Ohio City's Kowalski bucks housing trend

The Kowalski Heat Treating Co. is a manufacturing outlier in the
booming Detroit Avenue residential corridor in Cleveland's Ohio
City neighborhood (Google).(CLICK IMAGES TO ENLARGE)

A stretch of Detroit Avenue in Cleveland's Ohio City neighborhood, once known as Mariners' Row for its many boat dealers and boating stores, is quickly becoming home to a number of mid-rise apartment buildings. From The Quarter, Federal Knitting Mills, Mariner's Watch, Edge 32, to the latest and largest project yet -- Church + State -- more than a dozen blocks of Detroit Avenue next to the West Shoreway (now Edgewater Parkway) are lined with apartment buildings from four to 11 stories tall.

A notable exception is a holdout manufacturer, Kowalski Heat Treating Co., that has grown from 3,000 square feet to 83,000 square feet during its 44 years, adding nearly 23,000 square feet just in the past week.

A source said owner and President Steve Kowalski had secretly been looking to move to larger quarters in a business park elsewhere in Cleveland but the deal fell through. If so, it makes sense that Kowalski may stay put because his metalworking equipment is expensive to move. But the source said it is possible that Kowalski's latest acquisition might be for storage in the short term. In the long term, he could still sell his entire property to a developer and relocate his operation which employs about three dozen people.

Prior to 5 p.m. March 22, Kowalski had not returned two voicemails and an e-mail seeking clarification for this article. A woman who answered the phone earlier that day at Kowalski Heat Treating said the company wasn't planning on moving.

There are other indications that Kowalski Heat Treating will keep expanding to increase production of treated metal products and continue bucking the trend of an increasingly residential Detroit corridor overlooking Lake Erie and Whiskey Island.

To the right of the new Edge 32 apartments is the former head-
quarters and plant of Conveyer & Caster that was bought on
March 18 by Kowalski Heat Treating. Conveyer & Caster
moved out to Westlake and Kowalski moved in (Google).

On March 18, a corporation owned by Stephen G. Kowalski of Bay Village closed on the purchase of 0.83 acres that belonged to The Storefront Ltd. (doing business as Conveyer & Caster Inc.), 3501 Detroit Ave. Storefront is named after the Stohr family who founded Conveyer & Caster in 1961 and continues to run it today. The land and four buildings, including a house on Clinton Avenue, were valued in 2018 by Cuyahoga County at $719,400 for tax purposes.

The purchase amount is not publicly available. However, SGK Development Co. and KMJC Properties LLC, both owned by Kowalski, secured two $1.44 million mortgages from The Storefront Ltd. which also acted as lender, according to documents filed with the Cuyahoga County Fiscal Officer.

SGK Development is the firm that owns most of the 1.16 acres on which Kowalski Heat Treating had been operating. Its mortgage pertains to the parcels in those 1.16 acres. KMJC Properties was formed in January as part of Kowalski's efforts to acquire the neighboring Conveyer & Caster site.

Conveyer & Caster moved its offices, manufacturing plant and roughly 30-40 employees on March 1 to a 75,000-square-foot building it renovated at 29570 Clemens Rd. in Westlake. KMJC Properties' mortgage pertains to the parcels in the 0.83 acres that Kowalski acquired March 18.

It isn't known for what purpose Kowalski will use or has used the $2.88 million in loans. But it appears that one loan was used to acquire the Conveyer & Caster site and the other to possibly improve, replace or add equipment owned by Kowalski Heat Treating.

Stephen G. Kowalski, owner and president of Kowalski Heat
Treating, now has a significant presence on the Detroit Avenue
corridor that stands out along the West Shoreway (Google/KJP).

Kowalski Heat Treating has been expanding ever since the company was founded by Steve Kowalski's father Robert in 1975. The company's previous expansion before last week was in 2014 when it acquired Kennick Mold & Die, 3601 Detroit, for what Kowalski calls Plant 6. That acquisition brought the six-building site up to 60,000 square feet.

In 2002, according to Crain's Cleveland Business, Kowalski invested $2.5 million to refurbish its then-18,000-square-foot site and add 10,000 square feet of space to it. The article noted that Kowalski said he had no thoughts of relocating the company because many of his employees lived in Cleveland.

"We love this area," Kowalski told Crain's 17 years ago. "This location is ideally suited for our business. We didn't do this (refurbishment of the building) for the short term."

