Tuesday, March 31, 2020

Calming traffic at RTA station key to developing area

Urban architect Yong Woo Lee of planning firm AECOM pre-
sents transit-oriented development options at a public meeting
held June 20, 2017 at the Cudell Recreation Center. For the
Northeast Ohio Areawide Coordinating Agency, AECOM
identified promising rapid transit station-area development
sites. One of those was the West Blvd-Cudell Red Line rail
station that's the subject of a new planning effort (KJP).
The revitalization of Cleveland's Detroit-Shoreway neighborhood continues to spread west. To the north, Edgewater Park and its healthy namesake neighborhood have improved in recent years. And to the west, Lakewood has seen Greater Cleveland's fastest-growing real estate prices along with new housing development.

In between all of this is a left-behind area surrounding the West Boulevard-Cudell rapid transit station and Cudell Recreation Center. But that could start changing thanks to a planning effort underway by the Westown Community Development Corp. called the West Boulevard-Detroit Avenue Neighborhood Plan.

The station and recreation center are principal anchors of the Cudell neighborhood. They depend on pedestrian accessibility and could help attract pedestrian-friendly development. To do so will first require making that area more hospitable to pedestrians. That simple goal is the foundation of Westown's development masterplan.

The roadways around the Greater Cleveland Regional Transit Authority (GCRTA) station are designed to move a high volume of cars as quickly as possible. But they were designed that way long before Interstate 90 was built, when a combination of streets including Triskett Road, Berea Road, Detroit Road, West Boulevard, Baltic Road and the West Shoreway was the fastest way for motorists to reach downtown Cleveland from the West Side.
The area outlined in orange is the target area for Westown
Community Development Corp.'s West Boulevard-Detroit
Avenue Neighborhood Plan (City Architecture).
And they were designed that way with little regard to safe pedestrian access to the rapid transit line, even though most transit customers typically begin/end their trips as pedestrians. Instead, the West Side Red Line was built in the 1950s and 60s primarily as a park-n-ride service for downtown commuters.

Depending on park-n-ride traffic tends to limit GCRTA's Red Line to two types of riders -- those heading downtown in the morning and those returning to their cars in the evening. That's a big reason why Cleveland's rail system is so lightly used, according to a 2017 Transit- Oriented Development study by the Northeast Ohio Areawide Coordinating Agency (NOACA) and its consultant AECOM.

With most stations surrounded by big parking lots and big roads, there was little opportunity to develop a "low-mileage lifestyle" popular with young people and urbanists. That lifestyle is made possible by Transit Oriented Development (TOD) -- dense, neighborhood-scale mixed-use districts of housing, commercial and recreational uses within a comfortable walk of each station.

TODs tend to produce more pedestrian activity and transit ridership, with riders traveling on the rail line throughout the day and night for a variety of reasons -- work, school, shopping, medical appointments, nightlife, sporting events and so on, according to the NOACA study.
Detroit Avenue no longer needs to be up to seven lanes wide
past the West Blvd. rapid transit station, at right, and Cudell
Recreation Center, at left. And traffic still moves fast through
here. That has given rise to ideas about calming traffic with
fewer lanes, better pedestrian signage and redesigned inter-
sections to improve pedestrian safety (City Architecture).
The car traffic that once poured past the West Boulevard station has been gone for decades. But the seven-lane wide Detroit Avenue by the station remains, as do intersections with angled streets or gently curving lanes so cars can turn corners faster.

"They're death-defying traffic patterns," said Westown Executive Director Rose Zitiello. "It's a hazardous situation for pedestrians."

It's also proven to be a deterrent to TOD investment surrounding the West Boulevard station. Numerous transit-supportive developments have been built, are under construction or planned in Greater Cleveland in recent years. But not so much at the West Boulevard station.

