NEWS

Article originally published in Columbus Business First by Dan Trittschuh >

Brian Ellis has been deeply involved in that development from the beginning as the head of Nationwide Realty Investors.

He was less than a decade into his stint leading the real estate development arm of financial services giant Nationwide when the company stepped in to privately fund a downtown arena after a ballot initiative to publicly fund one failed in 1997.

The city’s bid to land an expansion franchise in the NHL appeared doomed until Nationwide committed to the project that ultimately resulted in the birth of the Columbus Blue Jackets.

I talked with Ellis on Sept. 4 about the origins of the Arena District and where it goes from here as part of the Storytellers Series by the Columbus chapter of the Urban Land Institute. The event marked 25 years since the opening of Nationwide Arena.

During the conversation at the Grand Event Center at Grandview Yard, we covered a lot of topics. The following are excerpts from Ellis’ remarks, edited for length and clarity.

Was it at all obvious that Nationwide would get into the arena business when the ballot initiative failed? How did that first come about? 

I mean, I think it starts with just our overall engagement, particularly in downtown and in Central Ohio. We were very engaged and we were supporters of the initiative to bring the NHL to Columbus. We thought that we had a once-in-a-generation opportunity. And we didn’t want to see that miss. We were, at that time, the largest city in the country without a downtown arena.

So we were supportive from a community standpoint. Never thought at that time that we would get to the point that we would have to drive it to the extent that we did. But the sales tax levy failed and it looked like the opportunity to bring the NHL to Columbus was going to be lost.

Our CEO at the time, Dimon McFerson, along with some other community leaders, was determined to not let that pass us by, pass the community by. He sort of raised his hand and said, ‘Let us take a crack at it. We can’t fund it publicly, but let us take a crack at funding it privately.’

I was in charge of the real estate development business for Nationwide so I got the call that helped put that deal together. We spent the month of May of 1997 trying to put together a really good business plan that could justify building the building.

I still remember these dates. I don’t remember all the dates anymore but May 6th of 1997, that sales tax levy failed. And we had the month of May. The NHL said to us, ‘We’re really disappointed that that sales tax levy failed because you guys were a front-runner. If you could build a building, if you could have a building, then you were going to get selected.’

So behind the scenes, we knew that if we could figure out the building side, we would win a franchise. We had the month of May to figure that out. And so May 6th, sales tax levy fails, June 2nd, we’re in front of City Council proposing what became Nationwide Arena.

Did you have any experience with that sort of thing?

We had no experience. We learned quickly. It wasn’t something that felt really alien because it’s just another real estate property. I had experience in real estate development and it was a different design. You had to hire different architects and bring in different expertise. But I couldn’t have been any more excited. And ultimately it’s been a great ride.

At the time were you saying, let’s just get the arena here? What were you thinking? 

We always felt, even when we began to talk about it, we wanted to see the arena as the catalyst to drive development downtown, and in particular, to be the centerpiece of a district. There wasn’t much going on downtown at that time. There wasn’t a lot of development activity, and we thought that maybe we could change this.

At the time that we announced that we were going to build the arena, it was just about 20 years after we moved into One Nationwide Plaza. That was our first building downtown and really put a stake in the ground from the downtown standpoint.

But even having the Nationwide tower there, the Ohio Penitentiary was still there too, wasn’t it?

Well, I’ll just step back for a second. I started with Nationwide in 1989, and the Penitentiary was there. And the guys that I worked with, that had been there before that, would talk about being in a boring meeting in One Nationwide and looking outside, looking over at the Penitentiary, and seeing the prisoners in there playing softball: ‘It’s a beautiful day, I’m here, and they’re out there playing ball.’

So it was torn down. By the time we got to 1997, the Penitentiary was mostly torn down. The front facade along Spring Street was still on. But for the most part, it was already in the process of being demolished.