Ironically, back in 2002, Kowalski also said he doubted the ability of the Detroit corridor to support more shops and housing. Yet, the neighborhood continues to boom with the addition of more shops and housing -- and a growing manufacturing plant.

END

New Sherwin Williams HQ plans may stir by 2020

Sherwin Williams' world HQ is the 89-year-old Landmark Office
Building in downtown Cleveland that the Fortune 500 company
outgrew five years ago. That was before it swallowed up rival
Valspar Corp. (KJP). (CLICK IMAGES TO ENLARGE)

By the end of this year, Cleveland coatings giant Sherwin Williams (SHW) plans to issue a request for proposals (RFP) from design-build teams for a new or expanded corporate world headquarters and research facilities. That's the word from two sources in the development community.

Once SHW wrapped up legal and staffing issues in the summer of 2018 surrounding its acquisition of rival Valspar Corp., it commissioned work on drafting an RFP for the combined company's facilities. While most of the parameters in the RFP aren't known, some are. For example, the RFP will reportedly seek proposals not only for a new headquarters but also for a new research center.

It is apparent that SHW will re-open consideration of Downtown Cleveland sites for the new headquarters or an expansion of its existing headquarters. Prior to launching its plan to acquire Valspar in 2016, the company was near to announcing a new headquarters tower on the Jacobs Group-owned parking lot on Public Square, according to a source at a firm hired by SHW five years ago to assist its extensive due diligence efforts.

SHW's headquarters since 1930 has been the Landmark Office Tower, 101 Prospect Ave. which it has owned since 1985 but outgrew five years ago. The growth accelerated even more rapidly following the Valspar deal, with local SHW employment increasing by 615 people between June 2017 and June 2018, to nearly 5,000 employees. SHW corporate office and research activities now are scattered among six facilities in Greater Cleveland.

Reportedly, SHW's charter directs its principal offices to be located within one mile of where the company was founded in 1866, roughly where SHW's Breen Technology Center is today at 601 Canal Rd. If the existing headquarters is vacated, the RFP may include parameters for purchasing and redeveloping it.

SHW's Breen Technology Center is next to where the company
was founded on Canal Road in 1866. The crowded R&D facility
is in need of a larger, more modern replacement. While it could
be built anywhere in the world, it will likely be close enough to
the downtown Cleveland headquarters to retain easy, personal
interaction between SHW's executives and scientists (Google).

Unlike the headquarters, there is no corporate restriction on where the Breen Center should be located. A new research and development facility is also part of the RFP, a source said. More than 400 people work at Breen which was built in 1948 and expanded in 1998. Today, the facility is so full that most of Valspar's R&D staff has had to remain in Minneapolis.

The RFP will likely leave it open to relocate SHW's primary R&D facility to anywhere in the world, although remaining relatively near the headquarters is apparently desirable. There is a lot of personal interaction between the two facilities, as SHW executives and researchers regularly walk back and forth between Landmark and Breen in their duties to advance new products and processes.

The timing of the release of the RFP before 2020 coincides with SHW's progress in paying down debt it incurred from the Valspar acquisition. SHW has been hyper-focused on paying down that debt and will not consider a new headquarters or research facility until its debt load is reduced. That includes leasing new facilities built and owned by others because long-term leases also count as debt.

In 2017, SHW's debt was more than four times higher than the average debt-to-equity ratio of its competitors in the coatings industry.

SHW's debt load is still significant but improving. Right after the Valspar acquisition was given the green light by numerous governments around the world, more than $11 billion of debt was on SHW's books in the third quarter of 2017. Its debt is now dropping to near $9 billion, but was just below $2 billion before acquiring Valspar.

So far, SHW has been able to pay off about $1 billion of its debt per year thanks to strong cash flow from increased business following the Valspar buy. The firm is not over-leveraged, however, as measured by the debt-to-equity (D/E) ratio. SHW's D/E ratio was 4:1 in 2017 but is now below 2.5:1 and should be at 2:1 by the end of this year.

An over-simplified projection of how and when SHW's debt-
to-equity ratio could recover from the Valspar acquisition and
return to an industry standard 1:1 ratio. SHW will not build or
pay a long-term lease for a new headquarters until its debt is
reduced to a normal level. Note that it takes more than three
years to design and build a skyscraper (KJP).

For context, competitor PPG's D/E ratio is at 1.66:1, although their debt is at a five-year high. The industry average is slightly better than 1:1. It is possible that SHW's D/E ratio could approach PPG's level by level by the middle of next year, assuming cash flow and share values do no worse than remain stable.