"At the time, the NOACA study was trying to attract development," she said. "It (the study) showed there was a market for it. But after the (study's) recommendations were issued, there wasn't much interest from developers. Many of their findings were very well thought out. So we really wanted to build on that TOD study."
This is a design concept for calming traffic on Detroit
Avenue past the rapid transit station and Cudell Recre-
ation center (City Architecture).
For the study, Westown organized an informal stakeholders group comprised of NOACA, Detroit Shoreway Community Development Organization (DSCDO), City of Cleveland, Cleveland Metropolitan School District (CMSD), West Boulevard resident Tom Yablonski who also serves as executive vice president of the Doantown Cleveland Alliance, The Palazzo restaurant and Environmental Design Group. Westown hired City Architecture as its project consultant.

Foremost among the early, preliminary recommendations is to improve the transportation experience at West Boulevard and Detroit that lays a foundation for TOD. Small-scale traffic-calming measures such as narrowing Detroit and squaring off its intersections with Berea and West Boulevard are possible recommendations, Zitiello said.

The plan will also identify potential development types for nearby underutilized properties and build off recent/ongoing investment and planning in the study area. The goal is to make a strong case for funding of the recommendations that come out of the planning work, study documents show.

Among the public investments occurring in the area is the nearly $45 million in infrastructure improvements GCRTA has been making to the Red Line tracks, retaining walls and electrical systems between Tower City and Hopkins Airport, GCRTA's current five-year capital program shows. The transit authority is also early in the process of replacing its aging rail cars with new trains. That program is estimated at between $250 million and $300 million.
Based on AECOM's market analysis, this was a recommended
development concept for the West Boulevard-Cudell Station
site -- several buildings of market-rate and affordable apart-
ments over retail and parking along a narrowed Detroit
Avenue to improve pedestrian safety (AECOM).
At the last study stakeholders meeting March 9, Hollie Dellisanti, CMSD's executive director of architectural services for capital projects, said the CMSD board has approved spending $34 million to address facilities at he Marion C. Seltzer K-8 School, 1468 W. 98th St. It hasn't been decided if the district will rebuild or replace the school. Seltzer School is located next to the Cudell Recreation Center.

Amid mostly small-scale private investments in the Westown-Cudell area, a big investment last year could soon produce hundreds of new jobs. Weston Group built a 168,750-square-foot warehouse as the first phase of Madison Industrial Park, 10801 Madison Ave. Several sources said this week that eCommerce giant Amazon will be the tenant for that warehouse as well as for a second, proposed warehouse to be built by Weston.

"I hope it's true," said Ward 11 Councilman Brian Mooney. "It will benefit many businesses in the area. I do know that Amazon is the rumor and that Weston was still trying to negotiate with one or more people."

And last November, a California-based group bought the Chicle Apartments and 10 neighboring townhouses at 10307-10335 Detroit Ave., just west of the West Boulevard station. But the investor group's intentions remain unknown.
The Greater Cleveland Regional Transit Authority's West
Boulevard-Cudell Red Line rapid transit station (Wikimedia).
In 2013, Marous Brothers renovated Boulevard Terrace and Neal Terrace, 10107 and 8811 Detroit Ave., respectively, for $10 million total. Boulevard Terrace is a 116-unit complex of row houses built between 1895 and 1917 while Neal Terrace is a 48-unit row house complex built in 1907. Both are within an easy walk of the West Boulevard station.

Next steps including fine-tuning the case for more public and private investment in the neighborhood. City Architecture will test its recommendations with the study's stakeholder group. The proposed findings will then be delivered to the City Planning Commission for its possible adoption. If the commission adopts the plan, it can then seek a mix of local, state and possibly federal grants to implement it.

Zitiello said the goal is to wrap up the planning work by June.

"Then we'll go for some TLCI (Transportation for Livable Communities') funding" from NOACA, she said. "There's no money for this year so we're hoping to get it for 2021 to develop some project-level plans for traffic calming, better signage and roadway changes."


