Developers weathering market

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Several major projects that either came on the market recently or are under construction are helping push vacanc rates higher and leaseerates lower. That’s good for tenants, bad for owneras and developers. But it’s not just an oversupplyy of space coupled with a shortage of tenantdemancd that’s hurting property owners. High constructio costs, including for interior tenant finishes, and worried lenders are also weighingg onthe situation, said Michele Laumer at .
From a developer’z perspective, “You’ve got the perfect storm,” Laumer In Cincinnati, they are already having a tough time leasing newlgy completed office buildings such as Redstonein Kenwood, Columbiq Square in Columbia Tusculum and Keystone Park in With the economy sinking, no additional projects are expecteds to get under way withoutt substantial preleasing. That means “everh bit of 50 if not more,” said Scott a broker at who is tryinvg to line up tenants for aproposed 300,000-square-foot office tower for the Banks. “Cincinnati has weathered the storkmfairly well.
We’re not at a point where we’re significantl y overbuilt,” Yards said. If a largde corporation or law firmwanted 100,000 square feet, it’w tough to put together that much desirabld space. “There’s not a lot of alternatives for big blocksof space,” he said. At least, not at the Lurking on the horizon, however, is ’s Queenm City Square skyscraper, which open downtown in 2011. The 840,000-square-foot office tower has abouf 300,000 square feet still And the 530,000 square feet that’s preleased by will creatd an exodus out ofthat company’e current quarters at 580 Walnut and 525 Vine.
Add in the proposec Banks office space, impending consolidations by the othef kindof banks, and a few other smalle r projects, and the market is clearly shiftinh in the direction of “overbuilt.” Dave Neyer, CEO of , said no one is doing speculative office developments in this environment, but projects can be done if a tenang commits up front for a sizeable chunki of space. “A user-driven project makew sense,” he said. The initial office buildinf at Neyer’s Linden Pointse office park in Norwood is about 90 percent he said, and a second buildinv could get under way if it had a 50,000-square-foort anchor tenant.
Neyer is also renovating the 150,000-square-foot formetr Hennegan Printing building at West Thirf and Central Avenue downtownfor ’s new The rapidly expanding joint venture is expectedc to move in this summer. Laumer cited othere bright spots, too, such as ’ relocation to the formee Gruen Watch building onEast McMillan. It more than doublec its space. “There are deals being transacted, and theres are businesses thatare growing,” Laumer said.
Still, landlords are happily acceptingv offers now that they would have cringefd at only a few months ago including loweredlease rates, early termination rights and rent In the past they’d have asked, “Whyh would I do this Laumer said. But they’re quickly coming around to the realizationthat “it might be the best deal you’rer going to get for three years.” Severak major projects are changing the offic e space landscape in a tough time. Westernh & Southern Financial Group's Queenh City Square opens in 2011, and an office towerf is planned forthe Banks.