Wednesday, June 12, 2019

Seeds & Sprouts II - Early intel on real estate projects

This is the second edition of Seeds & Sprouts - Early intelligence on Cleveland-area real estate projects. Because these projects are very early in their process of development or just a long-range plan, a lot can and probably will change their final shape, use and outcome.

Nautica Entertainment LLC has secured financing and possibly
a joint development agreement to move forward on at least one
part of its Waterfront District project, possibly starting with this
Flats West Bank: Nautica Waterfront District seeks Joint Venture

On May 13, Nautica Entertainment LLC recorded with Cuyahoga County the issuance of $35 million in five-year notes from a line of credit it collateralized through Wilmington Trust, National Association. The debt was mortgaged against all of Nautica Entertainment's properties on the Flats West Bank. A portion of the financing could reportedly help build the first phase of an ambitious, high-end community on the West Bank. Most of the rest will help capitalize the firm's other interests.

The first phase could be a 17-story residential building, located between Jacobs' Nautica Entertainment Complex (FirstEnergy Powerhouse & Jacobs Pavilion live stage) and the Main Avenue High Level Bridge (State Route 2).

Nautica Entertainment, chaired by Jeff Jacobs, isn't an active real estate developer in Ohio anymore. So it is seeking a joint development agreement with an active real estate developer to achieve a grand vision for its Flats West Bank properties. The issuance of short-term notes suggests that Nautica may be dangling some capital as a carrot to attract a deal. No joint development partner is yet confirmed.

David C. Grunenwald, vice-president of development at Nautica, did not return a phone call seeking comment.

The financing was secured as an amendment to a $350 million line of credit that Golden, Colorado-based Nautica Entertainment collateralized through Wilmington Trust, headquartered in Minneapolis. The amendment boosted the line of credit, established in 2017, to $385 million.

Nautica announced plans in 2016 for a $405 million complex of mid-rise buildings offering residential, office and hotel uses plus several parking garages. Once a joint development partner is in place, Grunenwald recently said he hopes to realize the grand vision for Flats West Bank in about seven years.

"We opened Nautica in 1987, and it has evolved from there," Grunenwald said in a article in 2016. "We've spent a lot of time evaluating the site and potential uses, and we've also watched as the city has emerged. This is not the same city as it was 36 months ago. Young people have discovered the city."

The former Cuyahoga County Engineer's headquarters
 in Cleveland's Ohio City neighborhood is for sale. The
 recommended bidder will likely build mid-rise housing
on the highly visible site (Allegro).
Ohio City: Hemingway favored to acquire county land

The former Cuyahoga County Engineer's headquarters property at the west end of the Veterans Memorial Detroit-Superior bridge is recommended to be sold to Hemingway Development, a county source said. The property, at 2429 Superior Viaduct, went on the market in an open-bid request for proposals (RFP) last winter.

Damon Taseff, a principal at Allegro Realty Advisors which serves as the county's real estate consultant, said he had no information he could share, but added "I presume the county will make a formal announcement in the future."

Mike Panzica, a principal at Hemingway, said he could not comment on the possible sale at this time.

The site is in a prime development location, at the edge of the booming Hingetown neighborhood and uphill from Flats West Bank (see previous news brief). It is also across the street from the planned $100 million, 20-acre Irishtown Bend Park and The Snavely Group's multi-phase Hingetown development.

Current zoning for the site is a mix of local retail-D and semi-industry-B, but both are in a height district allowing the construction of structures up to 115 feet tall, or roughly 11 stories.

Although the property is listed at 2 acres, it includes easements that extend out into the roadways for West 25th Street and old Detroit Avenue. Those easements cannot be built upon, reducing the developable land area to 1.6 acres.

Also, there is an abandoned street running diagonally through the site. The county has yet to vacate the street. Once vacated, its ownership would revert to that of the adjoining parcels, all owned by the county and which are the subject of the RFP.

The Cuyahoga County Personnel Review Commission had offices in the building but Taseff said in January that it would be moving out soon. The Cuyahoga County Engineer, which plans, builds and maintains all Cuyahoga County-owned roads, bridges and structures, was changed into the Department of Public Works during the county's reform in 2009. Its offices were relocated to the new county administration building at East 9th Street and Huron Road downtown.

