Thursday, September 26, 2019

Shaping up Sherwin-Williams new HQ, R&D facilities

Is a multi-building urban campus totaling 1.8 million square
feet, plus a large parking ed parking, be in the cards for the
7 acres of surface lots to the west of downtown Cleveland's
 Public Square? Or will it be somewhere else? (Geowizical)
For those of us who were expecting Sherwin-Williams' (SHW) new global corporate headquarters plus research and development facility to be Cleveland's newest, tallest skyscraper, we may be disappointed. That's more of a statement of about what the new HQ+R&D might look like than where it might be built.

In fact, in its recent Request For Qualifications from the Cleveland offices of two international construction management firms (CM), SHW has asked for their conceptual proposals for downtown Cleveland facilities only, according to a high-level source. Those proposals were due to be submitted today.

That source, confirmed by another, said that SHW's real estate broker, CBRE, hasn't reached out to any other U.S. or international offices of those two CM firms -- Turner Construction Co. and Gilbane Building Co.

SHW's project development process is highly compartmentalized. The Fortune 500 company, through CBRE, has separately reached out to downtown Cleveland property owners to discuss their asking prices and possible partnerships. Unfortunately, all of the sites aren't yet known.

On another track, SHW is working with Vocon Partners LLC to develop architectural concepts of potential developments involving those sites to accommodate approximately 6,000 office and research workers.

And on yet another track, SHW is reaching out to suppliers, many of them in Northeast Ohio, for design concepts and cost estimates for everything from office decorations to amenities to furniture.

Goodyear's headquarters in Akron offers an example of what
SHW's CEO John Morikis reportedly likes in a large office
building for 6,000 of his company's employees (Goodyear).
However, SHW is also accepting unsolicited proposals from other real estate owners and developers for places outside of downtown Cleveland and, indeed, from outside of Ohio, two sources said. Another source said that the proposals will have to include "significant" incentives to offset SHW's costs of relocation.

In other words, SHW will stay in Cleveland, and especially downtown, unless some other city makes SHW an offer it can't refuse and Cleveland can't at least match it.

Yet another source notes that Greater Cleveland goes through at least one of these big corporate competitions per year. This year, it's SHW's HQ+R&D. Last year, it was Swagelok's new HQ. The year before, it was Amazon's HQ2. Greater Cleveland has one win and one loss in that time, although Swagelok was as unlikely to leave Northeast Ohio as Amazon's HQ2 was to come here.

The source says the public-private sector here isn't taking any chances on whether SHW is seriously considering leaving Greater Cleveland or even the City of Cleveland.

As with recent efforts, the source says there will be a "full court press" to keep SHW in Cleveland, led by Gov. Mike DeWine, former Forest City Enterprises CEO Albert Ratner and the Greater Cleveland Partnership.

As a result of its extensive and compartmentalized due diligence, SHW's staff and board has received a great deal of detail from the respondents as to what the downtown Cleveland headquarters could look like. The extent of detail ranges from the overall physical form at the optional downtown Cleveland locations, right down to the interior finishes.

Interestingly, the overall physical form may not be the focus of many Cleveland skyline postcards. Why? To understand that, we need to understand SHW's leadership and corporate culture.

In contrast, Eaton Corp.'s HQ in Beachwood didn't gain a
fan in Morikis after he visited it and other corporate offices
throughout Northeast Ohio (Pickard Chilton). 
CEO John Morikis has been a SHW employee since he got his master's degree from National Louis University in Chicago. He studied business and psychology. He worked his way up through SHW's ranks since 1984. He has embraced his company's conservative, non-pretentious approach. And he is well aware of the company's deep Cleveland roots.

Armed with an understanding of psychology, business and what employees at multiple strata experience, he is now tasked with coming up with new HQ+R&D facilities that affect everything from the employees' mood, to their sense of belonging, to their innovation and to their productivity.

For those reasons, Morikis doesn't seem interested in setting a new height record for a downtown Cleveland skyscraper or building anything iconic merely for the sake of bragging rights, according to those working around him on this project.

In fact, when SHW first started working with century-old law firm Kohrman Jackson & Krantz on drawing up the RFQ one year ago, it initially assumed that the tallest building in the HQ complex would be a 40-story skyscraper.

While that sounds like a big building, the space requirements in the RFQ are far bigger -- 1.8 million square feet, divided among a roughly 1.45-million-square-foot HQ and a 350,000-square-foot R&D facility.

If the HQ was put in a single building with floorplates similar to those of Cleveland's Key Tower, SHW's HQ would be taller than Key, currently the tallest building between Chicago and the East Coast.

An artists' rendering of Sherwin-Williams Paint Co.'s first store
store at 118 Superior Ave. -- on Public Square in downtown
Cleveland in 1866. This is near the site SHW favors for its
new global headquarters and research center (SHW).
But, apparently Morikis has no interest in challenging Key Tower's reign. Instead, he reportedly envisions a multiple-structure urban campus with at least one tower, but none taller than 40 stories.

He seems to want a campus that is connected, collaborative, energizing and uplifting, rather than one or two buildings that are so confining that employees rarely step outside to recharge their batteries until their workday is done.

There are several large sites within downtown Cleveland where such an urban campus can be built without having to deal with multiple property owners and undertaking significant demolitions. The sites would have to be large enough so that SHW can spread 1.8 million square feet (not including parking) among multiple buildings.

Not many people realize how much land SHW owns along the Cuyahoga River -- 9.2 acres. It is where SHW's John G. Breen Technology Center is located now and where SHW was founded 153 years ago. It would be a beautiful and historic site for a SHW HQ+R&D, but only if construction could be undertaken in stages without disrupting the Breen Center.

The other that is more well known is on the west side of Public Square, near where SHW established its first store in 1866. The site starts with the 1.17-acre Jacobs Group-owned parking lot on which Ameritrust planned to construct a 60-story, 1,198-foot-tall headquarters in 1989 until the former Cleveland Trust Bank was acquired by Society Bank which then merged with Key Corp.

That site continues into the 5.6-acre Weston Group-owned Superblock, bounded by Superior and St. Clair avenues, as well as West 3rd and West 6th streets. Combined, the 6.77 acres of parking lots would provide the site for a connected, urbanized office campus that is fully integrated into the amenities of a major city's central business district, including a newly refurbished Public Square.

SHW's Center of Excellence on the ground floor of its current
downtown Cleveland headquarters, located in the SHW-owned
Landmark Office Tower in the Tower City Center complex. It
has been headquartered there since 1930 (WKSU).
A high-level source said this site is favored by SHW because it was the chosen site for SHW's HQ when the company did extensive due diligence for it in 2014-15. Since then, and including Morikis, SHW's 11-member board of directors has four new people, replacing three. Also, Lead Director Steven Wunning joined the board late in that HQ process in 2015.

