PRINT THIS STORY:

CHANGE TEXT SIZE:

A contender again

Retail gets Cincinnati off the ropes; waterfront round planned

By Edmund Mander

Department store Lazarus left Cincinnati in 1992, but came back stronger as part of upscale Fountain Place in 1997.

While Cincinnati’s decline cannot be compared to Cleveland’s — certainly its river never caught fire — the downtown had its own struggle with the suburbs a few years ago.

As happened in so many other cities across the United States, a lot of Cincinnati’s residents and businesses left, and its retailers followed.

“We had an excess of 16% in storefront vacancies [in 1994], and that number was going up,” recalled David Ginsburg, executive vice president of Downtown Cincinnati Inc., an organization formed and funded by downtown businesses to promote the area’s revitalization. “We had several closings of major department stores.”

In 1992, department store Lazarus moved out of its flagship building — an 800,000-square-foot structure comprising five buildings with an art deco facade — leaving a gaping hole in the downtown area. Soon after, Sears Roebuck & Co. shuttered its store, and McAlpin’s department store closed its doors in early 1996.

Lazarus has since relocated to Fountain Place, an upscale shopping center that opened in 1997.

In a sad, not to mention ironic, state of affairs for a city that boasted the headquarters of Federated Department Stores and Mercantile Stores, some retailers concluded they no longer were able to compete with the malls popping up in its suburbs.

Or so they thought.

But local business and civic leaders were determined to stop the decay and create a renaissance for Cincinnati, Ohio’s third-largest city, similar to that which has taken place in other U.S. cities in recent years.

While Cincinnati’s condition was by no means as serious as those afflicting Rust Belt cities, such as Cleveland and Pittsburgh, it was in trouble, recalled Stanley Eichelbaum, SCMD, president of Marketing Developments, a Cincinnati-based retail consulting and marketing firm hired by the city to conduct a study outlining a solution to its problems.

“It never got as bad as a lot of cities, but it definitely was headed in that direction,” he said. “We were fortunate in catching it while it was still breathing, and reorienting it toward the modern world.”

The city backed a multipronged effort to revive the downtown’s economy, overseeing the investment of billions of dollars in public and private money in a variety of revitalization projects that are ongoing today.

Retail has played a central role in the city’s revival. When Saks Fifth Avenue started making noises about leaving its Tower Place location at the corner of West Fifth and Race Streets, the city in 1995 provided $2.3 million to help pay for a $5 million renovation. Tower Place is a 220,000-square-foot, three-level center owned and developed by Trammell Crow Co., Dallas.

But the city has not stopped at helping existing business; a lot of investment has gone toward building new projects and attracting retailers. To help with the construction of Fountain Place, an upscale 205,000-square-foot shopping and restaurant location that opened across the road from Saks in 1997, the city provided a package worth $69.8 million, $42 million of which went toward the purchase of land, demolition of buildings and the removal of asbestos. The remaining $27.8 million was earmarked for the new construction and an agreement to pay $227,175 in annual county property taxes for 65 years.

The project, developed by Cincinnati-based Madison Marquette and three other local developers — Towne Properties, Belvedere Corp. and Duke-Weeks Realty Corp. — provided a new home for Lazarus and Brooks Bros., and brought Tiffany & Co. to Cincinnati.

Public officials are maintaining the commitment to luring quality retail to Cincinnati: This year the city council signed a letter of agreement to provide a $49 million incentive package to bring Nordstrom to a site opposite Fountain Place on Race Street. Of this, $25 million will go toward parking and building improvements; $9 million is to be spent on tax-increment financing; $5 million on a low-interest state loan; and $10 million is coming from a private equity fund administered by Downtown Cincinnati Inc.

The investment in Nordstrom will more than pay off, according to Eichelbaum. The two-level, 155,000-square-foot store is projected to increase annual downtown retail sales by $125 million, providing a $7.4 million increase in annual sales tax revenues, he said.

Meanwhile, the old McAlpin’s department store building on Fourth Street is coming back to life. Madison Marquette bought the structure for $4 million this year and intends to convert it into a mixture of retail, apartments, offices, and possibly a hotel, according to Robert C. Little, the firm’s COO.

As a result of widespread investment, the downtown’s retail vacancy rate has dropped to just 8%. But while retail has played an important role in Cincinnati’s revival, the city is expending equal effort on the development of housing and office space.

Cincinnati has seen an “explosion” of high-tech company growth in recent years, and today about 80,000 people work in the downtown, Ginsburg said, noting Procter & Gamble has its world headquarters there.

Development officials also want to boost the number of people living in the downtown from the current 3,000 to about 10,000, Ginsburg said. This has given new life to the former Lazarus building, which is being converted into 99 apartments.

Arts and education also are playing a role in the city’s revival. Since it opened in 1995, the Aronoff Center for the Performing Arts has attracted 500,000 people a year.

There also are plans for a new Contemporary Arts Center designed by the renowned Iraqi-born, London-based architect Zaha Hadid.

But one of the biggest revitalization projects in Cincinnati lies ahead: The city has put out a request for proposals to develop Cincinnati’s Ohio River waterfront for local retailers, restaurants, offices and apartments as well as plenty of green space. Plans also call for two new waterfront stadium facilities to house the Cincinnati Reds and the Bengals, costing a total of $800 million.

In all, the city is reclaiming eight blocks and 40 acres of land on its riverfront that was blocked off from the downtown by the construction in the 1950s of the Fort Washington Way highway. Following a massive project to move the highway, the downtown is connected to its waterfront once again. The project, which is expected to cost $2.1 billion, will be undertaken in two phases, the first to be completed in 2003 and the second in 2006.

The trick, Ginsburg said, was to strike a symbiosis between the city’s restaurants, retail and entertainment on the one hand, and its working and residential environment on the other, providing each segment the resources to flourish.

“If downtowns try to compete with malls at their own game, they’ll lose,” he said. “Downtown is a different product.”