Actually, there are four structures and six parcels which comprise the former county engineer's headquarters. According to the Cuyahoga County Fiscal Officer, the structures were built between 1947 and 1964, with the two largest buildings remodeled in 1970 and 1993. In total, there are 21,616 square feet of usable buildings on site.

The entire property was appraised by the county at $732,300 in 2018 but was valued at $1,015,200 in 1999. The appraisals didn't include the street rights of way.

Cleveland Clinic's Fairhill Facility, 11203 Stokes Blvd., is due
to be redeveloped with 38 housing units called North Park
Place by Premier Development Partners (Google).
University Circle: Cleveland Clinic partners in residential project

A former medical office building uphill from the heart of University Circle is proposed to be redeveloped with 38 housing units, both for-sale and rental. Cleveland Clinic Foundation's Fairhill Facility, 11203 Stokes Blvd., and its two acres of land will be redeveloped as North Park Place by Premier Development Partners of Cleveland.

As proposed, the 50,752-square-foot medical office building will be converted into 23 apartments with indoor parking and a three-level, 43,560-square-foot parking deck will be demolished to make way for 15 townhouses. Both the office building and parking deck were built in 1965 for Kaiser Foundation Health which sold it to the Cleveland Clinic in June 2001 for $3.25 million. The land and buildings are appraised by the county at $4,815,000 for taxes.

The project requires several zoning variances before development can proceed. The Board of Zoning Appeals will consider those variances at its next meeting, scheduled for June 17. North Park Place's architect is Kaczmar Architects, Inc.

Cleveland Clinic used the Fairhill Facility for its Sleep Disorders Center and Ohio Renal Care Group. The medical building was remodeled in 2006 for $897,900. Additional improvements, including to interior electrical systems, elevator and sleep lab plus dialysis facilities, were made in 2013-14, according to county records.

North Park Place Partners, LLC was formed in April by Premier Development Partners's Chairman Emeritus Ross Farro to deliver the project. Farro did not respond to a request for more information about North Park Place.

Premier was formed in 2006 with the acquisition of 330 acres in Northeast Ohio, previously owned by Duke Realty Corporation. As Duke exited the Northeast Ohio market, Farro, who was then Duke's senior vice president of Duke's office development and Spencer Pisczak, Duke’s then-senior vice president of industrial development, joined forces to create Premier, according to an online company history.

Although North Park Place is located in the city's University Circle planning district, it is across the street from Cleveland's Buckeye-Woodhill planning district in one direction, Buckeye-Shaker Square planning district in another, and the City of Cleveland Heights in yet another direction.

A small portion of the Tinnerman Building on Fulton Road,
just south of Lorain Avenue, is visible from the street. Most
of the historic building, owned by The Dalad Group, will be
 rehabilitated with apartments (Google).
Ohio City: Dalad Group submits plans for Tinnerman Building

Nearly three years after purchasing the historic Tinnerman Building, 2038 Fulton Road, The Dalad Group of Independence has declared its intentions to redevelop the largest portion into 53 apartments. The "announcement" came in the form of a zoning variance request to the city's Board of Zoning Appeals (BZA).

Of the 62,550-square-foot, seven-building complex that extends south behind homes to Chatham Avenue, 54,101 square feet are proposed for renovation, according to Dalad's filing with the city. The seven buildings range from one to three stories and were built from 1903 to 1938, county records show.

The Tinnerman Building was used most recently by Vista Color Imaging and Able Packaging. Vista moved to Brooklyn Heights and Able closed. It was named the Tinnerman Building because the Tinnerman Steel Range Co. was located on the site from 1880 to 1957, then moved to a new plant on Brookpark Road. It merged with Eaton Corp. in 1969.

The BZA filing was submitted by Paul E. Gallo LLC. The Gallo family has owned the property since at least the 1970s. However, property tax mailings are sent to Neal Viny, president of The Dalad Group at the firm's Independence address, per county records.

Next door to the Tinnerman Building is a long-vacant store built as a Rite Aid drug store and became a Hollywood Video store after 1998. It was bought in December 2016 by paper company FRE Holdings II created by MetroHealth System.

MetroHealth is moving most of its neighborhood clinical services from the city-owned Thomas F. McCafferty Health Center, 4242 Lorain Ave., to its new facility at the Urban Community School campus. However, a MetroHealth dental clinic will move into the the former drug/video store. The Veterans Administration also has services at McCafferty but their new home isn't yet known. Once vacated, McCafferty will likely be sold by the city for redevelopment.


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