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January 27, 2017
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Economic renaissance: Northern Kentucky’s airport is lifting off again, and the entire region is on the rise

Northern Kentucky is a region whose vibrant culture embraces work and it’s starting to enjoy the fruits of its labors, with even better to come.

By Greg Paeth

Local passenger traffic at the Cincinnati/Northern Kentucky International Airport increased by 38 percent since 2013.

Local passenger traffic at the Cincinnati/Northern Kentucky International Airport increased by 38 percent since 2013.

Northern Kentucky leaders know that hard work first on strategic planning to set high goals, followed then by forging partnerships to implement the programs that pursue those ambitions, pays off. A region whose vibrant culture embraces work is starting to enjoy the fruits of its labors, with even better to come.

For instance, sometimes being number 40 on a list is perfectly OK, maybe even approaching that elusive “best case scenario.”

That’s the situation at the Cincinnati/Northern Kentucky International Airport, which has seen its passenger count steadily increase as its ranking on the U.S. Department of Transportation’s quarterly list of average airport fare costs has declined consistently for nearly every measuring period the last four years.

Dramatic increases in passenger and cargo traffic at the airport are critical factors in a massive repositioning and growth at CVG that seems to mirror a business renaissance that’s underway throughout Northern Kentucky. The CEO of the airport, Candace McGraw, not surprisingly, is also the head of the ongoing community “visioning” process that first began in the 1980s and today goes by the organizational name of Skyward.

The “Elevating Northern Kentucky” efforts of Skyward include input from at least 15,000 area residents.

While some of the success can be objectively measured by checking building permits or the numbers of people added to business payrolls, an intangible – the improving image of the Cincinnati metropolitan area – may be equally important, according to Trey Grayson, president and CEO of the Northern Kentucky Chamber of Commerce, an organization that seems to be equal parts unabashed booster and thoughtful analyst.

“The other thing that’s helpful right now to Northern Kentucky is that Cincinnati has its act together. From a national standpoint, Cincinnati is getting a lot of favorable publicity for being kind of cool – you know, Over-the-Rhine, the Banks and the arts organizations keep knocking it out of the park,” said Grayson, who learned something about cool urban areas at his most previous job teaching at Harvard University in metropolitan Boston.

“When Cincinnati succeeds, the region succeeds, and (Northern Kentucky is) 20 percent of that metropolitan market, so with the success of Cincinnati improving its image around the country, we benefit from that as part of Cincinnati,” Grayson said.

A downside to being a part of metro Cincinnati is that unlike Louisville and Lexington, Northern Kentucky is not the primary driver in the region. The upside is that it’s a vitally important element of the largest metro area including a portion of Kentucky, an urban region that ranks 28th in the country with 2.1 million people, including three of the commonwealth’s eight largest counties: Kenton (third at 165,012), Boone (fourth at 127,712) and Campbell (eighth at 92,066).

Major bragging rights

mrnk-cover300Much of the success at and rippling around the airport is linked directly to efficient transportation, high-tech manufacturing and mindboggling advances in logistics. But Grayson and others who know Northern Kentucky intimately make it clear also that the regional rebirth is attributable as well to the growth of Northern Kentucky University, tourism, high-tech investments and revitalization of the older local river cities.

Grayson is particularly enthusiastic about the Hotel Covington, a $22 million, 114-room hotel that opened in late September in the century-old Coppin’s Building, constructed in 1910 for Coppin’s Department Store in the heart of downtown Covington, which is the region’s largest city with a current population of 41,000.

“It’s a great hotel. It’s boutique. It’s cool, and it’s going to serve as a catalyst for a lot of other development in that area,” Grayson said, noting that his father and grandfather both spent their careers running downtown banks that were located just a block away. “There’s a swagger, a confidence that Covington hasn’t had in a while.”

In the past, the airport had projected a kind of swagger, an irritating one perhaps because CVG fares were either the highest or nearly the highest in the country.

But things have changed.

For 2015, the last full year for which data was available, passenger traffic increased by 6.6 percent year-over-year and CVG is expected do better for 2016 when the final figures are tabulated in 2017. 

That 2015 total included a 16 percent increase in local passengers who were often driving to Louisville or Lexington or Dayton or Columbus in Ohio if they could save upwards of $100 per ticket when fares were at their past peak. Late in October, however, CVG’s average ticket prices ranked 40th ($378) on the U.S. Department of Transportation report for the country’s 100 largest airports.

That ranking is the best ever on a DOT list first published in 1995, a time when CVG was one of the major hubs for Delta, which had the luxury of pricing tickets in a near-monopoly market. Some 6.3 million passengers used the airport in 2015, a figure that included nearly 370,000 people who had never flown in or out of CVG before.

