By Ken Alltucker
The Cincinnati Enquirer
With low interest rates and a strong market for first-time home buyers, developers are rushing to convert buildings in downtown and Over-the-Rhine into loft condominiums with all the modern touches.
Douglas J. Hine, president of development services for Miller Valentine Group.|
(Michael E. Keating photo)
| ZOOM |
Older, obsolete office towers. Difficult-to-rent apartment complexes. Abandoned buildings. All are candidates for the latest can't-miss condo development.
Downtown Cincinnati Inc. counts at least 30 condo projects that are under construction or are seeking financial backing - a frenzied boom that promises to add several hundred new homeownership units to the urban core.
Though smaller developers triggered the craze with successful condo projects in downtown and Over-the-Rhine, larger developers are taking notice, too.
Dayton-based Miller Valentine Group last month announced an ambitious plan to convert the Polk building on Pike Street into 120 luxury condos. Madison Marquette scrapped plans to build apartments at the former McAlpin's store at Fourth and Vine streets. Now the developer sees condos as the anchor of a long-stalled, city-funded project that could include some offices and shops.
"It does show that property owners and investors are all a little like lemmings," said John McIlwain of the Washington, D.C.-based planning group, Urban Land Institute. "There is definitely a herd instinct in all of this."
Low interest rates make buying a mid-priced condo as affordable as renting. Apartment owners who are struggling with high vacancy rates are choosing to convert rental properties to condos.
While all the economic factors seem perfect for condo development, many question how many Cincinnati home shoppers are willing to spend their own money to buy a downtown home. Are developers pursuing fool's gold?
"We're playing a bit of musical chairs here," said Arn Bortz, partner at Mount Adams-based Towne Properties. "You hope when the music stops, you have a seat."
A 2003 study by Downtown Cincinnati Inc. predicts that more than 100 downtown and Over-the-Rhine condos can be sold each year.
The Cincinnati Development Fund, a consortium of banks that helps fund projects downtown and in Over-the-Rhine, has reported an increase in loan requests from developers. The fund this year has approved loans for construction of 170 for-sale condos and houses. So far, 70 units have sold, said Jeanne Golliher, the fund's director.
No developer represents the frenzy better than JFP Properties, a little-known company that made a splash two years ago when it sold four condos at 911 Race St.
JFP had visions of grand success when it next bought the 12-story Fourth National Bank building at 18 E. Fourth St. Plans called for a condo on each floor topped by a luxurious penthouse that would sell for $1.3 million. That vision fizzled for a lack of interested buyers.
So JFP scaled back its plans. It's now building smaller units (19 instead of 12) that are less expensive (starting at $215,000). The developer even hopes to eliminate the need for a large down payment by offering buyers rent-to-own contracts.
Indeed, some of the area's most successful condo projects have sold at inexpensive prices. The Crawford Lofts in the 1400 block of Main Street, for instance, sold out within three weeks at prices from $79,900 to $165,000.
The range of prices is the urban core's strength, according to Kathy Schwab, DCI's residential expert. Many first-time buyers, artists and young professionals, too, have a chance to buy downtown real estate.
McIlwain said the condo boom has caught on nationwide, providing cities with renewed energies at a time of job cuts and a slumping economy threaten gains made in recent years.
"It is a wonderful thing that is happening to cities," McIlwain said. "Not only are you bringing more people into the city, you are bringing home owners. They tend to have more of a stake in the community than renters."
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