Queen's Landing ULI Case Competition

QUEEN’S LANDING Downtown Cincinnati Waterfront Development

Table of Contents

Executive Summary Queen’s Landing is the complete redevelopment of over twenty acres of industrial yards that are located on the western fringe of Downtown Cincinnati. This is a complete mixed use project whose primary objective is to totally energize an untapped portion of the city and create a genuinely unique experience for people to live, work, and play.

For over seventy years this area has greatly served various industrial companies such as Hilltop Ready Mixed Concrete and Valley Asphalt. However, with the resurgence of people flowing into back downtown Cincinnati and with the success of other redevelopment projects in the city; we view this area as an amazing opportunity to even further improve the Cincinnati experience. Our proposed redevelopment totals over 530,000 square feet of new developments, which will include 260 luxury apartments, 265,000 square feet of class A office space, 66,000 square feet of retail/entertainment, and over 5 acres of green space.

Queen’s landing will also create a dynamic public space that will encourage great use from the residents, office inhabitants, and Cincinnatians who are looking to enjoy a nice meal, unique shopping, or night life. This

Executive Summary

project will also encourage use from Cincinnati’s extremely strong boating community as we will have a boardwalk extending from Smale Park all the way down to the I-75 bridge that will allow boaters to dock and enjoy the park, restaurants, and retail at our site. There will also be a harbor available for boat parking along with a class A marina restaurant whose exquisite food will attract boaters looking for a nice dinner.

There has been a large amount of development momentum with the Banks project taking place on the east side of Paul Brown Stadium and is continuing west into its later phases. Queen’s Landing plans on continuing that momentum while also creating a unique experience unlike anywhere else in the city.

Acknowledgments We would like to thank our team mentors; Chad Burke, Mike Dooley, Tom Rowe, and Kevin Wright, our class professors and project facilitators; Francis Russell, Shaun Bond, and Greg Burrows, the Urban Land Institute of Cincinnati, and Hilltop Basic Resources, for the support, guidance and opportunity to submit our proposal for this project.

Executive Summary

1

Opportunity Location Context Demographics Market

2 2 2 3 3

Concept Vision & Goals Development Plan Master Plan

4 4 4 5

Phase I

6

Phase II

8

Phase III

10

Execution Financing Plan Development Team Development Schedule Conclusion

12 12 15 15 15

This proposal is submitted by Team 4 to the Cincinnati Urban Land Institute on November 1, 2016 in response to the issued Request for Proposals.

Team Members: Jalisa Harris Joseph Rusche Sam Zhu

Connor Hymes Toni Strauch

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Opportunity 7

3

Hilltop Basic Resources, Inc. Cincinnati, Ohio

5

Downtown Cincinnati employs more people than any other Cincinnati neighborhood and is home to several Fortune 500 and Fortune 1000 companies. The 45202 zip code, which includes Over-the-Rhine and Pendleton is home to over 16,000 people. Recently the downtown area has seen significant revitalization as population levels increase and residential and office vacancy levels decrease. In addition, the decades-long multi-billion dollar riverfront revitalization project is entering it’s final stages, and this site is the final step in the transformation.

Opportunity

2

1

Location Located in Cincinnati’s Central Business district, this site is made up of 5 different parcels totaling just over 20.1 acres. Currently, the a significant portion of the site is occupied by Hilltop Basic Resources, Inc., a ready-mixed concrete and aggregate provider. The site also contains a small asphalt company, a large surface parking lot, and the Dock, an operating alternative lifestyle nightclub. The site directly abuts the Ohio river, is bisected by Mehring Way, which runs east to west, and bordered by Pete Rose Way, Rose Street, and Smith Street. FEMA designates this area as part of a Flood Zone AE, with a Base Flood Elevation of 498 feet above sea level.

4

5 to 10 Minute

Walk

6

N Context This site’s advantageous location puts it within close proximity to many highly desired amenities, including downtown workplaces, entertainment districts such as the Banks, Paul Brown Stadium, Great American Ball Park, and Smale Riverfront Park. Because of its non-central location within downtown, it maintains easy access from the highway and low traffic volumes. There are several bus stops throughout the site, and a designated bike trail runs through Smale Riverfront Park and connects to miles of bike trails throughout Ohio and Northern Kentucky.

