2023 State of Downtown

2023

STATE OF DOWNTOWN REPORT MOVING FORWARD

Downtown Lexington Partnership (DLP) is excited to present the fifth annual State of Downtown Report sponsored by RW Baird and the fifth State of Downtown Reception presented by Republic Bank, and hosted at Harper Hall. The information contained in the report provides benchmarks and insight, provided by DLP members and stakeholders, into the downtown’s economic health as well as forecasting future economic trends.

Many thanks to DLP real estate committee members, contributors, and sponsors for making this report and reception possible

Director/CEO

“Over the past 30 years, Lexington has remained dedicated to keeping its downtown robust. We are now enjoying the fruits of our labor. Downtown is full of parks and trails. Town Branch Commons Trail, which runs through the heart of downtown along the path of Lexington’s original water source, was completed last year. Town Branch Park, a privately funded destination park, is under construction to the west of a reinvented Rupp Arena and Central Bank Center. Plans are moving ahead to develop the Central Bank Center High Street parking lot, which will bring new attractions and new businesses to our urban core. Sidewalks downtown are bustling. Hundreds of people now live downtown, and hundreds more come downtown to eat, see a show, shop at the Farmers Market, watch a ball game, enjoy a concert, or stroll through one of the many art galleries that call downtown home. Downtown is everyone’s neighborhood, and we love it!”

-Mayor Linda Gorton

EXECUTIVE SUMMARY

Downtown continues a strong path forward with positive momentum in most market segments. Economic indicators showed a strong customer base, including the presence of office workers, visitors, students and people attending special events. The commercial real estate market showed strong sales, a stable office market, increased property values in the urban core further enhanced by the Downtown Lexington Management District, new street level merchants and a strong pipeline of projects that will continue to transform downtown. Mobility and transit benchmarks rose across the board. E-scooter trips show continued popularity, public transit ridership increased, and on-street and off-street parking occupancies demonstrate continued demand. Living and quality of life benchmarks were highlighted by strong for-sale and apartment markets driven by attractive amenities and neighborhoods. The newly completed Central Bank Center places downtown as a highly desirable location for both conventions and visitors, and local offerings bringing in regional traffic to the downtown core. The continued investments in downtown are augmented by construction and new projects announced by the University of Kentucky and also continued interest by developers in Lexington’s northside.

In the near-term downtown’s growth should continue. Strong consumer spending habits and a collaborative, public-private approach to public safety will allow Downtown Lexington to adapt to challenges more quickly than seen in other communities. Looking further ahead, completed large projects like City Center and Central Bank Center, as well as future projects like Town Branch Park and the upcoming $350 million Lincoln Webb development of the 14-acre High Street parking lot will continue to drive downtown growth.

DLP MISSION AREA BOUNDARY DLMD BOUNDARY PARKS

Allen McDaniel Executive

Downtown Lexington Partnership

Jennifer Taylor DLP Board Chair FORVIS

James H. Frazier III Chair Downtown Lexington Management District

DOWNTOWN LEXINGTON MANAGEMENT DISTRICT

THE DISTRICT

Downtown Lexington Management District anchors the downtown and through an annual property owner assessment, provides more than 11,000 hours of enhanced cleaning and safety services and invests significant dollars in economic, business support and art programs annually. These investments and programs have provided a high return on investment to property owners as seen in increasing property evaluations and vibrant street level mix. In 2022, the total property values grew by $13 Million dollars over 2021 and have increased by more than $100 million since 2015 when the district was first formed.

2022 AMBASSADOR SUMMARY

LOOKING AHEAD

Looking ahead, the DLMD is proud to further work toward a clean, safe, vibrant downtown as we add the FUSUS camera integration system as an eligible property improvement to our already existing property improvement grants program. Property and business owners can learn more about these new enhancements by visiting the DLMD website.

BOTH RESEARCH AND EXPERIENCE SHOW THAT SUCCESSFUL BUSINESS IMPROVEMENTS CREATE SAFER, CLEANER, MORE DESIRABLE PLACES TO WORK, LIVE, PLAY AND VISIT.”

