HEARTLAND SNAPSHOT, JULY 2005

CINCINNATI RETAIL MARKET

There are three trends evident within the Cincinnati retail development arena that actually go beyond what is being developed in adjacent Midwestern markets, according to Steve Brandt, president and CEO of Cincinnati-based Brandt Retail Group: a) streetscaping of regional malls; b) additional lifestyle projects being built and others being expanded emphasizing entertainment and mixed-use components, and; c) ongoing development and redevelopment of shopping centers to accommodate the continued expansion/relocation/in-filling of grocery, super discount and home improvement retailers.

General Growth’s Kenwood Towne Centre continues to experience tremendous growth through its aggressive remerchandising strategy and department store expansion. A recent streetscaping of the mall added Maggiano’s Little Italy, Cheesecake Factory, Pottery Barn, Ann Taylor Loft and this fall, Restoration Hardware opens. Additionally, high-end retailers Sephora, Sigred Olsen, Janeville, Sony Style and Williams Sonoma Home join the mall’s line up. Macy’s is adding 70,000 square feet to their department store footprint. “With these retailers additions it leaves no doubt as to which project is Cincinnati’s number one mall, leaving the other malls with the ability to maybe copy its concept, but not emulate its premier mix of upscale retailers,” Brandt says.

“Two successful lifestyle developments have announced expansion plans, noteworthy by the fact that they are adding mixed-use components,” he says. Jeffrey R. Anderson Real Estate plans a Phase III expansion of its premier Rookwood centers by adding another 260,000 square feet of retail and 450,000 square feet of office space. Co-developers Anderson and Casto recently announced their expansion plans for Deerfield Towne Center. The second phase will consist of 150,000 square feet of additional office and retail space as well as 150 units of brownstone condominiums. The retail development will be anchored by a 16-screen Regal Cinema, joining Phase I retailer anchors Dick’s Sporting Goods, Bed Bath & Beyond, Wild Oats, Gold’s Gym and Aquarium Adventure.

National Amusement’s 16-screen Cinema De Luxe will anchor an entertainment-oriented lifestyle project being developed by Trademark Companies and Vision Development in Cincinnati’s Oakley neighborhood. The planned project, The Market Street at Millworks, with an expected opening in late 2006, will also have a 75,000-square-foot Jungle Jim’s International Market. “Jungle Jim’s is a unique grocer attracting devoted food lovers locally and regionally,” Brandt says.

Indianapolis-based Premier Properties continues to develop Bridgewater Falls, a 630,000-square-foot center that the developer describes as a power village, with a combination of big-box retailers such as Target, Dick’s Sporting Goods, TJ Maxx, Petsmart, Old Navy, Michael’s, Best Buy and JC Penney. Also, there will be a unique addition of 134,000 square feet of restaurants and small specialty retailers, including Books-A-Million.

Cincinnati Capital Properties recently announced a 360,000-square-foot mixed-use project to be built in Kenwood and anchored by a 5-star restaurant called the Maisonette, positioning itself for concept modernization. Office and residential condominiums will join the mix in this project, which is expected to open in late 2006.

The largest concentration of retail development within Cincinnati has historically occurred along the Interstate 71 corridor that was initially centered around the Kenwood Towne Centre. “No other part of town has the proliferation of upscale retailers that I-71 has or will have with the projected and impending developments,” Brandt says. “The state and local municipalities are feverishly planning improvements to the interchanges along I-71 to handle this exploding growth.”

The I-71 corridor is also extending to the south with Anderson’s expanding Rookwood projects and Trademark’s Millworks project. Then, development goes 12 miles north to Deerfield Township’s lifestyle and power center projects and even further north to planned projects in Mason and Lebanon by national developers. “The reason for this is an affluent, educated customer base of between 500,000 and 600,000 with average household incomes approaching $80,000,” Brandt says.

The most notable newcomer to the Cincinnati retail market is the Wal-Mart Supercenter. “Some Cincinnati communities welcome the opportunity to have a Wal-Mart Supercenter, others spend considerable resources investigating alternatives,” he says. There are a total of 15 Supercenters either open or under construction in the area. Kroger and Meijer both are aggressively increasing store count to combat the Supercenter onslaught. Winn-Dixie chose to leave the market rather than expend capital in their northernmost market.

In addition to previously-mentioned new-to-market retailers, Cincinnati has recently welcomed Justice, Vitamin Shoppe, Trader Joe’s, Track N’ Trail, Archivers and Haverty’s Furniture. New restaurants include Qdoba Mexican Grill, Cheeseburger in Paradise, Mama Fu’s Asian House, Cici’s Pizza, Potbelly’s Sandwich Works, Mimi’s Café, Nothing but Noodles, Abuelo’s, Polo Grille and Red Star Tavern.

Several local developers have multiple projects, both redevelopments and new, in the pipeline. General Growth Properties, Jeffrey R. Anderson Real Estate, Casto and BCC are a few of the active developers.

In the near future, in addition to watching the grocery wars between the traditional grocer Kroger and the supercenters, it’s now time to factor in the specialty grocers, Jungle Jim’s, Trader Joes, Wild Oats and possibly Fresh Market and/or Whole Foods, according to Brandt. Target, Kohls and The Home Depot are all active with both infill sites and suburban growth beyond the Interstate 275 outerbelt. “Downtown and riverfront retail projects are gaining steam with the city/county funding and approvals, and will be the projects to watch in 2006 to 2008,” he says.

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