The group redeveloping the Dayton Arcade has acquired eight of the complex’s nine properties, displaying confidence that its ambitious rehab plan will move forward.
Acquisition of the real estate is a “big step” toward starting work on the more than $90 million first phase of the project, said Dave Williams, senior director of development for Cross Street Partners, the Maryland-based developer.
Projects like this always have risk, but the easiest way to develop real estate is to control it, Williams said.
“We wanted to make the financial close simpler,” he said. “This really helps us: By getting the real estate out of the way, we aren’t dealing with that at the same time as everything else.”
Developers hope to close on financing for the project in in December or January.
Acquiring the eight properties was no easy feat, considering some of the legal complications and the fact that they were encumbered with about $2.6 million worth of liens from previous owners, said Frances Kern Mennone, Cross Street Partners’ development director.
Cross Street Partners is the arcade’s lead development partner, but is working closely with McCormack Baron Salazar and Model Group.
They created a limited liability company called Dayton Arcade Partners for the project.
Development partners spent about $750,000 to get control of the real estate, which included costs for air rights, legal fees and settlements to close out the liens, Mennone said. About a dozen different groups and people worked on the real estate deal.
“This was not your average real estate closing,” Mennone said.
The development group officially took control of eight arcade buildings in recent weeks and has the ninth building under contract.
Dayton Arcade Partners now owns the Ludlow, Commercial, Rotunda, Fourth Street, McCrory, Lindsay, Gibbons and Third Street Arcade buildings. The buildings previously belonged to the city of Dayton, Dayton Arcade LLC and Robert Shiffler (owner of the McCrory Building Project Inc.).
“There’s still a lot of work ahead of us, but this is a big step,” Williams said.
Developers say the arcade project officially is a go when financing closes. But they say they continue to make important steps forward toward the finish line.
Developers have applied for building permits and hope to start clean-up demolition sometime soon.
Key components of the project — like the innovation hub, rotunda and first-floor retail — are targeted to open in the end of 2019, early 2020.
“We can’t go backwards at this point,” Mennone said.
The Dayton Arcade project’s initial phase is expected to create new housing, office space, restaurants and shops. The first phase also is projected to create 426 permanent jobs.
The arcade, which has been vacant since the early 1990s, has about 420,000 square feet of space.