James Flick, DTZ
Cincinnati’s central business district (CBD) is humming with activity, particularly in the office sector with nearly 13 million square feet of office space spread across 54 buildings. Class A office space has been in high demand in the past year as approximately 245,000 square feet was absorbed by area businesses, according to DTZ. During that time, the vacancy rate declined 380 basis points and now sits at 16.4 percent.
The Banks, an 18-acre mixed-use development on the Ohio River between Great American Ball Park and Paul Brown Stadium, is driving much of the recent activity downtown. It links entertainment venues and connects the CBD to the waterfront via a riverfront park. A much-anticipated 340,000-square-foot office building is currently under construction there.
The Banks’ office building, developed for General Electric’s new U.S. Global Operations Center, will accommodate up to 2,000 employees. The riverfront development edged out bids from other areas in the region, including Oakley and Mason, to land GE’s new operations center.
In June, GE announced that it is leasing 80,000 square feet in the Atrium Two building on a three-year temporary basis, allowing the company time to set up operations during construction. Cincinnati Bell recently leased 220,000 square feet in Atrium Two as well.
Another key downtown development is the 280,000-square-foot building for the company 84.51°, formerly known as dunnhumbyUSA. The Kroger Company recently acquired a majority stake in the data analytics firm and changed its name to represent the longitudinal coordinates of the new building. Completed in May, the building’s modern design features high ceilings, ample natural light and maximized efficiency. It also includes a 1,000-space parking garage and 30,000 square feet of street-level retail along Fifth, Race and Sixth streets.
Four other significant transactions that have already occurred downtown this year include Fifth Third Bank’s lease renewal of 122,504 square feet in the AT580 building; U.S. Bank’s lease renewal of 70,776 square feet in the Textile Building; the Better Business Bureau of Cincinnati’s lease of 10,783 square feet in the National City Tower/One East Fourth Street building; and Staffmark’s lease of 37,275 square feet in the Omnicare Center.
Hotel Development Surge
Cincinnati’s CBD also has seen a flurry of hotel development in recent years. Since 2011, construction has either started or been completed on five new hotels. Prior to that, a hotel had not been built downtown in 27 years. The newest hotels are Renaissance Hotel on Fourth Street and the Hampton Inn/Homewood Suites, a dual-branded lodging property within the former Cincinnati Enquirer Building on Vine Street. In total, the new hotels added 532 rooms to the Cincinnati inventory.
A deal also is in place to build a $35 million, 165-room Marriott AC Hotel to fill out the southwest corner of The Banks development at Joe Nuxhall Way and Freedom Way. (The late Nuxhall was a left-handed pitcher for the Cincinnati Reds in the 1950s and 1960s.) Construction on the hotel should begin before the end of the year and finish in the spring of 2017. Also, boutique and luxury hotel developer Kessler Enterprise seeks to transform a former Procter & Gamble office building into a 125-room, independent hotel, according to the Cincinnati Business Courier.
Urban Living in Demand
Currently, 1,734 apartment units are either in development or in the planning stages in downtown Cincinnati. Notable projects include AT 580 (175 units), the Pogue Garage (300 units) and Seventh and Broadway streets (110 units).
In addition to construction of the office building at The Banks, groundbreaking on Phase II of the mixed-use development recently took place. It features a 305-unit apartment building and 20,000 square feet of additional retail space. Phase II is expected to be completed in late 2015 or early 2016.
Looking ahead, investors are expressing interest in purchasing and converting the former Terrace Plaza Hotel, 15 W. Sixth St., into multifamily housing. No known activity is pending, so time will tell what the future of this building will be.
Bright Outlook for CBD
The story of downtown Cincinnati’s growth cannot be told without discussing the Over-The-Rhine neighborhood. For more than 10 years, it has been the target of a massive redevelopment movement. Close to $400 million has been invested in the refurbishing of over 100 historic buildings into office, retail and residential space.
Efforts have resulted in hundreds of new residents and dozens of new retailers and businesses to the area. When completed in 2016, the Cincinnati Streetcar system will connect this neighborhood to the riverfront, specifically The Banks, creating a direct artery between two of the hottest areas of development in the region.
Downtown Cincinnati exudes a vibrancy not seen since before the Great Recession. The Banks riverfront development is just one of the catalysts in creating a remarkable vitality in the CBD. Following the national trend of urban renewal, office and retail space and multifamily housing will continue to be in high demand.
— By James Flick, vice president, research and marketing, DTZ. This article originally appeared in the July 2015 issue of Heartland Real Estate Business magazine.