But Morikis was the chief operating officer until the end of 2015, ranking below only CEO Christopher Connor. Morikis oversaw the last HQ development effort that was temporarily halted by SHW focusing resources on the acquisition of competitor Valspar Corp.

Morikis' leadership and recommendations on how to proceed with the HQ+R&D project will be very important to SHW's board. Morikis has visited an unidentified number of Fortune 500 company HQs in the region to learn what those companies' executives, managers and staff like and don't like about their facilities. And he reportedly soaked up the atmosphere and designs and finishes of each.

So when Morikis visited Eaton Corp.'s 2012-built HQ in Beachwood, he "hated" it, primarily due to its finishes and atmosphere, a source said. Its isolated, car-dependent, 53-acre setting wasn't what he apparently hated. Instead, he was looking at how employees related to the building's design, materials and furnishings, once they were inside.

Conversely, he liked the atmosphere and finishes in the Goodyear Tire & Rubber Co.'s 2013-built HQ in Akron, just down the street from where the company was founded in 1900. Apparently that building energized him. Richard Kramer, who has served on SHW's board since 2012 and also serves on Goodyear's board, shared with Morikis his experiences in building a new global headquarters.

After today's deadline, solicited proposals for downtown Cleveland HQ+R&D sites and any unsolicited proposals for sites outside of downtown will be reviewed by SHW staff with presentations to the board likely in the coming weeks and months.

If that schedule holds, the new HQ+R&D project could be announced at SHW's annual National Sales Meeting in Kissimmee, Fla. in January 2020. Or, considering how fast this project is moving, the announcement could come even sooner.


Monday, September 23, 2019

Future of two idled Cleveland-area Ford plants looks electric

This is the office portion of Rivian's lone production facility,
a former Mitsubishi plant in Normal, IL (Rivian).
Since spring, Greater Clevelanders have been hearing that the sale and reactivation of two massive, idled auto plants in the area to a single buyer will be a "game-changer" for the economy of this region. There were more than 15 potential buyers with many showing interest in reusing both factories in a positive way.

Ford has since short-listed the potential buyers and will soon select a winner. I took a stab last May at who one of those buyers might be. While I'm pretty sure I missed then (Tenneco's finances have fallen sharply in the past year), I feel much more comfortable in my aim in this article.

Previously, I completely overlooked some major news announced only a month before my May article. That news and much more since then points strongly in one direction....

A possible buyer of Ford Motor Company's Brook Park and Walton Hills plants could be Rivian, a start-up SUV and truck manufacturer whose vehicles are powered by electric engines. They have impressive performance (0-60 mph in three seconds) and impressive ranges of 400 miles or more per charge.

Word is that a formal announcement of who will buy the two legacy auto plants will be made in two months or less. The hiring of 2,000 to 3,000 workers would follow a two- to three-year renovation and retooling of both factories.

Why Rivian?
Prototypes of Rivian's two launch vehicles, a seven-passenger
SUV and a five-passenger pickup -- both electric -- were a hit
at the New York Auto Show earlier this year (Rivian).
First off, Rivian, founded in 2009 and headquartered in the Detroit suburb of Plymouth, has come out of nowhere. But, already, it is a multi-billion-dollar company. It has raised $2 billion in equity since 2017 and just got an order from Amazon to build $10 billion dollars worth of electric delivery trucks.

So, $12 billion -- not bad for a company that has made only prototype vehicles so far.

Rivian's production line won't start churning out its launch products -- the five-passenger R1T pickup and seven-passenger R1S SUV -- until late-2020. And that doesn't include its new 100,000-truck order from Amazon. Nor does it include Rivian’s innovative, flexible chassis, dubbed the "skateboard platform" (the chassis looks like a skateboard!) that will be built en masse for the foundation of another automaker's huge EV program (more later).

Some will ask why would Rivian buy two huge factories in Northeast Ohio when it has already invested $200 million to reactivate a 2.6-million-square-foot former Mitsubishi auto plant it acquired in 2017 on the northwest side of Normal, IL. The company will employ about 1,000 people there.

As big as that plant is, it may not be big enough for what may be asked of Rivian in the coming years. At its peak under Mitsubishi, the Normal plant produced about 200,000 cars a year. Under Rivian, it expects to produce only about 50,000 vehicles in its first full year. But that doesn't quite tell the full story.

For context, consider the 3.7-million-square-foot Ford Avon Lake, OH plant. It produces 370 truck chassis a day. That's 128,000 to 135,000 chassis per year. That's just chassis. It also assembles about 15,000 medium-duty trucks per year with their engines and transmissions made in Mexico.

So not only will the Normal plant produce electric trucks. It will also produce the skateboard platform that will be the chassis for Rivian's two launch trucks, as well as for Amazon's 100,000 delivery vans as well as Ford's all-new EV.

That's a lot of skateboards, and that's just for the known business. Can the Normal plant handle all of that? And what will business be like in two to three years -- also known as the time it will take to reactivate the two Cleveland-area Ford plants?

That means adding millions more square feet to the production process. Ford's Brook Park Engine Plant No. 2 on Snow Road, closed since 2012, measures 1.7 million square feet and the Walton Hills stamping plant on Northfield Road, closed since 2014, totals 2.1 million square feet.

Ford's 1.7-million-square-foot Brook Park Engine Plant No. 2
(above) that closed in 2000 and Ford's Walton Hills Stamping
Plant (below) that closed in 2015 (Google).

If so, that could mean Rivian's chassis plant will be in Illinois, its engine plant in Brook Park and its stamping/body plant in Walton Hills. Sounds like a production line. And we're talking at a more appropriate scale -- not just for production, but also for equity.

Why is Rivian amassing billions in equity and orders merely to spend it on a single, reactivated factory, its growing Michigan headquarters and a California engineering center? It's not. Those facilities probably don't account for anywhere near close to the billions in Rivian's grasp.

That scale of resources probably means a larger scale of capital investment as well as to launch its first production vehicles.

Of course, transportation is a big part of the supplier chain. Interestingly, Rivian's Normal, IL plant, the Brook Park plant and the Walton Hills plant are all on Norfolk Southern Corp.'s (NS) railroad lines. That means no costly, time-consuming interchanges, least of all through congested Chicago.

And the trio of plants are situated so that NS can run continuous unit trains, each loaded with a thousand or more chassis in one direction and hundreds of finished vehicles in the other. NS-owned railroad yards are in place and in good condition at all three factories. And if NS should ever treat Rivian like a hostage shipper, there are competing mainline railroads nearby to pick up the slack.

