By Mark Hansel
NKyTribune managing editor
The Northern Kentucky Chamber of Commerce December Eggs ‘N Issues discussion focused on real estate and development in the region.
The December Northern Kentucky Eggs ‘N Issues discussion focused on real estate and development. Panelists included, left to right, Chuck Ackerman, Colliers International, Jeanne Schroer, Catalytic Development Funding Corp. of Northern Kentucky and David Heidrich, Zalla Companies. Moderator Pat Frew of the Covington Business Council is at far right (photos by Mark Hansel, click to enlarge).
A panel that included Chuck Ackerman of Colliers International, Jeanne Schroer of the Catalytic Fund and David Heidrich of the Zalla Companies talked about accomplishments in the past year and provided some projections for the future.
Pat Frew, executive director of the Covington Business Council, moderated the discussion at the Receptions events center in Erlanger.
As brokerage senior vice president, Cincinnati Colliers International, Chuck Ackerman is responsible for advising clients, including sellers, buyers, landlords and tenants in matters related to commercial real estate.
Ackerman said if the assessment of the region’s occupancy rate was a report card, it would be a perfect paper, especially with industrial and office properties.
“We’ve seen in industrial since 2010, a shrinking vacancy each and every year and basically the same thing for office,” Ackerman said. The numbers are in the 4 percent (range) for industrial in both the Northern Kentucky and Greater Cincinnati region and about the mid-teens for office.
Retail is about 8 percent vacant in greater Cincinnati, but only about 4 percent in Northern Kentucky.
“The big dog in office this year in Northern Kentucky was CTI leasing 125,000 square feet in RiverCenter II,” Ackerman said. “St. Elizabeth Healthcare was in the news, as it (transformed the former METS Center into an) Education and Training Center in Erlanger. They are building a 149,000 square foot behavioral health hospital with 197 beds, also in Erlanger.”
Retail developments include the opening of Gabes, an extreme value retailer, on Houston Road in September and the ongoing construction of a 134,000 square foot Kroger Marketplace in Union.
“With industrial, they just keep coming, these big deals with bulk distribution warehouse product,” Ackerman said. “HH Gregg is a new tenant in Hebron as is Vista Packaging (and) Sherwood Bedding in Walton.”
Jeanne Schroer is president and CEO of the Catalytic Development Funding Corp. of Northern Kentucky. The non-profit company provides capital and development services to real estate developers and local governments and undertakes projects in Northern Kentucky’s urban neighborhoods.
“These areas are rocking right now,” Schroer said. “I’m excited to tell you what some of the factors are, what things are going on and what some of the trends that are happening nationally that are impacting and playing out in these communities.”
There is a compelling case, Schroer said, for investment in urban real estate, particularly in Northern Kentucky.
Schroer said the quality-of-life options in downtown Covington weighed strongly on CTI’s decision to bring its 500 employees across the river.
“Their main focus in choosing a place to locate was ‘what is the condition of the urban community, what kind of housing opportunities are there as we try to attract talent, what kind of restaurants and amenities?’” Schroer said. “So, what we thought, back in the 2000s, would be an attraction is starting to play out and that’s a specific example of it. Place does matter.”
Emerging demographic trends are also beginning to support investment in urban product.
“Here’s the most important thing – our river cities in Northern Kentucky have extraordinary real estate fundamentals – their location, the assets that they have,” Schroer said. “If Northern Kentucky doesn’t capitalize on this and on these fundamentals, we are really missing an opportunity.”
Those in attendance at the Northern Kentucky Chamber of Commerce December Eggs “N Issues event take advantage of a little networking time before the discussion begins Tuesday.
David Heidrich is CEO of the Zalla Companies, a real estate development company that has been concerned with a variety of medical, professional, office industrial, retail and specialty real estate services in Greater Cincinnati and Florida.
Heidrich said the national trend for new home starts is far ahead of the Northern Kentucky region.
“That’s a rather disappointing trend,” Heidrich said. “We are not participating in the resurgence of real estate investment, when it comes to residential real estate in our country.”
A contributing factor, he says is the challenging real estate environment for development in Northern Kentucky.
“I know a lot of other landlords in this room and know a lot of us are charging the exact same rate for industrial space or office space that we charged 20 years ago,” Heidrich said. I don’t know why that is, but it makes it damn tough to pay $120 a cubic yard for concrete, when you used to pay $60 a yard, and still charge the same amount for office space.”
That also makes it difficult to attract the really big national finance players to Northern Kentucky.
“Frankly, they look at our markets and say you guys have got stable rent rates and that’s not what we’re betting on,” Heidrich said.
Northern Kentucky developers also have to be smart, Heidrich said, about the type of tenants and companies they bring in to the region
The Northern Kentucky Tri-County Economic Development Corporation (Tri ED) recently solicited a study from an outside consultant to help provide direction to the development community over the next five years.
“One of the takeaways from that is to be careful about how much flat ground you allow to be used for big bulk warehouses where rate of pay is relatively low,” Heidrich said. “Flat, developable ground is a limited resource in this town and we need to make sure that we think about that as we attract and incentivize people to come locate jobs here.”
The monthly Northern Kentucky Chamber of Commerce Eggs ‘N Issues meeting brings community leaders together to discuss issues of regional importance.
For more information on Northern Kentucky Chamber of Commerce events and activities, click here
Contact Mark Hansel at mark.hansel@nkytrib.com
