Celebrating 20 Years of ‘Seeing Value Where Others Did Not’

Celebrating 20 Years of ‘Seeing Value Where Others Did Not’

Neyer Properties is that rare real estate firm that thrives when the market is down. Sure, Dan Neyer has a rich family ancestry of real estate investment and development, but that heritage doesn’t fully explain his knack for bucking the conventional wisdom and increasing his real estate portfolio during the last two recessions. Neyer Properties turns 20 this summer with a story to tell of how to deal with change and an innate talent for sizing up the potential in "cracked" buildings. 

It seems that even as a boy, Dan Neyer had an aesthetic sense for quality real estate. 

"As a kid, I would drive down (Interstate) 75 and ask my dad, ‘Why are there so many ugly buildings? And 71 isn’t that great, either,’ " Neyer says. "Why aren’t there better buildings?" 

For two decades, Neyer has worked hard to make the commercial real estate market in Greater Cincinnati more pleasing to the eye while adding value to neighborhoods. And, yes, that includes developing some "better buildings" along the I-75 and I-71 corridors. 

Neyer Properties, the company Neyer founded, celebrates its 20th anniversary this year as a leading real estate investment, and commercial development company in the region. It has a legacy of developing over 3,000 acres of land that add up to more than $1 billion in development and construction. 

Neyer has done it while remaining true to his original vision that commercial real estate can be environmentally and aesthetically sound as well as functional and profitable. 

"I still feel good quality real estate can be used as a platform to improve the fabric of the community with implications for the region and the visitors who come to our fair city," he says.

Neyer comes from a family that has had real estate in its blood for more than 100 years in Greater Cincinnati with Al. Neyer, Inc. Dan started by working with his father, Don, one of the three brothers who guided Al. Neyer in the last part of the 20th century. 

Neyer credits his father with teaching him to pay attention to the minutiae of construction. He believes he learned his creative, visual side from his mother, Phyllis. As Neyer jokes, "It also made me kind of dangerous to be both a concept person and a detail person."

Dan left the family company in 1995 to seek what he envisioned as a more creative outlet in the commercial real estate world. 

"I always liked the fluid side of a development, the nuances and the ability to conceptualize, how to transform an area," Neyer says. 

In the first three years, Neyer had one employee: himself. 

"I had a lot of ideas and little money so that forced me to be a little more creative and go after the properties no one else wanted," he says. "I started acquiring properties that had environmental problems, topographical problems and obsolete, vacant or partially demolished buildings." 

Neyer had dabbled in real estate on his own while he worked for the family firm. Settling in Pleasant Ridge after graduating from Miami University, he realized the possibilities of the urban neighborhood, buying homes and properties and developing them with sweat equity. 

Twenty years later, he is not far from his original formula, if on a more sophisticated level. He still buys what he calls "cracked, but not broken buildings. Ones at good locations, high visibility, good bone structure." 

Actually, Neyer says Greater Cincinnati currently has a wealth of such structures due to the commercial building boom in the ’80s – solid structures that now are in need of an update. 

"There was a lot of mauve, brass and 2-by-2 inch bathroom tiles at that time," Neyer says with a chuckle. "We change the lighting, upgrade bathrooms and facilities, and sometimes do a partial demolition. It’s all in pursuit of seeing value where others do not." 

It is a prescription for success that has worked spectacularly and one that is especially suited for tough times. The biggest growth spurts for Neyer Properties came following the 2001 recession, with even larger growth following the Great Recession. 

Since 2008, Neyer Properties has doubled its portfolio, making it one of the few developers in Ohio that can make that claim in the wake of the downturn. Neyer attributes his post-recession success to aggressively purchasing troubled assets at significantly below replacement costs while stabilizing tenant value in existing properties. 

"Everybody was headed in one direction and I was going in the opposite," Neyer says. "I had a sense back in ’07 what was going to occur. A lot of things were going on that defied common sense. You can defy common sense for about two years, then people get slaughtered. We had our powder dry. I told our employees at the time you can moan and groan or do something about it."