Rivian's electric delivery truck for Amazon. The online retailer
ordered $10 billion worth of these trucks from Rivian, despite
that Rivian hasn't mass-produced any vehicles yet (Rivian).
Finally, perhaps the biggest reason why Rivian is the likely buyer is because of Ford itself.

The buyer of the Brook Park and Walton Hills plants was never going to be a competitor to Ford. Ford would not hand the keys to so much production capacity to GM, Chrysler, Toyota, Honda or Tesla. It might hand the keys to Volkswagen which announced an alliance with Ford in January.

A source who knows who is on the shortlist to buy the Ford plants wouldn't say publicly who they are. But he did say who it isn't, and it isn't VW "unless they are buying it under another name, but that would be unlikely," the source said.

The buyer could always be in an unrelated industry. But why sell to an unrelated industry and make money only once when you can sell it to a partner and make money for years and years?

And guess who Ford is a partner to? Rivian.

Ford, the nation's second-largest automaker and fifth-largest in the world made a $500 million equity investment in Rivian in April. That was the big news that I missed a month before I wrote my May blog. That's just a spark to Ford's $11 billion venture into the EV field.

Ford and Rivian agreed to work together to develop an all-new, next-generation battery electric vehicle for Ford’s growing EV portfolio. And Rivian will build for itself and for Ford its skateboard platform chassis to be used on several models of EVs. That's hundreds of thousands of vehicles, possibly including Ford's new electric Mustang and F-150.

It's a massive production commitment, one that will require billions of dollars and more production capacity than one auto plant in the flatlands of Illinois. Indeed, it looks increasingly like the two massive, idled auto plants in Greater Cleveland will be reactivated for this game-changing manufacturing future.


Thursday, September 19, 2019

Lakefront development project to start this winter

An updated lakefront development plan, dated Sept. 10,
2019, was released this week by Cumberland Development
LLC with a phased development approach. It includes two
parking lots that can be re-developed if the owners of the
Cleveland Browns build a new stadium and an associated
development zone elsewhere in/near downtown Cleveland
After shedding its partner Trammel Crow Co., things are starting to move a little faster for Cumberland Development LLC. when it comes to its lakefront development project. Demolition for and construction of the lakefront project is due to start in January.

This week, Cumberland President Dick Pace released a fully updated plan (see high-res PDF here) for his lakefront development that includes timelines and phasing for new and larger buildings. The revised plan also scuttles the idea of re-using one of the two old Dock 30 port warehouses as previously proposed. Instead, both warehouses are to be demolished.

Cumberland's plan would capitalize on growing momentum at City Hall for a "land bridge" to extend the downtown "malls" over the lakefront railroad tracks, Shoreway highway, and continue this corridor of greenspace all the way north to Lake Erie.

As proposed, a 200-foot-wide grassy public space would link downtown with its lakefront better than it has been linked since the Great Lakes Exposition of 1936-37. Because the land bridge would require demolishing the aging Amtrak station, a multi-modal transportation hub to unite rail and bus modes under one roof would need to be built. Recent plans showed a glassy transportation center west of East 9th Street.

An official rendering isn't publicly avail-
able to portray a proposed "land bridge"
 that would extend downtown's malls
over the lakefront railroad tracks and
Shoreway. However, this is generally
how the proposed, 200-foot-wide land
bridge would look from above (Google).
And, the plan would provide two surface parking lots and on-street parking along Erieside Avenue, north of First Energy Stadium, for stadium visitors. This would provide 412 stadium parking spaces to comply with the city's parking requirements, per its stadium lease with the Cleveland Browns.

But the parking lots are designed in such a way that one or more of them could be developed as a future phase if a parking deck was added. Or, they could be developed if Cleveland Browns owners Jimmy and Dee Haslam built a new stadium and development zone elsewhere in or near downtown by the time their existing stadium lease expires in 2029.

Cumberland has already built two buildings on the east side of North Coast Harbor -- the two-story Nuevo Modern Mexican & Tequila Bar and the three-story, 16-apartment Harbor Verandas where rents range from $4,000 to $5,000 per month.

The first structure west of North Coast Harbor to rise has the working title "Residential Building 4." Architecturally, it will look like a taller version of the Harbor Verandas. Its construction is due to start in January.

Each of the next three buildings to the west are scheduled to rise at a rate of one per year. The last one, Residential Building 1, would see construction starting in 2023 depending on the local and national economies.

Cumberland's Harbor Verandas apartments on the east side of
North Coast Harbor reportedly offer architectural insights into
 the planned quartet of mid-rise apartment buildings west of the
harbor. The Rock & Roll Hall of Fame and downtown's skyline
loom behind the fully occupied Harbor Verandas (KJP).
The bases of these four residential buildings are proposed be lined with 2.5-story townhouse rental liner units. While Pace said he would prefer to offer for-sale townhouses, this development is located on land owned by the City of Cleveland and leased by Cumberland. A lease prevents him from offering for-sale units.

On the other side of the extended mall greenspace (complete with a Superman statue), the office building, hotel and STEM school are also scheduled to be built over the course of the next four years. That will also depend on the economy, the commitment of an anchor office tenant and the availability of public subsidies to offset low office rents endemic to the Cleveland market.

Here are the proposed features and characteristics for each planned building:

Residential Building 4 -- Eight-story building with 115 apartments over a two-story podium base with 20 liner townhouses and 165 indoor parking spaces.

Residential Building 3 -- Eight-story building with 110 apartments over a two-story podium base with 20 liner townhouses and 160 indoor parking spaces.

Residential Building 2 -- Eight-story building with 100 apartments over a two-story podium base with 15 liner townhouses and 140 indoor parking spaces.

Residential Building 1 -- Nine-story building with 220 apartments over a three-story podium base with 30 liner townhouses and 250 indoor parking spaces. This building can be up to 150 feet tall as it is farther away from Burke Lakefront Airport.

Hotel -- Six-story, four-star hotel with 175 rooms over parking and retail base. A full-service restaurant is planned. No hotel brand has been publicly identified yet.

Office Building -- 200,000 square feet of leasable space above parking podium base and retail. The height of the office building and the hotel are limited to 100 feet because they are the closest planned buildings to Burke Lakefront Airport.

STEM School -- A two- to three-story school offering daycare and early education, as well as a K-8 curriculum focusing on science, technology, engineering, and mathematics is proposed. But the Cleveland Metropolitan School District has yet to commit to locating here.