Site Highway Arterial Roads Railroad Bike Trail Access to Site From Highway 1 2 3 4 5 6 7

Paul Brown Stadium Great American Ball Park The Banks Downtown & Fountain Square Longworth Hall Smale Riverfront Park Duke Energy Convention Center

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Demographics This site resides within the 45202 zip code, which is made up of Downtown, Over-The-Rhine, Pendleton, and parts of Mt. Auburn and Mt. Adams. Together, these neighborhoods make up the urban core of the city. The 45202 zip code has a population of approximately 15,500 economically and racially diverse people. The chart below shows the distribution of the population by race: White (45%), Black (48%), Asian (2%), Hispanic or Latino (2.5%), Other (0.5%), Two or More Races (2%).

Most residents in this zip code are between the ages of 20 and 35, have a high level of educational attainment, and are members of non-children households with multiple sources of income.

Market Below is a market survey of comparable apartment complexes within a 3 mile driving radius of the site area. A 3 mile driving radius was used because the riverfront is transforming into a pioneering live-work-play destination. As the Downtown area continues to expand and evolve, more people will want to live, work and play by the riverfront.

The intent of this market survey, therefore, was to compare apartment prices in close proximity to the riverfront. Considering that the proposed apartment complexes would be the closest residential units to the banks, our goal was to offer a rental price lower than the Radius at the Banks, but higher than the rental prices offered at the Current at the Banks. Both of these complexes are the most complementary to the proposed residential development and provide their residents with dynamic views of the city.

According to Truila.com, the average rent level of two bedroom units in the Central Business District is $1,750. Given the subject site location, the price for the proposed apartments should be slightly higher than the average. The rent per square foot for a two bedroom apartment at the subject site is $1.92 for 970 square foot. The rent per square foot for a two bedroom suite at the subject site is $2.05 for 1,300 square foot. The rent per square foot for a two bedroom and a two bedroom suite is lower than both the rent per square foot offered at the Radius on the Banks and the Current at the Banks, yet the two bedroom offers less square-feet per unit, justifying the price.

Additionally, a market analysis of the retail and the office space located Downtown was performed. The sites selected for analysis are not only comparable to the new development on the subject site, but are also in close proximity to the proposed site (within 2 mile driving radius). The selected site’s on this list illustrate the potential earning retail and office can have on the proposed site.

Approximately 76% of the population rent their homes or apartments, while the remaining 24% are homeowners. Nearly half the population have a Bachelor’s degree or higher, and 60% have never been married.

Average Household Income (Estimated): $42,546 Average Household Size: 1.7 people Median Age: 33.1 years

Opportunity

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Concept Design Goals Create a genuine and desirable sense of place that will bring residents, employers, and business patrons to the area in order to generate economic longevity and success.

Take advantage of the site’s proximity to the river and provide a point of access to the water for downtown.

Create homeownership and corporate expansion opportunities while stimulating small businesses and neighborhood-level growth.

Create a gateway to the city from the south that is aesthetically engaging and complete the transformation of Cincinnati’s riverfront.

Stimulate pedestrian and automotive connection to Queensgate to the west, The Banks and Smale Park to the east, and downtown to the north.

Feature active and inviting public spaces for gathering, tailgating, and other events.

Meet demand for parking during both normal and surge daytime and weekend events.

Remain true to the industrial character of the site in order to create a story of place and transition the urban fabric from downtown to industrial Queensgate.

Create a neighborhood that offers the connectivity of a downtown location with more semi-private and public green space amenities.

Concept

Proposed Zoning Change This project proposes the application for a zoning change for the site from Riverfront Industrial (RF - M) to Planned Development (PD). This zoning change will allow for a mixed use development on our site with a distinct set of aesthetic and technical guidelines that will contribute to the creation of a cohesive district. The scale of the development, including zoning requirements such as building height, setbacks, and parking requirements will be modeled after similar recent development in the area.

The Project Proposal The proposed development plan of 511 W Water Street is a transformational plan that will shift this area from an industrial site to an urban, fresh and energetic neighborhood that engages the Banks.

This new proposed area of mixed land uses will increase connectivity and walkability of the area while also contributing to the districts economic success.

The physical aspect of the site will create a well-connected network of open spaces and pedestrian connections to retail, office and parks.

The new attractive housing opportunities, which are close to existing and new amenities, will provide a semi-private environment for residents while also allowing them to take advantage of the Downtown atmosphere. On Mehring Way and Central Avenue, a large restaurant and a few small scale retail spaces will create an upbeat environment complementary to the new housing opportunities.

As of right now, residents of the Downtown area are disconnected from the riverfront. In order to combat this problem, a small scale marina will be developed. The marina will enhance the resident’s connection to the waterfront and serve as a source of entertainment for residents and visitors. Additionally, a boardwalk will also be created next to the marina and the along the riverfront further increasing the walkability of the area.

