Today's piles of dirt, steel beams and construction cranes will be stores and restaurants not found elsewhere in Greater Cincinnati and Northern Kentucky. An already strong retail area will be even stronger.
At the south end of the mall, work crews are making way for the highly touted, 140,000-square-foot Nordstrom department store.
To the north is rising Kenwood Towne Place, a $180 million retail and office development by Bear Creek Capital that will house the region's first Crate & Barrel.
And across Montgomery Road at Sycamore Plaza, construction is almost complete on the 27,000-square-foot Jared Jewelers. The store is part of a $2 million makeover of the plaza, which has added more than 50,000 square feet of new restaurants and retailers in the past three years, including The Fresh Market, IHOP and Macaroni Grille.
Of course, Kenwood already boasts the best selection of shopping in the region: The Apple Store, West Elm, Pottery Barn, Sharper Image, J. Crew and Coach, among others.
"Kenwood really just has more to offer," said Julie Haller, who drove from Liberty Township to Christmas shop at Coach and Macy's. "I had some pretty specific places I needed to go, so I came here."
Shoppers come from even farther than the northwest suburbs, said Greg Bickford, director of planning and zoning for Sycamore Township.
"If you look at Kenwood, you have places here that you can't get anywhere else," he said. "In turn that brings us people from as far down as Louisville and Lexington and as far north as Columbus."
For RP Properties, which purchased the center in July 2004 for $61.5 million, the investment was a no-brainer.
"This is the target market in Cincinnati for shopping, and we've seen our investment come back in spades," said Jason Lieberman, chief operating officer for RP Properties, which owns a portfolio of more than 15 shopping centers.
Today the firm estimates the value of Sycamore Plaza, which first opened in 1966 and is home to retailers including Old Navy, Barnes & Noble and Dick's Sporting Goods, exceeds $100 million.
AN OPENING AND A TURNAROUND
Just five years ago, the Kenwood area was not the bustling retail hub it is today.
The trendy lifestyle center Rookwood Commons in Norwood had opened, heating up competition for older, indoor-oriented centers such as Kenwood Mall, built in 1956. And developer Jeffrey Anderson Real Estate was contemplating a third expansion of its Rookwood shopping center.
Norwood was getting the retail attention back then, said Scott Yards, a senior associate with CB Richard Ellis' Cincinnati office. "Kenwood was kind of just there," he said.
But troubles surfaced for the planned Rookwood expansion and legal battles ensued over Norwood's use of eminent domain to secure neighboring homes and commercial properties for the development. Last year, the Ohio Supreme Court sided with home owners, and today the site houses two vacant houses surrounded by chain-linked fencing.
"Had the Rookwood scenario gone the other way, maybe you would have seen some other things happen there rather than at Kenwood," said Rob Molloy, Sycamore Township administrator. "Crate & Barrel is a prime example. We heard several times that it was going to be at Rookwood, but it ended up here."
At the same time, Chicago-based General Growth Properties entered the scene. The publicly traded real estate investment trust, which owns more than 200 malls including Florence Mall, purchased Kenwood from the Teachers Retirement System of Ohio for $218.1 million in August 2002.
As plans for Rookwood's expansion teetered, General Growth moved quickly to unveil a multimillion-dollar facelift for a recreated Kenwood Towne Centre.
By June 2003, construction had begun on Kenwood's new streetscape - a move that added nearly 100,000 square feet of shopping and helped attract top-tier retailers such as West Elm and Ann Taylor Loft as well as a Cheesecake Factory restaurant.
"The mall needed to have some capital invested into it to attract high-quality users, and they transformed it from something that was going downhill into something that will be viable for a long period of time," said John Silverman, managing principal of Cincinnati-based developer Midland Atlantic.
Silverman's firm in August completed a $20 million redevelopment of a former Frank's Nursery site across from the mall on Kenwood Road.
