Much of the space in Dayton’s downtown office towers is outdated and the Dayton region has continued adding more offices but not gained enough workers to fill the space.
“We have seen a significant amount of office space built around and in the Dayton region, but the region hasn’t grown proportionately at that level,” said Sandy Gudorf, president of the Downtown Dayton Partnership.
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Additionally, many of the downtown towers were built decades ago, when companies needed more employees to do the same work and valued walls and enclosed spaces. But with technology, companies have fewer people and more open spaces are the ideal.
“A lot of these buildings are traditional office space, and quite frankly, many of the users want unique space,” said Dave Dickerson, Dayton market president of real estate firm Miller-Valentine Group. “The traditional office building that was built back a couple of generations just doesn’t have a lot of appeal.”
But many of the downtown buildings are owned by out-of-market investors, who purchase them primarily from an investment standpoint, Dickerson said. Those non-regional investors likely lacked the knowledge about the Dayton market when they bought the towers, creating “a lack of willingness to reinvest back into these buildings,” he said.
“A lot of these vacant buildings are in the core. You can see them right along Main Street,” Dickerson said. “All of them have certain challenges whether they have outside ownership that are more interested in occupying their buildings by discounting rent, but they don’t want to put a lot of money into the building.”
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Below-market rent can be attractive, Dickerson said, but that only works if the space is ready to move in, which is not the case for most of the largely vacant downtown buildings.
Investing in renovations is becoming even more expensive, with construction costs rising and tariffs creating higher lumber and steel costs. And creating more usable office space in the downtown towers might not have the immediate return investors hope for, Dickerson said, so the buildings remain stagnant.
“There are a number of developers that are looking at buildings downtown that have a track record of repopulating space, and part of that could be converting an existing office building to an alternative use, but they also understand what it takes. I’m not sure if every building owner that has bought something as a pure investment understands that,” Dickerson said.
Success in finding new uses for old buildings
There are several buildings downtown following the adaptive reuse strategy, including the nine-building Arcade project that will have a mix of residential apartment and commercial uses.
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Downtown development leaders hope that increase in amenities will convince owners to reinvest in the years-long vacant offices, with more businesses wanting to move downtown to attract workers who want to live, work and find entertainment all within walking distance.
“We’ve got a unique opportunity in our downtown because of the character, because of the walkability, because of all the mixed uses within the business district that is attractive to this growing number of entrepreneurs and other business that want to attract and keep young talent,” Gudorf said.
The Downtown Dayton Partnership has its own solutions, with several initiatives to help fill the space including expanding the pop-up shop program that helps activate first-floor retail space to offer the same short-term, cheaper leases for office space.
In partnership with the Dayton Business Committee and CityWide Development, the Downtown Dayton Partnership also launched the Downtown Investment Fund, which will help fund some of the updates required by tenants to move into vacant offices.
“We’re heading in the right direction, we just have to keep working on it,” Gudorf said.
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