Friday, March 27, 2020

Amazon to add hundreds of jobs on Cleveland's West Side

The first building constructed at Madison Industrial Park, at
10801 Madison Ave. in Cleveland, will reportedly be leased
entirely by Amazon. This warehouse was built in 2019 by
Weston Group and Independence Construction (LoopNet).

Three sources confirm that e-commerce giant Amazon has agreed to occupy a large new warehouse on Cleveland's West Side and ultimately build out the rest of the site with more distribution facilities. The sources spoke off the record because they weren't authorized to speak publicly about the deal.

By the end of this year, Amazon will put at least 100 jobs into Madison Industrial Park with more jobs to follow. It will start by retrofitting and occupying a 168,750-square-foot building constructed last year at 10801 Madison Ave. Amazon will lease the building from developer and owner Weston Group. DiGeronimo Companies' Independence Construction was the building contractor.

One of the sources said this building will be used as warehouse for "returned deliveries with mostly straight trucks utilizing the facility." A straight truck is a vehicle in which all wheel axles are attached to a single frame. That's in contrast to a typically larger, articulated truck which has two or more connected separate frames such as for a cab and a trailer.

After Amazon moves in later this year, Weston and Independence will build for Amazon another large warehouse building or two to the south of the existing one. The original plan for the 21.6-acre Madison Industrial Park shows three buildings.

However, the same source said that another national company may be interested in one of the two as-yet-unbuilt buildings. The first building built on-site is the 168,750-square-foot warehouse that was completed in late-2019. Two more buildings, each measuring 115,000 square feet, are proposed next to and south of the first. Altogether, they would total nearly 400,000 square feet.

However, it isn't clear yet if that plan will be adhered to, or if Weston will seek to refine the plan through the city's Far West Design Review Committee to possibly combine the two proposed 115,000-square-foot buildings into one large one. If the plan is not refined, additional city reviews are not required to build out the site, one of the sources said.
The city-approved site plan for Madison
Industrial Park could be refined to add
more space by a localized Design-Review
committee. Even without modification,
the three buildings would total just under
400,000 square feet (Weston).
As large as these buildings are, they are not large enough to fall into the category of Amazon's largest distribution facilities called Fulfillment Centers. Instead, they are more likely to be utilized as sorting/logistics centers like the first two facilities that Amazon opened in Northeast Ohio.

One was the 248,000-square-foot Twinsburg Sortation Center that started with 150 jobs. The other was the 105,000-square-foot Euclid Logistics Center in Bluestone Industrial Park which began with about 100 employees. Aaustin Express and Titan Logistic Services, both Amazon contract delivery services, are also based in the same Bluestone II building in Euclid as Amazon.

The Twinsburg and Euclid Amazon facilities have reportedly increased their employment levels since they opened in 2016 and 2017 respectively, although definitive numbers are unavailable.

If those are indicative of what Amazon has in store for Madison Industrial Park, the first building could host at least 100 jobs at the outset. With additional growth and expansion of the site, employment could grow to 300-500 jobs in a couple of years, based on square footage and what has happened at other Amazon sites in Northeast Ohio.

Weston received in 2018 a 10-year property tax abatement from the city for the first building at 10801 Madison with an estimated construction cost of $10 million. Abatement applies only to the buildings, not the land.

In Weston's abatement application, it estimated the first building could accommodate at least 100 jobs and provide $1.4 million in property tax revenues for the Cleveland Metropolitan School District and nearly $900,000 in annual income tax revenue to the city.

In the last couple of years, Amazon opened in Greater Cleveland two of its largest type of distribution facilities --  Fulfillment Centers. One is an 855,000-square-foot facility employing 2,000 people on the site of the abandoned 650,000-square-foot Euclid Square Mall. The other is the 2.3-million-square-foot North Randall Fulfillment Center employing 2,500 people on the site of the old 2.2-million-square-foot Randall Park Mall.
By June 24, 2019, the first building at Madison Industrial Park
began to take shape. This view looked generally east from the
corner of Madison Avenue and West 106th Street (KJP).
"I spoke to Weston Sunday afternoon (March 22) and at that time they said they don't have a signed lease (for 10801 Madison)," said Ward 11 Councilman Brian Mooney. "They (Weston) have a non-disclosure agreement so even if they did have a tenant they couldn't say who it is. But at that time they didn't have a signed agreement yet. They were being very guarded as one might expect."

