Thursday, August 01, 2002

A city's new lease on life?


Downtown apartments prove enticing to renters

By Ken Alltucker, kalltucker@enquirer.com
The Cincinnati Enquirer

        With the recent opening of two large downtown apartment buildings, most experts agree that the next few months will be a crucial test of downtown living's viability.

        More than 200 new downtown apartments were made available with this summer's opening of the Power Building at Eighth and Sycamore streets and the former Krippendorf shoe building one block away.

[photo] This view is from one of more than 200 new apartments at the Power Building, Eighth and Sycamore.
(Gary Landers photos)
| ZOOM |
        So far, renters have snapped up 52 units in just a few weeks, making developers optimistic about plans for even more ambitious projects in coming years.

        “I know we didn't expect to be 25 percent full one month into the leasing,” said John Neyer of Al Neyer Inc., which teamed with North American Properties to convert the Krippendorf building into a 105-unit complex dubbed Sycamore Place at St. Xavier Park.

        Capital Investment Group is putting the finishing touches on the 117-unit Power Building. So far, 27 units have rented on floors two through five, with rents ranging from $680 to $1,900. Apartments on floors six through 10 will be finished by early October.

        With several new downtown apartment buildings on the drawing board, investors likely will scrutinize the success of the new buildings before pushing forth any new complexes.

[photo] Nancy Moorhead, property manager for the Power Building, stands in the lobby of the luxury apartment complex.
| ZOOM |
        “How they do will probably dictate what happens in the next three or four years,” said David Lockard, an apartment expert for CB Richard Ellis. “People are going to watch their performance closely.”

        Mayor Charlie Luken and downtown boosters trumpet the development of new homes and apartments as a key to stemming the city's population decline and creating a vibrant city abuzz with activity day and night. The so-called “24-hour” city is urban planners' concept of a downtown with enough people who can support shops, restaurants and cultural offerings.

        “From the city's point of view, encouraging that activity (residential development) is very desirable,” said John McIlwain, a residential expert at Washington-based Urban Land Institute. “Over the long term, these (24-hour) cities tend to do better economically.”

        The pursuit of downtown housing is a marked change for many U.S. cities that just a few years ago tried to duplicate the success of suburbs by building downtown malls or large department stores.

[photo] The former Krippendorf shoe building has been converted into an apartment complex.
| ZOOM |
        Those efforts often failed, with shoppers choosing the ease of suburban malls instead of the hassle of driving and parking downtown.

        Large department stores in downtown Cincinnati have struggled, too. Nordstrom rejected plans to build a department store at Fifth and Race two years ago despite a subsidy of almost $50 million offered by Cincinnati, and City Council last year approved a $6.6 million aid package to keep Saks Fifth Avenue's downtown store afloat.

        “Cities looked at malls and said if we build a mall downtown, people will come,” Mr. McIlwain said. “What is obvious now is that if you bring people downtown, retail will follow.”

        Al Neyer Inc. and Downtown Cincinnati Inc. hope to create that mix in an eight-block downtown neighborhood near Procter & Gamble dubbed St. Xavier Park. With the opening of two new apartment buildings, the Blue Wisp jazz club plans a move to 318 East Eighth St. and two delis will soon open.

        Silverglades will establish a mini grocery store at the Power Building, and the East Eighth Deli will open down the street next to Blue Wisp.

[photo] The Power Building.
| ZOOM |
        The new apartment buildings and nearby office workers prompted Dan and Mary Beth Shannon to take a gamble on the East Eighth Deli. They are putting the finishing touches on the 1,800-square-foot space and plan an August opening.

        They anticipate that a lunch crowd as well as visits from neighborhood residents and Blue Wisp patrons will drive the small shop.

        They also are looking forward to the possibility of even more downtown apartments nearby.

        The North American/Al Neyer duo plan a $20 million high-rise residential tower atop a city-owned parking garage under construction at the area bordered by East Seventh, Broadway, North and New streets. That project likely will start only after The Sycamore Place complex fills all 105 units and proves it can again lease units as tenants leave.

        “I think we may want to crawl before we walk,” said Chuck Ciolino, an apartment expert with downtown brokerage NAI Eagle.

        Indeed, developers say they plan to scrutinize the performance of downtown living overall. It's possible that the two new complexes will perform well while other downtown complexes struggle.

        Downtown's largest landlord, Towne Properties, reported a sharp increase in vacancies from less than 2 percent to greater than 15 percent a year ago because of a slowing economy and April 2001's riots.

        Towne, which owns 351 units and four downtown complexes, has trimmed its empty units to about 9 percent, still well above historical vacancy rates of 2 to 4 percent, Towne Partner and former Cincinnati Mayor Arn Bortz said.

        The two new apartments bring at once roughly the equivalent of all units added downtown in 2000 and 2001. Urban dwellers also have more choices with new apartments for middle-income earners sprouting up in neighboring Over-the-Rhine and West End at the site of the Lincoln and Laurel Homes public housing complexes.

        Kathy Schwab, residential adviser of Downtown Cincinnati Inc., said downtown needs more condo projects to add to its growing stock of rental options.

       



More names emerge in Erpenbeck fraud case
Distance aids other 'Peoples'
- A city's new lease on life?
American Financial records solid second quarter
GE to expense stock options
Justice Dept. looks into AOL Time Warner
Slower recovery forecast
Business Digest
Tristate Summary
Morning Memo
What's the Buzz?