Signs for Cumberland's lakefront development appear in front
of the Dock 30 warehouses on Erieside Avenue, north of First
Energy Stadium. The warehouses are scheduled to be razed
this winter to make way for new apartment buildings (KJP).
Other features are planned, in addition to the above buildings and the extension of the malls to Lake Erie. One of the saved Hulett ore unloaders is proposed to be located on the west side of the mouth of North Coast Harbor, next to the Steamship William G. Mather Maritime Museum, part of the neighboring Great Lakes Science Center. Also a playground, which has funding, is proposed to be located here.

Linking the west side of North Coast Harbor with the east side, via Voinovich Park, will be a $16.8 million pedestrian bridge. Construction of the bridge, which will raise up in the middle to allow boats to pass, is scheduled to begin in early 2020.

Lastly, construction of the Rock & Roll Hall of Fame and Museum's expansion is due to start the day after the 2021 NFL draft is held in Cleveland, in April or May. The expansion, costing $35 million, will add 50,000 square feet of space between the rock hall and science center, along the south side of North Coast Harbor.


Wednesday, September 18, 2019

Market Square project to shrink by about one-third

While construction of Harbor Bay's Market Square residential
building (at left) will go forward, the office building (at right)
won't -- at least not in the foreseeable future. It was a casualty
of Cleveland's high construction costs, low rents, lack of local
public subsidies for office construction and the city's desire to
protect its jurisdiction in approving tax abatement (HBREA).
Without state financing and a tax exemption for its project, the developer of a $175 million, mixed-used development has decided to scale back the project by about one-third -- at least at the outset.

Harbor Bay Real Estate Advisors, LLC is hoping for the city to approve a conventional, 15-year, 100-percent tax abatement for the residential portion of its Market Square project. If that happens, a seven-story apartment building with ground-floor retail would be located at the corner of Lorain Avenue and West 25th Street in Cleveland's Ohio City neighborhood.

But without a tax exemption for the entirety of the roughly 500,000-square-foot development, the 150,000-square-foot, 10-story office building is going to have to wait for more signed leases and an as-yet-unidentified form of public subsidy before it can be built.

That building was expected to increase the daytime population of the Market District with 1,000 office workers at a transit-accessible location, thereby boosting business at the West Side Market as well as at local restaurants and shops, said Harbor Bay's Project Director Dan Whalen.

"We had some leasing done in the (office) building, but there was still a ways to go," he said. "All we can do is keep going forward and treat the office (building) as a possible second phase. Hopefully, once companies see the timber in the flesh on the residential building, they’ll get excited about the potential and want to consider talking (about leasing)."

Market Square is proposed to be built with timber framing. It's a construction technique that is more expensive at the outset, but saves up to 40 percent in ongoing heating and cooling costs. And it is more environmentally friendly than manufacturing steel and concrete for traditional structures.

That's why the Ohio Air Quality Development Authority (OAQDA) was willing to finance the project and give it a tax exemption. But the city, school district and Cleveland Metroparks voiced their opposition, blocking the OAQDA request.

The Market Square development was planned to feature
roughly 500,000 square feet of development, as well as
structured parking. But the 150,000-square-foot office
building at lower right will have to wait for a second,
possibly distant phase of construction (HBREA).
Instead, with timely city approval of the residential tax abatement, Whalen anticipates being able to start construction on about 335,000 square feet of the project with minimal delay. Construction of expanded water lines and sanitary sewers could begin in the first quarter of 2020.

Demolition of the existing Market Plaza retail strip will begin as soon as KeyBank can move into its new location, Whalen added. KeyBank is relocating to the West 25th Street Lofts development, at the southwest corner of West 25th Street and Church Avenue, next to Bookhouse Brewing. Other retailers in the plaza have found new homes.

"The office (building) is on hold until we can basically pre-lease a building with tenants, or one big tenant, in the future," Whalen explained. "And we will need to determine how to finance it because Cleveland office rents don’t pencil without substantial public financing assistance."

That's also why a big reason why the nuCLEus development has stalled -- a lack of public assistance for constructing new, market-ready office buildings. Nearly half of nuCLEus' square footage is proposed to be offices. The last new office tower built in or near downtown Cleveland was the 21-story Ernst & Young building in the first phase of Flats East Bank in 2012.

Nearly half of the $270 million cost of the first phase of Flats East Bank, or $130 million, was publicly financed. That included loans and grants from the City of Cleveland, Cuyahoga County, Cleveland-Cuyahoga County Port Authority and the State of Ohio.

The existing Market Plaza retail strip along West 25th Street
is due to be demolished in the coming months -- just as soon
as KeyBank's new store just up the street is ready (Google).
Another large source of funding for Flats East Bank's first phase was the EB-5 "investor visa" program. While an exact figure wasn't available, up to $30 million from that program was used to finance Flats East Bank's construction. The Cleveland International Fund, which pools investor visa funding for local projects, has had to scale back its activity due to recent problems.

How can the city aid these stalled, new-construction office projects which cost as much to build as those in New York or Chicago due to prevailing construction wages, yet command low Cleveland rents? When asked that question, Ward 3 Cleveland Councilman Kerry McCormack chose to instead defend the city's jurisdiction on whether it should offer tax abatement.

"I support common-sense incentives to bring in jobs, development and housing, but allowing the state to completely strip a local municipality of its authority is never going to be supported," McCormack said. "I am working closely with Harbor Bay right now to get a great project over the finish line."

"Our position is that we don’t really want to be adversarial with the city," Whalen emphasized. "What’s done is done and we need to turn the page. We are in complete partnership with the city and success to us means building a world-class project at this corner in very short order."


Monday, September 16, 2019

Stadium sites are as much about development

A growing development zone and public realm space next to
Minneapolis' new US Bank Stadium offers an example to us
in Cleveland how a stadium-oriented development site can be
designed (Ryan Cos.). CLICK IMAGES TO ENLARGE
It's still early in the game, but a few sites in downtown Cleveland are being considered by the Haslam family, owners of the Cleveland Browns, for a large, stadium-oriented development zone. The planning process is just getting underway with an eye toward 2029 -- the year the team's lease ends with the city for use of First Energy Stadium.

While the record nationally of sports stadiums producing spin-off economic development has been uneven, much of it is due to the fact that the stadiums were often considered the end product. Most stadiums were sponsored by public agencies and any spin-off development was often not part of a coherent plan, let alone part of the sponsoring agencies' organizational missions.