That increase in passenger traffic is just a blip on the radar compared to the explosive growth of the airport’s biggest tenant, DHL, the huge German cargo carrier that has three “world hubs” – one in Hong Kong, one in Leipzig, Germany, and at CVG, where the company handles 46 million shipments per year from what was once a Boone County farm field.

A record-setting 800,000-plus tons of cargo were shipped through the airport in 2015, when cargo traffic increased more than 11 percent, according to data supplied by the airport. Since 2011, its air freight business has grown more than 50 percent, and CVG established itself in 2015 as the fastest-growing cargo airport in North America.

DHL completed a $108 million expansion at the airport in 2016 that provided gates and parking for 16 additional wide-body jets. The company had 2,400 employees in Northern Kentucky before the project and said it planned to add another 200 full- and part-time jobs once the expansion is completed.

“For DHL to make that statement is important to their solidification here at CVG and what DHL has done is help propel CVG to become the ninth-ranked cargo airport in the country,” said Dan Tobergte, president and CEO of the Tri-County Economic Development Corporation (Tri-ED), which was created to attract and nurture business in Northern Kentucky’s three largest counties: Boone, Campbell and Kenton.

“Every few weeks the airport’s got a new, positive announcement – whether it’s prices going down, carriers expanding service or other land around the airport being developed,” Grayson said.

“The growth of DHL is a reminder of the perfect (U.S.) location that we have to make things and to distribute things,” said Grayson, who mentioned a new warehouse and distribution center for Wayfair as a good example of the synergy between the airport and the region.

A huge online retailer of home furnishings and decorative items, Wayfair opened a 900,000-s.f. distribution center, the largest building of its kind in the region, in 2016 on property a few miles from its first Northern Kentucky facility.

“Wayfair wants to make this investment here, and they’re going to hire a lot of people,” Grayson said. “That’s a real strong endorsement of the logistics, the location and everything else that we have here.”

Tobergte mentions DHL first when asked to list some of the most significant developments in Northern Kentucky during 2016, which followed another year of impressive region growth reports.

In 2015, eight companies decided to move to Northern Kentucky and 19 expanded, creating more than 2,400 new jobs and another 2,000 spinoff jobs, according to Tri-ED. Those 27 companies also spent nearly $460 million on real estate and equipment, more than doubling the investment made in 2014, the agency said.

The numbers for 2016 won’t be quite as strong as 2015, said Tobergte, whose mid-November scorecard showed 1,450 new jobs and capital investments of about $237 million.

But Tobergte is highly enthusiastic about several projects at or near the airport.

Safran Landing Systems, a French company that makes landing gear for aircraft, invested an additional $150 million in its Walton plant in 2016 and created another 84 jobs. The company has now spent nearly $310 million on its plant and has 325 employees.

Germany’s Robert Bosch Automotive Steering expanded for the fifth time in its 10-year history in Northern Kentucky when it invested more than $85 million in its plant in Florence in 2015, which added 212 jobs. With that expansion, Bosch has 1,300 employees, which makes it one of the largest manufacturers in the region.

River cities rebirth

But the job growth and corporate investment at or near the airport doesn’t tell the whole story of the Northern Kentucky renaissance.

Some of the older river cities are enjoying a rebirth as a wave of urbanism washes over the region.

Jack Moreland, president and CEO of Southbank Partners, which was created to lead and nurture development in Northern Kentucky’s six river cities, said his organization routinely sponsored a splashy “Developer Day” every two years in an effort to attract new business investment to the cities.

But soaring interest in the region prompted Southbank to change its plans this year, Moreland said.

“We didn’t have the Developer Day this year,” said Moreland, who recalled that the semi-annual event went back about 10 years. “It used to cost us about $40,000 to do, but when you have developers calling you about doing projects in the area, it’s foolish to spend that kind of money when it can be spent elsewhere.”

Much of the revitalization has occurred in Covington and Newport, two of the region’s oldest cities that together straddle the Licking River directly across the Ohio from downtown Cincinnati.

Covington got a jolt of bad news in mid-September when the IRS announced it plans to eliminate some 1,800 jobs at its sprawling downtown tax processing center by 2019.

City officials said the upside of the agency’s decision is that it will open up a substantial swath of prime downtown land – most of it near the river – for redevelopment.

The announcement by the IRS came a month after CTI Clinical Trial and Consulting Service said it planned to move its headquarters from Ohio to Covington’s RiverCenter office complex, where 200 people would go to work in 2017 and another 300 jobs will follow in coming years.

As Thanksgiving approached, Jeanne Schroer, who heads the Catalytic Development Fund, which was created to work with developers in the older cities, outlined some of her organization’s most recent successes at a Covington Business Council luncheon that attracted nearly 130 people to The Madison, a nicely rehabbed landmark building just across the street from the Hotel Covington.