It was 150 years old. And it was contaminated. But the city acquired it from the state, and the city made a decision to tear it down, to remediate it. And they were in the process of cleaning it up. So that’s when we got involved.

So how big did you envision the Arena District at first? 

The answer to that question is it was 75 acres. It was defined by Neil Avenue on the west, Spring Street on the south, Front Street on the east, and then essentially where Vine Street is now on the north. And that’s about 75 acres. It’s now grown to 200 acres.

One of the things that’s interesting about that original master plan, and it feels very different today, but at the time, the biggest risk – and in fact, we even got a discount from the city for the price of the ground – was for the residential pieces. We had, I think it was 350 residential units in the original master plan and thought that was a stretch. I mean, we thought, ‘Do we think we can get anybody to live downtown?’

In the initial leasing of the offices and residences, was it a slow uptake or right off the bat?  

All a little bit different. We did pretty well from an office leasing standpoint. I think that people believed in it.

I think there were a couple things. One is the idea of being in an exciting sports and entertainment district was embraced. But I think there were other things, maybe a little more mundane. One, I think the feeling that, and it was never quite this easy, but the feeling that with an arena, there’s going to be all these bars and restaurants. So that’s going to be cool to have an office around that. And in some respects, that was true. We did some of that.

But the other thing is even more mundane that separated the Arena District, I think, from other things that were going on in town was we had parking. With every office space that we built, we built the necessary parking to support the office tenants that were there. That might sound pretty obvious. Well, it wasn’t happening. And there were a lot of places downtown that didn’t have parking. So in some respects, they gravitated to the Arena District.

The Arena District in the end became a model for the rest of the country.

The reception has been very good, consistently over 25 years. But it was only after we’d established a little bit of a successful track record that we began to get other cities that were visiting Columbus, and in some respects, holding the city out as a model. And that is, I think, a point of pride, certainly a point of pride for us, a point of pride for me, but also a point of pride for the city, which is important.

Image is a lot of the motivation here. I mean, at the time that this opportunity came, I think community leaders recognized that Columbus had an image problem. It might not have been a bad image, but in some respects, I think when they studied it, that it was no image at all: ‘What do you think about Columbus? I don’t think much about it.’

When did the discussion of a baseball stadium come up?

Well, I think it really starts with the quest that we’ve had from the very beginning. One of the things that we learned early on, people in the community sort of expected we’re going to build this arena, all these restaurants are going to come, and it’s going to be active all the time.

I remember working on this in May of ’97 (asking) how many events are we going to have? You’d hear 200 events, something like that. The reality of it is that’s exaggerated. There’s really not that many big events for a market of our size.

I’ll tell you one story. Where Starbucks is today, we identified that as a coffee location. And Starbucks was not in this market at the time, in that late ’90s time frame. And we offered (space to) one of the smaller operators. We thought we were doing somebody a big favor. We said, we’ll let you have the space, put a coffee shop in here. And I expected a hug: ‘Oh, thank God.’ And you know what he said? ‘I’m not sure. What’s going to happen the rest of the time, when there’s not a game? And those games aren’t in the morning.’

And so it’s a little bit of a reality check when you get out in the market and you start talking to people about what’s going to happen. Ultimately, we did convince Starbucks. They came to the market. I’d love to hype it and tell you it’s perfect, they’re the best Starbucks in the country. But the reality of it, they’re not. There’s limitations on sports and entertainment districts in terms of this cycle of activity, which isn’t always consistent.

So from the very beginning, not long after we opened, we’ve been in the search for 24/7, 365-day-a-year activity. That’s been a quest.

That was a long way to answer the question. Why were we so excited about Huntington Park? Because there’s 72 home games that complement 44 games from the Blue Jackets and begin to fill out the activity. And that was really important.

Why did we do the Arena Grand Theater? Some of you remember that. Because that was, again, a way to get consistent activity, support the restaurants that are so valuable.

But easier said than done.

