HEARTLAND SNAPSHOT, APRIL 2006

Cincinnati Retail Market

According to senior vice president John Thompson and associate Chris Nachtrab with The Everest Group/TCN Worldwide in Cincinnati, the increased development of casual food concepts such as Chipotle, Moe’s Southwest Grill and Potbelly Sandwich Works is the present retail development trend in Cincinnati. Additionally, new mixed-use lifestyle centers are taking shape in place of new malls, and town square developments with office or residential space above first-floor retail are gaining popularity.

In central Cincinnati, the Millworks lifestyle center development, which includes Showcase Cinemas and Jungle Jim’s International Market among other possible anchors, represents tenants’ desire to be close to the Hyde Park market. The Streets of West Chester, a mixed-use development with office, hotel, residential, restaurants and retail, will possibly add a second phase to its already successful tenant mix that includes Barnes & Noble and a Rave Motion Pictures theater. The high-income population growth of the northern suburbs continues to attract tenants to the area. Kenwood Towne Center recently added a new streetscape and a 45,000-square-foot Macy’s Men’s Store addition. Other traditional malls, such as Tri-County, Northgate and The Florence are planning on making similar improvements. Stone Creek Towne Center, a 440,000-square-foot development at Colerain Avenue and Interstate 275, will be anchored by Meijer once completed.

Wal-Mart continues to strengthen its position in the market, say Thompson and Nachtrab. The addition of several new Supercenters, as well as the replacement of non-food Wal-Mart locations with Supercenters, is making Wal-Mart one of the leaders in major lease closings in Cincinnati.

New retailers to the market include Trader Joe’s, The Fresh Market, Doc Green’s Gourmet Salads and United Art and Education. McCormick and Schmick’s Seafood Restaurant plans to open a location in the downtown Westin Hotel as part of the Fountain Square redevelopment.

Jeffrey R. Anderson Real Estate continues to successfully develop area lifestyle centers, the latest being Crestview Hills Towne Center in northern Kentucky. Tenants of the center include Dillard’s, Banana Republic, Borders Books & Music, Jos. A. Bank and Bed Bath & Beyond. New Plan Excel Real Estate Trust has purchased a number of Kroger-anchored centers in the area that are being redeveloped to accommodate expanded Kroger footprints.

With vacancy rates at approximately 10.8 percent, retailers are continuing to follow residential population growth in the West Chester, Deerfield Township and Liberty Township, Ohio, markets as well as in the northern Kentucky markets.

According to Thompson and Nachtrab, lifestyle centers have become important for the store growth of luxury goods and non-discounted product retailers. Since these retailers will continue to take sales away from the malls, the malls will need to reinvent themselves to allow for easier store access and quicker shopping trips. As is the case with most Ohio and Midwest markets, new anchors and sub-anchors are needed for existing opportunities in the Cincinnati area. Smaller sub-anchors do not seem to be doing much expansion.

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