Being located on the banks of a waterway like the Ohio River presents land use challenges for cities, especially when determining growth along the riverfront downtown. But the project many in Cincinnati are talking about is taking place on the Ohio River (called “the Banks”), a 40-acre (16 ha), mixed-use project between the existing baseball and football stadiums.
Speaking at local ULI event in December, Phillip Beck, the project executive representing both the city of Cincinnati and Hamilton County, said the downtown property investment is very much an example of the area’s cooperation between the public and private sectors. “We have been waiting to redesign this prime property for decades,” he said, “but it couldn’t be done if just the government wanted to make changes, nor could it be done by the private business developer alone, either.”
Beck and other panelists said that Cincinnati has major pluses going for it these days, including old neighborhoods that are moving up in stature and established businesses doing well.
“We have needed to work together, and we have, and the results are starting to show through,” he said. The project is in its early phase, with 600 housing units built and another 400 to be added in a few years.
Public/private cooperation and economic development are driving the following: pop-up retail shops in the downtown to reduce vacancies, historic preservation in older neighborhoods, and how potential federal tax changes might affect financing of some projects. Speakers agreed that a midsize market like Cincinnati needs cooperation between the public and private sectors to move things forward.
“There is a lot of interest by investors in secondary markets,” said Doug Bolton, the former managing principal Cincinnati’s largest commercial real estate firm, Cushman & Wakefield. “The overall thought is that we are in a long-path cycle, not boom or bust, but of perhaps a future soft landing.”
“The real estate business is realizing that space is not just about head count any more, but more about function,” Bolton said. “And the business community is seeing that in Cincinnati, and we are seeing a difference in project design and what is coming on the market.”
That change in design thinking is being seen at a 632,000-square-foot (58,700 sq m) pediatric intensive-care unit being constructed for the Cincinnati Children’s Hospital Medical Center. Maura L. Moran-Berry, who handles new-construction project development for the hospital, told the ULI event attendees that the planning stages went beyond just “a design and then hand it off” approach.
“We have spent time with a warehouse-setting mockup of what the new care center might look like, and have used doctors and nurses and the critical people who will work there to give us real feedback and experience on how the hospital might actually work, instead of just looking at a two-dimensional mockup on paper,” Moran-Berry said.
“What we are learning is that taking care of planning issues this way greatly reduces fixing and changing things afterwards,” she said.
Data from ULI’s Emerging Trends in Real Estate® 2018 report are generally positive for the Queen City. While the city does rank in the middle of the pack among cities in the “Investor Demand” and “Development/Redevelopment Opportunities” rankings, Cincinnati is ranked number five in “Homebuilding Prospects.” That is tops among Midwest cities.
The report says, “Increasing economic diversity is supporting growth in the Midwest” and that those surveyed in Cincinnati “mention the impact that entrepreneurial activity is having on new business creation.”
“One of the strengths we are seeing is connecting the Midtown neighborhoods of the city with the downtown development, and how the closeness that those neighborhoods have to people is very important, as they are looking for neighborhoods with both character and convenience,” said Adam Gelter, executive vice president for Cincinnati Center City Development Corporation (3CDC), a nonprofit organization founded to strengthen downtown by revitalizing and connecting the central business district and historic Over-the-Rhine neighborhood.
And one of the many pluses Cincinnati has going for it is the state of the housing market going into the future. “Baby boomers bought houses for size, but millennials are buying now for quality, and our historical neighborhoods are able to satisfy a lot of that demand,” Bolton said.
That demand is pushing solid growth in the city’s 23 designated historic districts and specific building renovation projects are getting historic tax credits to help fund those projects. Cincinnati Union Terminal, which is undergoing a massive restoration, received $5 million in tax credits for its restoration, while the Reakirt Building—a ten-story downtown office building erected in 1924—was awarded $2 million in tax credits to help fund the rehab.
“Part of the reason that the Over-the-Rhine and other historic neighborhoods have been able to grow so quickly and with such quality in rehabilitation of older structures, is that we have been able to use the historic tax credits in a way to move things along better,” said Beth Johnson, the urban conservator with the city of Cincinnati.
“We need to protect what makes these neighborhoods and these buildings special,” she continued. “The concentration of such areas is in the urban core, and we see those areas are such a vital part of the city, and we are working with developers and investors and homeowners behind the scenes to preserve these areas but to help them grow at the same time.”