Downtowns Defying the Downsizing Trend?

YOUNGSTOWN, Ohio – The windows of the downtown Youngstown building occupied by Chase Bank and its predecessors for generations are still decorated for the Santa’s Gift Shop that was in the space for the parade in December. Fake owls intended to ward off rodents and birds hang above the bank space’s main entrance on West Federal Street.

But come July, the empty space is on track to operate as an event center for up to 500 people, says Jenna Tharp, associate adviser with SVN Summit Commercial Real Estate Advisers in Akron. SVN is managing and leasing the building on behalf of Ashiana Homes Inc., of Forest Hills, N.Y., which purchased it in September 2021.

“There’s a need for event centers around here, too,” Tharp says. “It’s so beautiful. It needs to be something where people are constantly coming in and out of it.” A restaurant would be another good use of the space but would require construction of a kitchen, making that more of a long-term plan that could change if a tenant envisioned a different use for it, she says.

Just a block away, another bank building is being reconfigured to help meet growing demand for downtown apartments, according to a local architect involved in the project. And the city’s economic development director is confident that announcement of a second downtown hotel will come within the next year.

The landmark Chase Bank building in downtown Youngstown awaits new life as an event center.

All of this repositioning and other downtown activity is happening amid a national environment in which downtowns are experiencing continued downsizing of office space. An April 22 blog post on the website of CommercialEdge, a software provider for the real estate industry, put the national office vacancy rate at 18.2%, up from 17.9% the month before.

The downtown office market isn’t what it was in years past but is improved from 2021, according to Tharp. There have been steady conversations as some companies determine that the work-at-home model isn’t working or they just need to find central hubs for employees to meet and work.

Still, some properties in downtown Youngstown and Warren have been vacant or near vacant for years.

“Downtown space is off somewhat,” acknowledges Mark Marvin, president of Downtown Development Group in Warren. The pandemic caused a “work-at-home workforce” that continues to some extent to this day. Additionally, crime has led to an exodus in some larger cities while layoffs and cutbacks because of economic conditions have affected demand for downtown space.

“The office space mentality has diminished since Covid,” says Melissa Phillips, executive director of Warren Redevelopment and Planning. “It’s difficult to get people interested in office spaces.”

“It is challenging,” adds Stephanie Gilchrist, Youngstown economic development director. With businesses reluctant to return to central business districts in recent years, many cities are repositioning their downtown spaces to focus on some residential mixed in with commercial spaces.

Youngstown is no different than the rest of the country, Gilchrist says. Some downtown restaurants have been struggling to meet goals, she notes, “but we’re also seeing some interest from businesses.”

The city of Youngstown is preparing to conduct an inventory of available space as it prepares its economic development strategic action plan. The goal is to find businesses – particularly local ones – that would like to expand into larger spaces, Gilchrist says. She already is working with several prospects.

“You’re going to see a lot of showrooms [and] a lot of folks’ headquarters will be based out of downtown Youngstown,” she says.

Gilchrist bases her reasoning in part on the relocation of Steelite International’s corporate headquarters from New Castle, Pa., to the Youngstown Business Incubator’s Taft Technology Center.

Another factor in companies’ interest in downtown as a potential headquarters site is the presence of the DoubleTree by Hilton Youngstown Downtown hotel.

Opened in 2018, the hotel has served as a “catalyst for our downtown,” she says. Discussions are underway for another hotel downtown, according to Gilchrist, and she anticipates an announcement by this time next year. She did not specify what parties might be involved.

One possibility for a small hotel is the former Legal Arts Centre building on Market Street. GreenHeart Companies owns Legal Arts as well as the Gallagher Building on North Hazel Street – which has recently been repurposed as apartments – stated on its website a plan to open a “boutique hotel, [short-term rental apartments] and restaurants” there in 2023.

GreenHeart has yet to announce its plans for Legal Arts, which recently was deemed a historical property.  “That makes them eligible for the historical tax credits,” Gilchrist says.

Huntington Building

Not long after it was sold in December 2022, the landmark building erected by the former Mahoning Bank at 26 Market St. was awarded $1.2 million from Ohio’s Historic Preservation Tax Credit Program. Huntington National Bank moved from its longtime space in the building in 2021 but is planning to move back once renovations and repairs from water damage to its old space are complete.

Contractors are in the process of preparing the building for construction and “bringing the building up to code,” says Annissa Neider, owner/principal of A Neider Architecture.

Demolition work should begin soon on floors five through 13 of the building, where apartments are planned, while the lowest floors will be reserved for commercial and office space, most of which will be occupied by existing tenants, as well as by Huntington.

Renovation of the upper levels should begin in the third quarter, with finished units available for rental in mid- to late 2025, according to Neider’s timetable.

“Talking with local leaders, there’s definitely a market for these [apartments], and hopefully more” she says. “Once it’s said and done, I think it’ll be a pretty well occupied building.”

Downtown Warren

In Warren, the lack of interest in offices opens more space for retail. Despite the recent closing of Downtown 124, restaurants are doing well, and a Vietnamese restaurant is opening shortly. Work also is going on behind the scenes for a larger residential development, according to WRAP’s Phillips.

Last fall, plans were announced to develop market-rate apartments at Trumbull Family Fitness. Just over a year ago, a Dayton area developer anticipated starting this year on a mixed-use development in the city that he expects will exceed $100 million in investment.

