Recession is Over for Neyer Properties
Despite the recession and its deleterious effect on commercial real estate, Neyer Properties of Cincinnati has seen its portfolio more than double over the past three years.
Neyer Properties is one of the few Ohio commercial real estate and development companies able to use the recession to its advantage. Although its employment base has remained constant, it grew dramatically over the last three years, doubling its size to more than 3.5 million square feet for its commercial, retail and industrial properties.
Neyer Properties president Dan Neyer attributes his company’s growth in a down economy to the conservative approach he took from 2005 to 2008, when others were tempted by high market values to overextend themselves. He has used the recession to aggressively– yet conservatively– acquire properties that will provide long term value.
“We are in the strongest growth period in the history of our organization because of our ability to generate equity organically and raise funds,” said Neyer. “I see this continuing for the foreseeable future.
“If there is a silver lining in some of the overall real estate values being hurt, it is that we can go in and buy existing properties at a lower value. That’s been our modus operandi and will continue to be.”
He acknowledged that the recession did not affect Neyer Properties substantially because — unlike other commercial real estate firms– his firm is not highly leveraged. “Our net operating income has more than doubled during the recession,” he said, “and our cash flow has almost tripled during this time. This shows the strength of our portfolio.”
A continuing challenge, however, is the reduction in commercial real estate values due to downward pressure in rental rates and the way appraisers now evaluate property value.
“I have seen the same appraiser with the same property and the same income come up with values that are 25 percent less from year to year,” he said. “This makes no sense and is hurting our industry, the underwriting and loans that service these properties. The pendulum has swung too far in the other direction, and I hope for everyone’s benefit that it finds middle ground soon.”
The commercial real estate and development company is actively seeking acquisitions in Columbus, Indianapolis, Louisville and Lexington, and seeks to purchase and redevelop another two million square feet over the next two years.
In July, Neyer Properties purchased Olympic Corporate Center I, an 88,000 square-foot office building in Erlanger. Neyer Properties plans to make improvements to the building including updating the exterior landscaping and entrance.
Neyer Properties recently purchased the 12.5- acre, 70,000 square foot Bridge Pointe shopping center in Dublin, Ohio, and is improving the façade, landscaping and lighting. The property was built in 1978. Neyer also has three office buildings under contract that the company expects to purchase by August of this year.
Within Neyer’s existing land developments, the FBI has moved into its $47 million division headquarters near I-71 and Montgomery Road in Cincinnati, and Neyer is in the process of beginning infrastructure improvements within the development to allow for a hotel and office building at the adjacent The Greens at Kenwood.
At its $100 million development Keystone Parke, located at I-71 and Dana Avenue, Neyer is moving toward development of a hotel and additional medical office space. The LEED Gold American Red Cross’ regional headquarters is its next-door neighbor in its 45,000 square foot building.
Neyer said he’s seen a strong uptick in medical space leases lately, noting that Keystone Parke, Kenwood Crossing, and The Greens at Kenwood have increased leasing activity this year.
“It’s been a roller coaster ride, but that’s always exciting,” said Neyer. “We always have certain challenges, but on the whole, things are working out pretty well.”