One more story. What we think of as the LC, Kemba Live, that was a part of that same thing. That was 2001 maybe. Again, it was another way of filling in those dark days and creating more consistent activity. So that was, again, a purposeful, almost opportunistic thing that we did to try to create that, try to balance that out.

I just wanted to extend this real quick to Lower.com Field and how it came about. Can you talk us through how close we came to having a casino there?

Well, yes. Without really collaborating, Penn National identified that site and essentially went through the process, I would say not non-collaboratively, just sort of said, ‘We’re going to put a casino, and we’re going to get the state to vote on that and get it approved.’

And they did. And our leadership at Nationwide at that time, Steve Rasmussen, and John Wolfe, in particular, did not see that as additive. Their lens was a little different than a purely real estate development lens. When I looked at it, at first I was like, that’s pretty good. Again, we’re trying to look for this 24/7, 365.

And when you look at it closer, not really. Because first of all, the way that the legislation worked, there were casinos positioned all over the state. So almost the entirety of the population was less than an hour away from a casino. So in some respects, it wasn’t going to create hotel activity. I mean, casinos are introverted buildings. When you get somebody in a casino, they’re not going to walk to restaurants in the Arena District. And in this case, one of the things that I thought was, at least it’ll generate some hotel business, because we own some hotels. And the reality of it is it wasn’t going to do that either. I think maybe just now, they’re starting to talk about a hotel on the west side. But it really was never a driver of hotel business.

And then the other thing that we looked at, traffic and parking from the very beginning was an essential element to our planning. We always were very hyper-focused on making sure that people could get in and out of Nationwide Arena again as gracefully as possible. That was a big priority for us. And there was synergy between the uses that we had. Office people were gone, left the parking spaces filled by event-goers, and it worked out really, really well.

When we asked our traffic engineers to overlay a casino on top of that, I was assured that it was going to be gridlock. That we were not going to get people down the end of that dead-end street where it was going to be located, in any kind of a way that wasn’t going to muck up everything for everyone. So that, for me, was the primary driver in my mind.

We made the right decision. It was a heck of a lot of work. But it was the right thing to do.

And it also conveys, I think, from a leadership standpoint, this sort of long-term view. (We’re) not land merchants, not just selling a piece of dirt, (we’re) trying to look at this as something that’s going to be important for generations, and let’s do it right, and let’s take a long-term view.

So how many acres is there in the Arena District today? 

I think about 200. We always hoped that it would grow, that it would be successful enough that it would sort of organically grow. But now it’s really all the way west to the river. By the way, it’s unofficial, really. There’s no official designation. But south to Spring Street, east to High Street and then north to 670.

What percentage of the district is built out?

I honestly don’t know. I mean, I think that in some respects, we have more, I would say, dirt that we can develop that’s been undeveloped. But I also think it’s gotten to the size that I think it’s just going to continue to evolve and change over time. There are a number of sites.

We’re also more focused today on the north side of the arena, the area between the arena and 670. We just opened an office building and an apartment project and are continuing.

So you talk about the evolution of the district. What do you see as the right mix between residential and office and I’ll just call it entertainment spaces? Where do you see it now, and does it need to be reclassified somehow post-Covid?

It’s certainly evolved, and I think it will continue to evolve. Right now, I mean, I think that the market’s telling us that we want more residential. I always thought, and I said this really pretty early on, that we’ll know we’re successful when downtown is not a niche neighborhood, that people really want to live downtown. It’s not something you force. I think it’s got to be a real thing. And that’s when we get to that critical mass. And I think we’re getting there.

So I think almost everything that we look at right now in the context of at least the Arena District is about residential. It’s about more people living here. I don’t think we don’t need more office space.

The restaurant business and bar and restaurant business is tough. So our effort there is to keep the ones we have going and successful. We originally – this is a little kind of funny, a little self-deprecating – originally, we thought that that ground-floor retail space would be our most valuable real estate. And in fact, we still get rent. But now it’s not really that. We now commonly call that space ‘amenity space.’ Those are the amenities that we’re trying to provide to our office tenants.

