Downtown Cincinnati to get another new office tower, but is it an opportunity missed?

On Monday dunnhumbyUSA announced that they had found a location for their new expanded headquarters. The consumer analytics company will build a new office tower at Fifth and Race in downtown Cincinnati.

The embattled property had long been seen as a site for a tower by city leaders. Development plans, at some point or another, had called for a department store, theater, condo tower, office tower, or some combination thereof. Both Eagle Realty and Towne Properties had failed at developing the site beyond the surface parking lot currently located there.

As one of the most ardent supporters of Cincinnati’s urban core, I am here to say that I am disappointed by this news. Yes, it is exciting that Cincinnati will be getting yet another tower built in its urban core as so much other investment takes place. And yes, it is terrific that a young company is flourishing in Cincinnati. The problem, however, is more complex.

A new office tower will soon rise from the center-left of this vantage point as dunnhumbyUSA builds its new headquarters in downtown Cincinnati. Photograph by Randy A. Simes for UrbanCincy.

As the renaissance continues to progress in Cincinnati’s urban core, the city must seize every opportunity to inject life where life has long since been vacant. The activity that follows should be thought about in a logical manner. What kinds of activities are found in what parts of the center city, and what is needed?

In the case of the notorious Fifth and Race location, what is needed is after-hours street life. It is currently an area vibrant during the business day, but struggles to support businesses and street activity into the evenings and weekends. The development of a new office tower there does not address either of those issues.

Yes, the new dunnhumbyUSA tower will be a boon for city coffers and develop a long underutilized piece of property just a block from Fountain Square. But the central business district needs more residents if it ever wants to support the likes of a grocery store, theater or other service retail. And there are very few sites well-suited for a high-rise residential tower beyond the Fifth and Race location that will now be occupied by a shiny new office tower.

The alternate location for dunnhumbyUSA’s new tower would have been at The Banks where an office tower has been proposed at the corner of Second and Walnut streets. This is an area that is, infact, in need of daytime activity. Unlike the rest of the central business district, The Banks is primarily made up of high density residential and other entertainment that fills the streets into the evenings. What The Banks does not have is daytime business activity, and dunnhumbyUSA would have provided just that.

Furthermore, a location at The Banks would guarantee increased parking revenues at the county-owned garages sitting beneath the development. This, in turn, would help to pay off the stadium debt that is crippling Hamilton County.

If you are to look at things in order of sparking additional development, The Banks location also comes out on top. As most industry insiders are aware, it is difficult to make money on residential development, but office development makes money hand over fist if you can lease it. Such a tower at The Banks would have almost assuredly helped either pay off debts on the first phase, or finance the second phase of development there.

Unless the Cincinnati Center City Development Corporation (3CDC) uses the profits to leverage additional development in Over-the-Rhine or in the central business district, the Fifth and Race location will not have the same ripple effect that would have been seen at The Banks.

In my opinion, city officials should have been patient and sat on the Fifth and Race site until a deal came to pass that would have developed the site into a 20 to 30-story residential tower. Cincinnati may only have one or two sites well-suited to accommodate such a tower in its central business district now, but it could probably use three times that many to achieve the vibrancy that is needed.

Let’s hope that the development plan for the Fifth and Race site includes some residential component to help offset this situation. Until then, chalk this one up as good news, but an opportunity missed.

  • Anonymous

    could a residential developer be encouraged to partner with dunnhumbyUSA on the 5th/Race site to build a mixed-use tower, and maybe double the height?

    • I’m actually hopeful that one, or two, slender residential towers could still rise from the top of dunnhumbyUSA’s 4-5 story office component. You would then have street-level retail, 4-5 floors of office, then some residential rising above.

      I don’t know what 3CDC and dunnhumbyUSA are working out, but let’s hope it’s something creative.

    • Jacob Peters

      It would be surprising if the building was not designed for such a future tower development.  I can’t imagine a situation where 3CDC views 4-5 floors of development downtown as utilizing property, when that, square footage wise, would be not significantly denser than Mercer Commons.

      As you said, this lot is also one of the few centrally located downtown sites that could accommodate a full service grocery store, and the upscale residential needed to support it, as well as more after hours oriented storefronts at its periphery.  Now that would be a dream of a mixed use development.  Heck, Minneapolis just announced they’ve landed a Whole Foods for 2013, how about that for a young urban professional amenity?

    •  Wouldn’t it be great if Kroger designed an urban grocery store format for this sites first floor.  It would be a great location.  Do they really want to see a Whole Foods 5 blocks from the corporate headquarters? 

    • Zachary Schunn

      Kroger is still mired in a suburban model.  Even their urban stores (OTR, Corryville, Walnut Hills, etc.) have a more suburban build.  (OTR may be an exception, but one Senior VP admitted to our class at UC that the only reason that store is still open is as a good-will gesture to the community.)

    • It would be even better for a rival grocer to step up and shove an urban grocery success in Kroger’s face.  Whole food’s anyone?