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Development Plan

Master Plan

Office: 265,000 square feet The development of office space within this project primarily takes place during Phase II. These two structures are available for lease to one single or multiple tenant(s). Phase I also contains some office use, which will be devoted to small-scale startups and creative industry companies.

Retail: 66,000 square feet Retail is primarily focused in the first Phase of development, with one large destination restaurant incorporated into the Marina of Phase II and on the corner opposite the entrance to Paul Brown Stadium. Retail will be focused on locally-owned destination restaurants and bars with active night scenes, as well as boutique merchandising shops, cafes, and sandwich shops.

Phase I Phase II Phase III

Residential: 300 apartment units Residential use is focused in the third phase of development and will be made up of studio, one-, two-, and deluxe twobedroom apartment units.

Parking: 1500 spaces Total Project Cost: $108,700,000 Construction Time-line: Phase I: Jan 2017 –– Jan 2018 Phase II: July 2019 –– Jan 2021 Phase III: July 2020 –– Jan 2022

Concept

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Phase I Phase 1A

Creating a Place Retail: 8,000 square feet Phase IA utilizes strategic placemaking, promotion and programing to turn one of Cincinnati’s existing small businesses, the Dock Nightclub, into a destination restaurant and nighttime attraction.

Phase IA Phase IB

A pop-up market will be created to stimulate future growth in the area, provide small business opportunities, and generate hype for the upcoming development phases.

Phase 1B

Phase III

Phase II

Testing the Market Retail: 35,000 square feet Office: 15,000 square feet Phase 1B further tests the market for this site with the creation of unique office, retail, restaurant, and entertainment which will attract significant weekend and evening activity as well as daytime support from employees located in neighboring Longworth Hall and the CBD. This commercial entertainment district will draw most activity from nearby residents as both a day and night time destination. The space will also feature podium parking beneath the development, and programmable pedestrian walkways and amphitheater elements.

REVENUES

YEAR

1

2

3

4

5

6

7

8

9

10

Gross Commercial Rent -­‐ Commercial Vacancy = Commercial Income

891,500 624,050 267,450

913,788 274,136 639,651

936,632 74,931 861,702

960,048 76,804 883,244

984,049 78,724 905,325

1,008,650 80,692 927,958

1,033,867 82,709 951,157

1,059,713 84,777 974,936

1,086,206 86,896 999,310

1,113,361 89,069 1,024,292

Gross Retail/ Instutional/ Other Rent =Other Rent -­‐ Other Vacancy =Other Income

114,400 114,400 80,080 34,320

114,400 114,400 34,320 80,080

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

114,400 114,400 9,152 105,248

= Effective Gross Income

301,770

719,731

966,950

988,492

1,010,573

1,033,206

1,056,405

1,080,184

1,104,558

1,129,540

Operating Expenses = Total Operating Expenses -­‐ Transfer to Reserves = Net Operating Income

55,236 23,200 223,334

56,617 23,780 639,334

58,032 24,375 884,543

59,483 24,984 904,025

60,970 25,608 923,995

62,494 26,249 944,463

64,057 26,905 965,444

65,658 27,578 986,949

67,300 28,267 1,008,991

68,982 28,974 1,031,585

-­‐ Debt Service (p+i) bank -­‐ Interest Only Loan Payments Perm Loan Proceeds = Cash Flow $ (2,101,944.61)

0 273,253 0 (49,919)

0 273,253 0 366,082

587,325 0 626,803 924,020

587,325 0 0 316,700

587,325 0 0 336,669

587,325 0 0 357,138

587,325 0 0 378,118

587,325 0 0 399,623

587,325 0 0 421,666

587,325 0 0 444,259

IRR

Phase I

12.04%

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Phase I

Phase I

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Phase II

Phase I

Phase II

Driving Demand Office: 250,000 square feet The west side of the Clay Wade Bailey Bridge will feature a large office complex primarily housing a single company. This location provides significant opportunity for marketing as the building is easily seen from I-75 and I71 North, and will effectively create an aesthetically pleasing gateway to the city from the south.

Phase III

Commercial: 15,000 square feet To further reconnect the city with it’s waterfront, Phase II will also include the construction of a small limited-service marina with a number of permanent and temporary slips available for rent.

The marina will also feature a large high-end restaurant which overlooks the water and creates a waterfront entertainment destination.