Assuming there are no major corporate or economic hiccups, SHW's D/E ratio should be able to reach 1:1 by the end of 2022. That's interesting timing considering that it takes more than three years to design and build a roughly 1-million-square-foot skyscraper that would be big enough to accommodate all of SHW's scattered corporate offices and allow room for future growth.

That three-year clock could start ticking at the end of this year. That coincides when sources say SHW will issue its RFP to developers for what would likely be the largest office building constructed in downtown Cleveland in 30 years.

END

New HQ may land on Scranton Peninsula

A corporate headquarters is now shown in the marketing materials
for Thunderbird, the 22-acre development of Scranton Peninsula
in Cleveland's Flats, after a 7.44-acre plot was put under contract
 to a new user. (LoopNet)(CLICK IMAGES TO ENLARGE)

With roughly 80 acres of land, Cleveland's Scranton Peninsula is practically a blank canvas for a developer to pursue their SimCity dreams along a navigable waterway in the heart of a major city. And someone has just planted a big flag on Scranton Peninsula, the largely vacated expanse of land nearly surrounded by the Cuyahoga River a mile south of Public Square.

Great Lakes Brewing Company planted the first and biggest flag, taking eight of 22 acres being actively marketed as "Thunderbird" by developers. The craft brewer will expand its brewing capacity and for a possible canning facility, tasting room and restaurant. Great Lakes has an option to buy two more acres to the west, along the river.

But it wasn't Great Lakes that took the next chunk of Thunderbird on barren Scranton Peninsula. Thunderbird is being marketed and potentially developed by an investor group including developer Fred Geis, a group of investor companies called the East West Alliance (led by attorney Matthew Weiner) and J Roc Development. After Great Lakes grabbed its parcel, there were three more plots of land to be had in the Thunderbird offering -- the 7.44-acre Lot A, 4.17-acre Lot B, and 2.04-acre Lot C.

The proximity of Thunderbird and Scranton Peninsula
to downtown Cleveland is evident. so is the new HQ
shown in this image, released March 11 (LoopNet).

The largest of those is now under contract for sale or lease to.....someone. That means there is an agreement to sell or lease it but because the transaction hasn't closed, it's still a mystery who it is. However, a couple of clues suggest a notable shift in the aspirational designs for this site.

First, the land area involved is more than 324,000 square feet. At this point, it doesn't appear to be for a land-gobbling warehouse or assembly plant -- if the new renderings being marketed in brand-new Thunderbird marketing materials are any indication.

Released on March 11, a new marketing brochure shows a glassy, 11-story, cube-shaped corporate headquarters rising next to the planned Great Lakes brewery, along cobblestone streets and overlooking the Cuyahoga River and Columbus Road peninsula. Three of the stories appear to be for parking, above a ground-floor level of retail and/or restaurants.

The headquarters building bears an obscure sign "Tenants Name" on the facade. And the marketing piece encourages a headquarters tenant to locate here, suggesting that an end user isn't the firm who is under contract for Lot A, but rather another developer or investor.

Views from the same vantage point, before (above) and after
(below) an unknown user agreed to buy or lease Thunderbird
Lot A for what is now shown as a corporate headquarters.
Previously, the aspirational design envisioned a possible
residential use for the same site (LoopNet).

Previously, in Thunderbird's listing on LoopNet, the building shown in the renderings for this site looked residential, complete with balconies. It was elongated, about half as tall, and built possibly of brick and other earthy colored materials.

While the identity of the company that is buying or leasing here is still a mystery, Thunderbird's newfound promotion of its inclusion in the Opportunity Zone program is not. The backers now tout it on the cover of the marketing brochure and with a full page inside explaining how the O-Zone program can benefit investors who choose to put their money into Scranton Peninsula.

This 135-year-old building at 1920 Scranton Rd. is due to be
demolished soon. It is next to the Lot A site that is now under
contract for development. This view is from 2016 (Google).

Most of the rest of Scranton Peninsula is not being actively marketed for development, but that may be starting to change. Scranton Averell Inc. owns most of the land on the peninsula. It has owned properties here through predecessors and ancestors since the 1820s.

Although Scranton Averell is not a partner in the Thunderbird project, it is cooperating with it by allowing its land to be shown bearing conceptual developments in marketing renderings. And Scranton Averell has agreed to pursue demolition of a collection of brick buildings at 1920 Scranton Rd., dating from 1884. These buildings are next to the Lot A parcel that is now under contract.