When informed that an agreement was reportedly signed Thursday (March 26), Mooney replied, "I hope it's true. It will benefit many businesses in the area. I do know that Amazon is the rumor and that Weston was still trying to negotiate with one or more people."

No one else is talking on the record yet about the Amazon's deal to locate at 10801 Madison. Messages and e-mails seeking comment were not returned prior to publication from several representatives of Weston and DiGeronimo.

One of the sources said Amazon business is growing so fast that the eCommerce giant immediately needed a modern warehouse on Cleveland's West Side with high overhead interior clearances. The new warehouse at 10801 Madison has 24 feet of clear height and 50-foot structural bays, according to Weston promotional materials.

Multiple additional warehouses in the Greater Cleveland area are also reportedly being considered by Amazon to augment its existing facilities, as well as to augment Madison Industrial Park. And Amazon recently announced hiring another 100,000 people nationwide including 4,600 new jobs in Ohio due to surging demand during the COVID-19 shutdown of bricks-and-mortar stores.

A Weston affiliate acquired the entire Madison Industrial Park site from the city of Cleveland in 2018 for $1.65 million after the city had spent $5.3 million in local, state and federal money to clean up pollutants left by the prior owner, Midland Steel Products. That auto parts company went bankrupt and closed in 2003, laying off 223 workers. The massive factory was demolished the following year.


Tuesday, March 24, 2020

Sale of Midtown development site on Euclid OK'd by GCRTA

An affiliate of the Cleveland Foundation will acquire the vacant
land at right, following a vote today by the Greater Cleveland
Regional Transit Authority's Board of Trustees to sell it. The
land is on the south side on Euclid Avenue, just east of East
55th Street. This view is from September 2018 (Google).
Historically, the area around Penn Square/East 55th Street was one of two "mini-downtowns" along Euclid Avenue east of the city's central business district. Doans Corners/East 105th Street was the other, dubbed Cleveland's Other Downtown.

But as Midtown, its busy streetcar lines and Pennsylvania Railroad station faded away as America built Interstate highways and suburbs, Penn Square's many residential hotels, theaters, stores and restaurants faded away too. The suburban flight was the era of America's Fourth Migration.

In response to the Fifth Migration, Midtown Cleveland Inc., the Cleveland Foundation and the Greater Cleveland Regional Transit Authority (GCRTA) would like to accommodate the return of Americans young and old to urban centers like Cleveland.

To that end, the GCRTA's Board of Trustees today approved selling property in Cleveland's Midtown neighborhood to an affiliate of the Cleveland Foundation for future development. The sale amount is $550,000.

The 2.38 acres of land located at 5508-5510 Euclid Ave. was acquired by GCRTA in 2005 and demolished several underutilized buildings to use the site as a construction staging area for the HealthLine bus rapid transit corridor. The $200 million HealthLine opened in 2008, linking downtown, University Circle and East Cleveland. The staging area has sat unused since.
Forty years ago, mostly empty shells were all that was left
from Penn Square's vibrant century from the mid-1800s to
the mid-1900s when it was a mini-downtown. Now only
two buildings from this view looking east from the rail-
 road overpass are still standing, including those at right
which stood on the property GCRTA agreed to sell to-
day to the Cleveland Foundation to redevelop (TPH).
Under Federal Transit Administration (FTA) regulations, transit agencies are required to dispose of any surplus properties. However, the FTA also encourages joint development opportunities to create jobs and promote new sources of ridership. GCRTA put the former staging area up for sale in 2017.

