3 downtown towers going up for auction
Experts: Right buyers could strengthen Dayton’s urban core.
The sale of three large Dayton office towers in a two-block area could dramatically change the city’s downtown if the right owners acquire the mostly empty space, local developers said.
The KeyBank tower, the Courthouse Plaza Southwest building
and the Grant-Deneau tower are all headed to the auction block next month.
These three towers that help make the city’s skyline have large vacancies, which hampers the health of downtown Dayton. If the towers had more office tenants, it could boost business at downtown shops and restaurants, add to the income tax collected by
the city and further drive demand for Dayton housing.
New building owners could mean a new direction for the downtown office towers, but real estate experts say that depends on whether the auction winners are willing to spend money to renovate the properties.
“The bottom line is: Anyone who acquires these properties has to figure out how to position them,” said Dave Dickerson, Dayton-market president for Dayton-based real estate firm Miller-Valentine Group.
For now, the Grant-Deneau tower is entirely vacant, the KeyBank tower is more than threefourths empty and Courthouse Plaza is more than half-empty. Downtown Dayton office real estate is about 28 percent vacant, according to real estate firm Colliers International.
“We all benefit from a strong
urban core. As to the ownership of the buildings, I do think it impacts
Dayton,” said Jerad Barnett, president and CEO of Synergy and Mills Development.
Both the KeyBank Tower and the Leigh Building parking garage, at 10 W. Second St. and 100 W. Second St. respectively, are listed together for auction, with the starting bid set at $2.8 million. The online auction is set for Nov. 13-15.
The 27-story KeyBank building is the second-largest office tower in downtown Dayton and was once called Mead Tower when it was home to Mead Corp. Besides KeyBank, some of the other tenants include the Downtown Dayton Partnership offices and the law firm of Hedrick & Jordan.
The Leigh Building, with the garage, is an eight-story mixed-use building, offering office, retail and parking with high visibility, a block away from KeyBank Tower. Both properties offer a total of 413,000 rentable square feet.
The property is listed by real estate firm Marcus and Millichap on online auction marketplace Ten-X. Messages left with one of the building owners and with Marcus and Millichap were not returned.
The 222,164-square-foot Grant-Deneau tower at 40 W. Fourth St. once housed the administrative offices of Premier Health. Building owner Matrix Group had sought to redevelop the tower with the help of tax credits but the CEO of the real estate firm died in a car accident and the redevelopment project fell apart.
According to Real Estate Auctions LLC, which is listing the property for auction, the 23-floor building with an attached 360-space parking garage was recently appraised at more than $5 million. The auction is Nov. 9.
Courthouse Plaza, an 11-story tower at the corner of Ludlow and Second streets, will be auctioned about a year after the current owner bought the building. Its owner, Atlanta-based Cygnus Capital, did not return a message seeking comment.
The building is home to tenants such as U.S. Bank, Catapult Creative and the Miami Valley Regional Planning Commission and is 36 percent occupied, according to the auction listing.
Courthouse Plaza’s auction listing on Ten-X says bidding is from Nov. 5-7.
Dickerson said it’s difficult to say whether the auctions could be a positive opportunity for downtown.
With buildings that need work or have been on the market for extended periods, Dickerson said one key question is: Does anyone have a plan for the properties and the wherewithal to execute that plan?
That could include fixing the buildings up, perhaps bringing an “activated space” to the ground floor and more.
There’s also the question of how “realistic” the required minimum bids are for the properties and whether anyone is willing to meet those minimums in an auction, he added.
Dickerson noted that the Grant-Deneau building has been on the market for some time and has attracted some interest.
“I would have more confidence in some of the local and regional developers who have looked at that,” he said.
Barnett said coastal investors often look at Dayton as a cheap place to buy real estate, but to be successful it also takes money to modernize the building and draw in tenants. In addition, he said it takes patience to invest in Dayton, which doesn’t have the same demand as larger coastal cities.
“It takes an understanding of the Dayton market and how we get deals done and also a willingness to invest in the property,” Barnett said.
He said a property owner’s success as a downtown landlord is not necessarily dependent on whether they are local or out-of-state.
“It doesn’t matter if the owner is in town or out of town. It’s ‘Have they done their homework on Dayton and are willing to invest in it?’” Barnett said.
Beavercreek-based Synergy invested millions into an office building on South Patterson Boulevard, which is now home to an accounting firm.
Barnett said it is difficult to find a downtown property that can be bought and renovated at a cost that can be earned back while average rental rates downtown remain low.