The Dennison and the Myth of the Free Market in Cincinnati

Cranley on preserving the Dennison: ‘I’d rather let the market decide’

That was yesterday’s headline for Chris Wetterich’s article in the Business Courier about Mr. Cranley’s take on the best use for the Dennison Hotel site.

On this particular issue,  I have to admit, I strongly agree with our mayor.

I, too, would rather let the market decide what we build and what we tear down in this town.  But that’s not the way things work.  Laws of supply and demand have absolutely nothing to do with decisions regarding commercial real estate development.

Proposed development for the Dennison site

 

There hasn’t been a major office building constructed in the last forty years without significant government intervention to override existing market realities.

Take Great American Tower, for instance, the most recent Class A office building completed in Cincinnati.  In order to make that project economically feasible, our local government had to pay for over $65,000,000 of the costs.  The 2,250 space garage.  The pedestrian promenade.  The lobby.  The escalators.  The plaza out front. We also abated the property taxes for over 30 years so Eagle Realty (a Western & Southern subsidiary)  doesn’t have to pay their fair share of the costs of basic services like police and fire.  The city also picked up 47% of the cost to build the 84.51 building now owned by Kroger – and abated the property taxes.

Now the developer of the Dennison site wants us to over-ride existing district protections to destroy an important historic structure well-suited to needs for residential housing, and we’re supposed to do this in order to speculate on the remote chance that  a major corporation might want to move to Cincinnati and bring lots of jobs.  And we’re supposed to believe this in spite of everything we’ve witnessed on a local basis that indicates big corporations are reducing personnel and need less traditional office space – the reason Cincinnati’s Class A vacancy rate is 13.7% versus 7.3%  in Pittsburgh and other comparable cities our size.

Members of the current administration also claim parking is a goldmine and so the city can’t seem to build them fast enough.  Shouldn’t the private sector be more than eager to keep those profits all for themselves without the need for government subsidy if that’s the case?   That is, unless private developers are worried about streetcars, self-driving vehicles and shifts in generational taste like I am.

Yes, Mayor Cranley, I wholeheartedly agree with your assessment.  City governments should not interfere in the real estate markets and subject taxpayers to the risks associated with those investments. It’s time to return to business decisions based on logical assumptions about supply and demand.  It’s time for government to leave real estate speculation to the private sector where it belongs.