GCRTA is seeking to promote transit-oriented developments that put more ridership generators along high-frequency transit routes like the HealthLine -- or the Red Line rail rapid transit where GCRTA today approved a joint development in Ohio City. By making jobs and housing more proximate and transit-accessible, it will help address the city's high poverty rate.

“As part of our collaborative vision to create a new civic district in Midtown that connects downtown with University Circle, our board of directors approved strategic land acquisition to help steward thoughtful, inclusive development in the short- and long-term that will benefit our community,” said a Cleveland Foundation spokesperson.

The Cleveland Foundation plans to relocate its headquarters from the Hanna Building in downtown to alongside the Dunham Tavern. The foundation acquired property in December for a three-story, 50,500-square-foot headquarters building on the northeast corner of of Euclid and East 66th. On the northwest corner, the foundation proposes a future Center For Innovation measuring 100,000 square feet.

From GCRTA, the foundation's affiliate Civic Property Development LLC will acquire seven parcels on the south side of Euclid and east of East 55th and the Norfolk Southern Corp. railroad overpass. The foundation also planned to contribute $50,000 to aid in the planning of a transit oriented development (TOD) project or projects on the site.
This is a conceptual masterplan of the Penn Square area of Cleve-
land's Midtown. GCRTA's property is outlined in blue (Pennrose).
However, the discovery of old building foundations and a storage tank that must be removed prior to redevelopment forced the Cleveland Foundation to reduce that contribution to $20,000, according to a source. That source also said the foundation will pursue a joint real estate development with a qualified developer to build a mixed use project of housing and commercial spaces.

In recent months, Midtown Cleveland, through its real estate arm Lassi Enterprises LLC, has been acquiring, clearing and assembling properties to make them ready for future development, said Jeff Epstein, Midtown's executive director.

Pennrose Properties, LLC, Berusch Development Partners, LLC and others are also acquiring properties in the vicinity of East 55th Street, between Euclid and Carnegie avenues. The goal is to restore density to this once vibrant urban node, said developer Russell Berusch in a recent interview.

The Euclid-East 55th area was called Penn Square for more than 100 years because the main Cleveland railroad passenger station for the Pennsylvania Railroad was located here. At this station, travelers could board and alight two dozen daily passenger trains to/from places as far west as St. Louis and as far east as New York City.

Two busy streetcar lines also crossed here, carrying as many riders as all of Northeast Ohio's transit agencies combined do today. The mix of those transportation modes and mixed-use density gave the immediate neighborhood the activity level of a 24-hour, satellite downtown.


Ohio City Transit Oriented Development arrives the next station

The Greater Cleveland Regional Transit Authority
board today authorized the agency's unique role
in a Transit-Oriented Development next to and
above its rail line in the Ohio City neighbor-
hood. The property involved is huge for an
urban site -- 5.6 acres (Cuyahoga County).
A significant real estate development next to and possibly above the rail rapid transit line in Cleveland's Ohio City neighborhood moved a step closer to reality today. That occurred when the Greater Cleveland Regional Transit Authority's (GCRTA) Board of Trustees authorized staff to execute a development and use agreement with Carnegie Management and Development Corp. of Westlake.

The eventual agreement will include three parcels of land south of Abbey Avenue and west of Columbus Road, south of Lorain Avenue, totaling 5.6 acres. Also, the agreement will include air rights over GCRTA's Red Line that links the airport, downtown, University Circle and Windermere.

A potential development with public plazas over the tracks could provide seamless pedestrian linkages between the Duck Island neighborhood to the east with the Ohio City's Market Square area to the west.

That includes Harbor Bay's new development where site preparation work is already underway. It could also enhance the Ohio City rail station with a second trackside platform entrance or even replace the existing station headhouse that was built 30 years ago.

