Life Returns to the Dayton Arcade

After being shuttered for 30 years, there’s life again in the Dayton Arcade, a collection of nine buildings totaling 500,000 square feet in the heart of its community.

Multiple attempts to renovate the historic property all failed until recently when Cross Street Partners, Model Group, and McCormack Baron Salazar joined forces and came up with a plan to redevelop the historic Dayton, Ohio, property in much the same way it was created at the start of the 20th century—with a vibrant mix of retail, offices, event space, and housing.

The first phase includes the 110-unit The Arts Lofts at the Dayton Arcade, featuring 103 affordable and seven market-rate units marketed to people in the arts community. By including apartments marketed to artists earning no more than 50% and 60% of the area median income, the Art Lofts will preserve affordability as the downtown revitalizes, according to the developers.

The development is anticipated to be an important catalyst for the surrounding downtown area, says Trace Shaughnessy, vice president at McCormack Baron Salazar. The first phase also includes an innovation and entrepreneur center with the University of Dayton as a partner.

A second phase will include a shared commercial kitchen program, a marketplace retail and restaurant environment, and a hotel.

In addition to restoring a magnificent rotunda, the team worked to preserve many of the Arcade’s historic details, including windows, floors, and fireplaces.

The project benefited from three strong, veteran development companies bringing their different expertise to the table, according to Shaughnessy. The project also required intricate details to come together, including on the complex financing. The $37.9 million Arts Lofts uses multiple sources of funding, including low-income housing and federal and state historic tax credits. The larger restoration of the South Arcade, of which the housing is a component, is about $90 million and 26 layers of financing.

Bruce Katz, an authority on housing and reforms that help cities grow, has called the Dayton Arcade “the most transformative project in America.”