This graphic from the Thunderbird marketing tools show the
15.5 acres of land that are spoken for and the 6.2 acres that
are still on the market for lease or purchase (LoopNet).

Another development may also be moving forward, separate from both Thunderbird and Scranton-Averell. At the neck of Scranton Peninsula along Carter Road just east of Columbus Road, Lake Link LLC is requesting city approvals to build a 2,967-square-foot model home. It's the first of a dozen luxury, single-family homes that will carry a weighty price tag that's becoming more common in Cleveland's core city. The homes' list prices start in the $750,000 range according to a roadside sign.

END

Four downtown towers are in the works

A pair of 24-story towers in the revised nuCLEus development,
as seen from the Huron Road entrance to Quicken Loans Arena,
may see construction start by the end of Summer 2019.
(Stark) (CLICK IMAGES TO ENLARGE)

The real estate market in Cleveland and especially downtown is shifting into a whole 'nother gear.

Growth of the market combined with the advent of new financing tools, plus the dwindling supply of older office buildings available for residential conversion is making significant new construction more realistic.

There's 3.4 million square feet of obsolete office space getting converted, or about to be converted to residential or mixed-use downtown. When that supply goes, that's it for a while, unless and until another office user vacates its historic digs (thinking of you, Sherwin Williams, with love).

That's why there's four new towers in the works downtown, in addition to the two already under construction -- The Beacon (28 stories) and The Lumen (34 stories).

Stark Enterprises' announcement this week is just the start. Its nuCLEus development has evolved into a more financially viable design, with two 16-story towers (one office, the other residential) atop a eight-story pedestal. It evolved just as the downtown market has evolved. No longer does Stark need as much subsidy to build this long-sought project on land the company owns just north of Quicken Loans Arena. In fact, Stark has most of the financing already in place or pledged.

Looking south, nuCLEus' office tower is at the left and residen-
tial tower is on the right. The two 16-story buildings will be
built atop an eight-story pedestal of parking and retail (Stark).

“The new plan responds to the changing demands of the market and is sized so that the project can move forward immediately," said Ezra Stark, Chief Operating Officer at Stark Enterprises. "Public-sector assistance is fully supported by incremental tax revenue generated by the project.”

The nuCLEus office tower is proposed to reach 353 feet tall while the residential tower would top out at 310 feet tall. Stark Enterprises' development plan for nuCLEus was submitted March 7 to City Planning Commission for schematic design approval. Stark hopes to break ground as early as August 2019, according to an official press statement.

About a year behind nuCLEus is the City Club Apartments, proposed for the surface parking lot next to the City Club Building. But that's not why the proposed high-rise carries the City Club name. It's because that's the name of the national development firm Jonathan Holtzman leads. It just so happens that this last undeveloped Euclid Avenue site between Public Square and Playhouse Square is next to the City Club Building, historically called the Citizens Building.

Holtzman has offered little fanfare about his plans for the 0.56-acre lot. It's a site he has so far publicly revealed only to Crain's Cleveland Business last November as his favored location for constructing a high-rise, mixed-use building. Based on City Club's other projects, the non-residential uses are ground-floor retail and co-working/creative Class A office spaces. Typically, City Club has about 300 apartments in each of its developments. Given the 22,000-square-foot development site, this could be a roughly 25-story building.

Visible progress was noted on March 2 when several drilling rigs were on site to extract core samples for geotechnical analysis to engineer a foundation for a new skyscraper. The last time similar drilling rigs descended on downtown was in September 2015 at a parking lot where The Lumen apartment tower is now rising. Playhouse Square Foundation searched for nearly two more years for a sponsor, financing and a developer for the project, choosing instead to sponsor the project itself. Ground was broken for The Lumen in April 2018.

Geotechnical drilling to gather soil samples was conducted on
March 2 below a parking lot at 720 Euclid Ave. prior to the
engineering work for a 300-unit apartment tower that could
be approximately 25 stories tall (NCLE-UrbanOhio.com).

Will it take 2.5 years before ground is broken for the City Club Apartments? Probably not. Consider that the lowest-hanging fruit among the new-build apartment towers was the first one started this century -- The Beacon. Yet this project may have a better shot of happening than when planning started on The Beacon more than five years ago.