Board documents show that the deal between GCRTA and Carnegie will create a unique public-private partnership the likes of which GCRTA has never attempted before. However, these partnerships are encouraged by the Federal Transit Administration to promote joint development opportunities for transit agencies, according to GCRTA documents.
The GCRTA-Carnegie TOD site is again outlined in red and
shows its strategic location between the fast-growing Duck
Island and the heart of Ohio City's Market Square district.
West Side Market is at the lower right with Lorain Avenue
across the bottom. This view looks southward (Google).
Such developments are called Transit Oriented Developments (TODs) which have special design features including the proximity of high-frequency transit services, pedestrian friendly settings, density, mixed use, public spaces and de-emphasized parking.

The uniqueness of the deal is that a single-asset corporation will be created for this development and own it for the life of the asset. After GCRTA sells land and air rights to the new Carnegie-led corporation, GCRTA will retain an ownership position in the corporation.

GCRTA's ownership stake will be a non-recourse, non-dilutable position that will provide GCRTA with long-term revenue for the life of the TOD asset, agency documents show.

The sale price has yet to be determined, pending a preliminary outline of the development project's physical scope and an FTA-compliant appraisal of the properties involved. However, GCRTA's ownership stake will be no less than 3 percent, per the board-approved development agreement.

Between the sale of the property and GCRTA's ownership stake in the single-asset corporation, the transit authority expects to generate long-term revenue. That revenue can be used as part of a local funding share for federal loans and grants to expand or substantially renovate the Ohio City rail station.
Carnegie Management & Development Corp. of Westlake has
reportedly partnered with architectural firm Perkins+Will to
help it develop its Ohio City TOD project. Perkins+Will's
resume includes the Beltway Trail in Atlanta. That ex-
perience should help it co-mingle Carnegie's TOD
with the Red Line rail as well as the new Red
Line Greenway trail (Perkins+Will).
"This TOD will enhance the West 25th Street Rail Station and promote increased use of the Red Line," according to GCRTA staff comments in the board-approved resolution. "The project will provide GCRTA with significant revenue including the fair market, appraised value of the property and...(an) ownership position in the legal entity that owns the project for the life of the project."

Carnegie has typically developed on suburban or exurban greenfields where no structures had existed before. Their first urbanized site re-use is the One Lakewood Place development. With it, two sources say Carnegie has surprisingly discovered that redeveloping an urbanized site is more expensive than building on a fresh greenfield site.

That has caused delays and a potential funding gap for the One Lakewood Place project, as well as different expectations and outcomes sought by the new Lakewood Mayor Meghan George administration, according to the two sources.

Per the board-approved agreement, GCRTA can refuse to execute the development and use agreement with Carnegie and terminate the TOD process at any time. This TOD project has been under negotiation between Carnegie and GCRTA for more than a year. Requests for qualifications were issued by GCRTA in August 2018.

Due to many GCRTA staff working remotely during the pandemic emergency, no GCRTA staff could be reached for comment prior to publication of this article.

Similarly, a message left with a Carnegie receptionist for Rustom Khouri III, Carnegie's director of business development and pre-construction services was not returned prior to publication.


Monday, March 23, 2020

Financing set, work starts at Ohio City's Intro

Utility work began this week for the first phase of Ohio City's
Market Square development, a 290-unit apartment and retail
building called Intro. This is what the 350,000-square-foot
building is proposed to look like on the southeast corner
of Lorain Avenue and West 25th Street (HBREA).

Overnight work began late Monday (March 23) on expanding utilities in the vicinity of a planned mixed-use development that will further enliven one of Cleveland's most recognizable intersections.

The development is Harbor Bay Real Estate Advisors LLC's Market Square and the intersection is Lorain Avenue at West 25th Street onto which the iconic tower of West Side Market casts its shadow. The first phase of Market Square is Intro -- a nine-story building with 290 market-rate apartments over 36,000 square feet of retail and 550 underground parking spaces. Note that these renderings show only seven stories.

Dan Whalen, vice president of design and development at Chicago-based Harbor Bay, said his firm closed Friday on its debt financing. Up to $130 million in taxable lease bonds will be available for construction of the $140 million Intro phase but some debt could be used to support the second phase, an office building for which there is no estimated start date yet.