Increasingly, sports stadium developments are led by private efforts and the stadiums themselves are roughly only half of the end game of these developers. The rest includes offices, hotels, housing and supportive retail/restaurants.
Looking north over the Malls extended above the lakefront
railroad tracks to First Energy Stadium, complete with two
20-story towers, one residential and the other a hotel and a
new multimodal transportation center between them (HKS).
The nation's biggest stadium-oriented real estate master plan is in Los Angeles, where a $2.4 billion stadium for the Rams and Chargers anchors an overall $5 billion development. The LA Stadium and Entertainment District in Hollywood Park includes $2.6 billion worth of commercial, residential and retail investment.

Cleveland obviously isn't Los Angeles (it hasn't been since LA overtook it in population in 1930), but it does have a few things in common with cold-weathered, Midwestern Minneapolis.

There, the city established a development zone around the new US Bank Stadium and began offering sites to developers willing to build to meet the city's vision of a high-density district next to a new public park and light-rail line. So far, Ryan Companies has responded with plans for a 17-story office building and a 25-story apartment tower.

Here are four of the potential stadium-oriented development
sites being considered at this early stage. These can and likely
will change as the process becomes more formalized (Google).
Similar opportunities exist in Cleveland. But where? So far, these are the sites that apparently are being considered by the Haslams, according to sources close to them, for their stadium-oriented development built around a domed/retractable-roof facility:

1. Rebuild existing stadium with retractable roof -- This would easily be the least expensive of the plans, costing in the hundreds of millions of dollars, but is also currently one of the least accessible. There are only two routes into the stadium -- West Third Street and East Ninth Street.

This is what First Energy Stadium could look like if someone
put a retractable roof on it and connected it with the new Hun-
tington Convention Center via a land bridge and transportation
center. This general idea has some strong proponents but has
yet to be subjected to a geotechnical analysis (Bob Corna).
Extending the downtown malls as a land bridge over the railroad tracks and Shoreway would help address that, along with incorporating a multimodal transportation center for trains, buses and light-rail connected to housing, hotels, offices and retail. The land bridge, with expanded convention facilities on a lower level and linked to the new stadium would create a massive, connected indoor complex for conventions, meetings and other special events.

2. Northeast side of downtown -- This part of downtown, along St. Clair Avenue west of the Inner Belt, has much in common with what was the Central Market District of downtown in the 1970s and 1980s (today's Gateway District). It is a place of low-rise buildings and parking lots that most people pass through between Interstate 90 and the central business district.

Another view of the stadium-area development zone located in
Minneapolis, with new office buildings at left for Wells Fargo
and a planned 25-story apartment tower beyond (Ryan Cos.).
The site has many advantages. It overlooks Lake Erie and with some access improvements, the site could become an attractive place for a stadium-oriented development zone. Improvement could include extending East 18th Street north to the Shoreway and extending the Waterfront Line light rail southward to create a more usable downtown loop.

But developing here would require acquiring dozens of small properties and demolishing lots of low-rise buildings, much like those in the Central Market-area properties that were sold to and demolished by the Greater Cleveland Domed Stadium Corp. in the 1980s. Those properties were later acquired by Gateway Economic Development Corp. of Greater Cleveland for the basketball arena and baseball stadium.

3. Intermodal Yards -- Formerly the Norfolk Southern intermodal railroad yards, this vast area of vacant land was acquired by the Ohio Department of Transportation in 2011 prior to its reconstruction of the Inner Belt highway. It and most of the surrounding vacant land, suitable for development, remains publicly owned thereby reducing acquisition costs.

The amount of publicly owned land on southeast side of the
Inner Belt (I-90) highway is large. This was the runner-up
site for the Cleveland Browns stadium in the 1990s (Google).
This was actually the runner-up site for the new Cleveland Browns stadium in the late-1990s. But time was of the essence in bringing back the Browns and this site needed lots of infrastructure improvements (parking, transit, plus storm/water/sanitary sewers) prior to building a new stadium.

The site still needs those features, but it is easily the most accessible of the stadium sites being considered. It is accessible from Interstates 77 and 90 and a station on the existing Red, Blue and Green rapid transit lines could be built below the stadium. It would turn a dead zone above the Cuyahoga River into a year-round modern sports and entertainment complex.

4. Honorable Mentions -- Two other sites were included in the list but one reportedly has already been rejected and the other is likely to be turned down, too. The already rejected site is the Weston Group-owned Superblock in the Warehouse District, bounded by West Sixth Street, West Third, Superior Avenue and St. Clair. The field would run parallel with West Third and Sixth. But the site is too constrained for an NFL stadium here.

This site, across Ontario Street from Progressive Field and the
Rocket Mortgage Field House, is a distant fourth among the
sites being considered for the stadium-oriented development
district. This graphic shows a proposed new Loop Trail that
would provide views of the Cuyahoga River valley (AoDK).
The other site, Flats South, has more room but the topography is difficult. It would either require a lot of fill dirt or relocating the rapid transit lines just southeast of Tower City Center and closing Canal Road. But it would offer prime development sites along the river in an area where developer Joel Scheer has been trying to jump start his Flats South Innovation District.

Before someone decides to run out to start buying up land near any of these sites, realize first that the Haslams are VERY early on their search. There are no active proposals being tendered, nor even an architect hired at this time. But it is intriguing to see where their initial search may be leading them.


Thursday, September 12, 2019

Snavely, investors acquiring Vibrator site for Hingetown project

The familiar sight of the Cleve-
land Vibrator Co. in Ohio City
is due to give way to a fourth
phase of the Snavely Group's
mostly residential Hingetown
real estate development (KJP).
Cleveland Vibrator Co., one of the most recognizable names in local manufacturing, will move its operations to the city's Old Brooklyn neighborhood. In its place will be what amounts to the fourth phase of Snavely Group's ever-growing Hingetown development.

Pete Snavely Jr., vice-president of development at his family's Chagrin Falls-based development firm, confirmed the pending acquisition of the 1.715-acre, 14-parcel property bounded by West 28th and West 29th streets, as well as Church and Clinton avenues. Terms of the pending deal were not disclosed.

The property, and indeed the 96-year-old Cleveland Vibrator Co., are actually owned by 2828 Clinton Inc. To facilitate the property's ownership and development, Snavely Development Company (SDC) on Aug. 29 registered two new firms: SDC Residential – 2828 Clinton LLC as well as 2828 Clinton Avenue LLC, according to the Ohio Secretary of State's office.

Site of Cleveland Vibrator Co.'s 1.715-acre, 14-parcel property
in Ohio City's Hingetown section. Also on the same block is
 the Ohio City Firehouse, the Malachi House and the Banana
Blossom Thai Cuisine restaurant which, presumably, will
remain untouched by Snavely's fourth phase (Google).
As reported here at NEOtrans in February, Snavely initially intended to design the fourth phase of its Hingetown master development around the new offices of The Adcom Group. The full-service marketing and communications firm is headquartered at 1370 W. 6th St. in downtown Cleveland's Warehouse District, above Starbucks Coffee.