The Beacon had the benefit of not having to build any parking because it was built on top of a nine-level parking deck that was mostly full during the day but mostly empty at night. Also, Stark didn't buy any land to build The Beacon. It formed a partnership with Reuven Dessler, the managing partner of an investor group that owned the 515 Euclid parking structure atop which The Beacon was built.

The City Club Apartments might benefit from a similar arrangement. Thus far, Holtzman has not purchased land from David Goldberg who owns 720 Euclid, the property that has a surface parking lot on Euclid, a surface lot on Prospect and a six-story, 540-space parking deck in between. That parking deck is mostly full during the day but mostly empty at night. Holtzman may not purchase any land and instead form a partnership with Goldberg to reduce his upfront costs.

Holtzman has a knack for reducing costs on developments while also finding hidden value. Thus it is possible that there will be little or no parking added as a result of this development. That could save $10 million+ from the cost of building this project.

There are more reasons why this project has a better shot at happening than The Beacon in 2014. City Club Apartments is a larger company and better capitalized that Stark Enterprises. Holtzman sold an apartment building in St. Louis for $48 million, in part to help capitalize his Cleveland project. The downtown Cleveland real estate market is stronger than when The Beacon was first planned five years ago. And this project can benefit from the Opportunity Zone program which increases liquidity by reducing investors' tax burdens when they reinvest their capital gains in projects that are in O-Zones. Downtown Cleveland is in such a zone.

Finally, a fourth tower is more speculative but there are growing signs it has been in the works for a couple of years. For decades Lou Frangos has been known as a parking lot magnate. Last year, he turned the family business over to his son Damon Frangos who is less interested in parking lots and more interested in real estate development. Last year, The Frangos Group outsourced much of its parking management to Platinum Parking North East to focus on real estate.

Since 2000, The Frangos Group has acquired 3.2 acres of land
along East 14th between Prospect and Carnegie avenues, west
of the Wolstein Center at CSU. Most of the land was acquired
in 2017 and 2018 as The Frangos Group shifted its focus from
operating parking lots to developing real estate (Google).

In April 2017, through paper companies Prospectus Holdings/II, Frangos acquired 17 parcels southeast of the intersection of Prospect and East 14th. Then, in June 2018, through Travelers Building LLC, Frangos bought two parcels hosting the former Travelers Leather Goods Manufacturing Co. Terms of those deals were not available.

The purchases added to three parcels Frangos acquired in 2000 under the name Caton Court LLC and one parcel acquired in 2007 as 2200 Prospect Parking LLC. So now Frangos owns 3.23 acres of land bounded by Prospect, East 14th, East 18th and the Salvation Army's Harbor Light complex. The site is less than a block south of The Lumen tower, under construction.

On June 8, 2018, as Frangos closed on the last property acquisition in that block, the company's Twitter account posted "DOWNTOWN CLEVELND [sic] DEVELOPMENT - THE BIGGEST SURPRISE IS YET TO COME - 2020."

In recent days, surveyors have been measuring and photographing those 3+ acres from the ground and from nearby parking decks. And, a couple of years ago, about the same time Frangos decided to vastly increase its property holdings in this block, Frangos commissioned drone photography from 300 to 400 feet in the air to see what the views would look like from a building of that height.

Pursuing a development of that scale would be a significant escalation for The Frangos Group whose real estate development experience has been limited to renovating a few existing, historic buildings in Cleveland and Youngstown. It is likely Frangos may pursue a development here in partnership with another developer who has experience with large, new construction projects.

"I see great things on our horizon as we plan to do more real estate development and form strategic partnerships that will make a lasting impact on our city and community," Damon Frangos said in a 2018 press release.

It will certainly be worth watching.

END

Columbus Road TOD coming into focus for Duck Island

This rendering of the Atlanta BeltLine Eastside Trail is an
example of work done by part of the development team that
is recommended by the Greater Cleveland Regional Transit
Authority for its Columbus Road property along the Red Line
rapid transit and greenway. (Perkins & Will Global)
CLICK IMAGE TO ENLARGE

Today, the Greater Cleveland Regional Transit Authority (GCRTA) announced its staff recommendation for who should develop its Duck Island property along Columbus Road south of the Ohio City Red Line rail station. The GCRTA Board of Trustees still must decide whether to approve that recommendation. The proposed team and design may be intriguing to many.

The recommended developer is Carnegie Management and Development Corp. of Westlake. On their team is a well-known international architectural firm Perkins & Will Global which has undertaken many Transit-Oriented Development (TOD) master plans and TOD-thematic projects.

