GE workers' exit from Downtown adds to office woes

This is part of The Enquirer's Future of Downtown series.

Downtown's post-pandemic recovery took a step backward with General Electric's decision to relocate the remaining workers at its gleaming office tower on Cincinnati's riverfront to GE Aerospace's headquarters in Evendale.

About 250 remaining General Electric workers at its Global Operations Center at The Banks are set to relocate by the end of the year, company officials told The Enquirer Wednesday.

Boston-based GE is splitting off parts of its businesses and will become GE Aerospace. Company officials said none of the local 9,000 employees in Greater Cincinnati or Northern Kentucky are losing their jobs.

Still, GE's exit from The Bank's building that once housed nearly 2,000 GE workers and is part of Downtown's central business district could exacerbate office vacancies, which are still struggling to recover from the pandemic.

How is Cincinnati's downtown office market?

In the third quarter this year, the most recent quarter for which figures are available, the central business district's office vacancy rate stood at 16.7%, up from 14.4% in the same quarter last year, according to Colliers' latest report for the Cincinnati market.

At the end of 2019, the central business district's office vacancy rate stood at 12.2%, per Colliers' research.

In addition to rising vacancy rates, the space available to lease in the central business district has declined sharply, from about 18 million square feet at the end of 2019 to about 16 million at the end of the third quarter this year, Colliers reported.

Much of the office space was lost when developers converted older office buildings to apartments or hotels.

Despite in-office mandates and other return-to-work incentives offered by employers, a plurality of downtown workers nationwide continue to work from home or work hybrid schedules that bring them into their offices only a few days a week.

As a result, Downtown Cincinnati has yet to see total foot traffic return to pre-pandemic levels, based on the latest report from the School of Cities at the University of Toronto, which has been recording foot traffic based on cellphone data in 66 North American cities since 2019.

Cincinnati's downtown has recovered about 64% of its previous foot traffic levels as office workers and visitors remain scarcer than they once were, according to School of Cities' figures. For comparison, Oklahoma City reached 93%, Cleveland 78%, New York 66% and Louisville 54%.

"It's a challenge that every major city is facing," said Doug Moormann, a development consultant with Development Strategies Group in downtown Cincinnati.

Why the GE building is poised for higher occupancy

Still, Moorman said, the global headquarters building at 191 Rosa Parks St., which will be largely vacant when GE pulls out, is in a better position than many other office buildings to remain viable.

"It's Class A office space, and I believe it's in a highly desirable location that will attract tenants looking for high-quality space," he said, noting the building sits in the heart of one of Cincinnati's premier entertainment districts and is situated between two major sports arenas: Paycor Stadium and Great American Ball Park.

The building has a fitness center and other amenities that employers are looking for to "lure people back to work," he added.

It's the amenities that The Banks offers − easy access to Smale Riverfront Park, multiple dining options and places to play − that give Tracy Schwegmann of The Banks Community Authority, the local business coalition, hope for the building's future. "We think it's the best address in town and I don't envision them having a difficult time filling that space," she said. "It's got amazing views, and they can offer prospective office tenants the entire Banks community."

Schwegmann said The Banks had a record year in sales at area bars and restaurants, possibly in large part to the success of the Cincinnati Reds, the Bengals and the Taylor Swift concerts. "There's lots of momentum with new tenants down here, too, with Nation Kitchen and Bet MGM coming online soon," she added.

Moormann thinks the GE building will ultimately transition from one formerly dominated by "one end user" to a building with "multiple end users."

What about the tax credits?

GE's Global Operations Center is one of the larger − if not the largest − enclosed buildings at The Banks at 338,000 square feet. It came online in 2016, acting as a major catalyst for the then-8-year-old Banks redevelopment project.

The company received the biggest tax-incentive package in Cincinnati's history in order to jumpstart the 12-story building's construction, too: a 15-year tax credit estimated to be worth $90.4 million in exchange for the creation and retention of jobs.

GE spokesperson Nick Hurm told The Enquirer that the company met the incentive goals required over the course of the building's development.

City spokesperson Mollie Lair said that GE collaborated with the city over the decision to leave The Banks property. "GE acknowledges its considerable, outstanding financial commitment to the City of Cincinnati and is in talks with City leaders to further define that commitment moving forward," she said in a statement.

What happens to the office building?

Just because GE is relocating its employees doesn't necessarily mean its custom-built headquarters will go to waste. GE Aerospace still holds the master lease on the facility and will likely rent out its empty spaces until the lease runs out in 2031, according to Hurm.

So far, GE has been successful in drawing new tenants as it has shrunk its footprint within the building in recent years.

• First Student, a major national school transportation provider, moved about 300 employees from Center at 600 Vine to the GE building in August.

• The company's move came on the heels of nationwide staffing firm Staffmark's decision to take over 32,000 square feet on the 10th floor of the property this summer. Staffmark was previously located at the Omnicare Center on East Fourth Street. The move was an effort to reduce space, cut costs and find an office that required little renovations.

• MassMutual Ascend Life Insurance Co., formerly known as Great American Life Insurance, also relocated over 633 employees to 65,000 square feet of space in the building last year. The company received $3.4 million in state incentives to also create 150 more jobs.

What it means for the future of work Downtown and at The Banks

As for whether future development at The Banks might include offices, that remains unclear. Five parcels are undeveloped and more work can be done. The Banks project executive Phil Becks told The Enquirer that the county still wants to build another office tower there.

But that may depend on how well the GE building recovers from GE's mass exodus.

"Sadly, it's always been interesting because we never even got a sense of what that building looks like full," Schwegmann said. "We didn't get a chance to experience that in its full glory, but now we're feeling the impact of it filling back up."

As GE Aerospace works to fill its leasable spaces, more change is coming to The Banks. Mayor Aftab Pureval is pushing to get federal funding to cap Fort Washington Way, the strip of highway that separates Downtown from The Banks. Soccer fields, small buildings, plazas or parks could be built on top of these decks, further solidifying the area as an entertainment district.

This article originally appeared on Cincinnati Enquirer: GE exits custom-built HQ in Cincinnati, what's next for building