At left is the Bradford Building in its current state. At right is a rendering of the renovated Bradford on Scott building (provided photos).
By Mark Hansel
NKyTribune managing editor
The Covington Business Council Luncheon Thursday featured one of Northern Kentucky’s premier real estate analysts talking about market trends.
Jeanne Schroer of the Catalytic Fund talks about real estate trends and the potential impact on the urban core of the region’s River cities (photo by Mark Hansel).
Jeanne Schroer, CRE, President/CEO of the Catalytic Development Funding Corp. of Northern Kentucky identified eight issues affecting the real estate market and explained how they could impact our region.
Schroer also revealed that the Catalytic Fund has identified its next high-profile project, the renovation of the Bradford Building on Scott Street in Covington.
The issues discussed included:
– Demographic Shifts
– The sharing / virtual economy
– The rise of experiential retail
– Densification /urbanization
– Debt capital retrenchment
– The political environment
– Transformation through location choice
– Optionality
“I’m going to talk about the Catalytic Fund a little bit, but in the context of issues that are happening on a national basis, big issues that do impact real estate,” Schroer said. “How are we, in Northern Kentucky, particularly in our urban core, positioned with respect to these big trends?”
Schroer is a member of the Counselors of Real Estate, which is a professional designation awarded to individuals upon invitation by their peers. She has been the catalyst for virtually every urban revitalization project in Covington in recent years.
Schroer said it is no secret that there is a big demographic shift occurring in the United States.
“Millennials and the Baby Boomers have a big impact on real estate development,” Schroer said. “They have shared desires to occupy the same types of housing in urban centers. They are kind of competing for the same types of spaces, but they have a lot of different desires in terms of the shape of their space.”
Millennials continue to feel the effects of the Great Recessions and student loans, so rental housing is expected to thrive for some time. A desire for flexibility, coupled with the inability to purchase a home in a desired neighborhood is expected to keep the market strong.
The sharing/virtual economy has been spurred by enterprises such as Airbnb, Uber and Red Bike, which operate out of the traditional realm. The growth of the coworking space has also reduced the demand for Class A office.
Schroer said experiential retailing has changed how people want to shop.
“Consumers seem to be seeking these high-ended, curated brick-and-mortar experiences,” Schroer said. “In the urban core, that can provide a critical mass of these opportunities and it’s not just retail. I think we all know that Hotel Covington is a good example of an experience that you don’t get in a chain type of operation.”
Urbanization and densification is driven by economic opportunities, generational preferences and access to amenities, but the United States remains a largely suburban nation.
Schroer says urban areas are expected to capture about 15 percent of household growth, but business districts and amenities won’t be sustained by this type of growth alone.
The topic of the political environment provided a bit of comic relief, in light of recent events, when the slide show briefly malfunctioned.
“I think it’s obvious that this has become a little bit acrimonious on all levels,” Schroer said laughing. “It’s good for there to be public debate, but I think we need to thing about how outsiders looking in at a community might view us. It creates heightened awareness and it does influence business location and tourist spending decisions.”
The decision by new companies to locate in a city’s core has become an increasingly significant factor in urban revitalization.
“Corporate leaders are starting to understand a triple bottom-line impact,” Schroer said. “The fact that they can have a profitable bottom line, but they can also contribute to the environment and their community.”
The decision to purchase and renovate the Bradford Building represents a significant departure for the Catalytic Fund.
The Bradford Building
The structure, located on Scott Boulevard near Fourth Street was the former home of the Viva La Foxx gentleman’s club. It is named for Bradford Shinkle, a wealthy resident who died more than a century ago. In recent years the building has been vacant and has significant deferred maintenance issues.
“Until this point, the Catalytic Fund has used its $10 million investment fund to make secured loans on projects,” Schroer said. “We did make an equity investment in the Hotel Covington, but we have not acquired anything. I’m really grateful that our investors are allowing us to take this next level of risk, but it’s not without a plan and it’s not without thought.”
The Catalytic Fund was formed in 2008 as an economic development initiative to revitalize Northern Kentucky’s urban core. The group established an investment fund and launched activities in 2013.
To date, the Catalytic Fund has invested $2.8 million, with $976,000 in project-specific grants received, on 21 projects with a total investment of $101 million.
This includes 300,000 square feet of commercial space, 255 residential units, with $630,000 in principal repaid, with all of its investments performing.
The monthly Covington Business Council Luncheon provides opportunities for members to interact with each other, as well as the City of Covington elected officials and staff. Luncheons generally include a presentation on a topic of local interest to the community at the Madison Event Center.
Contact Mark Hansel at mark.hansel@nkytrib.com
