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Dayton market seeks stability

Downtown vacancies create opportunities, but recovery will take time.

Key-Ads Inc., a family-owned outdoor advertising company, plans to relocate in March from Harrison Twp. into a downtown Dayton building the company has bought at the intersection of Third and Jefferson streets. We talk with Key-Ads, the city and commercial real estate executives about whether this and several other recent business relocations amounts to a downtown resurgence or just a coincidence.

Staff photo by Chris Stewart Key-Ads Inc., a family-owned outdoor advertising company, plans to relocate in March from Harrison Twp. into a downtown Dayton building the company has bought at the intersection of Third and Jefferson streets. We talk with Key-Ads, the city and commercial real estate executives about whether this and several other recent business relocations amounts to a downtown resurgence or just a coincidence.

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By John Nolan, Staff Writer Updated 6:55 AM Tuesday, January 3, 2012

DAYTON — Key-Ads Inc., an outdoor advertising company that has established digital billboards along Dayton-area highways, hopes to make a similar splash at a downtown Dayton building the company has bought as its new home.

The company plans to invest at least $1.5 million, including a rooftop digital advertising board and a scrolling digital wrap-around sign that could display news updates, after Key-Ads moves into 50 E. Third St. in March, said Nicholas Keyes, its president. The family-owned company, founded in 1955, will leave Harrison Twp. for more space and visibility in the downtown building.

The digital displays are allowed in what Dayton envisions as its “graphic arts overlay district,” an area designated for creative enterprises, said Shelley Dickstein, Dayton’s assistant city manager for strategic development. The goal is to add a splash to the urban streetscape, she said.

Advocates of Dayton’s downtown business district cite Key-Ads’ decision and Premier Health Partners’ purchase last year of the former Fifth Third Bank regional headquarters building at 110 N. Main St. as signs of recovery, after years in which downtown has lost hundreds of jobs.

Increased downtown office vacancies and the resulting lower prices for purchases and rentals have created opportunities, commercial real estate executives said. But that’s also the bad news, they said.

“It’s going to be a very slow recovery,” said Dave Dickerson, president of Gem Real Estate Group Inc., whose company does annual surveys of the Dayton-area real estate market. “The big challenge for downtown is, we just have way too much supply. The demand will not be there, going forward.”

A Gem Real Estate survey released in early 2011 found that 34 percent of downtown Dayton’s office space was vacant in 2010, up from 30 percent in 2009. Dayton’s suburban market fared better with an office vacancy rate of 21 percent in 2010, up from 18 percent the prior year, Gem reported.

Vacant space remains in the downtown’s landmark office buildings, including Kettering Tower and KeyBank Tower.

KeyBank Tower has struggled since its former prime occupant, MeadWestvaco Corp., decided in 2006 to relocate 730 jobs to the suburbs or other states.

This fall, the law firm Thompson Hine LLP moved its 100 employees from the building to the Austin Landing development along Interstate 75, south of Dayton.

That left KeyBank and the Downtown Dayton Partnership as the KeyBank Tower’s primary tenants.

Austin Landing and the Interstate 675 corridor, with new development and available land and parking, pose stiff competitive threats for downtown Dayton.

Thompson Hine LLP had been a tenant in what is now known as KeyBank Tower since the 1970s. The firm tried for five years to find new quarters in KeyBank Tower, Kettering Tower and the proposed Ballpark Village development, but couldn’t secure the commitments it needed from prospective landlords, said Bob Curry, partner in charge of the law firm’s Dayton office.

“We actually tried very hard to stay downtown,” Curry said. “But when this last deal fell through, we were in a difficult position and had to make a decision that was in the best interests of our office.”

Lower purchase and rental rates have spurred interest among some companies to stay downtown, or at least consider it.

Downtown Dayton Partnership, a nonprofit organization that promotes the district as a place to live and work, operates a site-seeker program to help companies inquiring about downtown space. A total of 71 companies participated in 2011 as of mid-December, up from 20 in 2007, said Sandy Gudorf, the partnership’s president.

Her organization’s annual survey of employers concluded there were nearly 21,700 downtown workers in 2010, a net gain of 88 jobs. That represents a bright spot after net losses of 432 downtown jobs in 2009, 952 in 2008 and 1,475 in 2007, Gudorf said.

It remains to be seen whether the recovery can continue in a sluggish economy, she said.

Key-Ads paid $375,000 for its new home, a two-story building that formerly housed a law firm. Mark Fornes Realty Inc., a commercial realty agent that handled the transaction, had tried to sell the building for four years. Its price had dropped steadily from the original listing of about $1 million before Fornes became involved, said Mark Fornes, a partner in the firm.

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