REVENUES

YEAR

Gross Commercial Rent -­‐ Commercial Vacancy = Commercial Income = Effective Gross Income Operating Expenses = Total Operating Expenses -­‐ Transfer to Reserves = Net Operating Income

1

2

3

4

5

6

7

8

9

10

4,115,000 3,868,100 246,900

4,217,875 0 4,217,875

4,323,322 0 4,323,322

4,431,405 0 4,431,405

4,542,190 0 4,542,190

4,655,745 0 4,655,745

4,772,138 0 4,772,138

4,891,442 0 4,891,442

5,013,728 0 5,013,728

5,139,071 0 5,139,071

246,900

4,217,875

4,323,322

4,431,405

4,542,190

4,655,745

4,772,138

4,891,442

5,013,728

5,139,071

164,600 106,000 (23,700)

168,715 108,650 3,940,510

-­‐ Debt Service (p+i) bank 0 -­‐ Interest Only Loan Payments 1,649,242 Perm Loan Proceeds 0 -­‐ Debt Service -­‐CF Loan 0 = Cash Flow $ (12,686,480.36)

(1,672,942)

172,933 111,366 4,039,023

177,256 114,150 4,139,998

181,688 117,004 4,243,498

186,230 119,929 4,349,586

190,886 122,928 4,458,325

195,658 126,001 4,569,784

200,549 129,151 4,684,028

205,563 132,379 4,801,129

0 2,665,802 1,649,242 0 0 9,738,988 0 0 2,291,268 11,112,209

2,665,802 0 0 0 1,474,196

2,665,802 0 0 0 1,577,696

2,665,802 0 0 0 1,683,784

2,665,802 0 0 0 1,792,523

2,665,802 0 0 0 1,903,981

2,665,802 0 0 0 2,018,226

2,665,802 0 0 0 2,135,327

IRR

Phase II

14.29%

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Phase II

Phase II

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Phase III

Phase I

Phase III

Creating a Community Residential: 300 units Retail: 8,000 square feet The proposal for Phase III will transform the site into a multi story residential complex at a highly desirable location with close proximity to the waterfront and downtown Cincinnati. The building itself correlates to its surrounding, shaped by three spheres of influence: downtown Cincinnati, Smale Riverfront Park, and the Paul Brown Stadium. The newly proposed building extends the city’s fabric to the water and in doing so reconnects Cincinnati core to its edge. Landscape becomes a transitioning element for the elevation changes The residential complex is site specific with two interwoven residential ribbons as a reaction to the cityscape and waterscape. Primarily view driven, this proposal wraps around the parking garage hiding it from immediate public views. Corridors wrap the interior of the complex allowing all residential views to be outward with many great views over the waterfront and city of Cincinnati. There are 300 units with a mix of studio, one bedroom, two bedroom, and condo living units. Ample green space and amenities allow for the residents to partake in the green space as well as activate the waterfront and phase one and two.

Phase II

REVENUES

YEAR

1

2

3

4

5

6

7

8

9

10

Gross Commercial Rent -­‐ Commercial Vacancy = Commercial Income

5,300,658 3,710,461 1,590,198

5,433,175 1,629,952 3,803,222

5,569,004 445,520 5,123,484

5,708,229 456,658 5,251,571

5,850,935 468,075 5,382,860

5,997,208 479,777 5,517,432

6,147,139 491,771 5,655,368

6,300,817 504,065 5,796,752

6,458,338 516,667 5,941,671

6,619,796 529,584 6,090,212

Gross Retail/ Instutional/ Other Rent + Tenant Contributions =Other Rent -­‐ Other Vacancy =Other Income

312,000 935,350 1,247,350 873,145 374,205

312,000 958,734 1,270,734 381,220 889,514

312,000 982,702 1,294,702 103,576 1,191,126

312,000 1,007,270 1,319,270 105,542 1,213,728

312,000 1,032,451 1,344,451 107,556 1,236,895

312,000 1,058,263 1,370,263 109,621 1,260,642

312,000 1,084,719 1,396,719 111,738 1,284,982

312,000 1,111,837 1,423,837 113,907 1,309,930

312,000 1,139,633 1,451,633 116,131 1,335,502

312,000 1,168,124 1,480,124 118,410 1,361,714

= Effective Gross Income

1,964,403

4,692,736

6,314,610

6,465,299

6,619,756

6,778,073

6,940,349

7,106,682

7,277,173

7,451,926

2,605,092 150,000 200,000 (990,689)