– James H. Frazier III, Chair, Downtown Lexington Management District

DLMD TAXABLE VALUE

CUSTOMER BASE

2022 RECAP

With in-person events increasing, downtown visitation was strong, providing more customers to support downtown businesses. In addition, the student population continues to increase. Nevertheless, there was more economic activity generated from the downtown customer base in 2022.

FAST FACTS

70,000 Convention delegates using downtown hotel rooms

172

Large-scale meetings, conventions, public shows or trade shows

33,691 Number of college students

STUDENTS

The total university student population grew for the sixth year. The return of students to campus continues to provide a positive economic impact in 2022 for all of downtown.

CONVENTIONS AND ATTRACTIONS

As the center of the Bluegrass Region’s convention market, downtown benefitted from a resurgence in conventions and meetings as restrictions were lifted and is an important generator of economic activity. In 2022, downtown hosted 172 large-scale meetings bringing 70,000 convention delegates, up 11,000 more delegates than in 2021. Significant growth of the trend should continue in 2023 with the completion of the $300 million renovation and expansion of the Central Bank Center.

CUSTOMER BASE

SPECIAL EVENTS AND FESTIVALS

Many festival and special events occurred attracting significantly more people to downtown and providing an economic boost to the downtown economy. In 2022, Downtown Lexington Partnership and other event organizers hosted more than 160 event-days attracting nearly 300,000 + to downtown.

COMMERCIAL REAL ESTATE

2022 RECAP

Downtown commercial real estate continued to rebound and grow in 2022 There were nearly $89 million in commercial real estate sales, new street level merchant, bar, hospitality and food service business opened and the value of real estate in the Downtown Lexington Management District continued to increase.

FAST FACTS

OFFICE MARKET

The Downtown office market has remained relatively stable since 2018 even as the market absorbed the 155,000 square feet of new space in City Center in 2019, and the effects of the pandemic on remote/hybrid work popularity. According to NAI Isaac, 2023 mid-year vacancy rate for Class A and B space was 11.21% compared to 11.67% in 2021 and 11.12% in 2020. Downtown accounts for approximately 40% of the total office space in the market. Similar vacancy rates can be seen in the suburban market.

The vacancy rates reflect the amount of unleased space but don’t necessarily reflect the actual number of office workers present. A stable leasing environment appears currently for the near term, but as footprint demands reduce, renewals may be impacted long term.

Downtown Central Business District Office Market Trend

Suburban

COMMERCIAL REAL ESTATE

2022 DOWNTOWN STREET LEVEL MERCHANT, BAR, HOSPITALITY AND FOOD SERVICE BUSINESS OPENINGS AND CLOSINGS

Downtown’s street level merchants, bars, hospitality and food service businesses continue to be a vibrant part of downtown. Strong interest in the expansion of retail to compliment the diverse offering of hospitality venues will add additional opportunities for consumers to experience a full spectrum of activities.

DOWNTOWN PROJECT PIPELINE

The timeline shows a sampling of the $4.8+ billion projects since 2015 that have transformed downtown, University of Kentucky and Transylvania University as well as future projects that will continue to shape and revitalize downtown.

OPENINGS

y Jack Brown’s Burgers

y Fresh Bourbon

y Van Meter James

y Big Blue Deli

y Ruby’s

y Cauldron Café

y Forcht Bank

y Sawyer’s Grill

y La Folie

y Health First

y MET Retail

y Brevede (East High Street)

y UKFCU Downtown Branch

CLOSINGS

y BurgerFi

y Fusion Brewing

y Mellow Mushroom

y Oscar Diggs

y Pour Decisions

y Sav’s Chill

y Tilty Bob’s

y SoundBar

y Wilson’s – Greyline

y Postmaster Pub

2022 NOTABLE BUSINESS OPENINGS AND CLOSINGS OUTLOOK

Commercial sales should remain moderately steady. The office market should remain stable but will continue to adapt as leases contain less square footage than demanded previously. Property values will continue to rise in the Downtown Lexington Management District propelled by enhanced cleaning, safety assistance, and hospitality encounters offered by the Ambassadors. However, the biggest factor in driving growth will be the strong pipeline of new projects underway like the Lincoln-Webb 14-acre High Street development adjacent to Central Bank Center, the upcoming renovation of 325 W Main (formerly the Triangle Center), and the start of construction of Town Branch Park.