In Snavely's fourth phase, Adcom's offices would have relocated to the ground floor of a new building topped by residential. But Adcom CEO Joe Kubic said that plan was scrapped due to its high cost. That doesn't mean he has lost interest in redeveloping that site, however. Quite the opposite.

Snavely's third phase along Detroit Avenue between West 26th
and West 28th streets will have a commanding street presence.
But the fourth phase will be located off the main thoroughfare
and in a neighborhood of smaller-scale buildings (Vocon).
"Myself and other investors, including the Snavely Group, are in the process of buying the Cleveland Vibrator site," Kubic said. "We haven't determined what we are going to do with it yet, but we hope to soon. It's a great site, in a great community and we are excited to continue to explore our options there."

Kubic and others at Adcom, founded in 1990, haven't decided if they will look for another location to move the 120-employee headquarters. But a decision has already been made to relocate Cleveland Vibrator and its roughly three dozen workers from its 27,000-square-foot plant that has much outdoor storage. The company manufactures material handling equipment.

Construction barriers went up this week along Detroit Avenue
and West 28th Street for Snavely's third phase (KJP).
Cleveland Vibrator's new location will be at 4544 Hinckley Industrial Parkway in Cleveland, two sources said. The site is the former Watt Printing building located just south of the Jennings Freeway's interchange with Spring Road/Hinckley Industrial.

The property currently is owned by the Gergel-Kellem Company Inc. according to Cuyahoga County records. The 3.14-acre property and 60,790-square-foot building was listed for sale at $3.25 million.

Craig Macklin, president of Cleveland Vibrator, did not respond to an e-mail seeking comment for this article. Thus it is not known when the company will relocate.

The former Watt Printing plant, built in 1996 at 4544 Hinckley
Industrial Parkway in Cleveland, will be the new home of the
Cleveland Vibrator Co., according to two sources (LoopNet).
However, the firm on Sept. 10 was approved by the Ohio Air Quality Development Authority  (OAQDA) for $160,000 in Air Quality Revenue Bonds to install air quality facilities at its new plant.

Cleveland Vibrator also was awarded two grants by OAQDA. One grant will cover the financing closing costs and the other will pay up to 30 percent or $30,000 of the principal amount.

Visible construction got underway this week for phase three of Snavely's Hingetown development, featuring 88 apartments in two buildings. One is an existing structure -- the three-story Painters Union building at 2605 Detroit Ave. that is due to be renovated. Next to it will be a newly built, five-story building.

Not all of the block being bought up for Snavely's fourth phase
of development was owned by the Cleveland Vibrator Co. The
block includes several buildings that may not be be a part of the
development, such as Banana Blossom Thai Cuisine restaurant
and, at left, the Malachi House which provides hospice care
and housing for terminally ill persons (KJP).
Phase two was completed this year -- the renovation of the historic Forest City Bank Building and Seymour Block on the southwest corner of Detroit and West 25th Street. The two buildings were updated with ground-floor commercial uses and 38 affordable apartments above.

Last year, Snavely built the first phase at the northwest corner of Detroit and West 25th -- The Quarter, consisting of 194 apartments above 30,000 square feet of ground-floor commercial space.


$175 million Market Square development gets new life

Although Harbor Bay's Market Square development may not
be as big as it would have been with the financing that was
minutes away from being OK'd by the State of Ohio, it will
still be a big improvement for Cleveland's Ohio City neigh-
borhood. This old rendering of Market Square shows a plaza
Like a tree at risk of getting chopped down, a $175 million development in the heart of Cleveland's Ohio City neighborhood was in danger of being felled. But instead of hearing the cry "Timber!" Clevelanders should soon see a new plan released for the construction of buildings here.

The large mixed-use development combining residential, retail and offices in two connected, uniquely timber-framed buildings at Lorain Avenue and West 25th Street was in danger of being axed by an impasse between the city and Chicago-based developer Harbor Bay Real Estate Advisors.

On one side, Harbor Bay sought a source of non-conventional financing that included an unusually long (30 years) and expansive (affecting not just residential but commercial uses, too) property tax abatement without civic and public input.

And while the school district and Cleveland Metroparks were willing to consider a shorter abatement term, the City of Cleveland refused to concede its abatement powers to a state entity -- in this case the Ohio Air Quality Development Authority (OAQDA).

But the impasse was addressed at a Sept. 11 meeting between city officials and the developer. The project could go forward with city incentives rather than state help, although the development probably won't be in the same form as before, according to Harbor Bay Project Director Dan Whalen.

"We likely will have to revamp" the project, he said. "But we are moving quickly."
With West 25th Street in the foreground and West
Side Market's tower at far left, Market Plaza will
be a significant addition to Ohio City's Market
District and its urban vibrancy (HPA).
Part of the reason for the expedited development timetable is because Harbor Bay had to commit to contractors and suppliers by the end of September on whether it would proceed with construction.

"The project is 70 percent bid and we can hold those prices for only a limited time," he said.

Harbor Bay has invested nearly $10 million in the project so far, including buying a retail strip for which it has city permits in hand to demolish. City officials acknowledged the renewed positive dialogue and a shared willingness to move the project forward.

"Yes, there are productive conversations with Harbor Bay," said Ward 3 Councilman Kerry McCormack confirmed. "The (city's) normal economic development tools are on the table."

Those typically include a 15-year, 100 percent tax abatement on new-construction residential, with a tax-increment financing arrangement so the city can share the increased income taxes with the school district during the abatement period.

The existing Market Plaza retail strip has more in common with
auto-oriented suburban areas rather than an urban neighborhood
with a busy rail station and three 24-hour bus lines that get more
than 700,000 boardings at this site per year. Harbor Bay hopes
to increase that synergy by demolishing this retail strip and
constructing a transit-oriented development here (Google).
Harbor Bay had hoped to get $150 million in bond financing and the 30-year tax abatement approved at OAQDA's Aug. 13 board meeting. But last-minute letters of of opposition from the city, school district and metroparks nixed the financing and abatement.

OAQDA was approached because Market Square's timber framing would reduce emissions by 40 percent mostly from reduced heating and cooling, but also from avoiding the manufacture of steel and concrete. The most recent plan was for a 10-story office building and seven-story apartment building connected by a pedestal of ground-floor retail.

While Whalen wasn't prepared to say how the project would be changed, he said the timber framing for the buildings would remain.

