Friday, June 28, 2019

City Block at Tower City, announcement Monday; sneak peak

The view looking up at Terminal Tower from The Avenue
at Tower City Center may not change. But everything inside
The Avenue shopping mall is due to change in a big way as
shops give way to spaces for entrepreneurs in City
Block, a hub for startup businesses (KJP).
On Monday, July 1, BlockLand Cleveland will announce that The Avenue at Tower City Center is the group's chosen site for a hub for entrepreneurs called City Block. The hub could someday grow to be the world's largest incubator under one roof.

Bernie Moreno, founder and leader of BlockLand Cleveland, a volunteer effort, confirmed in a personal message via Twitter that the project would be announced at 4 p.m. Monday at the group's next regular meeting. The meeting will be held on the second floor of the former Plain Dealer building, 1801 Superior Ave.

In April, Moreno acknowledged to this blog that Tower City was the preferred site for City Block. The chosen site was first reported in this blog and then announced on April 18 by Cuyahoga County Executive Armond Budish during his State of the County speech.

Moreno said that the site announcement will be made at Monday's meeting after he was asked to confirm some specific information from a source about the project. Moreno said the project's details would be revealed at the meeting.

The information is that Bedrock Real Estate, which owns The Avenue at Tower City Center, has agreed to lead the City Block redevelopment of the former railroad station-turned-shopping mall. Furthermore, Bedrock, founded in 2011 by Cleveland Cavaliers owner Dan Gilbert and Bedrock Chairman Jim Ketai, hired Vocon Partners, LLC to design the conversion of The Avenue into the hub for entrepreneurs, not just those involved in technology.

A harder cost figure for the conversion will be available in the coming months. A year ago, Moreno estimated that the development costs for City Block could be about $150 million.

The Avenue's airy concourses and large
skylights will soon illuminate aspiring
entrepreneurs and their new businesses
being incubated in City Block (KJP).
Bedrock shelled out $56.5 million in 2016 to acquire The Avenue at Tower City, the adjoining Ritz Carlton Hotel and parking lots along the Cuyahoga River to the south of the Tower City complex. Bedrock bought The Avenue and riverfront properties associated with the former Cleveland Union Terminal from Forest City Realty Trust Inc. Forest City converted the 1930-built railroad terminal into The Avenue shopping mall for $400 million in 1990.

Also in 2016, K&D Group acquired Terminal Tower, the old main Post Office and other Tower City properties from Forest City for $38.5 million. K&D is renovating the 13 lowest floors in Terminal Tower with 293 apartments, with the first units available for occupancy in September. The other buildings will remain as offices.

Reportedly, Bedrock's vision for The Avenue is to eventually remove all of the retail from the lower portions of the mall and instead line both sides of Prospect Avenue through the Tower City complex with storefronts, possibly retail spaces for technology companies like Apple or Microsoft plus non-tech-related examples. That includes redesigning the skylight rotundas with new facades, said a source familiar with the planning.

Station F in Paris, France is a large tech startup incubator that
is located in a former railroad freight terminal. The concourse
features old railroad carriages as well as settings to collaborate
with other entrepreneurs or to relax and recharge (Station F).
Replacing the retail in the mall will be a massive business startup center, focusing on digital technologies but others as well. Another source, one who serves on the BlockLand Place Committee, noted that the group researched other tech incubators around the world, especially Station F in Paris, France.

Opened in 2017, Station F is so-named because it is in a former freight railroad terminal previously called La halle Freyssinet. It was named after French structural and civil engineer Eugene Freyssinet, a pioneer in the use of pre-stressed concrete.

Station F is already the world’s biggest startup campus hosting thousands of entrepreneurs, venture capitalists and partners Facebook, Zendesk, Amazon, Vente-PrivĂ©e, HEC, Microsoft, and others. Those big tech companies pick young startups to come to Station F and collaborate with them. French billionaire Xavier Niel spent hundreds of millions of euros to purchase and convert the railroad terminal.

Many spaces at Station F aren't offices for tech startups; those
that are can be quite small. Other spaces are available to venture
capital firms, or provide on-demand meeting spaces, or merely
are spaces for entrepreneurs to let off some steam (CityLab).
Visiting Station F caused BlockLand's Place Committee to focus on the former Cleveland Union Terminal, once the city's principal railroad station which still hosts a smaller station for rapid transit trains today. The 366,000-square-foot The Avenue at Tower City met the group's space requirements, namely that it would offer about 300,000 square feet and could include a separate wing for a technology school called Genesis.

The Avenue at Tower City will offer three times more floor space, as measured in square feet, than Station F. BlockLand will market Cleveland's lower cost of living as a draw to entrepreneurs and startups. Tower City has under one roof two hotels, hundreds of new apartments, 2 million square feet of offices, plus direct rail service to Cleveland's airport and rail and bus rapid-transit services to two universities and the booming eds-n-meds cluster in and near University Circle.

It is not yet known which corporate sponsors will further legitimize and energize City Block. But having Bedrock lead the project is a significant development. In Detroit, Bedrock has attracted to its properties businesses and retailers in which Gilbert has equity by offering discounted (or free) rent at the outset to create a critical mass of activity. That includes retailers like Stock X, Shinola, Apple, Microsoft and others.

The Avenue at Tower City Center's Prospect Avenue entrance
is due to be remodeled into storefronts and sidewalk cafes,
according to sources. Details about the project are scheduled
to be announced on Monday (KJP).
Funding for City Block is coming mostly from investors and foundations. A new $50 million partnership was announced in March between NCT Ventures of Columbus and the Cleveland Foundation to help boost the city's technology scene. It is not yet clear how much of this funding could be used directly for developing City Block, however.

Also, Moreno sold in April seven of his car dealerships to focus on his technology initiatives. No sale amount was publicized, but other recent sales of car dealerships have netted anywhere from $10 million to $40 million per dealership. If Moreno netted somewhere in the middle, he could have grossed something in the neighborhood of $150 million to $200 million.

Jumpstart and Flashstarts also announced they'll make available millions for blockchain and other technology startups, Budish said. Ironically, Flashstarts' StartMart is already located at Tower City Center.


No comments:

Post a Comment