Riegel’s company, Arkham Red LLC, will have the option to buy the KeyBank property and land if he makes significant renovations, fills up tens of thousands of square feet of office space and gets a certain number of people to work in the building.
Riegel told the Dayton Daily News on Wednesday that KeyBank Tower is in an important and strategic location and downtown cannot afford to have it sit empty.
“It’s too big to fail — it has to be successful,” said Riegel, who several years ago also bought another building at Courthouse Square, where the tower is located. “I’d rather step in and right that ship rather than have it become a big problem for downtown.”
Credit: Jim Noelker
Credit: Jim Noelker
The Dayton City Commission on Wednesday approved an assignment and assumption of ground lease agreement with Arkham Red for the KeyBank Tower that gives the company a purchase option if certain benchmarks are met.
Arkham Red, which is managed by Stratacache CEO and founder Riegel, says it has negotiated a leaseholder sale for the tower with THMG 10 West Second Street LLC, which currently holds the leaseholder rights.
The city of Dayton owns the land on which the building sits, as well as the “air rights,” meaning the actual office tower, city officials said.
The city has to approve any new lease assignments.
Keybank Tower, located at 10 W. Second St. in Courthouse Square, was constructed in the 1970s during the urban renewal efforts that transformed downtown.
The building originally was occupied by MeadWestvaco Corp, but later became the Dayton headquarters for KeyBank, which put its name and logo atop the 27-story structure around 2008.
THMG later acquired the leaseholder rights for the property in 2010.
Credit: Jim Witmer
Credit: Jim Witmer
Riegel purchased Kettering Tower in 2019 which he renamed Stratacache Tower.
The building is across the street from the KeyBank property. He also owns the Courthouse Plaza SW building at 10 N. Ludlow, which was formerly the DP&L building.
The Courthouse Plaza building also is in Courthouse Square, like the KeyBank Tower.
Riegel said he has spent millions of dollars repairing and renovating the two buildings, which have “consumption” rates north of 60%.
“Probably with the Plaza building we will be pushing 70% by year end,” he said.
Riegel has roughly 250 to 300 Stratacache employees in the Courthouse Plaza and Stratacache Tower buildings.
Riegel said he hopes he can in the near future share more details about his plans for the KeyBank Tower.
“We’ll have further announcements once the deals closed,” he said. “We have very specific plans for the building.”
Riegel said he plans to make improvements to the tower in the next six to nine months.
City Manager Shelley Dickstein said KeyBank Tower was built with the help of a public financing tool that gave the city the ground leases and air rights.
But she said the city never expected and did not ever want to own the property.
She said the tower has an annual holding cost of nearly $1 million to keep it heated and secured, and the city does not want to shoulder that financial burden.
Dickstein said the tower likely will be completely empty sometime this year, after the Downtown Dayton Partnership and KeyBank vacate their offices.
Under the purchase option agreement, Arkham Red will be able to buy the land and air rights from the city if the company invests at least $4 million into the property, fills 85,000 square feet of office space and ensures 90 or more full-time employees work in the building, according to Dickstein.
The company will have three years to reach these milestones. If Arkham Red exercises this option, the city no longer would have ownership of any kind of the property, Dickstein said.
The city says it would sell ownership of the tower to the company for $10.
The city says THMG owes hundreds of thousands of dollars in unpaid rent and real estate tax obligations, but it will not pursue those under the new agreement.
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