"Timber will still be the focal point," he said.

Whalen also noted that all of Market Square's office and retail tenants will be new to Greater Cleveland, bringing more than 1,000 jobs and nearly $11.8 million per year in new sales and incomes taxes to the city and county.


Sherwin-Williams finally admits new HQ, R&D site search

This unofficial massing based on available information from
 several sources shows what a 1,000-foot-tall headquarters
tower would look like if located on the west side of down-
town Cleveland's Public Square, flanked on the west (right)
by a second tower about 500 feet tall for Sherwin-Williams
research center. This is viewed from Lake Erie (Geowizical).
After months of denials, Sherwin-Williams (SHW) finally has acknowledged publicly and officially that it is seeking a new home for its global headquarters and research-development facilities.

In a press release shared today, SHW Chairman and Chief Executive Officer John G. Morikis admitted what has been reported here at NEOtrans for nearly a year -- that the global coatings giant has outgrown its scattered offices throughout Greater Cleveland and is looking for a new HQ+R&D.

“The company’s significant growth and global expansion over the last several decades has resulted in a less than optimal configuration of headquarters, offices and R&D facilities across multiple locations,” Morikis said.

This action comes as a result of the company’s ongoing review of its facilities requirements as it seeks to best meet the current and future needs of its customers and employees, the company said.

After multiple articles written here at NEOtrans, Morikis and SHW's public relations staff issued at least two intra-office e-mails (including one just last week) urging staff not to publicly discuss the company's HQ+R&D facilities search.

This has been the location of Sherwin-Williams' headquarters
since 1930 -- the 900,000-square-foot Landmark Office Tower.
. Until the 1970s, SHW shared this 22-story building with three
other large companies' headquarters -- Sohio, Republic Steel and
the Erie-Lackawanna Railroad. Now, SHW owns the property
and occupies about 90 percent of the building (KJP).
As part of the exploratory process, SHW said officially that will consider multiple potential sites, including locations in Cleveland, Northeast Ohio and several other states. Any transition to new facilities is not expected to occur until 2023 at the earliest and would require approval by SHW's board of directors, the company said.

The reference to "other states" is likely to appease former Valspar workers now working for SHW in Minneapolis and other locales, according to several sources. The Cleveland suburb of Brecksville also has been mentioned, as the DiGeronimo family -- developers of the former Veterans Administration hospital -- have pitched their site for SHW's R&D facility and possibly the HQ as well.

Also, other sources reminded that SHW sent request for qualifications to the Cleveland offices of Turner Construction Co. and Gilbane Building Co. for the construction of 1.8 million square feet of HQ+R&D facilities. And, Cleveland-based architectural firm Vocon was retained to develop site alternatives for the new HQ+R&D facilities. SHW's attention to the Cleveland offices of those firms may be noteworthy.

Councilman Kerry McCormack, whose Ward 3 includes downtown Cleveland, didn't sound terribly worried about SHW leaving.

"We're in good communication with Sherwin-Williams," he said. "We'll do whatever it takes to keep them. But companies that want to attract talent are looking at moving into cities, not leave them. We are going to work closely with Sherwin-Williams to make sure they have a great new home in Downtown Cleveland."

The days are numbered for Sherwin-Williams' John G. Breen
Technology Center, 601 Canal Rd. But they also appear to be
numbered for the coatings giant's larger research facility in
Minneapolis. Both may be consolidated as a result of major
changes to the growing company's space needs (Ohio EPA).
SHW's consideration of other cities/states for its HQ+R&D spaces may have more in common with Swagelok's recent facility search. In 2018, Solon-based Swagelok Co. issued an RFP for a new corporate headquarters and innovation center.

While company officials claimed that they would consider building a new home anywhere, few expected Swagelok to leave the city where it was founded in 1965. Sure enough, Swagelok decided to stay put and build a new Solon facility for 400 employees now, and possibly growing to 1,000 in the near future.

SHW's roots go 100 years deeper into Cleveland's soil. To pull them out would be a tremendous blow to the city and possibly to SHW as well. And it wouldn't merely be a public relations stain on SHW. All of SHW's headquarters employees and most of its research workers are located here.

A high-level source last week informed NEOtrans that SHW reportedly favors building its HQ+R&D on the west side of Public Square, the same location where SHW had proceeded to advance detailed civil engineering for a new HQ in 2014-15 before the firm decided to direct its resources to acquiring rival Valspar. SHW is on an increasingly speedy glidepath to pay down debt from the Valspar acquisition, possibly by 2022.

SHW has been in its current headquarters in the Landmark Office Tower at 101 W. Prospect Avenue in Downtown Cleveland, Ohio since 1930. The company expanded and filled out that building after it acquired it in 1985 and has since spread its 4,400 employees to multiple facilities in Greater Cleveland.

These facilities include the neighboring Skylight Office Tower, offices for the Performance Coatings Group at 4780 Hinckley Industrial Parkway in Cleveland, plus the Automotive Division Headquarters, 4440 Warrensville Center Rd. in Warrensville Heights. SHW also operates the Breen Technology Center, 601 Canal Rd. and additional automotive research facilities in Warrensville Heights.

The new HQ+R&D facilities will reportedly house 6,000 workers, several sources said.

Sherwin-Williams in 2017 leased this former check processing
center for Charter One Bank as the location for its Performance
Coatings Group. The 151,830-square-foot building is the work-
place for more than 250 SHW employees. The increasingly
scattered nature of SHW's office workforce is why Cleveland's
153-year-old, growing coatings firm is seeking a new global
headquarters and research facilities (LoopNet).
“Given the limitations of our current footprint and driven by the needs of our customers, we are exploring options that will help us to accelerate productivity and efficiency, enhance technology and innovation, enable greater collaboration, support recruitment and retention and reduce maintenance costs over the long term,” Morikis added.

In its press release, SHW said the company will update employees and external stakeholders on an ongoing basis as the multi-year process goes forward. In the meantime, SHW will continue to focus its efforts on the service, quality and innovations that fuel the company’s commitment to help customers around the world succeed, the company said in its written statement.


Saturday, September 7, 2019

NuCLEus may be on hold for years

NuCLEus was proposed by a partnership of Stark Enterprises
and J-Dek Investments five years ago, but appears no closer to
seeing construction (KJP). CLICK IMAGES TO ENLARGE
The latest word on the proposed $350 million nuCLEus development is that its partnership appears to be waiting on the Ohio General Assembly's passage of a new financial incentive. That's according to a source with the City of Cleveland. Others in the real estate investment community confirm that the project is on hold.