James Pepper Distillery

$1.3 million

A multi-year renovation project of the historic James E. Pepper Distillery, a National Historic Landmark, which had been abandoned for over 50 years enabling distilling to begin once again.

City Center $300 million

12-story office tower incorporating premium luxury condominiums in its top three floors. It also features a 205room Marriott City Center and 100-room Residence Inn, retail spaces and a 700-space underground parking garage.

Transylvania University William T. Young Student Center $30 million

97,710 sq. ft. features a dining hall, conference and meeting rooms, fitness center, a bookstore and community outreach areas for student organizations.

2018

2019

2020

Fayette County Courthouse

$30 million

A complete interior and exterior renovation now housing a restaurant and bar, the Visitors Center, special event space and offices.

The Met $24.5 million

75,000 sq. ft. mixed-use facility with 44 market rate and affordable apartments and 25,000 sq. ft. of retail space featuring food, finance and health care tenants and art installations.

Greyline Station $5 million

Renovation of the 65,000 sq. ft. former bus headquarters and maintenance hub contains more than 15 retail stores, restaurants, offices and Julietta Market. In addition, there is a radio studio and event space.

DOWNTOWN PROJECT PIPELINE

Lex Live $70 million

90,000 sq. ft. entertainment center featuring 10 movie screens, three bars, a bowling alley, an arcade and meeting rooms.

Central Bank Center $300 million

Expansion and renovation of convention center and Rupp Arena including contemporary exhibit space, meeting rooms, flexible event space, and new ballroom. Rupp Arena had renovations and upgrades to the upper seating bowl, UK Hospitality club space and expanded concourses.

The Manchester $37.5 million

125 room boutique hotel located in the Distillery District featuring, roof top bar and café.

Town Branch Park $35 million

Nine acre urban park and open space featuring art installations, recreational lawn and water features and a great lawn and stage to host performances.

FUTURE

Gatton Student Center Phase I and Expansion

$225 million

364,000 sq. ft. energetic and vibrant hub for student activities featuring many food-service options, a 1,000seat Champions Kitchen, multiple ballrooms, a theater, student organization offices, Alumni Gym, campus bookstore, and the Cats Den.

Town Branch Commons and Trail $39.5 million

Town Branch Commons is a winding park and trail system that runs through downtown with continuous bike and walking paths connecting new and existing parks including Town Branch Trail and Legacy Trail providing 22 miles of uninterrupted trail.

Splash! $2.8 million

Water play project at Charles Young Park, funded by private and public dollars that features an interactive water display.

Lincoln Webb Development $350 million

Proposed development of the 14-acre High Street parking lot to include grocery store, parking garage, residential, office, hotel and entertainment venue.

330 Newtown $41.5 million

108-unit mixed-income development in northeast part of downtown.

MOBILITY & TRANSIT

2022 RECAP

Downtown’s walkscore.com measures continue to be very strong. Other mobility and transit sectors such as e-scooters show strong utilization. Notably, e-scooter usage shows surge demand during not only the academic year, but also during the Fall and Spring Keeneland meets. Public Transit ridership grew 8%.

WALK SCORE

According to walkscore.com, downtown Lexington scored high in all three categories. In 2022, Downtown’s walk score of 91 earns a rating of “a walker’s paradise”. The downtown bike score of 83 earned a rating of “very bikeable” and the transit score of 73 earned an “excellent” rating.

WALK SCORE WALK BIKE TRANSIT

FAST FACTS

177,199 e-scooter Trips

82,808 Lextran ridership at downtown stops

8,391 Downtown on and offstreet parking spaces managed by LexPark

91 Walk Score

85% e-scooter trips during UK school year

22.61 Miles of bike lanes and trails

MICRO-MOBILITY

E-scooters impact on mobility was clearly demonstrated in 2022. Usage increases significantly during the academic year, and even more so during the Spring and Fall Keeneland meets. In 2022, the number of e-scooter trips decreased to 177,199 trips from almost 220,000 in 2021, however, public transit ridership increased by 8%. The availability of E-scooters is important to University of Kentucky and downtown because they help people move within these dense areas without having to drive and secure parking. Approximately 85% of the trips occurred during the UK school year.

E-SCOOTER TRIP

MOBILITY & TRANSIT

BIKE LANES AND TRAILS

.61 miles of bike lanes were added in 2022 bringing the total to nearly 23 miles of bike lanes and trails in Lexington.

