ragerunner

Macy's sales slump is worse than expected "CHICAGO (MarketWatch) -- Macy's Inc. posted a larger-than-expected drop in May same-store sales Thursday, and the department-store giant said things aren't necessarily looking up for the near future, either. Before the start of trading, Macy's said same-store sales -- sales at stores open at least a year -- slumped 3.3% last month. That compares with the company's previously stated hopes for flat to down 2% same-store sales and an average estimate of analysts polled by Thomson Financial for a slip of 1%. ... http://www.marketwatch.com/news/story/macys-sales-slump-worse-expected/story.aspx?guid=%7BCA750DF9%2DBF1B%2D48D0%2DAF8C%2D7DD6E89404B0%7D

Here is an interesting article from Columbus on Condos sales and the ability to construct condos in the 150s to 200,000 range. http://dispatch.com/dispatch/content/local_news/stories/2007/05/30/DT_REAL.ART_ART_05-30-07_B1_EJ6S190.html I know, some how Cincy will be different than, Columbus, Indy, and just about every major city in the US right now. Feel free to discount all market forces, to ignore the basic economics of supply and demand, and the concepts of land values and how they are related to square footage costs. It still doesn't change the reality. Will the Banks get built, I think so. But, the size and timeline of the project is the main questions. Will they be able to sell condo units, yes, but will it be at the expense of other condo projects downtown, probably yes. Weather you like it or not Cincy's downtown market has only so much demand, and its clear that the supply level is getting out of hand. I wonder how long before the local development community downtown or media finally admits the market is overprices and over built. They are admitting it in Columbus, in Indy and many other cities. When will Cincy and its developers finally admit the obvious. Once again, look at the state of downtown reports for the last year or year and half and tell me sales have not dropped in half or more.

No doom and gloom here, just reality check with data (same thing Bortz did with his comments). You are right I don't know they left because the numbers didn't add up, but you don't know they left because the numbers did add up and it was just other forces that made them pull out. Like I said above, we will just have to wait and see were this goes and what the final plans and timeline for phase 1 will actually be.

I guess AIG financial didn't think so. We will just have to wait and see what happens.

First, are you saying the Bortz (chairman of Cincinnati City Council's economic development committee and downtown developer) doesn't understand market forces and what is going on in the market in downtown Cincy? Its not just me saying downtown Cincy has a supply and demand issue when it comes to condos, he said it to. Second, so are you saying that the Banks developers are going to mainly build condos in the high 100s? Let see, high cost for the project to be constructed usually means the developer must increase the square footage cost for the units, not decrease the cost for units. However you want to look at downtown's office vacancy rate it makes no difference. Until you either pre-sign a big lease or bring downtown class A office space to under 10% (which is not going to happen anytime soon) major new office construction is going to be either limited or not at all. I am not trying to be a butt about this, its just how the business and financing world looks at projects. I have been in that position, working with developers that are working on the financing for projects and sometimes the numbers just don't workout or it takes a lot more time and redesign of the project to make the numbers work. This concept applys to most markets, Indy, Columbus, K.C. etc... That is why downtown Indy has not seen any major for lease construction of Class A office space in some time. They have added some owner build projects like the Simon tower, Lilly and the research park downtown, but that is about it. Do you honestly believe that AIG would bail on a project this big if the data and numbers looked good? NO! Can they find someone else, probably, but how that affects the design of the project and its timeline maybe interesting.

"It is important now for the Banks Working Group to find out why AIG pulled out, so that any defects in the proposed plan can be corrected, he said. "What about the market conditions made AIG feel it wasn't a worthwhile investment?" Bortz asked. Bortz speculated that AIG might have been swayed by the weak market for condominiums across the country, especially in the Midwest, and by the large numbers of new condos that are already coming on line. The pace at which new condos are being absorbed has already slowed in Cincinnati, he said." No more honest words have been spoken. I know I have had several people dislike my comments on this subject. But it is REALITY. The condo and housing market has dropped significantly in the US, in the midwest and in downtown Cincy. These guys are not stupid. They can clearly see that consumption of condos in the downtown Cincy area has fallen off the cliff (look at the last 3 quarters of the State of Downtown). There are over 800 condo units under construction or in preconstruction right now in Downtown Cincy and Northern KY. At the current rate of consumption that probably a 3 to 4 year supply (and that doesn't include units done that have not sold). On top of that the phase 1 plan wants to construct 300,000 sq. ft. of class A office space. Yet, downtown Cincy has around a 19% vacancy rate in office space. Those types of numbers general mean to a developer and financier that the market is overbuilt. The only way you would back this is if you could get a major tenant to sign on for about 50% or more of the space. Which would probably mean the tenant is vacanting other space in the downtown area. They may very well get another financial partner, maybe somebody locally, but that partner is going to have to be willing to take a HUGE risk right now. A risk that many investment firms are becoming less willing to take across the US. The Banks is a great project, the problem is simple, the market for more condos and office space in downtown Cincy is just not there at this time. Matter of fact its not there for a lot of markets in the US right now and that is why condo projects and even big office projects around the country (that are not currently under construction) are not getting off the ground. I hope the Banks makes it, the area really needs this development, but its timing is really not good.