Although Carnegie has historically built suburban sprawl-type developments, it has recently taken a new approach in winning the City of Lakewood's bid to build the $100 million, new-urbanist, mixed-use One Lakewood Place redevelopment of the former Lakewood Hospital site. Combined with Perkins & Will's expertise, it builds hope that their involvement will result in a well-designed project that will generate ridership for the adjacent GCRTA Red Line rail station and boost the surrounding neighborhood.

The proposed development will not just be residential but include some mixed use, plus 2 acres of greenspace as well as a partial cap over the Red Line and planned greenway trail, said GCRTA Real Estate Manager James Rusnov. The cap is proposed to be located more than one hundred feet south of Abbey Road and include a building, a public plaza, and potentially a secondary access point to the Ohio City Red Line station platform which extends well south from Abbey.

"It will also improve connectivity with Harbor Bay's (Market Square) development," Rusnov said. "It's a nice way to blend the two projects. Our RFP (Request For Proposals) stipulates improved access to the (Red Line) station."

Public spaces will be a prominent feature in Carnegie's One
Lakewood Place project that will see construction starting
this year on the site of the the former Lakewood Hospital.
Carnegie's proposed development on GCRTA's land will
also feature public spaces, including over the Red Line
 tracks and greenway (Nelson-K&A).

Some neighbors expressed concern that the development would be nothing more than a row of high-priced luxury townhouses that would produce little if any ridership benefit to GCRTA or offer any retail/restaurant amenities, public spaces and enhanced pedestrian connectivity between Ohio City and the Duck Island neighborhood. One of those opposed is developer Sam McNulty who built the Duck Island 7 luxury townhomes across the street from the property GCRTA seeks to develop. He recently wrote an op-ed in Scene explaining his opposition.

Ironically, public records show that one of the Columbus Road development proposals rejected by GCRTA staff was by a team that included Gary Ogrocki, a principal at Dimit Architects. Ogrocki is also a partner of McNulty's in the Duck Island 7 development. Ogrocki did not respond to an e-mail seeking comment for this article.

The development of GCRTA's Columbus Road property will be a topic of discussion at the Duck Island Block club at 6:30 p.m. March 5 at Forest City Brewery, 2135 Columbus Rd.

The entire west side of Columbus Road visible here
was rezoned to multi-family housing by the city
according to the Duck Island Neighborhood Plan
which was shaped by public input. However, only
a portion of this GCRTA-owned land is proposed
to be developed, leaving the rest of the land, or
2 acres, for greenspace (Google/KJP).

Last October, Cleveland City Council rezoned multiple parcels of land in the fast-growing Duck Island neighborhood. The rezoning followed six years of neighborhood engagement and the creation of a local development masterplan based on public input.

The land along the west side of Columbus Road (including the land GCRTA seeks to develop) from Lorain to West 25th, was rezoned from semi-industry to "multi-family G-1" which allows a range of residential uses, from single-family homes to apartment buildings. Only a portion of that is proposed to be developed. The rest will remain greenspace measuring about 88,000 square feet or 2 acres.

The proposed inclusion of mixed-use in Carnegie's project will require a variance from the Board of Zoning Appeals -- as does Harbor Bay's development across the tracks. The maximum square footage of a building on a property zoned G-1 is three times the lot area and can be up to 35 feet in height based on the street frontage. The site of the lot area would be expanded by building over the Red Line.

In my November blog posting, Rusnov noted that the GCRTA-owned land to be developed is south of Abbey, measuring 85 feet by 700 feet. That brings it to near the Willey Avenue intersection. The land north and south of the GCRTA development site, including next to the station headhouse, would feature improved, accessible greenspace and offer pedestrian and bicycle paths to the the Red Line Greenway trail.

Given the zoning, height district and lot area, the height of the development's street frontage along Columbus Road could permit a four-story building. But the Red Line right of way below Columbus Road is 25-30 feet lower, offering the opportunity to erect buildings as tall as seven stories from the perspective of the rail line's ravine. Also, the lot area allows buildings to provide up to 178,500 square feet of space, equaling approximately 150 apartments, without a variance. That doesn't include a larger, undefined lot area over the tracks, however.

