The Cincinnati office market had a positive start in 2013, according to CBRE Group Inc. And the world’s largest real estate company says the city’s market environment is improving. In a report released for the first quarter of the year, CBRE advises tenants to make quicker decisions as competition for space continues to increase. This, together with the fact that there is limited to no new construction will lead to rising rental rates and bend the market to a landlord-controlled atmosphere.
In their quest to find optimal space, some tenants have decided either to purchase or construct their own buildings. There are, however, some exceptions. According to the Business Courier, Convergys Corp. is selling its downtown Cincinnati headquarters but plans to lease space in the building once the transaction is finalized.
Atrium I, part of the Atrium Tower complex, is a high-rise building located at 201 E. Fourth St. in the Central Business District. It was constructed between 1979 and 1981 and acquired by Convergys in 2003 for $63.8 million. Currently, the company occupies 175,000 square feet of space on seven floors in the 20-story office tower, with 600 Convergys employees working there. The building has 566,609 square feet of space, and the Business Courier reports 97,600 square feet are still available.
Atrium I was a key element in retaining Convergys in Cincinnati. The Cincinnati City Council approved a $52.2 million incentive package and the state of Ohio agreed to provide tax breaks and grants totaling $144.2 million to keep the company in Ohio. As part of the deal, Convergys was supposed to create 1,450 jobs over 15 years and invest more than $100 million to buy and renovate an office building.
But Convergys never reached its job creation goals and it did not receive $18 million in tax breaks from the city. In December 2011, the company struck a new deal with the city, calling for Convergys to pay $14 million, keep its headquarters in Cincinnati through 2020 and pay an additional $5 million if its Cincinnati employment falls below 500.
Krista Boyle, a spokeswoman for Convergys, told the Business Courier the company will remain committed to the city and that the sale of the building will have no impact on its agreement. She declined to disclose the name of a potential buyer or the purchase price for Atrium I.Photo credits: Google Maps. Charts courtesy of CBRE