Covington VS Cincinnati

We’ve received lots of questions as to why we’re focusing more on Covington, KY instead of Cincinnati- and what made us pivot.

After many trips to both cities, studying them for over 18 months, and now living in one- we have a granular understanding of both markets and the synergies/differences across them.

These thoughts and findings are detailed below:

The Covington-Cincinnati Relationship: Real Estate, Employment, & Urban Appeal

Covington has long had a symbiotic relationship with Cincinnati.

For real estate investors and developers, understanding this dynamic is key to appreciating Covington's value proposition, particularly in the context of employment, livability, and historic appeal.

1. Economic Interdependence and Employment Centers

Cincinnati serves as the employment engine for the region with corporations such as Procter & Gamble, Kroger, Fifth Third Bank, and Cincinnati Children's Hospital, which are headquartered or have significant operations in the urban core.

This concentration of corporate and healthcare employment within a 5-10 minute drive of Covington provides a stable base of demand for housing, particularly rental housing.

Many Covington residents, especially professionals in healthcare, finance, and technology, commute daily across the Roebling Suspension Bridge or via I-75/I-71 into downtown Cincinnati.

During warmer months, those living in the urban core often walk to work.

Covington itself has also developed its own growing employment base, especially in the creative, manufacturing (ProMach, Ashland), and service sectors (St. Elizabeth’s, Crown Services).

This is highlighted by the recent announcement from Fischer Homes (the region’s largest home builder and 31st in the country), detailing the relocation of their corporate headquarters to downtown Covington- bringing over 350 high paying jobs to the area.

Additionally, the life sciences industry has been growing in the city with many corporations either entering the market or growing their existing footprint.

Some Examples:

CTI Clinical Trial & Consulting Services

Headquarters: RiverCenter Towers, Covington

Employees: Approximately 400 currently, with plans to add 500 more by 2027

Focus: Global clinical research services, specializing in rare diseases, cell and gene therapies, and complex programs for critically ill patients

Gravity Diagnostics

Location: Russell Street, Covington

Employees: Approximately 465

Specialization: CAP Accredited and CLIA Certified laboratory providing innovative testing in areas like COVID-19, toxicology, and pharmacogenomics

Growth: Expanded into a 77,000-square-foot facility, marking a 1,000% increase in space

Thermo Fisher Scientific

Expansion: Investing nearly $48 million to establish a new lab operation in Covington’s Latonia neighborhood

Job Creation: Expected to create 69 additional jobs

Purpose: Expanding central laboratory operations to accelerate pharmaceutical and biotech customers’ delivery of safe, effective medicines

Startups and digital firms are also increasingly choosing Covington for its lower costs, subsidies (which the city is great at), historic buildings, and walkable neighborhoods that appeal to younger professionals.

Specifically, Co-Hatch (a co-working concept) just opened in Covington and is nearing full occupancy just after 3-4 months.

An incubator, SparkHaus (opening in late 2025/2026), is currently being developed downtown and will span more than 40,000 square feet - making it the largest dedicated entrepreneurship hub in Kentucky.

2. Real Estate Dynamics: Covington as the Alternative Urban Core

Covington has emerged as a compelling alternative to Cincinnati’s Over-the-Rhine and downtown neighborhoods.

Both cities share historic architecture, 19th-century charm, and walkable grids.

However, Covington offers these features with lower price points, less bureaucratic friction, and an overall safer environment (motor vehicle theft rate per 100,000 residents is 4x higher in Cincy).

Investors are drawn to Covington for its strong fundamentals: relatively low acquisition costs, upward-trending rents, and a tenant base seeking urban amenities without the safety and governance concerns seen in Cincinnati.

Notably, many renters in the market are single women- a demographic that often values safety, cleanliness, and community.

Covington's compact, navigable urban environment and responsive local government have made it particularly attractive to this group and continues to attract more.

Side Note: the joke amongst the locals here is: "if you commit a crime here, you better get over that bridge and into Ohio before the troopers get to you."

Public perception of policing is vastly different across the two markets- Covington PD doesn't mess around and that's felt.

3. Urban Livability and the "Cool Factor"

Neighborhoods like Mainstrasse Village, Mutter Gottes, and the Central Business District have become cultural hubs- home to locally owned restaurants, craft breweries/bars, boutique retail, and art spaces.

The city’s emphasis on place making, historic preservation, and pedestrian-first design has paid dividends in attracting both residents and businesses (this is also seen in the ongoing development of the former IRS Site, which will connect the river front to the urban core).

Main Street alone (the main artery) offers a grocery store, retail options, over 8 restaurants, over 10 bars, a theater, bakeries, coffee shops, and countless more- all within a ~200 yard walk.

The walkability of this city fosters a lifestyle that appeals to millennials, Gen Z professionals, and downsizing boomers alike (I closely track all sales in the market and have been amazed by the soaring condo prices, $1M+, as more boomers start to buy in Northern Kentucky).

4. Public Policy and Governance

Covington's local government has a reputation for being developer-friendly while maintaining a clear focus on historic preservation and neighborhood character (the neighborhood organizations in Kentucky are much easier to work with).

In contrast, Cincinnati’s more complex political dynamics, zoning challenges, and higher property taxes (~2.5% in Cincinnati vs. ~1.6% in Covington) can slow down development.

The result is a smoother path to entitlements, renovations, and adaptive reuse projects in Covington.

Conclusion: A Strategic Node in the Greater Cincinnati Ecosystem

Covington is not merely a peripheral city; it's a vital node in the Greater Cincinnati ecosystem.

Its proximity to Cincinnati's job centers, coupled with its historic charm, walkability, and pragmatic governance, makes it uniquely positioned for growth.

