$50 million transformation planned for this corner of Fourth Street
Two Cincinnati business leaders with a passion for the city are working together to redevelop a critical corner of downtown Cincinnati.
Last year, I reported on Model Group’s plans to purchase the Mercantile Library Building, convert most of it to apartments and double the size of the building’s namesake tenant. Now, Model Group and building owner, Rick Rothfuss, have decided to partner on redeveloping not just that building, but the adjoining Mercantile Center at 120 E. Fourth St. Combined, the investment on this corner of Fourth and Walnut streets is expected to be more than $50 million.
Bobby Maly, CEO of Model Group, said the Mercantile Library project is a little different than most of his company’s projects because it doesn’t typically partner on developments. He appreciates Rothfuss’ focus on doing the right thing for the buildings in the long run.
“He’s been the steward of those buildings,” Maly told me. “And we’ll be the next stewards of these important buildings.”
Rothfuss, who has worked on this block of downtown for 48 years, said the buildings have meant so much to him.
“I can see the energy coming to this block with this development,” Rothfuss told me. “This half of the block, it’s a lot of energy being pulled into this right now that I am so excited about.”
In the Mercantile Center, the developers will honor all existing office leases. (The Business Courier is a current office tenant of the Mercantile Center.) They’ll also be working with office tenants to see if they want to remain in the building after those leases end in a portion of the building. The idea is to condense the office users to a few floors of the Mercantile Center, leaving the remainder of the floors to be converted to additional residential units.
The Mercantile Library Building, located at 414 Walnut St., is expected to house about 111 apartments on the second through 10th floors, with retail on the first floor and the expanded library on the top two floors. The Mercantile Center could add another 64 to 110 apartments, depending on how much space remains as offices.
Maly said he expects at least seven floors of residential units in the Mercantile Center. Regardless of the break down between residential and office space, Maly said the key is for the building to be 100% filled with people living and working in the city, paying earnings tax and helping the city grow its tax base.
“We need projects like this downtown,” Maly said. “Repopulating our urban core is doubly important.”
Maly said the Mercantile Center is a good candidate for conversion to residential space because it has high ceilings, good windows and an efficient layout that allows for apartments on both sides. Plus, the buildings are already connected, so it made sense to redevelop both properties.
“In a lot of ways, they function as one,” Maly said.
At this point, all the apartments are planned as market-rate units. However, Maly said they are working to see if it’s possible to include workforce affordable housing in the project.
The developers are seeking a state historic tax credit for the Mercantile Library portion of the project again. Maly also said a tax abatement will be important for the project and it will not be possible to set aside some units for workforce housing if there is not offsetting capital provided by the city of Cincinnati.
The team is working with City Studios Architecture as the architect for the project. Model Construction will handle construction of the project. Stock Yards Bank & Trust provided the acquisition loan for Model Group to be part of the ownership of the buildings and Maly and Rothfuss plan to use Stock Yards for construction and permanent financing on the development.
The arcade space in the Mercantile Center offers one of the biggest opportunities to do something “interesting and special,” Maly said. He said Model Group is pursuing three or four different ideas for the space that would activate it on a daily basis.
One perk Model Group and Rothfuss are planning is any resident of the buildings will be eligible for a membership to the Mercantile Library.
Maly and Rothfuss also plan to demolish the skywalk entrance to Mercantile Center from U.S. Bank Tower across Walnut Street. The skywalk currently blocks the Mercantile Library Building, so removing it will help with freshening up this corner of downtown.
“We need the energy out on the sidewalk, out on the street,” Maly said.
The goal is to start work on both buildings this summer. Once construction begins, Maly estimates the project will take about 18 to 24 months to complete, with some variation based on the number of office tenants that remain in the Mercantile Center.
“Every day that goes by with construction inflation is not a good day,” he said.
For Rothfuss, this conversion is about seeing both the buildings and downtown Cincinnati thrive.
“I believe in our city, and I know Bobby does, too” Rothfuss said. “We’re going to help plant a flag here in downtown Cincinnati, right in the heart of the city.”