  • I would hope we wouldn’t waste this site on a 4-5 floor tower. Given the speed at which DH outgrew their 3rd street location, I would think the building would have that growth rate in mind, even if they don’t need it for 5+ years. 3CDC has done a good job at looking at the long term, I have faith they’ll come up with something creative and appropriate. 

  • Great points. I am optimistic that dunnhumby is a creative and progressive enough company to realize that they have an opportunity to have a real effect on the city with this site and will be willing to work with the right organizations to do something special at 5th and Race. Fingers crossed.. 

  • As reported by the Business Courier, “Milton Dohoney told Cincinnati council committee Tuesday that retail space and residential units could be part of a new Fifth and Race development.” It goes on to say that, “there would be interest in Dunnhumby employees living and working at the site.” With 3CDC in charge of the development, they have my full confidence that they will do what is right for the city.  I think they have proven that they know what they are doing with their current/past projects.  Yet, I do agree that a move to the Banks would have been more advantageous to the site, but dunnhumby isn’t the only suitor for office space at the Banks. 

  • Anonymous

    I would much rather see more adaptive reuse projects, like former office space converted to residential units, than the construction of new residential towers in the downtown area. But I do agree that the 5th/Race area needs more nightlife and the Banks needs more day traffic. Also, as a broomball player for the last 5 years, I’ve been pleased to see the growing night life around Fountain Square over the last few years, even during dreary, winter nights!

    • Interesting you mention that. I too would like to see old office space converted into residential units. Obviously, the historic office buildings make for perfect candidates, but I also think there are some other unique opportunities.

      How about converting the 580 Building into condos? Or how about turning the old Terrace Plaza into something with a residential focus?

    • Emily Schneider

      Better yet, how about turning some of these buildings into luxury rental apartments?  Condos are out, renting is in.

    • Agreed. Ownership society is out. People want flexibility. Buying has a proper time and place of course, but rental apts are a bigger need than condos IMO. I read that the Enquirer building has new life as apartments from the BizJournal I think.

      Just please please PLEASE…call it the Flimm Building Apts!

    • Zachary Schunn

      Turning the Terrace Plaza into apartments is one of the best ideas I’ve seen in a while.  Maybe a new project for 3CDC?

    • Randy’s prediction was right on, as the 580 Building is now being converted to condos.

  • Anonymous

    Wonder if there is any possibility that Nordstrom might be more interested now in a downtown location than when they pulled the plug on the corner.  I would think that 3CDC would explore a number of different options in addition to just dunhumbyUSA to fully develop such a strategic site.

  • Matt Jacob

    It’s still way too early to judge this project. We don’t even know the size or scope of what they are going to build on the site yet. Retail and residential are still possible as part of the mix. 

    I’m just happy to have yet another new building being built in downtown, whatever the exact makeup. It’s saying something positive to those looking at moving to the city and giving landlords downtown a reality check that they’d better start upgrading their existing spaces. They just passed up all the cheap vacant space downtown (granted in smaller chunks than DH needed) to take some expensive new stuff. 

    I think the Banks office pad will find someone sooner than you think, and in the meantime we get to see that great Artswave mural (which IMHO is better than the original Cobbler’s Apprentice at the Taft).

  • Anonymous

    You’ve got the Reserve at 4th and Race (88 apartments) and the always looming Enquirer Building project.  If anyone can figure out what to do with the Bartlett Building, that’s another possibility for residential.  Lots of potential, and I think those older office buildings are better suited to be retrofit into very cool living spaces.  Even the Carew Tower is going to need massive renovations in a few years and could really be an amazing living space (it might even fill the mall back up).

  • Anonymous

    This is a radical idea, but would make a great change for the long term…. Move Macy’s/Tiffany’s etc to 5th & Race for a Modern 3-5 stories of retail. Put 4-5 stories of office space above that, and residential tower(s) above that…
    Level the current Macy’s location and build a park with a lawn over subterranean parking (existing?). This would be a natural extension of Fountain Sq which the new tower would look directly over. This creates a park enclosed by retail and large towers like San Fransisco’s Union Sq. Closing that section of Vine St for special events would make it one large space.

    • Interesting. Although I am not sure that downtown Cincinnati needs more civic space. What it seems to need is more people and activities filling up the existing civic spaces found throughout the urban core.

  • I think you may need to get out of Cincinnati and see what the rest of the world puts up on lot-sizes a lot smaller than the fifth and race site. Sure, one would hope that after having been seized twice by eminent domain, and thus twice cleared the city might accomplish something more grand, but modest development can do quite a bit to make a place work too! Plus, the city doesn’t necessarily need scores upon scores of 20+ story residential towers to achieve density, let alone vibrancy. 

