Why the Dayton area lost 2,000 jobs to Hamilton

Twice this year, the Dayton area has made a short list for new call center locations promising to create thousands of jobs, but the region was unable to make the final cut, according to company and economic development officials involved in the deals.

The companies — Colorado-based business process outsourcing company StarTek Inc., and Barclaycard US, a credit card servicing division of international financial company Barclays Bank — were unable to find property in Dayton or its suburbs to meet their needs.

Instead, StarTek and Barclaycard selected space in Hamilton where they promise to create more than 2,000 jobs combined in coming years and invest millions to renovate formerly vacant buildings.

“A number of real estate solutions in both (Cincinnati and Dayton) regions and other states were considered for these two companies,” said Marty Hohenberger, vice president of business development for Dayton Development Coalition, in an email when asked why the Dayton-area real estate didn’t work out.

The Dayton Coalition is a private economic development agency in charge of business recruitment to a 12-county area. Its Cincinnati-area counterpart is REDI Cincinnati.

“Fortunately, the state of Ohio and southwest Ohio in particular won out, and both regions will benefit from the new jobs being created,” Hohenberger said.

Barclaycard was looking for small communities where it could have a big impact, located in the middle of the country in a time zone separate from its other call center locations and in an area that was weather reliable — not highly prone to hurricanes or tornadoes, for example, said Larry Drexler, chief privacy officer for the payments company. It needed an existing facility big enough to accommodate 1,500 people, and in good enough condition for a quick opening, Drexler said.

Last Monday, Aug. 17, it announced the Vora Technology Park on Knightsbridge Drive in Hamilton was chosen to open the center.

Greater Dayton fell in the company’s top five list for locations, Drexler said.

“Cincinnati was not on that list initially but Dayton was. We flew out to Dayton and were very impressed with the area and the people we were talking to, but we saw some limitations around real estate,” Drexler said.

“Dayton did not have for our time frame readily available real estate, which was disappointing to us, so we took a step back and said what else is there?” he said.

Vora Technology’s almost ready-to-go, 365,000-square-foot building; favorable rental rates; high-tech infrastructure including data and power back-ups and fiber connectivity; along with ample parking helped close the deal, property owner Mahendra Vora said.

“We became strategically attracted to Hamilton because of its location between Dayton and Cincinnati, which gave us pull from both markets,” Drexler added.

StarTek was also looking for space to open quickly, according to Hamilton and Middletown economic development staffers. The company looked at Dayton and seriously considered a location in Middletown, Hohenberger confirmed with this news outlet during a March interview. But StarTek settled on space in downtown Hamilton previously occupied by the department store Elder-Beerman and made the announcement official in February.

“Generally, a call center’s a big, single-story type of building with a sea of parking around it in the suburbs, and we probably don’t have that product readily available,” said Tony Taylor, a partner for Crest Commercial Realty in Dayton.

There’s usually not enough time to build a new facility, nor does the length of the lease or rental rate for a call center typically justify the cost to build it, Taylor said.

StarTek was a win for Hamilton’s nonprofit CORE Fund, which was launched in 2012 and modeled after a similar development fund known as 3CDC in Cincinnati. CORE has raised money including taxpayer-backed funds to acquire blighted properties, ready them for redevelopment, and make non-traditional loans to developers for projects.

The CORE Fund owns the building StarTek picked, and was able to offer low-cost renovations and rent. And the CORE’s leader, Mike Dingeldein, an architect by trade, mocked up drawings for a call center layout in the building to help convince the company the plans would work, according to Dingeldein. CORE is also credited with providing a quicker response than an out-of-town owner typically would.

“We could desperately use the equivalent of a 3CDC in Dayton,” Taylor, of Crest Realty, said.

However, “companies will make decisions based on a lot of analysis, and I don’t know if the existence of a Dayton development corporation would have made the difference by targeting a building,” he said. “Let’s face it, it just comes down to a couple decision makers at Barclays to pull that trigger.”

The Vora Technology Park building Barclays chose was formerly the headquarters of a paper manufacturer. It’s a specific building — large and outfitted with technology — that lent well to the Barclays use, said Larry Bergman, president and chief executive officer of Cincinnati-Dayton commercial real estate firm NAI Bergman.

“I think Dayton is a very strong viable market with an educated workforce, and it’s affordable, and I do believe in time it will get absorbed,” Bergman said. “There is no reason that it shouldn’t be a place that other companies wouldn’t consider.”

“There are companies actually reaching into the Dayton market to see if there’s space available. That’s positive. That means a lot of the demographics are meeting their needs,” Bergman said.

The city of Dayton was not contacted by Barclays or StarTek for potential sites, according to spokeswoman Toni Bankston. Bankston said also did not know if the Coalition was contacted about sites in city limits.

Hohenberger of the Coalition could not be reached for a phone interview. Erik Collins, Montgomery County economic development director, also could not be reached for a phone interview, but these written statements were provided by the county: “In most cases, companies work through site selectors, and the projects are given code names.”

“Montgomery County and the Dayton Region absolutely have ‘Class A’ office space that we present to these site selectors. For example, the Key Bank building, Kettering Tower, the soon to be vacated PNC Headquarters in downtown Dayton, the Mound Advanced Technology Center in Miamisburg, Kettering Research Park, Austin Landing and various other locations throughout Montgomery County all have ‘Class A’ office space,” reads the statement.

The Dayton region saw in 2014 a 50 percent increase in the amount of commitments for new job creation including success stories such as auto glass maker Fuyao in Moraine, Procter & Gamble’s new distribution center in Union, and the expansion of Speedway’s headquarters in Clark County, according to the state’s privatized economic development agency JobsOhio.

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