Is Sherwin-Williams ready to paint Cleveland's sky?

Will a new 40+ story tower paint the sky in downtown Cleveland
 in a few years to consolidate the scattered headquarters offices
of the Sherwin-Williams Company? With the Valspar deal now
 behind it, there are new rumors that the world's largest coatings
company is reviewing its skyscraping options (thetorontoblog).

On Jan. 22, 2016, some 6,000 Sherwin-Williams Co. (SHW) salespersons began descending upon the Fortune 500 company's annual National Sales Meeting in Orlando, Fla. Many were excited and not just because it was the paint and coatings company's 150th year in business. Reportedly, a large number of attendees expected to learn about the company's grand birthday prize to itself -- a shiny new headquarters tower in SHW's home city of Cleveland, Oh.

But when the sales meeting wrapped up five days later, no such announcement was made. For the next two months back in Cleveland, however, rumors about the headquarters tower continued to swirl despite (or even enhanced by) off-the-record denials by SHW. The city's largest developers were reportedly responding to SHW's requests for proposals for a 900,0000-square-foot headquarters, roughly 40 stories tall, to consolidate its scattered offices into a modern, efficient, collaborative new headquarters. The Jacobs Lot on Public Square was the favored site. Before the sales meeting, developers apparently delivered their proposals to SHW.

It was soon learned why SHW didn't announce a new headquarters tower at Orlando. SHW had started working on something much bigger. In late March 2016, it was revealed that SHW was seeking to acquire rival coatings company Valspar Corp. of Minneapolis in an $11.3 billion transaction.

Accomplishing a task of that scale and complexity would occupy so much of SHW's staff time that they brought in outside consultants and law firms to help them through all of the paperwork and filings with the Federal Trade Commission, Securities & Exchange Commission, and other agencies in the USA and overseas. Antitrust approvals were also required in Australia, Brazil, Canada, China, Ecuador, the European Union, Mexico, Russia and Vietnam.

That paperwork didn't end after governments gave their blessings, with conditions, to the merger that wrapped up June 1, 2017. After that date, SHW managers began sorting through new organizational charts, staffing needs, office locations and assignments for nearly 53,000 employees on a global scale. It would take another year of internal reorganization and wrapping up of legal work.

Once the reorganization was done, SHW's interest payments increased roughly four-fold to service the debt from acquiring Valspar, but its free cash flow increased further, too. SHW's ability to cover its interest payments is still better than than any of SHW's competitors except PPG.

SHW started to grow again. It began hiring again. And it reportedly began looking at its headquarters situation again.

It's difficult to know the specifics of what SHW is pursuing because its clients apparently have non-disclosure agreements with the coatings firm. But you can learn some things even when typically friendly, chatty sources refuse to even return a phone call or e-mail to discuss this subject.

What can be gathered from recent sources and cross-referenced against 2016 information is that SHW is pursuing a headquarters tower measuring about 1 million square feet (upwards of 40 stories in height depending on the site), that it will be located within 1-mile of where the company was founded near SHW's John G. Breen Technology Center, 601 Canal Road (per the company's charter), that it may have already hired its engineering and architectural firms (possibly from 2015-16) but is still in the conceptual stage because it hasn't gotten into detailed costs of elements like electrical and structural needs.

If SHW had justification for consolidating its administrative offices in 2016, it has even more justification now. Fifty years ago, SHW occupied less than one-fourth of the Landmark Office Towers. Today, the growing company occupies six facilities scattered across Greater Cleveland. Consider:

Landmark Office Towers at Cleveland's Tower City Center
complex, with the Skylight Office Tower to the left (KJP).

• In 2014, SHW outgrew its 900,000-square-foot (SF) Landmark Office Towers, which it has called home since it was built in 1930. Perhaps 100,000 to 150,000 SF is leased to other tenants, the largest of which are Reminger Attorneys at Law and McCarthy, Lebit, Crystal & Liffman Co., LPA. In the 1950s-70s, there were four major tenants leasing space in the complex -- Republic Steel Corporation, Erie-Lackawanna Railroad, Sohio and SHW. During the 1980s, an expanding SHW acquired the majority of the leases in the complex. SHW purchased the complex in 1985 and remodeled it in 1989. Nearly 3,000 SHW employees work at Landmark Office Towers today.

John G. Breen Technology Center, Cleveland (Google)

• One of SHW's oldest facilities is the Breen Technology Center, built in 1948 but was expanded 50 percent in 1998 to 140,293 SF. It was built next to SHW's pre-1930 headquarters and where SHW was founded in 1866. Today, it is the workplace for about 400 researchers and scientists. The facility is so full that most of Valspar's R&D staff had to remain in Minneapolis.

Sherwin-Williams Learning Center, Strongsville (Google)

• In 1994, SHW opened its Sherwin-Williams Learning Center, 11350 Alameda Dr., in Strongsville. It purchased a 8,928-SF building and added two new buildings, bringing the total size of the complex to 24,150 SF. It is one of several such facilities around the country. An online curriculum also is offered.

Sherwin-Williams Automotive Finishes Corp. world head-
quarters and technical center, Warrensville Hts. (Google)

• In 2000, SHW acquired a 388,766 SF, 80-acre manufacturing plant and office campus, 4440 Warrensville Center Rd., Warrensville Hts., from BP America (was a Standard Oil facility) for its Automotive Finishes Corp. global headquarters, research and development facility and training center. The administrative headquarters building measures about 30,000 SF and houses about 100-130 employees.

Skylight Office Tower, Cleveland, tenants and leases
(Morgan Stanley et al, CLICK TO ENLARGE)

• Starting in 2014, SHW began leasing up to 51,810 SF in the Skylight Office Tower., across West 2nd St. from the Landmark Office Towers. With respect to 39,792 SF, SHW's lease began on April 1, 2014 and had an expiration date of Oct. 31, 2018 with a three-year lease extension option that SHW exercised. With respect to 12,018 SF, SHW's lease began on July 1, 2014 and has a current expiration date of March 31, 2020 with a three-year lease extension option.

Sherwin-Williams flex, Hinckley Pkwy., Cleveland (LoopNet)

• In mid-2017, and according to SHW sources, about 225 SHW administrative employees began moving to 4770-4780 Hinckley Industrial Parkway in Cleveland. This 1985-built, former Charter One Bank check processing facility was sold in 2012 to IRG Dayton I LLC (former Ohio Realty Advisors) which marketed the 151,830 SF facility as an office/flex space. SHW began moving employees from downtown Cleveland, from Valspar in Minneapolis or creating new jobs to replace (rather than relocate) Valspar workers. I was able to locate more than $740,000 in building permits in the past year for SHW's remodeling 63,000 SF of offices in this structure and for the addition of a fitness center for SHW employees. Leasing information could not be located.

When you see a summary of the office space growth of SHW from the past 30 years and how scattered it has become, the need for a new consolidated headquarters facility becomes more apparent. The need existed before the Valspar acquisition. The need is even more acute now. With the Valspar integration process concluded, it is understandable why there are reports that SHW has returned its attention toward graduating from its nearly 90-year-old headquarters building and constructing a much larger, more efficient and modern structure to chart its growth for the next 90 years.

It remains to be seen whether SHW can advance planning for a consolidated headquarters enough beyond a conceptual level by January to where its representatives can discuss it publicly. If so, when its cadre of salespeople gather for the next national sales meeting in Orlando, they will feel even more proud about their company and its towering future.

END