    It simply needs a downtown that isn’t covered with surface parking, or too much parking of the structured variety either. Lot’s of ground-floor activity is key. For Cincinnati, if anything the downtown would be served better if it were more tightly fused to its surrounding neighborhoods and sister cities (across the Ohio River) through a web of pedestrian and bicycle-friendly streets and transit routes and perhaps an Emerald-Necklace like park corridor. The neighborhoods, Cincinnati has aplenty. They simply need more density, less parking, and a reasonably effective Main Street Program to ensure that each community offers its residents a basic core of goods and services within walking distance. And that’s that’s small change stuff too! To launch a program of maybe 20 neighborhood Main Street Districts supplied with 10 years of start-up to implementation phase support (structured carefully to ween from operating subsidy to capital and programmatic matching) and complemented with a Central Resource Lab & Team of Advisers & Gurus (Marketing, Design, Architecture, CPA, Technology, Legal, GC’s, Data, and etc.) and support a pool of revolving investment capital might run $30 mil – max, plus the $30 mil in recoverable funds. That would by any good measure reasonably result in about 3:1 direct private/business sponsorship to city investment in operations & programming, and 7:1, in direct private/business  leverage on capital supports. Plus 100’s of new businesses started/expanded, thousands of new jobs created.base figures drawn on costs via Boston and Washington D.C. the substantial cost differentials to Cincinnati were not discounted. 

    • Great points, Sean. I don’t know that anyone was suggesting that downtown Cincinnati needs “scores upon scores of 20+ story residential towers” though.

      If downtown Cincinnati is intended to be not much more than a central business district, then the overwhelming majority of high-rise office towers is fine. But, if you want to balance out the level of commercial activity with a number of residents that can sustain it, then you are going to need a lot more units. In downtown Cincinnati’s case, there just is not that much left, and this was an ideal piece of land close to the heart of the CBD where residential would have provided a great balance.

  • Sorry to be so didactic sounding…

  • Zachary Schunn

    Randy, I have to agree with your points in the article, and surely I hope 3CDC has mixed-use plans for the site.

    But I find it interesting you make this argument after our recent discussion on downtown office space.  As you stated, a lot of plans are already in the works to turn class B/C office space into residential space.  Both office and residential construction are needed, but office seems to be in higher demand now (in spite of some class A supply already… i.e. the 580 building), and supply is still available for residential space.  A lot of other commenters have already pointed to particular buildings as proof of this.

    Second, look at the potential of and demand for both sites.  The Banks’ site can only hold a 5-ish story office building, and because of this as well as the new development down there, the county WILL find someone for the site.

    The 5th/Race site has seen repeated development failure, and it’s great that we will finally see something there.  If DH hadn’t chosen this site, I’m not sure someone else would have.  Here’s hoping they use the maximum potential of the site.  But either way, nice to see our city increasing in size during a rough economic period nationally!

    (PS:  I know little about the financial numbers at the Banks, but I sure hope they can turn a profit with apartments renting near full capacity at $1.50-$1.60/sf/mo….)

  • I would much rather have another unnecessary office tower than a giant surface parking lot. I’ll take what we can get.

  • Anonymous

    Randy I love your blog
    and I agree with most of your positions with regard to Cincinnati.  However, the fact that a growing
    company is a building a new HQ downtown is anything but an “opportunity
    missed.”  If anything it is a huge success story for the city…the
    story is this: a company starts in Cincinnati and grows.  In fact, the company grows so fast that
    within 10 years they already need to build a new HQ.  This story reinforces the fact that start ups/joint
    ventures/businesses have thrived and continue to thrive in this great city.

    In my mind This positions
    Over-The-Rhine for further growth. 
    The more people we get to work downtown the more people will realize the
    value and convenience of living closer to work especially with viable public
    transportation options, like the streetcar, coming online.

    would like to see more residential units in the central business district as
    well but, as Patrcikjnewton pointed out, there is already enormous potential
    for some of the older buildings downtown to be converted into apartments,
    lofts, condos, etc..  We just came out of a recession that was especially tough on the housing market, give it time.

    • I agree that this business news is good for Cincinnati. I never questioned that. What I’m questioning is whether this was the best move for the region’s urban core? Maybe another site could have been suitable, maybe not.

      I’m of the mindset that Cincinnati should expect good news just like all quality cities should. We need to take that good news and make the most of it. I hope that this turns out to be the case and we get more than a 4-5 story building of 40,000sf floorplates.

  • Roger Smithson

    Really disappointed in this article- and I hope for the sake of my business courier membership they didn’t reprint it.

    Randy has started to show a disregard for facts, and an insistence on imaginary fictional perfection.

    The Banks was NOT what Dunnhumby wanted.  They wanted way larger floor plates.  They wanted to be much closer to Fountain square.

    The Banks office tower is 15 stories and 250,000 sqft max.  That means an average of 15,000 SQFT per floor.  They preferred a more suburban like 40-50,000 SQFT and will likely get a 35,000-40,000 situation at 5th and Race.

    It’s wonderful to pretend and imagine.  But don’t write serious articles about something that is not what a business wants.  They get the choice of where they want.  They chose 5th and Race. 

    • If the city and county weren’t offering up public tax dollars as incentives for dunnhumbyUSA to locate there then I would agree with you that they should be able to do whatever they want as a business. But if the government is going to offer up millions of dollars for developments like this then we should get the best product for the overall community, not just what the business wants.