Cincinnati’s Over-the-Rhine (OTR) neighborhood has come a long way since it served as the location for gritty scenes in movie director Steven Soderbergh’s 2000 film Traffic. Gone are the 500 vacant buildings and 700 vacant lots. The disadvantage of having the highest crime rate in the city is no more.
Thanks to efforts by prominent Cincinnati companies such as Kroger Co. and Procter & Gamble, as well as the Cincinnati Center City Development Corp. (3CDC), efforts to revive the historic neighborhood have exceeded expectations.
Scott Abernethy, Cushman & Wakefield
Located just north of downtown Cincinnati, OTR is one of the largest urban historic districts in the United States and is known for its abundance of architecturally significant buildings and homes. The area has a rich cultural scene due to its proximity to the Art Academy of Cincinnati, the Cincinnati Symphony Orchestra, the Cincinnati Opera, the School for Creative and Performing Arts, Memorial Hall and other artistic points of interest.
OTR was named one of the top 15 “cool streets” in Cushman & Wakefield’s Cool Streets of North America report. A new breed of urban, experiential and independent mid-market retailers catering to millennial consumers has led to the rise of 100 Cool Streets across the United States and Canada.
The renaissance in nearly all the “cool streets” has been driven by an explosion of unconventional new retail concepts. For example, OTR has experienced a revitalization of the craft brewing industry in Cincinnati through the likes of Taft’s Ale House, Christian Moerlein and Rheinegeist breweries.
Historic Findlay Market (Ohio’s oldest continuously operated public market) was founded in 1852 and is one of OTR’s most cherished institutions. Surrounding Findlay Market is the Brewery District, which celebrates OTR’s brewing heritage. The neighborhood was originally settled by German immigrants in the mid-1850s and is called Over-the-Rhine for its rich German heritage and location north of Central Parkway, which was once a canal.
In the early 2000s, 3CDC began revitalization efforts, and by 2010, hip restaurants, retail shops and living places designed for millennials and young professionals were being developed. In 2011 and 2012, office growth began with boutique firms seeking cool space.
Often these firms are in small offices above first-floor retail space. Architectural firms, advertising agencies and other creative firms continue to look for these types of spaces as they appeal to millennial workers.
Larger office users
OTR is no longer just for small office users. Grandin Properties purchased the former Strietmann Biscuit Co. building at 231 W. 12th St., a former cracker manufacturing plant, and is offering 15,000-square-foot floor plates. This is the first OTR renovation project to feature larger Class A office space in a multi-level building, with retail and restaurants on the first floor.
Now open, the 88,000-square-foot Strietmann Center features the Penthaus Conference Center on the top floor. 3CDC also recently redeveloped the 42,500-square-foot, five-story 15th and Vine property into an office building with large floor plates (11,000 square feet each).
With net rental rates ranging around $20 per square foot, OTR sits at the top of the office pricing structure. 3CDC and Grandin’s gamble in fiscally conservative Cincinnati is paying off as companies are clamoring to be part of the OTR renaissance.
After years of searching for a new headquarters location, ad agency Empower MediaMarketing recently built a new 65,000-square-foot building in the heart of OTR. Located just outside of downtown for years, Empower is the first major company to move into OTR and now occupies 50,000 square feet of The Marketer. Equator Design Ltd., a creative design agency, has leased the top floor at a rate of over $20 per square foot.
Despite the attention to larger projects, developers are continuing to create smaller office spaces. Area housing developers Urban Sights and Model Group have purchased older buildings and continue to add office space in the 3,000- to 5,000-square-foot range with lower asking rates.
What’s old is new again
Momentum from all the redevelopment is paving the way for other opportunities. Cincinnati finally will welcome a much-needed large grocery tenant with the advent of a new Kroger building to be located at the south end of OTR. The new mixed-use building will face Kroger’s headquarters and consist of a multi-level, full-service grocery store with apartments above.
Professional soccer club FC Cincinnati, currently playing at the University of Cincinnati, has made a bid to build a soccer stadium along Central Parkway in the OTR. This would further enhance the neighborhood and is expected to help surrounding commercial real estate markets grow. A streetcar line that runs through OTR is another advantage that both developers and companies consider when looking at opportunities there.
OTR is an emerging office market, but doesn’t yet have the density to be considered a separate submarket. While retail rents currently range from $16 to $40 per square foot, they will continue to climb as developers look for creative ways to renovate or build office space and utilize historic tax credits. Meanwhile, millennials are embracing the live/work/play experience of this urban, historic neighborhood.
— By Scott Abernethy, Senior Director, Cushman & Wakefield. This article originally appeared in the April 2018 issue of Heartland Real Estate Business magazine.