Wednesday, January 28, 2004

Condos, penthouses in developer's plan

By Ken Alltucker
The Cincinnati Enquirer

[IMAGE] Douglas J. Hine, president of development services for the Miller Valentine Group, shows off the view from one of the condos being rehabbed in the R.L. Polk building on Pike Street in downtown Cincinnati.
(Gary Landers photos)
[IMAGE] Condos at the converted R.L. Polk building will sell from $179,000 to as much as $1.5 million.
Developer Miller Valentine Group is betting that Cincinnatians will be willing to spend up to $1.5 million for a penthouse with sweeping views of the Ohio River and downtown's skyline.

But high-priced living won't be the only option at the converted R.L. Polk & Co. building on Pike Street near Lytle Park. First-time buyers, too, can get a new condo with the basic touches for as little as $179,000.

As developers chat up dozens of condo projects from the riverfront through Over-the-Rhine, Dayton-based Miller Valentine's plan to spend up to $35 million to convert the Polk building into 109 condominiums stands apart in size and scope.

A 2003 Downtown Cincinnati Inc. survey counts at least 30 downtown condo projects that are under construction or are seeking financial backing. The survey also predicts that more than 100 units can be sold each year in downtown and Over-the-Rhine.

Kathy Schwab, DCI's residential adviser, said the Polk building's location in an established downtown neighborhood makes it a natural candidate for a condo conversion. There are more than 500 apartments nearby at Lytle Tower, One Lytle Place and two other apartment buildings.

"It's the right neighborhood, right building, right location," Schwab said. "It's got everything that a downtown residential project needs."

Developer Miller Valentine is more accustomed to building warehouses and office buildings in Cincinnati's sprawling suburbs, but the Polk building's setting next to the Taft Museum and across the street from Lytle Park intrigued Douglas Hine, the firm's president of development services.

"This is an established neighborhood," Hine said. "You feel safe from day one."

The Polk conversion will be Miller Valentine's first housing development in downtown Cincinnati.

Hine's firm expects to pay more than $5 million to buy the 10-story building that the Hamilton County Auditor's office values at $9.3 million. Hine wants to sell at least 40 units by the time his firm completes the purchase next month. So far, buyers have signed contracts on 22 units.

The Port of Greater Cincinnati Development Authority will apply for a $1 million grant through the Clean Ohio Assistance Fund to help pay for asbestos removal.

Miller Valentine wants to appeal to young professionals with the units starting at $179,000. Floors five through nine will have 20 units apiece that range from 1,000 to 3,000 square feet.

But the development's showpiece will be the 10th floor with penthouses that likely fetch prices of $1.2 million to $1.5 million when luxurious touches are added.

One of the more unique features of the building will be an open-air atrium that will extend from the lobby through the 10th floor. Mini bridges will cross the atrium, leading condo owners to the front step of their units.

The building's floors are huge - measuring about 1 acre apiece. And the window-walled floors offer a panoramic view of the Ohio River, Mount Adams and downtown's high-rise towers.

One office tenant will remain on the third floor of the building, and about 135 parking spaces will be available in the building's basement.

Miller Valentine isn't the only developer betting that young professionals and empty-nesters increasingly will choose the excitement of city living over the suburbs.

Three years ago, developers Al Neyer Inc./North American Properties and Capital Investment Group combined spent more than $20 million to convert two one-time factories - the Power and Krippendorf buildings - into large-scale luxury apartment buildings. Other smaller apartment conversions followed.

But now, more developers are seeking to sell condos after a handful of smaller downtown and Over-the-Rhine condo projects sold out swiftly. Real estate agents eager to breathe new life into downtown's empty office buildings and stalled retail projects are selling buildings to housing developers.

Corporate downsizing and slow job growth have punctured demand for downtown office space, especially at older buildings that lack modern amenities. Downtown's Class A office buildings have a vacancy rate of 11.5 percent as of December, but vacancy was much higher for Class B buildings (16 percent) and Class C buildings (28 percent), according to commercial real estate firm CB Richard Ellis.

Many office building owners are seeing a more lucrative option in converting office buildings into condos.

"It's what everybody is doing," said Bill Schneller, a CB broker who is attempting to sell the 16-story Ingalls office building at the northeast corner of Forth and Vine to a residential developer.

"There seems to be a stronger demand for people to live downtown. This is happening not only here, but in St. Louis, Columbus and Cleveland, and it seems to be working."

Commercial real estate firm CB Richard Ellis predicts that more and more real estate operatives will seek to cash in on the condo trend.

Developers Jeff Jacobs and Roger Thesing are converting the former Fourth National Bank building at 18 E. Fourth Street into 19 units. And Jacobs expects to team with Madison Marquette to build condos at the vacant McAlpin's store on Fourth Street - the latest reincarnation of a long-stalled, city-funded project that previously promised a combination of mostly retail and office.

Thesing worries that too many developers are rushing to build the same project.

"I just hope that the market is deep enough to support all of the new properties," Thesing said. "I wouldn't like to see a glut in the market."


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