Financial partner leaves Banks But project will remain on track, developer says "The Atlanta-based team that has been negotiating for the past year to build The Banks has lost a key member. AIG Global Real Estate Investment Corp. said Tuesday that it's pulling out of the project, leaving Carter Real Estate looking elsewhere for money and a new partner to build what it envisions as a billion-dollar mixed-use neighborhood and entertainment district on Cincinnati's central riverfront. Full story text is available at http://news.enquirer.com/apps/pbcs.dll/article?AID=/20070606/NEWS01/706060337

I would be happy to at least see neo traditional and mixed use projects 'pop up all over the place' in Cincy and its suburbs. It would sure beat the 1980s and early 1990s development patterns of strip centers, individual office parks and track housing that the local development community seems unable to break away from.

Do you think we as Americans will every get it? Or will we just continue to build roads, destroy our environment and construct sprawling suburban neighborhoods that are completely isolated. I hope we get in time to leave something worth while to our ourselves and our children.

Ian, Please note that the drop in sales has been continuous for several quarters now and so has prices, not just the first quarter. Also, the first quarter of '06 was actually the biggest quarter of that year.

GM is really hurting financially. Wait until the baby boomers start retiring and wanting all those benefits and money.

Lets just hope lower prices mean more units will start sellings. Up to this point the lower prices have only been met with continued lower sales.

I really like that building.

Maybe its means only the low end is selling because people are not will to pay for the high end product? Median 4th quarter '06 - $242,000 1st quarter '07 - $174,000 Median is also going down by a lot and so is the amount of units being sold.

Maybe its because more than one person lived in the household. It probably more like 2.5 to 3 persons per household.

The reasons the sale prices are down has to do with the buildings that are being sold. The previous numbers had a lot of sales in the buildings around Lytle Park. These new numbers probably (I don't know for sure) reflect sales in Parker Flats, the Edge, the Brittany?, and other more affordable buildings. I don't know if the Gateway units in OTR are included, but it seems they have been selling very well and are much cheaper than the units closer to the river. Do you really believe that explains 35% drop in sales prices? It might cause numbers to fluctuate some but that much, I am more inclined to believe prices are being lowers. I don't understand why people can't believe that developers have dropped prices since sales numbers have now been dropping for almost a year. Out in the suburbs I have seen new townhomes and single family projects drop their prices by $30,000 or more and that on product that was only priced in the $180,000 to $230,000 range. It not complicated, sales are way down, inventories are way up and prices are dropping. At the current selling rate compared to units under construction the downtown area has more than a 5 year supply of condos. That is a LOT!!! In most RE anything over about a 1 year supply is considered to much.

You may be right, UncleRando and I once calculated that area using census track data and we came up with about 11,000 people. But, the main point of the post was how sales and prices are really starting to drop in the downtown area.

Downtown Condo sales and growth rate 1st quarter '06 - sales (52) price ($317,732) 2nd quarter '06 - sales (76) price ($351,970) 3rd quarter '06 - sales (22) price ($341,129) 4th quarter '06 - sales (21) price ($281,767) 1st quarter '07 - sales (17) price ($201,631) There seems to be a trend that is developing for downtown and its not a good one. Since the Condo and RE bust hit the US back in mid to late Summer of '06 condo sales and prices continue to drop in downtown Cincy, which is what is happening in most US cities right now (developers are even starting to drop some projects in places like Chicago). If the data shows 2nd quarter '07 still slow with prices way down the chances of downtown population coming close to their projected 2010 numbers are very slim. You can see how not only sales numbers but prices over the last 6 to 8 months have really dropped off. I think the developers of the banks are seeing similar data and that is why they have been very vauge on how many units phase 1 of the banks will have and what type of units they will be.

That's how I interpret it, but the number for the greater CBD area seems low. So OTR, Betts-Longworth/City West, and Adams Landing on has 3805 people? I thought OTR itself had around 6000-7000 people in it. Perhaps they are including part of OTR, or have a ton of people left the area? My understanding is the the Greater CDB includes the CDB number. So the total for the downtown area is 7,785. If someone has information that the state of downtown numbers are wrong they should let them know. What ever downtown's population is, expecting the downtown to double it population in just 3 years is very bullish. Remember, the banks won't even have phase one done before 2010 and that phase is only to have a few hundred units. If the banks development in its early stages (up to 2010) can create housing demands for downtown at 4 to 5 times the rate it currently is at that deserves national and international attention.

the CBD is .8 sq miles The area with the population estimate of 3,980 (CDB - 2006) is defined as - "(a)The CBD is defined by Eggleston Ave., Central Parkway, the riverfront and Central Ave." The area with the population estimate of 7,785 (Greater CDB - 2006) is defined as - "The greater CBD includes the neighborhoods of Over-the-Rhine (OTR), City West/Betts-Longworth, and Adams Landing" The CDB has been adding about 200 to 300 residents every year since 2000. Solid steady growth. But, if you look at the 2006 annual report they project the CDB downtown population will grow from from a population of 4,292 in 2007 to 8,378 in 2010. WOW!!! That would mean the CDB would have to start growing by about 1,300 new residents in 2008, 2009, 2010. What do they think is going to create such a massive boom in demand? I am all for downtown growth but I think those numbers are WAY high. :-o

Wow, An IHOP and Logan's Roadhouse. Its the new destination center of Cincy.

I think the most we can hope for now is that garage construction will begin before the end of the year. Let hope the market stays strong enough for them to start construction on the buildings in Phase 1 soon than the 4 year deadline. I think those restaurant pads located infront of the Freedom Center may be the first buildings to go up. How do others feel about the timelines and negotiations that still need to be done?

Lets just hope that by summers end we have plans in place to start the construction process for the banks.

I am glad to see you are starting to come to your senses. :laugh:

I would hope they keep this new facility in Cincy.