END

Cleveland's Tower City may soon become tech hub

Tower City Center's The Avenue in 2008. This was before the
Great Recession, the apparent disinterest by Forest City Enter-
prises in sustaining its Cleveland holdings and declared disin-
terest by Bedrock LLC in retaining the downtown mall as a
retail center had reduced its occupancy by nearly half. Now,
the former railroad station is facing its next useful existence.
(KJP) (CLICK IMAGES TO ENLARGE)

Tower City Center, formerly Cleveland's main railroad passenger station, could soon enter its third incarnation -- this time as a $150 million tech hub. Dubbed City Block, the hub would become an incubator for a variety of technology firms, ranging in size from Fortune 100 anchor companies to flash-in-the-pan start-ups.

City Block, although sought by the heavy-hitting, civic-minded BlockLand initiative to give blockchain technology a home base in the USA, will unite all sorts of technology start-ups in a collaborative setting. After investigating a dozen Cleveland sites, BlockLand's Place Committee has zeroed in on The Avenue at Tower City Center, according to several sources who asked not to be identified. The reason is that negotiations haven't yet concluded, so it's not yet a done deal.

The Avenue is the mostly retail space at Tower City topped by skylights which were originally built as the railroad and rapid transit stations of Cleveland Union Terminal in 1930 and converted to their current uses in 1991 by Forest City Enterprises.

Tower City Center had bigger plans in the late-1980s, including
the Riverview Phase shown here, including several skyscrapers
that were never built. The Riverview land remains available for
future development (Forest City Enterprises). 

BlockLand reportedly favors The Avenue because it meets their search criteria. The Place Committee prefers an existing building, one that is located in downtown Cleveland, and offers about 300,000 square feet of collaborative space. The Tower City complex surrounding The Avenue has under one roof nearly 2 million square feet of existing office space, 300 housing units, two hotels, and five rail transit lines fanning outward including to the airport.

Underutilized, The Avenue itself offers 366,000 square feet of space for retailers, cafes, restaurants and even offices. About half of The Avenue is vacant and more tenants will leave soon to make way for renovations. Some retailers will stay.

One of The Avenue's largest tenants is the City of Cleveland's Office of Sustainability. It has its Sustainable Cleveland Center in a former J.Crew store on two levels above the food court and below the Ritz Carlton Hotel. It plans to move out by July at the urging of Mayor Frank Jackson's administration, a City Hall source said.

Funding would come mostly from investors and foundations. A new $50 million partnership was announced between NCT Ventures of Columbus and the Cleveland Foundation to help boost the city's technology scene. It is not clear how much of this funding could be used directly for developing City Block, however.

Redevelopment of Tower City Center could feature a new vision
for Prospect Avenue, which is actually built on a bridge over The
Avenue. That vision could result in a more pedestrian-friendly
setting with wider sidewalks and outdoor cafes (Bedrock LLC).

City Block will also feature a school called Genesis where students in kindergarten through college would learn blockchain. Although popular around the world, blockchain, which uses cryptography to connect and secure electronic records and transactions, has been slow to catch on in the U.S. There is no North American "home base" for this technology yet, so BlockLand supporters are trying to position Cleveland as its American home.

"We're hoping to bring companies here who want to access U.S. markets and need a U.S. headquarters," said BlockLand leader Bernie Moreno in Crain's Cleveland Business. "I'm seeing Cleveland as a spot for that."

In that same article, Moreno said he wants to bring to City Block one or more Fortune 100 regional offices, or a nascent blockchain-brand being developed by a Fortune 100 tech firm. Here are the Fortune 100 tech firms, with one or more of these being approached by Moreno:

4 Apple
8 Amazon
9 AT&T
16 Verizon
22 Alphabet (aka Google)
30 Microsoft
33 Comcast
34 IBM
35 Dell Technologies
46 Intel
51 United Technologies (recently was broken up & bought out)
58 HP
74 Charter Communications (aka Spectrum)
76 Facebook
82 Oracle
83 Tech Data
98 Time Warner

The Avenue was bought from Forest City by Bedrock LLC in 2016. Ever since then, Bedrock has had little or no interest in maintaining retail as the dominant use at the The Avenue. Going as far back as last August, Ken Till, vice president of development for the Detroit-based Bedrock's Cleveland properties, identified all of the components of City Block without anyone realizing he was letting the cat out of the bag.

"We're really looking at mixed-use development," Till said to WCPN's Aug. 9, 2018 The Downtower podcast. "That means office space, school space, maybe a tech incubator."