2,670,219 153,750 205,000 1,663,767

2,736,974 157,594 210,125 3,209,917

2,805,399 161,534 215,378 3,282,989

2,875,534 165,572 220,763 3,357,887

2,947,422 169,711 226,282 3,434,659

3,021,107 173,954 231,939 3,513,349

3,096,635 178,303 237,737 3,594,007

3,174,051 182,760 243,681 3,676,681

3,253,402 187,329 249,773 3,761,422

-­‐ Debt Service (p+i) bank 0 -­‐ Interest Only Loan Payments 903,661 Perm Loan Proceeds 0 = Cash Flow $ (6,951,235.95)

(1,894,350)

0 903,661 0 760,107

2,128,173 0 4,931,869 6,013,613

2,128,173 0 0 1,154,815

2,128,173 0 0 1,229,714

2,128,173 0 0 1,306,485

2,128,173 0 0 1,385,176

2,128,173 0 0 1,465,833

2,128,173 0 0 1,548,508

2,128,173 0 0 1,633,249

Operating Expenses = Total Operating Expenses -­‐ Transfer to Reserves -­‐ Other Expenses = Net Operating Income

IRR

Phase III

13.80%

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Phase III

Phase III

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Execution Financial Plan

Key Assumptions:

When looking at the huge scale of this development we decided that it would be in our best interest to finance and develop this project into three separate phases.

There is a detailed financial breakdown of each phase located below, but here are all the combined sources and uses for Queen’s Landing.

All the rent, vacancy, and growth rate assumptions were a result of extensive market research and heavily based on similar projects that have occurred in the surrounding area. Based on our analysis this a feasible project and we used fair assumptions for our financial models.

Sources: Permanent Bank Loans: These proposed banks loans were calculated by taking the NOI at the first year of stabilization and dividing by a LTV of 80% and a cap rate of 7.50%. The combined amount of $82,778,325.33 will be provided by Fifth Third Bank.

Bengals Grant: The Cincinnati Bengals have always been committed to improving the parks and recreation of Cincinnati in order to promote their Play 60 initiative. Which strives to get kids to engage in outdoor physical activity for at least 60 minutes a day. The Bengals have always been open to donating towards parks/recreational area so the amount of $500,000 will be provided.

City of Cincinnati TIF: The value of this TIF was calculated based on the developments in Phase 3 and the majority of this source will go towards financing the 810 car garage that will be a part of Phase 3 development.

City of Cincinnati Grants: The city currently owns Parcel C, which is where we plan to create a dynamic expansion of Smale Park along the Riverfront. The city will provide the amount of $256,841.

Execution

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Execution

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Execution

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Development Team

Conclusion

Developer –– Model Group

511 W Water Street is in need of a dynamic upbeat transformation that adds economic, social and environmental value to Downtown Cincinnati.

In order to optimize the effectiveness of the subject site’s location and increase the Downtown experience, we are proposing a complete renovation from a Riverfront Industrial zoning to a Planned Development zoned community. We strongly believe that this proposed development of mixed land uses elevates the highest and best use of the site. Additionally, given the growing population of Downtown Cincinnati, there will also be a growing demand for residential units, office space and retail uses. Our proposed developments seeks to supply that inevitable demand.

Architect –– GBBN Architects Lender –– PNC Bank Construction –– Terrex Development & Construction Residential and Commercial Management & Leasing –– Model Realty

Development Schedule Site Control

Jan. 2016

Design, Projections & Construction Estimates

Apr. 2016

Secure Financing & Other Enhancements

Aug. 2016

Final Design & Permit Submission

Nov. 2016

Phase I - Construction

Jan. 2017 –– Jan.2018

Phase II - Construction

Jul. 2019 –– Jan 2021

Phase III - Construction

Jul. 2020 –– Jan 2022

Lease Up Period Phase I

Jan. 2018 –– Jan. 2021

Lease Up Period Phase II

Jan. 2021 –– Jan. 2023

Lease Up Period Phase III

Jan. 2022 –– Jan. 2025

Combined Stabilized Operations

Execution

The new construction is not only complementary to the demographic makeup of the area—a typical resident attains a higher degree with multiple sources of income, no children and between the ages of 20-35—but will also offer an entertainment space for both singles and families with the creation of our class A marina.

The proposed zoning change and proposed development will give Downtown Cincinnati the competitive edge the city is seeking. Reconnecting the city to its waterfront, providing residential and office spaces with dynamic views of the city, and by creating retail, open spaces and a marina will foster a vibrant and thriving Downtown that is fun and well-connected to residents’ everyday destinations.

Jan. 2025

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