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In the immediate wake of the Great Recession (version 2.0), it was not uncommon to see halted development projects in greater Cincinnati. Now that the economy has rebounded, retail development has started to follow suit. However, the original developers that began many of the region’s key projects aren’t necessarily the ones finishing them. What follows is a summary of some key projects in various stages of completion that have had to adapt to changing market conditions and consumer preferences.
Oakley Station
Among the high-profile projects in the greater Cincinnati market that have undergone changes in development direction is Oakley Station. This former 74-acre Cincinnati Milacron complex, originally known as the Millworks project, was conceived as a Main Street-focused lifestyle center supplemented by structured parking that would incorporate some of the existing industrial structures.
Once the recession hit, the project fell victim to the nationwide lending freeze and tenants’ slowing growth plans, making it difficult to move beyond the project’s design stage. However, given the location in the geographic center of Cincinnati and the easy access to interstates, Oakley Station was always prime real estate and stayed on developers’ radar screens.
Now being developed by Vandercar Holdings, the developer responsible for the box-anchored Center of Cincinnati development immediately adjacent to it, Oakley Station now represents a more traditionally accepted format of mixed-used development.
The development still has the various components expected in mixed use — retail, residential, office and entertainment (a 14-screen Cinemark theater is slated to open in July of this year) — but has eliminated the structured parking that causes consternation with both Midwestern consumers and developers alike.
Historically, Midwestern consumers expect surface parking because it is generally free, plentiful and convenient. Further, developers would rather do without the significantly higher construction costs associated with structured parking.
Maintaining the thematic plans of incorporating elements of the milling park history into the final development project also bodes well for the desirability of the project. This high-density, urban industrial park has evolved into the perfect answer for Cincinnati residents who prefer to combine the mantra “live, work and play” with more traditional suburban conveniences like surface-level parking. The development is scheduled for completion in 2014.
Kenwood Towne Centre
Situated adjacent to GGP’s Kenwood Towne Centre, this partially completed vertical mixed-use development sitting atop a publicly funded parking garage was initially anchored by a Kroger Fresh Fare store, Crate & Barrel and The Container Store. The project’s financial problems contributed to the stagnation of the unfinished project, and ultimately led to Kroger terminating its lease in May 2010.
Similarly to Oakley Station, the fundamental desirability of this project remained strong during the lull in development. The project is located adjacent to an upscale mall in a trade area with historically low vacancy rates and high rents. Further, its office and retail space has optimal advertising potential with billboard-like visibility to highly traveled highway I-71.
Phillips Edison & Co., long known as a buyer and developer of value-added projects, bought the unfinished property out of foreclosure. Its plan is to finish the office tower and reconstruct the available retail space to accommodate the needs of the retailers currently pursuing space in the trade area.
Phillips Edison has yet to discuss publicly which retailers will fill the available space, but speculation is focused on several unique and well-known, one-store-per-market brands entering the Cincinnati market. Construction is expected to start up again this year, with the anticipation of turning the completed space over to office tenants in 2014 and retail tenants in 2015.
Kenwood City Place
A hard-corner site originally acquired by the owner and operator of a regional chain of fitness centers in December 2007, Kenwood City Place was intended as a vertical mixed-use project with street-level retail and fitness. With development stalled by the slow economy, tight lending environment and scarcity of tenants, the owner decided to locate his fitness concept in a more immediately available property — leaving the development without an anchor.
Now being developed by Jeffrey R. Anderson Real Estate, plans are to minimize the original high-density vertical mixed-use concept and
utilize a more traditional format.
An 11,000-square-foot restaurant, Cooper’s Hawk Winery, will locate on the hard corner of the site and a small retail center will be built atop structured parking immediately adjacent to it. This project is slated for completion by the end of this year.
Newport Pavilion & The Pavilion at Rivers Crossing
The histories of Newport Pavilion, located in Newport, Ky., and The Pavilion at Rivers Crossing, located in South Lebanon, Ohio are quite similar to one another. Anchored by well-known big boxes such as Kroger and Target (in Newport), and Target, Kohl’s, and Lowe’s (in South Lebanon), these developments were expected to have junior boxes and smaller retailers fill out the then unbuilt space between the anchors in each of the respective shopping centers.
For the past six years, both developments were left unfinished. Under new leadership, however, the development of each property is back on track. While the names on some of the inline and outparcel spaces may have changed during the hiatus (such as Dick’s Sporting Goods signing a lease to occupy space where a home improvement anchor once planned to build), the overall plans have not been altered dramatically. Both shopping centers should be completed by this time next year.
The Big Picture
It is easy to say that once the economy began to recover, these partially finished developments were destined for completion, but reality is never that simple. There are several commonalities among these projects. The most obvious is that the developers who picked up these partially finished projects have the capability of seeing the job through to completion.
Looking below the surface, however, one finds another common theme among many of these projects: In order to rekindle interest and restart the development process, the developers have had to provide a more traditionally accepted format. For some, this meant moving away from their original plans and including relatively simple features such as convenient surface parking.
The exception to this, Kenwood Towne Place, had other factors affecting how development might restart. In this case, both the significant investment made in the structure to date and the fact that it is built atop a parking structure funded with public money likely played large roles in the current developer’s decision not to revamp the plans dramatically.
In any event, if the old adage that “activity begets activity” holds true, then near-term development activity in the Queen City looks promising.
— Michael Halonen, X Tem international partner and partner of Edge Real Estate Group LLC