Only a block away from that gathering, heavy equipment rumbled along Washington Street, demolishing several buildings being cleared away for a project called Duveneck Square. Phase one of the project will include two buildings with a total of 108 apartments and 5,000 s.f. of retail space.

Cincinnati-based NorthPointe Group, which worked with the Catalytic Fund, said phase one should be completed early in 2018.

“The projects already completed or slated for the Central Business District are astounding,” said Pat Frew, president/CEO of Covington Business Council. “At one of our recent monthly luncheons, it took me more than five minutes on stage to invite members to upcoming openings – a new bank branch, an exciting concept bar, a large mixed-use development that will bring much needed tax revenue, upscale housing and commercial space.

“The next big challenge for developers and the city will be generating enough parking options to satisfy the needs of new and existing businesses and residents. But that’s a problem we can learn to live with, at least temporarily,” Frew said.

Two more substantial multiuse projects in Covington’s MainStrasse tourist and entertainment district have been announced that will increase the action level.

Flaherty & Collins of Indianapolis announced plans in October to move ahead with a $20 million development at Fifth at Main that calls for construction of 187 apartments, ground floor retail space and a 314-space parking garage.

A little more than a block to the south, a developer based in Birmingham, Ala., has moved ahead with a $30 million project to build 182 apartments, retail space and a parking garage on the iconic John R. Green Co. school supply property –only a couple hundred feet from the Sixth and Main epicenter of the MainStrasse entertainment district.

Although the upscale suburb of Fort Thomas has surpassed it as Campbell County’s largest population city, Newport (15,400) has experienced spectacular business growth along the Ohio River and on a 56-acre tract that butts up against I-471 near the city’s southeast corner.

The city seems perfectly poised for even more explosive growth within a couple of city blocks from Newport on the Levee, the 15-year-old “lifestyle center” that blends shopping, dining and entertainment from its perch above the Ohio River. 

The Levee, home to the Newport Aquarium and a 20-screen AMC movie complex, is adjacent to the Taylor Southgate Bridge that links Newport to Cincinnati and will become the northern terminus for a $42 million extension of Kentucky Route 9, which parallels the Licking River that is the city’s western boundary.  This KY 9 “urban boulevard” will link the commercial heart of Newport to I-275, the interstate that loops around the Cincinnati metro region, and the AA Highway, which runs 115 miles east to Grayson, where it ties into I-64.

The KY 9 project that is slated for completion in 2017 hasn’t gone unnoticed by developers.

Aqua-on-the-Levee, an $80 million hotel, apartment and retail project that includes an 800-space parking garage, is nearing completion on property that abuts the shopping and entertainment complex to the east. Just west of Newport on the Levee, an aging TraveLodge motel was demolished and replaced with a six-story Hampton Inn and Suites, which opened in the fall.

The aging Newport Intermediate School along Monmouth Street, which deadends into Newport on the Levee, has been acquired by an Indianapolis-based developer for $2.6 million. The company intends to build about 200 apartments and retail space, according to David George, a vice president for CRG.

Billion-dollar revival?

While a long list of multimillion-dollar projects are at or near completion, Newport hasn’t heard much about Ovation, which may be the single biggest project ever announced for the region.

Covington-based Corporex, which created that city’s riverfront skyline with high-rise offices, first-rate hotels and exclusive condominiums, purchased the 14-acre site 10 years ago from the City of Newport, which had demolished a former public housing project.

When Corporex acquired the property for nearly $1 million an acre, the company said $1 billion would be invested on a project that would include office tours, a hotel, condos, townhouses, retailing, parking and what was described as a “Las Vegas-type showroom” that could seat as many as 3,000 people.

The 2008 economic crisis and recession, plus a lack of progress on the highway construction, smothered those grandiose plans.

However, after years of inactivity, Corporex seemed to signal that Ovation plans were still standing when it spent $2 million this summer for a 3-acre parcel immediately east of the 14 acres it already owns.

A couple of miles away, the Newport Pavilion “power center,” anchored by a huge Kroger Marketplace and a Target, had a slow start in 2009 when the U.S. economy was still struggling. But it has now developed into a huge hit with shoppers and become a major contributor to the city’s economy.

Investors now appear to be convinced Newport Pavilion’s slow start is ancient history. Inland Real Estate, based near Chicago, and a Dutch firm have purchased the two phases of the project, which has 35 stores and restaurants, for $67 million.

Another major project that is expected to have an impact on Campbell County and NKU in Highland Heights is the $105 million Health Innovation Center, which will include new construction as well as a major renovation of the existing Founders Hall.

The project, scheduled for completion in 2018, “…will bring together experts from each of NKU’s six colleges to create transdisciplinary teams to study healthcare from new perspectives. The approach will combine data analytics, psychology, preventative care and holistic approaches to help address population health challenges such as addiction and chronic illness,” according to a prepared university statement. l

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