Sunday, March 13, 2016

Downtown Cleveland's next office tower is in the works

During LeBron James' playing time in Miami, residents and visitors to Cleveland got a brief insight as to the headquarters location of one of this city's most successful and enduring corporate citizens. However, the street address of that company could soon change and in a very visible way.

The paint and coatings giant Sherwin-Williams (SHW), founded in 1866 in Cleveland, isn't a flamboyant company. The only time it displayed a sign on its headquarters, telling the world what's inside, was in the final year of James' absence. The basketball star's previous 10-story-tall mural gave way to a barren, brick wall for three years. Then in 2013, a similarly sized marker was placed there by SHW. It suggested the company's headquarters was close by. Indeed, the mural hung on SHW's home -- the unfinished side of an 86-year-old collection of three buildings known as the Landmark Office Towers. That unfinished side is where a fourth building, 18 stories tall like the other three, was to be built until the Great Depression halted it.

Sherwin-Williams' vibrantly colored mural on the Landmark
Office Towers was displayed above Ontario Street for only
one year (2013-14). It read: "Our Vibrant Home Town --
Sherwin-Williams and Cleveland: Together since 1866."

SHW's giant mural pictured above gave way to a new James mural following his 2014 return to Cleveland. SHW's offices returned to anonymity, at least for those who did not already know the firm occupied most of the 900,000-square-foot Landmark Office Towers, which SHW owns. It also owns the land on which its Breen Technology Center sets on Canal Road downtown, roughly where the company was founded.

Since the Great Recession, the company has grown quickly -- from $7.8 billion in revenues and earnings per share of $4.19 in 2009 to more than $11.34 billion in revenues and earnings per share of $11.16 in 2015. That's five consecutive years of record sales and four years of record earnings. SHW has outgrown its Landmark home. Now its offices are spilling over like so much paint into a portion of the neighboring Skylight Office Building, a 12-story, 321,000-square-foot building constructed by Forest City Enterprises in 1991. That building is almost entirely full too.

In 1990, Sherwin-Williams planned to build
this 30-story office tower called "Gateway at
Landmark" where the LeBron James mural is
today. The recession of the early 1990s halted
further consideration of this skinny tower
. A
reincarnation of this tower apparently isn't
being considered because it is too small.
So SHW's Chief Operating Officer John Morikis began looking at his company's growth and measuring it against SHW's space needs. He came to the conclusion that the Fortune 500 firm needed more room to grow. The question is, should it expand into other downtown buildings or consolidate its offices into a new headquarters building. The latter was favored. So basic questions needed to be answered next such as how much space would it need, where should it be located, would SHW want to own the building or pay rent, and who would build it?

As Morikis was promoted to chief executive officer effective Jan 1, 2016, the search for a new headquarters went into high gear. Major downtown developers and property owners were contacted about constructing a roughly 40-story office building with modern floor plates averaging no more than 30,000 square feet so that open working spaces can be illuminated with natural light and foster more employee collaboration. Modern open-floor configurations also typically reduce the need for space by about 20 percent compared to the inefficient, enclosed rooms that SHW office workers are in now.

Those contacted reportedly include (see graphics at end of blog posting):
  • Geis Companies plans a low-rise, multi-building office campus called the Burke Development District at the west end of Burke Lakefront Airport that could accommodate 750,000 square feet of offices. Geis is also reportedly seeking to develop properties north and south of Playhouse Square;
  • Jacobs Group owns the parking lot on Public Square where the 60-story Ameritrust tower was to be built before the bank was acquired by Society Bank in 1991. Jacobs/Hines proposed a 21-story office building on that lot but the idea fizzled during the Great Recession; and
  • Weston Inc's conceptual plan for the Superblock in the Warehouse District, approved by the city, features two 23-story apartment towers, one hotel tower and a 37-story office tower on the NW corner of West 3rd St. and Superior Ave.

City Hall and developer sources confirmed these sites were under consideration but did not know which, if any was favored by the company. The Public Square site would certainly be the most visible, but given SHW's traditions, an identifiable headquarters building has not been a priority for this unassuming company. Whichever developer offers the best financial deal to SHW will likely win. The financial picture could also entail SHW selling or trading the Landmark Office Towers for redevelopment. It's an ideal candidate for a housing conversion.

Conceptual plans for other downtown Cleveland developments offering much smaller office leasing opportunities would have to be significantly altered to accommodate SHW. Stark Enterprises' proposed nuCLEus development north of Quicken Loans Arena features a 54-story, mostly residential skyscraper. It is proposed to have 200,000 square feet of offices. The Benesch law firm committed to 66,500 square feet of that, prompting Stark to consider altering its plans to add another 100,000 square feet of office space to "respond to demand."