I’ve also said this, and I think it’s still true, it’s the office tenants that pay the bills at the end of the day. And we have a great situation. The arena supports that, and the other sports facilities by helping to support the amenities that make an attractive place to office.

You said for restaurants that it’s not as easy a sell as people may think. How would you characterize the turnover in bars in restaurants in the Arena District?

I think that we’re in this for the long term. So in some respects, when we do a lease with a restaurant, in my head, I sort of like think that they’re going to be there forever. That’s not reality. And when we think about it and we reflect on it practically, the fact that Gordon Biersch was in there for over 20 years and had a successful run for 20 years is pretty good in the restaurant business. The fact that Ted’s been there for at least that long. Buca’s still there. Buca opened before the arena opened. So we’re proud of those. But it’s still tough.

I think this is one of the things that when communities come and say, how’d you do it? One of the things that I tell them is, you’ve got to compete. One of the reasons we don’t have more restaurants in the Arena District is because he’s doing so well at Easton with restaurants (pointing to Easton co-developer Yaromir Steiner in the audience). I mean, that’s the reality and that’s OK, that’s not a bad thing, from a community standpoint. But that was a quick reality check.

I mean, back in 2000, ’99, we would have loved to have done Cheesecake Factory or PF Chang’s. Those were the hot restaurants at the time. But they were taken. And in some respects, they probably made the right decision. They went to the right place where, by the way, they have 365-day-a-year activity. They have consistent activity. And inherently, in the Arena District, we really don’t. We’re working on it. We’re trying. And I think we’re getting better and better at it.

Future development will be mostly focused it sounds like on residential. Is there anything that needs to be converted? 

No. I mean, first of all, I’ve been asked that question a lot. And my general reaction is that it’s very difficult to do. It’s very difficult to earn an appropriate return on a conversion from office to residential. The buildings aren’t generally set up right. I mean, the residual value that you get from those is pretty minimal.

We do have one that we think has the potential to be converted, but it starts with a pretty minimal value to start with. Our office buildings in the Arena District are worth too much to be converted and spend the money to convert it into residential.

What was the old 2 Nationwide Plaza, we’re evaluating that. But we started with the expectation that it was sort of past its prime, let’s say. It really didn’t have great value to start with. And by the way, an older building with smaller floorplates and kind of a better setup. So I think that that has the potential. I think it would be the only one that we do if we do it.

And I think in almost any other building – the real estate developers here, they know – it’s just, there’s so much that needs to be invested it’s just not going to make sense in most cases.

You and the team at Nationwide Realty, you took the Arena District’s success to Grandview Yard, and you have a lot of investments out in Arizona. Where does Nationwide Realty go from here? 

The thing I would say about Arizona is just that we wanted to be a great developer. We didn’t want to be a good developer, we wanted to be a great developer. And we realized that we couldn’t be a great developer all over the place. It’s not formulaic. It’s not made to order. You have to figure out what you have in your community, and be ready to compete, and be ready to add value in your community, what your community needs.

People would say, why didn’t you do retail? Well, do you think the Arena District could be a retail destination? Under the right circumstances. In our circumstance, absolutely not. There was the City Center Mall already there. It wouldn’t have allowed us to really do anything. Easton was ahead of us and they had a team and were ready. I mean, there was no chance that we could compete. It wasn’t that the master plan wouldn’t have allowed it. It was that the competitive landscape wasn’t going to allow it. And that’s important.

And people, especially the public sector people that come here, don’t really realize that. They don’t understand that, ‘If you build it, they will come,’ is not real. It’s not real at all. In some respects, I find that almost a little bit insulting. Because it wasn’t, ‘Hey, we built an arena and then all this stuff happened.’ I mean, we had to compete, and we had to do all the other things right for the success that we have had.

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