PARKING

In 2022, the total supply of on and off-street parking spaces increased to 9,863. On-street meter occupancy increased 3% from 2020 to 55% for 2022, signaling a gradual increase in transient parking activity and stable usage despite a slight increase in parking costs. The transient off-street occupancy in LEXPARK garages recorded greater occupancy gains but still lag behind pre-pandemic levels.

LEXPARK OCCUPANCY RATES (M-F, 8:00 A.M. – 5:00 P.M.)

*Includes public & private garages and surface lots

MOBILITY & TRANSIT

TRANSIT

Lextran is the public transit provider with a fleet that includes compressed natural gas, battery-electric, hybrid-electric, and diesel buses. Lextran operates 21 fixed routes, a door-to-door paratransit service and a vanpool/ridesharing program. Regular bus fare is $1.00, and there are a variety of reduced fares and pass programs available to individuals who qualify. All buses are equipped with bike racks and are wheelchair accessible.

LexTran operates 21 bus stops including a transit center in downtown. More people began to use public transit as we emerged out of the pandemic. Lextran ridership increased 8% in 2022 to 82,808 and they expect strong ridership demand to continue in 2023.

LEXTRAN RIDERSHIP AT DOWNTOWN STOPS

OUTLOOK

Walk and bike scores should increase in 2023 and beyond with 22.61 miles of bike lanes making walking and biking downtown more attractive. E-scooter and E-Bike usage will continue to grow providing customers another means of non-car transit. A strong pipeline of more conventions, meeting and special events will bring significantly more people to downtown especially given the completion of the $300 million Central Bank Center renovation and expansion.

LIVING & QUALITY OF LIFE FAST FACTS

2022 RECAP

Trends indicate that more working adults are choosing where they live with greater emphasis on areas that provide a high quality of life. Accordingly, Downtown Lexington should continue to attract more people to live because of its density of quality-of-life amenities. For this reason, there continues to be strong demand in the for-sale and apartment markets. Perhaps the only threat to this trend is recent uptick in certain crimes.

DOWNTOWN SALES OF SINGLE-FAMILY HOMES AND CONDOMINIUMS

According to the Fayette County Property Valuation office, the 2022 top 10 residential sales totaled $13.59 million, an average price of $1.36 million while the top 50 sales total $38.75 million an average of $775,000. Both these sets of sales data are significantly higher than 2020 data with the top 10 sales totaling $12.6 million and the top 50 sales generating $29 million.

DOWNTOWN RENTAL MARKET

Downtown enjoys a robust rental market composed of 3,822 market rate apartments, affordable housing apartments and student housing units with a combined 97.11% occupancy rate and ranging from efficiency to four-bedroom units providing a broad continuum of rental options. While there have been new projects that have recently come on the market, each market segment has high occupancy rates showing the strength of demand for downtown living, the ability to absorb new development and the relative shortage of downtown rental units.

LIVING & QUALITY OF LIFE

CRIME RATE

Downtown’s safe environment creates the foundation for a vibrant, clean and successful urban core. In 2022, more people continue to come downtown to go to events, restaurants and bars. As that activity increased, some minor crimes have seen a slight increase but overall the environment remains safe and well policed. The police department is working with downtown partners to address these security issues. However, downtown’s crime rate remains low.

FUTURE FORWARD

With the opening of Town Branch Commons and Trail, and Town Branch Park projected to open by 2025, downtown should become more walkable and bikeable while also providing additional quality park space. New apartment and for-sale projects should increase downtown’s residential population and continue to increase downtown vibrancy and quality of life.

ACKNOWLEDGEMENTS

Thanks to the many individuals and organizations that provided information to make this report possible.

CONTRIBUTORS AND SOURCES

y Ross Boggess, Carto Commercial, The Integral Group

y Cornett

y Downtown Lexington Partnership

y Fayette County PVA

y Ken Silvestri Real Estate

y LEXPARK

y Lextran

y Lexington Police Department

y Lexington-Fayette County Urban County Government

y Loopnet.com

y NAI Isaac

y Transylvania University

y VisitLEX

y University of Kentucky

y U.S. Census Bureau

y Walkscore.com

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