Part of what Neyer did was to tap the private equity market, launching a series of four private equity funds since 2010, raising more than $100 million. The firm closed the latest fund – $50 million – in July. The money has helped the firm navigate in a lending world where spooked banks created a lending crisis. The private equity allowed Neyer to be more nimble, jumping on undervalued properties following the real estate crash.  

"Private equity helped so we could be in the position to buy properties on a very quick turnaround time and not be 100 percent dependent on lenders," he explains. 

Among the jewels from that buying spree is the historic Baldwin complex, which Neyer purchased for $17.1 million last August through a foreclosure action. Neyer plans to develop 180 apartments in the 224,000 square foot Grand Baldwin and renovate the 210,000 square foot Baldwin office building at the former home of the legendary piano maker. He also wants to tie the building into the Eden Park neighborhood with landscaping, sidewalks, a pedestrian bridge and other improvements. 

Neyer says it is the type of redevelopment that has defined his company – breathing new life into "cracked buildings."

"I’d love to have more of those. That’s the type of development I focus on. It’s an iconic building. Cincinnati needs it and it needs Cincinnati."

It is also a rare foray into the residential market for the company, but Neyer thinks the original building is more suitable to apartments than offices.

"I like the idea of going with apartments instead of office space to bring back the history and significance of the structure. In the apartments we plan to expose a lot of the original columns and other historic touches." 

Ask Neyer to choose his "favorite child" among the hundreds of commercial structures he has built or developed and he names the one where he is sitting – Keystone Parke – home to the firm’s headquarters that overlook I-71 at Dana Avenue. 

"I think your favorite is the one you are giving birth to," he says. 

It’s been quite the labor. Neyer has been birthing the 10-acre development "since the last century," as he wryly puts it. Neyer has shown patience, finesse and his social conscience in taking more than a decade to develop the site. He meticulously acquired 47 properties, 37 of them residential. He bought them one at a time over the years as they became available instead of resorting to the sometimes more costly and controversial eminent domain process. Neyer also donated a piece of the land to expand a small ballfield and park. The original structure, started in 2002, is a LEED-certified green building at a time when such development was not yet in vogue. 

"We were pioneers. We wanted to differentiate ourselves from a marketing standpoint, but also to do what’s right," he says. "We made the commitment to be eco-friendly and we have seen the benefits of that." 

A second 60,000-square-foot building to be completed later this year will be home to the TriHealth acute rehabilitation hospital. Neyer hopes a third building, which is in the planning stages, will house a hotel in an area of town that is a bit of a hotel desert. 

Neyer sees Keystone Parke as an anchor stimulating development along Dana Avenue in Evanston. "It’s improved the neighborhood and that’s what real estate is all about," he says. "Between the new development at Xavier and Keystone, we are the bookends and it’s improving in between."

Neyer feels his success comes because the company keeps focused on what it does best. Early on he mimicked Al. Neyer’s model by also operating a construction firm. But he abandoned that and doesn’t get involved in property management and leasing, usually outsourcing those aspects. 

"We keep the value part of the equation. We keep the design concept, the architecture and some in-house engineering and outsource the general construction component and day-to-day management," Neyer says. "We keep focused on what I feel are our core competencies – finding and acquiring assets, redeveloping them and leasing them." 

Going forward, Neyer sees a strong commercial real estate market in the area although he is less bullish on new construction, which is down to about 15 percent of Neyer’s current projects. He said government and medical construction is a disproportionate share of the new construction market and costs continue to rise relative to inflation. 

So Neyer is sticking to his first principles of primarily buying properties that need updating. As he puts it: "Find the right location, with good value, well below replacement cost and you will fare well in good times and bad."

Neyer Properties is located at 2135 Dana Avenue, Suite 200, Cincinnati, OH 45207. Your can reach them at 513.563.7555 or visit their website at www.neyer1.com.

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