Josiah Huber, managing director of DiPerna Advisors, told trustees at their Monday meeting that the office and commercial components of the project are proving to be “challenging” in the current environment.
According to Huber, a project of this nature necessitates special incentives to be initiated.
“Based on current market conditions — where labor costs and interest rates are — the necessity for incentives has increased over the past few months,” he said. Which is part of the reason why we are examining this bridge finance today.
The market rate housing portion of the project is extremely “bankable,” according to Huber, who added, “The big problem is the commercial and office components. Class A office space for which they do not yet have an anchor tenant. They are promoting the space.
“However, considering the environment, this undertaking is fairly ambitious,” Huber also stated. The commercial and office component has presented a significant financing obstacle.
Lenders are monitoring the rise in interest rates. And while firms are returning employees to the office, many continue to rely on a “hybrid” work paradigm in which employees split their time between the office and distant sites. Therefore, some businesses may require less office space as they did before to the pandemic.
A comment request was addressed to a representative of Crawford Hoying. Huber stated that the developer has reached out to JobsOhio and CityWide for potential incentives and support.
Accordingly, Crawford remains on schedule as part of the big building’s construction, he said.
“The $6 million will buy them a few extra months until they hear back from the state of Ohio and JobsOhio,” stated Huber.