For investors, Covington offers many of the cultural and architectural benefits of Cincinnati without the associated drawbacks.

It stands as a case study in how smaller cities adjacent to major metros can harness their assets to create vibrant, livable communities - and compelling investment opportunities.

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Broken Arrow Holding is currently focused on Covington, where we see the most promising opportunities, but remains open to exploring future possibilities in Cincinnati as they arise.

We are excited to continue building our team and expanding our portfolio in this dynamic and unique region.

Live by the List

We maintain separate “lists” for each stage of the acquisition process that serve their own purpose.

These documents ensure we’re receiving all needed information (and that the information is accurate), highlight issues that may affect our business plan, and create processes to improve performance.

1.)  Due-Diligence: This is how we ensure we’re not buying a lemon. Checking everything from location/elevation, surrounding properties, existing leases, permit history, title reports (easements, liens), and all other inputs that we gather through our general/sewer inspections.

2.)  Post-Acquisition (depending on the project): Quick maintenance to set the tone for management and to show existing tenants we care. This encompasses upgrades to entryway fixtures, painting, landscaping, and a deep cleaning of all common areas. If we’re gutting the whole building, this list becomes less important.

3.)  Renovation: Construction and capital expenditures that add value such as new kitchens/bathrooms/flooring/roof/etc. These are organized by scope of work and have permits, estimates, and hard quotes corresponding to each stage.

4.)  Punch-Out: Last items before the property is tenant ready; cleaning, touch-ups, signage, security, and the closing of open permits associated with the project.

5.)  Preventative (On-Going): We maintain a list of maintenance items that we execute periodically, such as air filter replacements, MEP inspections, and landscaping. Getting in front of maintenance is generally a good way to save money in the future and tenants don’t always sound the bell early if something is wrong.

Each list is dynamic and seemingly grows after each project we execute.

There will always be surprises along the way but it’s best to have an itemized list of these “what ifs” to help mitigate any future issues and remind you of those you encountered in the past.

Purposeful Development

We’ve been discussing the Covington, Kentucky market for many months at this point, but are especially excited about the recently announced redevelopment of the former IRS Headquarters within the city.

The site was previously home to a sprawling IRS tax-processing facility that operated for over five decades and was located on 23 acres just south of the Ohio River.

The facility was decommissioned in 2019, and the city purchased the site in 2020 for $20.5 million.

Currently, it's being transformed into a vibrant mixed-use neighborhood, with several key components that are detailed below:

A.) Educational Complex:

A $150 million state allocation has been proposed as part of the 2024-26 state budget to establish a new home for The Salmon P. Chase College of Law and The Northern Kentucky campus of the University of Kentucky's four-year School of Medicine.

This complex will be located on Block G of the Central Riverfront subdivided map and will bring nearly 600 graduate students, faculty, and staff to the area.

B.) Residential Development:

16 townhouses are planned for Block B, fronting Fourth Street and will provide both rental/ownership opportunities to residents within the community.

A proposal on behalf of a local developer was already accepted by the city for this project.

C.) Commercial Development:

Block O, the largest at over 2.5 acres, is earmarked for a commercial user, will likely be developed into market rate apartments with mixed-use components.

To note, the city allocated parcels to several local developers instead of providing the site to a single, institutional player.

Through splicing parcels, we'll receive differentiated (nobody wants a concrete building with 400 sardine can apartments to consume this space) product that conforms to the surrounding area while serving the residents within it.

D.) Public Infrastructure:

Phase 1 includes approximately $15 million in streets, sidewalks, sewer lines, and utilities.

Future phases will include additional utilities, a parking garage, a public park, and connections to the Riverfront Commons walk/bike trail.

Impact on the Surrounding Area:

A.) Economic Development:

The project is expected to be a catalyst for further growth, attracting more offices, commercial ventures, and housing.

The development also complements Covington's emerging life sciences cluster and will contribute to the wet lab that is currently being constructed in the city.

Covington based companies like CTI Clinical Trial and Consulting Services, Gravity Diagnostics, and Bexion Pharmaceuticals will benefit from these capital allocations.

B.) Urban Integration:

The development aims to replace the former "fenced-off concrete island" with a connected neighborhood that provides walkability throughout the urban core of the city.

It will restore the street grid between Third and Fourth streets and create a new Russell Street promenade- furthering this mission.

C.) Community Amenities

The project includes plans for a public park with views from the top of the levee and will connect to the multi-mile Riverfront Commons Walk/bike trail, improving accessibility and recreational opportunities.

D.) Real Estate Impact:

Normally, we’d be wary of the construction of new apartments around our assets but view this as a positive given these apartments will likely be priced 20-30% higher than other Class A rentals (which don’t have amenities).

Given we’re not competing in the higher end of this market- we believe these developments will bring in more young professionals and higher-earners, which should positively surrounding establishments.

We may be a refuge for individuals seeking out quality rentals in walkable areas but aren’t able to afford the buildings littered with door men, pools, and gyms.

In essence, a middle ground for quality that doesn’t reach the point of luxury.

IE.) A couple is looking for a quality 2 bed/1 bath in a walkable location in Mainstrasse Village or Mutter Gottes (neighborhoods within the city). A brand-new building with amenities will have rents starting at ~$2,200-$2,500. The same unit in our building is $1,700-$1,850k (granted without a lot of bells and whistles). Same location, same quality of apartment, just a decreased rental rate that should provide more wiggle room for these residents.

We have no way of projecting the future but believe that the developer interest in this market ($5B+ in planned projects), the city’s willingness to grow, and the concerted effort to maintain historic features/walkability will contribute to progress over time.