, with the remaining units affordable to households at or below 50%-60% AMI.

Cortex will start taking applications a few months before completion, which is anticipated to be late summer 2026.

The building will have a lobby, community room, and management and supportive services offices. The project is being designed to be energy efficient.

State Sen. Nick Miller, D-Lehigh, said the project is an important step for the downtown and the first to feature affordable housing since the city’s Neighborhood Improvement Zone was created in 2011.

“We haven’t seen an affordable housing project since the creation of the NIZ program, and seeing a housing project like this, we’re looking forward to investing in more,” Miller said. “Quite frankly, we’ve seen the challenges across the Lehigh Valley’s housing market, and it’s really quite at the crisis level. A 63% increase in housing costs is not something that everybody can shoulder.”

Walnut Square is just outside the NIZ, but Strauss credited the projects in Allentown’s unique tax subsidy zone for making it possible, and giving future residents access to amenities located there.

“It’s very important to us that we’re building affordable housing that has proximity to resources that can promote socioeconomic growth for individuals,” Strauss said. “With this project in this city, we can accomplish that. We are steps away from resources like the Social Security office, the post office, the Da Vinci Science Center and the PPL Center. There’s a ton of amenities downtown that these residents will be able to have at their fingertips.”

The project is being financed through a $1.43 million low-income housing tax credit from the Pennsylvania Housing Finance Agency for a 10-year period. In addition to the tax credit funding, Cortex also benefited from a $2 million grant from Allentown and around $600,000 from Lehigh County, both from American Rescue Plan coffers.

Allentown-based Cortex Residential was co-founded in 2021 by Strauss, who previously worked for prominent city developer City Center Investment Corp.

“Allentown is home for us,” Strauss said. “It’s where we have our corporate office and we’re really, really proud to be a part of the revitalization and redevelopment of downtown.”

Morning Call reporter Evan Jones can be reached at ejones@mcall.com.