Given the timing of the Office of Sustainability's departure, the number of local, national and even international heavy hitters involved, as well as other recent rumors, it's possible that the City Block project could see construction as early as this summer -- if an agreement between BlockLand and Bedrock is reached soon.

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Ohio City mixed-use project may feature downtown ad firm

It was only a matter of time before the 1.7-acre Hingetown site
of the Cleveland Vibrator Company was acquired for redevelop-
ment. It is surrounded by recent, in-progress and planned high-
value, multi-story developments (Google).
CLICK IMAGES TO ENLARGE

An exciting mixed-use development is in the works for the Hingetown section of Cleveland's Ohio City neighborhood, according to multiple sources. Although still in a preliminary stage, the development's concept at this point involves putting the offices for a fast-growing downtown company on the lower floors of a new building with apartments on the upper floors.

Two sources say the site is 2828 Clinton Ave., the current location of one of the region's most well-known and oft-photographed businesses -- the 94-year-old Cleveland Vibrator Company which will relocate from the site. The downtown company seeking to move to the site is The Adcom Group, a full-service marketing and communications firm, according to two other sources.

However, Adcom CEO Joe Kubic would not confirm specifics at this time.

"I personally, along with some other partners, are in the process of buying some commercial property in Ohio City," he wrote in an e-mail. "We haven’t yet finalized our plans for it though. It is certainly a possibility that Adcom may relocate there at some point, but we are happy in our current location as of now."

Adcom is headquartered at 1370 W. 6th St. in downtown Cleveland's Warehouse District, above Starbucks Coffee.

The Adcom Group's Warehouse District HQ
is becoming constrained by the company's
rapid growth. The communications and
marketing firms anticipates further growth
and needs more office space (Google).

Two sources also say that The Snavely Group of Chagrin Falls will likely be the developer for the proposed mixed-use project. However, President Pete Snavely Sr., Vice-President of Marketing Polly Snavely and Vice-President of Development Pete Snavely Jr. have yet to respond to a Feb. 19th e-mail seeking comment for this article.

This would be Snavely's second Hingetown development. Last year, at the corner of Detroit Avenue and West 25th Street, it completed construction of The Quarter -- 194 apartments above 30,000 square feet of ground-floor commercial space. The commercial space is fully leased and the residential units are 93 percent leased, according to The Quarter's Web site. The $60 million development also involves the renovation of the historic Forest City Bank Building on the other side of Detroit with ground-floor commercial uses and 38 affordable apartments above.

One of the most well-known signs on the West Side is this one
at the corner of West 29th Street and Clinton Avenue in Ohio
City's Hingetown section. The manufacturer of industrial equip-
ment to resolve material flow challenges is already looking for
a new home in the area (Google).

Through 2828 Clinton Inc., Cleveland Vibrator owns 14 parcels totaling 1.715 acres, according to Cuyahoga County property records. The site is bounded by West 28th and West 29th streets, as well as Church and Clinton avenues. The proposed development reportedly does not include the Ohio City Firehouse, 1455 W. 29th, which was converted into offices and the Rising Star Coffee Roasters cafe. There is also no information to indicate whether the development site includes a residential property and the Banana Blossom Thai Cuisine at West 28th and Clinton.

Sources do not have information yet as to how tall the proposed mixed-use building might be or when demolition and construction might begin. Contrary to Kubic's statement, other persons close to the project say time is of the essence. Adcom reportedly expects to double in size in the coming years and needs more space soon.

Adcom was founded in 1990 and today has more than 110 employees although Kubic wouldn't clarify how many. The employment data comes from news coverage last year about 100-employee Adcom's purchase of fellow ad firm Arras Keathley that had 10 employees.

The Cleveland Vibrator site is reportedly under a sale contract but has yet to close. Terms of the deal were unavailable. In total, the land and buildings on the 14 parcels are appraised by the county at a combined value of $510,000 for tax purposes. Cleveland Vibrator has already begun a search for its new location and hopes to find a new home nearby soon, a source said.

Its current site is surrounded by new developments, in addition to Snavely's Quarter. Northward, across Church Avenue, Hemingway Development is building its $60 million, mixed-use Church & State project, featuring an 11-story building and a 6-story building. In the opposite direction, across Clinton Avenue, Casto will soon begin constructing its $22 million, 119-unit Dexter Place apartments. To the east, across West 28th, the $24 million West 25th Street Lofts were renovated a few years ago with 83 apartments over 9,600-square-feet of commercial space.

END