Known as Kenwood Place, the retail center is 100 percent leased and boasts retailers such as M. Hopple & Co. stationery, Down Lite and Drexel Heritage, a furniture store new to Cincinnati.
"We are very strong believers in the Kenwood market," Silverman said. "I hate to give credit to a competing company, but quite frankly what has made Kenwood a 20-year market has been the investment by General Growth."
Today Kenwood Towne Centre is considered to have the highest sales per square foot among malls in Ohio, Yards said, though General Growth declined to disclose those figures.
"For true retailers coming into the market, the No. 1 location to go is Kenwood," he said.
Bear Creek Capital, RP Properties and Midland Atlantic are just a few of the area developers hoping to ride the wave of Kenwood's comeback.
"In the past two years, the amount of new retail and office space under construction has really boomed," Yards said.
Since 2005, more than 360,000 square feet of new retail space has been constructed in the Kenwood market, along with 485,000 square feet of office space between 2006 and 2007, according to CBRE.
"The demographics are so strong that we think you're going to continue to see that unique retail and office opportunity blossom," said Greg Bickford, planning and zoning director for Sycamore Township.
While Hamilton County's median income is about $43,800, the average household income in a 1-mile radius of Kenwood and Montgomery roads is estimated at $66,757, according to statistics from CB Richard Ellis. Within a 3-mile radius the average jumps to $80,466.
Though they declined to share occupancy rates, both RP Properties and General Growth said retail tenants are waiting in line.
"Spaces don't sit empty here," said Cindy Hart, sales and marketing director for Kenwood Towne Centre. "I think the biggest change you're going to see in the next two years is new tenants coming in along with Nordstrom."
At Sycamore Plaza, RP Properties is lining up a restaurant and additional retailer to fill space left open by Rackroom Shoes' departure.
"It's a very tight market for property, and we have several tenants that we're talking to," Lieberman said. "We expect to make a selection in the next 30 days."
DEMAND UP, LAND SCARCE
With demand for space on the rise and a tight supply of developable land, investors are paying a premium to be near the action.
"One-acre lots are selling for $1 million to $3 million simply because the market can support it," Bickford said. "You'd be hard-pressed to find land going for that price anywhere else in town."
The area also boasts the highest average rental rates in the region with retail space topping off at about $18 a square foot and office space ringing in at $22 a square foot, according to CB Richard Ellis.
However, such costs are offset for tenants and investors by other perks and savings, said Dan Neyer, president of Neyer Properties, which is constructing the second phase of an $18 million office condo on East Galbraith Road just across from the mall.
"It's non-incorporated area, so there's no earnings tax. It has great visibility and access, and it's close to so many business owners," he said. "Kenwood has all of the amenities and none of the burden."
As retail opportunities become saturated, office projects such as Neyer's are coming to the forefront in Kenwood, Bickford said.
"One of the things we hear some retailers say is, 'Well, I don't do well during the day,' " Bickford said. "The township's push is to continue to increase office opportunities to bring in the corporate folks as well as the smaller businesses."
In addition to Neyer Properties' office condos, construction on a 160,000-square-foot office development is under way on Montgomery Road at the Redstone of Kenwood, a project by Cincinnati Capital Properties and Scott Street Partners.
The site was once touted as a new location for the downtown Maisonette restaurant, although that plan was sidelined in 2005.
Additionally, Global Fitness Holdings announced earlier this year its plans to break ground on a new Urban Active fitness center, which will include 60,000 square feet of office space, at Montgomery and Hosbrook roads.
DOWN THE ROAD
Looking forward, Yards said that despite the heavy development, the Kenwood area still has room - and reason - to grow.
"There are additional sites that offer potential redevelopment opportunities down the road," he said. "From an office perspective, a major factor for Kenwood will continue to be that it's amenity-driven, it's surrounded by a good employee base with the growing suburbs in Warren and Butler counties, and it's attractive to the young professionals."
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source: enquirer.com