Phillips credits Marvin as “an integral force” in downtown Warren, where he has developed residential and commercial spaces, including the Robins Theatre and the former Mickey’s Army-Navy Store plaza. “That guy has done wonders with downtown,” she remarks.

Marvin reports he has had four calls from parties expressing interest in the space that was occupied by Downtown 124.

“So, that demand still seems strong,” he says.

In addition, all of the residential space his company developed downtown has been sold “for some time” and his other spaces are near 100% occupancy, with just a few small spaces available in the Mahoning Building.

“Downtown is definitely different than it was 10 years ago,” Phillips says. She points to Nova Coffee as an unexpected success, as the data didn’t support a coffee shop succeeding.

Downtown Warren’s Union Square Tower, which also housed a Chase branch for decades, is at around 20% or 30% occupancy, says Bill Axiotis, co-owner. If he and his business partner, Nick Liakaris, with whom he also owns the Mocha House restaurant, could get a couple more floors leased, “We’d be golden there,” he says.

Leasing activity is “about the same” since the pandemic, “maybe even a little bit better,” Axiotis says. Although many companies are having employees work from home, some firms are becoming more insistent on bringing people back into the office.

The former Chase space is being used on a limited basis for ceremonies and specific events during which the environment can be tightly controlled so as not to damage the building.

The partners also are pitching the building to some of the companies that have announced plans to relocate to the community.

Downtown Youngstown

In downtown Youngstown, the former Chase building at 6 Wick Ave. is attached to two vacant properties: 20 Federal Place, and 16 Wick.

The city-owned 20 Federal is undergoing environmental remediation funded by a $6.9 million state brownfield grant as city officials seek a developer to partner with on the building.

The 16 Wick building, which for years housed the Dollar Savings and Trust branch and those of its successors, remains vacant. Its owners are supposedly holding off until 20 Federal is finished, Gilchrist says.

“We’re still working on who best fits the vision of what 20 Federal should look like,” she says. The city wants to maintain the integrity of the building, which was awarded $10 million in state historic preservation tax credits and is eligible for an additional $14 million in federal historic tax credits.

Steadfast City Economic & Community Partners had proposed a mix of retail, office and residential uses for the building, although what mix of uses would be executed would be determined by a developer. “Efforts to find a partner to assist in the redevelopment of 20 Federal are ongoing,” says Katie Ward, associate director of community planning with Steadfast.

“A development partner would help determine an accurate cost for renovation based on their specific development plans,” Ward continues. “Recent modeling exercises projected renovation to cost around $69 million. However, this figure is based on a mix of uses that a developer may or may not align with.”

Currently five of the 12 rentable floors at 6 W. Federal are occupied, says Tharp from SVN Summit Commercial Real Estate Advisers.

“We see a steady flow as far as inquiries go,” she says. “We are seeing a pickup.”

Many are independent types of executives such as accountants who require smaller spaces. But Tharp also is working with businesses that need larger spaces. Two years ago, she onboarded a tenant that took a 6,000-square-foot space. The building ownership also is exploring the possibility of converting some of the floors to residential apartments.

“We do have a couple that should be pretty easy to transition,” Tharp says. Crucial to the overall efforts will be a parking area at the back of the building that the city is installing, she adds.

Downtown buildings are among the projects included in the $155.76 million Appalachian Community Grant Program application submitted last December by Ashtabula, Columbiana, Mahoning and Trumbull counties. They include façade improvements at 20 W. Federal and the redevelopment of 27 W. Federal St., the former Silver’s Vogue Shop, which QuickMed Urgent Care CEO Lena Esmail purchased two years ago.

According to Gilchrist, Esmail mainly had been awaiting the completion of road construction projects on West Federal Street before moving forward with redevelopment of her building.

Other Projects

The AGCP grant program also included a $5.5 million request for Brite Energy Innovators in Warren to support a $10.4 million renovation to its headquarters.

The pandemic changed how people are using space overall, and a lot has changed since Brite’s space was designed a decade ago, says Rick Stockburger, president and CEO. Before the Ultium Cells plant opened, it used Brite’s facilities for training groups of new employees.

“We’ve seen a lot of changes in people’s patterns and how they want to utilize our facilities,” Stockburger says. As now configured, the space isn’t conducive to the type of large groups that have been using the incubator building – which currently loses Brite around $100,000 per year to operate – for training. The renovation is intended to reconfigure the building to make it more conducive for leasing and bringing in additional revenue.

Gilchrist reports the city has received “great interest from organizations and companies that do want to move into office space downtown.” She says she gets emails daily from interested parties, but the city wants to make sure they have the financial resources to execute their plans and are not simply relying on any incentives the city might offer.

Negotiations are in progress between Platz Realty Group and a potential tenant for the former St. Vincent dePaul dining hall downtown that will be a “phenomenal addition to downtown,” she says.

Tharp says 6 W. Federal’s owner is offering “crazy rent incentive packages” to lease space. The market “comes in waves” and is “a lot better than it was a year ago but still not where it needs to be by any means,” she remarks.

Marvin points to several elements that could stimulate downtown leasing activity, including assurance of a safe working environment, offering tax incentives, making sure necessities such as housing, restaurants, greenspace and entertainment are available, and cleaning up inner-city buildings and removing blight.

“All of these items drive people to downtown from a living and working perspective,” he says.

Pictured at top: Jenna Tharp stands on the ornate balcony at the north end of the former Chase Bank building in Youngstown. An events venue is planned for the space.