Fairmount Properties/Wolstein Group are planning a small office building of roughly 150,000 square feet on Front Street as part of their third phase of Flats East Bank. Dick Pace/Trammell Crow plans only 80,000 square feet of offices in their lakefront development north of First Energy Stadium. That project's conceptual plan was recently amended to add more residential, not offices.

At one point, plans apparently were moving fast enough to spawn company-wide rumors that SHW was going to announce the new headquarters building at its national sales meeting Jan. 22-27, 2016. The event is held in late January every year in Orlando, Fla. and attended by more than 6,000 salespersons. Alas there was no announcement. [UPDATE: the reason why no announcement was made was likely due to the uncertainty surrounding SHW's pending acquisition of Valspar announced March 20.]

As recently as late February, a member of Mayor Frank Jackson's cabinet said that several downtown Cleveland sites remained under consideration by SHW. There is no information at this time to suggest that any sites outside of downtown are being considered. SHW apparently wants to stay close to its geographic roots, not far from where Henry Sherwin and Edward Williams founded the company along the banks of the Cuyahoga River 150 years ago this year.

It would be apropos if plans for a stunning new downtown Cleveland headquarters tower for this global coatings giant could be publicly unveiled in the company's sesquicentennial year. If all goes right, they will be.

Geis Companies' Burke Development District.
Jacobs Group/Hines' 21-story Public Square
tower, proposed in 2008.
Jacobs Group's 60-story AmeriTrust Tower on
Public Square, proposed in 1991.
What the AmeriTrust tower would look like if it was built as a
40-story structure, which is approximately the size Sherwin-
Williams is reportedly considering for its new headquarters.
Weston Inc.'s Superblock plan for the Warehouse District, with
the 37-story office tower being the closest structure shown.
Stay tuned!

END

Friday, January 15, 2016

Cleveland ready to scrape the skies more


Downtown Cleveland buildings under construction in 2016 or planned in coming years are shown in light-blue (click to enlarge all photos). Courtesy of UrbanOhio.com.

The pace of investment in America's cities has been one of the remarkable stories since the end of the Great Recession. There are few places where that investment is more evident than in Greater Cleveland which in 2014 ranked ninth in the nation in total new construction jobs (not percentage of change).

Much of that is for renovating historic buildings, rebuilding infrastructure and some modest new buildings. Anyone who has spent time downtown or in neighborhoods like Asiatown, Gordon Square, Little Italy, Ohio City, Tremont or University Circle in recent years has seen orange barrels, scaffolding and construction crews everywhere.

With the rebuilding of Cleveland's foundation substantially underway and the region's economy pivoted away from manufacturing (only 11 percent of the metro area's employment), most renovation-related work is about to transition to new construction. Big time.

Cleveland's Public Square is seeing its largest transformation
in decades, an investment of more than $50 million. Courtesy
of the Cleveland Group Plan Commission.
Don't get me wrong. There's still lots of old buildings and infrastructure to rebuild or replace. While many of Cleveland's neighborhoods have seen amazing transitions and rising populations, others remain out of control from a safety and economic perspective. But bringing residents with purchasing power to support more jobs in a core city that's accessible to all is a worthy goal. A job is the best social program there is. More residents mean more shopping, restaurants and amenities which also make downtown more attractive to companies seeking settings to establish offices and to access talent.

So while there are still more old office buildings and department stores to convert into residential and other supportive uses (see the huge 925 Euclid or the May Company buildings), the market for more residential continues to grow as more residential products are added. Downtown buildings, in total, have 1,800 people on waiting lists. And yes, there's a few office buildings that will soon be in the mix too. All of these will change the skyline of downtown Cleveland in ways not seen in decades.

Here are the recently built, planned or proposed buildings of 20 stories or more in downtown Cleveland, ranked in order of probability:

Ernst & Young Tower/Flats East Bank Phase 1 (completed 2013): 23 stories or 330 feet tall, with 480,000 sq. ft. of office space. $275 million first phase includes an adjacent 9-story Aloft Hotel on W. 10th at Main. Phase 2 added a 8-story apartment building with surrounding restaurants. Phase 3 in 2016 will add an 11-story apartment building plus grocery store and movie theater, all developed by Fairmount/Wolstein.
Flats East Bank Ernst & Young
Tower. Photo by the author.
Hilton Convention Center Hotel (to be completed 2016): 32 stories or 380 feet tall, with 600 hotel rooms and Level 32 Skybar restaurant open to the public, on Lakeside at Ontario, costing $272 million and developed by Cuyahoga County.
Cleveland Hilton Convention Hotel.
Warehouse District Parcel A (groundbreaking August 2016): 24-story apartment tower with 352-apartments and adjacent 7-story mixed-use building to be developed by Weston/Citymark Capital at SE corner of St. Clair and W. 6th. $100 million is estimated for first phase.
Parcel A would host the two closest buildings at the bottom-
center of this rendering of the Warehouse District. Courtesy of
the Cleveland Planning Commission.
515 Euclid (construction due late-summer 2016): 27-story tower (18-story apartment building with 200 units atop existing 9-story parking garage) to be developed by Stark Enterprises at the building's namesake address. Parking garage cost $20 million. Adding the tower could cost about $50 million.
The planned apartment tower atop 515 Euclid is shown in purple
in this northerly view. Courtesy of Stark Enterprises.
nuCLEus (demolitions due late-summer 2016): 54-story tower mixing apartments, offices (Benesch is anchor office tenant) and hotel over pad of retail and parking between E. 4th, Prospect and Huron to be developed by Stark Enterprises and J-Dek Investments for about $380 million.
Even though it wouldn't be downtown Cleveland's tallest (Key
Tower would still be taller), the 54-story nuCLEus tower would
dominate the city's skyline when viewed from the south side.
Courtesy of Stark Enterprises.
Playhouse Square tower (groundbreaking TBA): 30-story tower featuring mostly apartments but may include dine-in movie/TV theater or other non-residential use on the ground floor to be developed by the Playhouse Square Foundation on SW corner of Euclid and E. 17th.

Justice Center replacement (groundbreaking TBA): 55-65 stories if all 2.3 million sq. ft. of current uses not including structured parking were stacked in the same structure with huge floorplates of about 40,000 sq. ft. each. Or the new center could be put in two new towers of 25-35 stories each, including parking. The current jail is spread among 20 floors; the courts tower is 25 stories; the police department is 9 stories. None has public parking. A space needs analysis is underway.

Warehouse District Parcel B (groundbreaking TBA): 24-story apartment tower with 380-apartments and adjacent 6-story mixed-use building to be developed by Weston/Citymark Capital at SW corner of St. Clair and W. 3rd.
Another view of the multiple towers and lower-scale buildings
proposed for the Warehouse District's parking crater by Weston
and Citymark. Courtesy of Cleveland Planning Commission.
 
Warehouse District Parcel C (groundbreaking TBA): 24-story apartment or hotel tower with 370-apartments or 250 hotel rooms and two adjacent 5-story mixed-use buildings to be developed by Weston/Citymark Capital at NE corner of Superior and W. 6th.

Warehouse District Parcel D (groundbreaking TBA): 37-story apartment or office tower with 1.5 million sq. ft. of space to be developed by Weston/Citymark Capital at NW corner of Superior and W. 3rd.
Weston/Citymark's proposed four towers in the Warehouse
District would dramatically change the skyline by filling in
most of downtown Cleveland's largest parking crater.
Courtesy of Cleveland Planning Commission.
The 37-story proposed skyscraper listed last could find an anchor tenant soon and be bumped higher up the list. Medical Mutual may consolidate its 1,700 Northeast Ohio employees into roughly 600,000+/- sq. ft. of space. That could be located in downtown Cleveland, based on their actions recently in consolidating its Central Ohio offices into a single building in downtown Columbus. Perhaps Medical Mutual might move to Weston/Citymark's development.

Perhaps Jacobs Group may build the insurance company a new, high-profile tower on its now-dismal Public Square parking lot. There are also rumors that Sherwin-Williams is in the market for a big new tower. The 150-year-old paint company has outgrown its headquarters space in the Landmark Offices at Tower City Center.

More new buildings albeit shorter than 20 stories are under construction or about to get underway in downtown Cleveland. This includes the 11-story, 237-unit Edge CSU Student Housing underway at Euclid and E. 18th and an 11-story, 100-unit apartment building will likely see a groundbreaking this year at Flats East Bank. Plus numerous buildings in the 5- to 20-story range are under construction or will start this year in Cleveland's Ohio City, Gordon Square, Tremont, University Circle and other city neighborhoods.

If you're having a hard time keeping track of it all, check back weekly at UrbanOhio's Northeast Ohio "Projects & Construction" section. There's always something new going on citywide and even a few developments in the suburbs. The pace of construction will kick into high gear after July once the Republican National Convention clears out of town. But most of the above projects will get their final designs reviewed by the city in the meantime and the graphics will be posted at UrbanOhio.

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