The apparent decision to wait on the State of Ohio by the partnership, called Gateway Huron LLC, comprised of Stark Enterprises and J-Dek Investments Ltd., means that the project could be on hold for two to three years. The project was first announced in 2014.

That financial incentive is a so-called transformational tax credit, Senate Bill 39. It would create a new tax credit to incentivize the construction of transformational mixed-use developments (TMUD) in Ohio. NuCLEus would likely qualify, but it's not that simple.

NuCLEus is proposed to feature two 24-story buildings, one for residential and the other for offices, atop a muli-story pedestal of parking and retail between Prospect Avenue and Huron Road at East 4th Street.

According to Thompson Hine LLP, which helped draft the bill at the request of Stark, for a development to be considered a TMUD it must include a mix of land uses, have a development cost of more than $50 million and be 15 or more stories in height or at least 350,000 square feet.

The bill authorizes a nonrefundable insurance company tax credit of up to 10 percent of total eligible project costs for contributions of capital to eligible projects. The legislation still has to pass both the Ohio House of Representatives and the Ohio Senate in the same legislative session, then be signed into law by the governor.

Assuming that happens, it still doesn't guarantee that nuCLEus would be one of the certified TMUDs. Ohio's next biennial appropriations (budget) bill would have to authorize the number of TMUD credits the state will allow per year. Ohio just passed a biennial budget law this summer. The next one won't be passed until June 2021. A "budget corrections bill" is often passed in the intervening years, however.

Since construction costs in Cleveland are as high as those in
New York City or Chicago, but rents aren't anywhere near as
high, real estate developers say they need public financing to
help close financing gaps. A tax credit for "transformational"
projects is pending before the Ohio General Assembly (KJP).
So even if the number of credits is authorized in the budget corrections bill next year, nuCLEus would have to be one of the limited number of projects certified months later by the state's Director of  Development Services. Just because Stark staff thought of the TMUD credit, doesn't guarantee that nuCLEus would be among those chosen to receive one.

Ask developers John Carney, Bob Rains and David Goldberg who urged the creation of a $25 million Catalytic Historic Tax Credit to help finance their planned renovation of the May Co. building in downtown Cleveland. But their development project got passed over twice for the credit and ended up having to resort to a special earmark three years later at the conclusion of the program.

Ironically, the TMUD tax credit legislation has passed both the Ohio House and the Ohio Senate. It just hasn't done so in the same legislative session. House Bill 469 was passed by the House 91-0 in June 2018. But the term of the 132nd General Assembly expired at the end of 2018 before the Senate could pass it.

So in the 133rd General Assembly, Senate Bill 39 was introduced by Sen. Kirk Schuring. The Senate passed the nearly identical TMUD legislation by a 32-1 vote in July. The legislation was then introduced in the Ohio House and referred to the its Economic and Workforce Development Committee. No committee hearings have been scheduled for the remainder of the year but that can and probably will change.

Even if SB39 becomes law by year's end, the number of TMUD credits per year still has to be authorized by a budget bill sometime thereafter. Then, hopefully nuCLEus would win one of the TMUD credits perhaps as early as 2021 -- seven years after the project was first announced.

NuCLEus' prospective anchor tenant, Benesch Friedlander Coplan & Aronoff, has been remarkably patient. In 2015, it agreed to occupy 66,500 square feet in nuCLEus' office building, estimated to measure 400,000 square feet. A 250-unit residential building also is proposed.

Stark has attempted different public financing schemes to help pay for nuCLEus' construction costs. They included a tax-increment financing scheme involving the school district in 2017 when nuCLEus was proposed as a 54-story tower. Earlier this year, Stark sought a $12 million forgivable loan from the city. Neither scheme won acceptance.

These are the proposed uses in the two towers, representing
Stark Enterprises' current plan for nuCLEus (Stark). 
Ezra Stark, chief operating officer, of Stark Enterprises did not respond to two e-mails seeking comment for this article. But he recently chided the City of Cleveland for its "localism" and "stubbornness" in not embracing innovations in a recent blog.

As an example, Stark cited the city's blocking of the introduction of Bird electric scooters which had chosen Cleveland among its first 100 cities for its e-scooters. Despite that the scooters would improve the city's quality of life, Stark said "bureaucratic red tape, political posturing and a very unfortunate accident" kept Bird from introducing them here for many months.

Earlier this summer, Stark said he would not comment on the status of demolitions involving nuCLEus, citing a "delicate" political matter involving the city.

In related news, on Sept. 6, the City Planning Commission unanimously tabled a request by Stark Enterprises to demolish its vacant Herold Building, 310 Prospect Ave., next to the proposed nuCLEus site.

It did so a day after the commission's Design-Review Committee voted 7-3 against the demolition. The committee's vote was only advisory whereas the commission's vote would have been binding.

Stark asked the commission to table its request following the committee's negative recommendation so that it could work with the Historic Gateway District on seeking tax credits to renovate the building. The demolition was proposed in response to the city's condemnation of the Herold Building due to its many building code violations.

Rebecca Molyneaux, vice president of development at Stark Enterprises, told the committee it would cost $6 million merely to address the code violations. It could cost another $1 million to mothball the structure or millions more to renovate the building into a marketable property.

The committee on Sept. 5 offered to table Stark's demolition request but Stark initially refused. The committee then advised the Planning Commission to deny the demolition at its meeting the following day. At the Planning Commission meeting, Stark finally agreed to table its request.

Downtown Cleveland properties outlined in red are those that
that Stark Enterprises or a Stark-led partnership with J-Dek
Investments acquired in late-2014. The group of properties at
right is where nuCLEus is proposed. The group at left is the
site of a possible high-rise development. Public Square is
 located in the top-center of this satellite image (Google)
Stark inherited the Herold Building as part of a larger portfolio of properties it acquired in 2014 from L&R Group of Companies for $26 million. L&R also tried to demolish the Herold Building but was rebuffed by the city. It discovered that it is extremely difficult to demolish a building in a designated Cleveland historic district.

That portfolio not only included the 3-acre parking lot where nuCLEus is proposed to rise, but also a 2.33-acre parking lot at West 9th Street and St. Clair Avenue. The latter site is reportedly involved in discussions for a possible high-rise residential development.

Stark also has experienced delays in Downtown Pittsburgh in trying to develop the $63 million Smith & Fifth project, previously called the Icon on Smithfield. The project would renovate the former Frank & Seder department store into apartments over restaurants. Stark bought the property nearly three years ago.

The start of construction has been postponed further, now expected to start in early 2020. The delays in developing the vacant building have become a source of impatience for some, according to an August article in the Pittsburgh Post-Gazette.