The Water Street Redevelopment Project, a proposed mixed-use development in downtown Dayton, Ohio, has been approved by the Dayton City Commission and continues to move forward. This is exciting news for Dayton, since city leaders have been working to get something developed on this site, for years. Finally, it looks like redevelopment will occur.

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The first phase of the Water Street Redevelopment Project is slated to include 161 luxury residential apartments, 50,000 square feet of office and retail space, and 430 parking spaces. The project will break ground in the spring of 2014 with an anticipated completion date in fall 2015. It is being developed by Woodard Real Estate Resources of Dayton, in conjunction with Crawford Hoying, a developer with several similar mixed-use developments underway in Columbus, Ohio.

If all goes to plan, the Water Street Redevelopment Project can have a significant impact on downtown Dayton. In an economy that has been slow to recover (in the Milliken Institute’s Best Performing Cities 2013 rankings, Dayton’s economy was rated a dismal 172 out of 200 metropolitan areas, roughly on par with Riverside, Ontario and Scranton, Pennsylvania) this is the type of project that could be catalytic for the downtown area.

There are three factors that make the Water Street Redevelopment Project’s potential impact on downtown Dayton so significant:

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Location

The Water Street Redevelopment Project is directly north of Fifth Third Field where the Dayton Dragons play. This is a smart location for this project, as the Dayton Dragons are a large draw in the city. The Dayton Dragons, a Class A baseball team affiliated with the Cincinnati Reds, are very popular. The Dragons have had the highest attendance of all Class A teams since their first year in 2000 with an average attendance of 8,375 per game. The Dayton Dragons hold the record in U.S. professional sports for most consecutive sellout games (815). If the retail space is leased strategically, bars and restaurants can capture this crowd and allow them to enjoy more activities downtown, as has been the case in stadium-oriented economic developments across the country. Furthermore, being near this type of energy will be a major draw for young professionals and other would-be urban dwellers.

Fifth Third Field is not the only attraction near the site. The project will be within close walking distance to other significant Dayton developments, including Tech Town, a technology-oriented business park, and RiverScape MetroPark, a riverside park that is the center of community activities in downtown Dayton. The developers plan to include linkages to these other activity hubs during the first phase and future phases are anticipated to grow towards Tech Town. When completed the Water Street Redevelopment Project will connect these three major developments along Monument Street, establishing an activity corridor in downtown Dayton.

Phasing

The Water Street Redevelopment Project will be phased in over time instead of being developed all at once. The Dayton Business Journal points out that this is a key difference between this development and the proposed Dayton Ballpark Village, conceptualized for the site in 2006. Ballpark Village was a 300,000 sq. ft. mixed-use development that was slated to be built completely and in its entirety. However due to the economic downturn that hit communities hard in 2008 and beyond, Ballpark Village never became a reality.

The developers plan to wait to determine more concrete plans until they can learn the lessons of the first phase. Concepts for second and third phases of the Water Street Redevelopment Project include moving east along the river towards Tech Town and eventually extending across the river. This is a smart tactic that not only reduces initial risk, but also allows the developers to adapt the plans to the market’s response. This responsiveness could enhance the project’s overall impact on downtown Dayton.

Timing

The most important factor in Ballpark Village’s demise was the economic recession the nation faced in 2008. 2014 looks to be a more hospitable year for large-scale downtown development projects. The residential component, for example, is sorely needed. The market for urban living space is growing across the country and there is a hole in Dayton’s market that needs to be filled in order to keep up with demand. According to the Downtown Dayton Partnership, there are currently 951 market-rate housing units downtown.

While that number of current downtown residential units is comparable to per capita ratios of neighboring cities, the downtown residential market is changing drastically. For example, Dayton’s southern neighbor, Cincinnati (which has a significantly more substantial population), had 2,500 apartments in its Central Business District in 2012, according to a Cincinnati news outlet’s study. However, 1,574 more apartments are in the development phase in downtown Cincinnati and Over-the-Rhine. This is a 38.6% growth.

While Dayton may not have exactly the same market conditions of Cincinnati that warrant nearly a 40% growth in downtown residential units, Dayton’s market should welcome a substantial increase in downtown housing options. The first phase of the Water Street Redevelopment Project alone will increase downtown apartments by 14%. Even in the midst of the recession, Dayton boasted a downtown residential occupancy rate of over 90%.

The same return-to-downtown trend is currently going on the office space market nationwide, a trend being seen in Dayton as well. According to an interview with the Dayton Business Journal, the developers at Crawford Hoying cited an increase in demand for urban office space that the Water Street Redevelopment Project is responding to.

There are still a number of steps the development must go through before breaking ground, including securing an anchor tenant, but stakeholders involved with the project seem confident the Water Street Redevelopment will break ground. I am hopeful their optimism is warranted, as this is a project that Dayton truly needs.