The project also has a $10.8 million loan from the Ohio Development Services Agency and a $2 million loan from the city of Cleveland. The developers are contributing up to $30 million, with the amount again depending on finding an anchor tenant for a planned office building.
This is the ground-floor plan for Intro -- the first phase of
Harbor Bay's Market Square development. Utility work
began March 23 on Gehring and Lorain avenues. Site
 prep and demolition of the existing shopping center is
due April 6 with groundbreaking to follow (HBREA).
There is no hard date yet for the groundbreaking for Intro. It is generally set for "spring" with a harder start date depending on if any hiccups are experienced during the utility work.

There is a hard date for site preparation and demolition work to start, however. That work is due to begin April 6-8 with demolition of the existing, 1989-built retail strip center called Market Plaza to follow, Whalen said. Most tenants from that shopping center were relocated to new sites around Ohio City while a few closed. Harbor Bay acquired the 2-acre property last year.

Utility work to expand the sewer lines beneath Lorain and Gehring avenues began at 7 p.m. Monday and is expected to take several weeks, Whalen added. Work will then shift to West 25th Street. No road closures are occurring at this time.

"Gehring is not closed yet," he said. "That's why work is taking place at night. Utilities on Lorain are partially happening now and (West) 25th will happen later."

The utility work might also support other developments planned nearby, including a large apartment building by Chicago-area Stoneleigh Companies LLC on the north side of Lorain at West 20th Street.

Then, for a site on the east side of Gehring, Westlake-based Carnegie Management & Development Corp. has reached an agreement with the Greater Cleveland Regional Transit (GCRTA) on building a mixed-use development on transit authority land next to and possibly above the Ohio City Red Line rail station.
Few developments have the opportunity to insert itself into
the center of the action and take to another level an already
already popular urban setting. The Market Square develop-
ment is positioned to that in the coming years (HBREA).
The current description of the office building is a 208,000-square-foot structure with 18,000-square-foot floorplates. The total square footage will probably change based on leasing activity as will the height. The office building is currently being marketed as an 11-story structure but the existing zoning allows a height of up 175 feet, or about 11 to 12 stories for a commercial building.

"There have been numerous iterations as we worked through things, but it (the office building) had been 12 floors for a while," Whalen said. "It can and will likely change again once office tenants come back into the fold."

Additionally, Whalen said his firm is updating exterior renderings and actively pursuing more retail and office tenants but wasn't prepared to publicly release any renderings or tenant names as yet -- especially on the retail side.

Intro will be built using mass timber, which caused the city to modify its building codes to accommodate the project. Whalen said the roughly 350,000-square-foot apartment building will be the largest mass timber-framed structure in the country. The wood is being imported from Austria into the Port of Cleveland.

Construction of Intro is expected to take up to 18 months. When completed, it will offer more than just apartments and retail. For residents, there will be a penthouse event center, as well as patios, fitness and bike storage. The site is steps away from the Ohio City station on GCRTA's Red Line between the airport, downtown, University Circle and other destinations.

At street level, there will be a 1-acre public courtyard across Lorain from the West Side Market. It will complement Market Square Park that's across West 25th from the 108-year-old market house. Whalen said the courtyard will serve as Intro's “living room” and be activated with art, cultural and family events.


Friday, March 20, 2020

Baker Building may become boutique hotel -- eventually

Having less than 54,000 square feet while
offering views from its 11-story structure,
the Baker Building on East 6th Street is a
natural for conversion to a boutique hotel.
That's what it future holds, albeit several
years from now. This view is from 2005,
before The Beacon apartment tower was
built next to and behind it (LoopNet).

The 11-story Baker Building at 1900 E. 6th St. in downtown Cleveland enjoys a brighter future now that it's in the hands of a deep-pocketed firm. But that future may not be imminent. And the delay has nothing to do with the global pandemic, according to a source familiar with the project.

Instead, the Walton Enterprises of Walmart fame which bought the Class C office building usually acquires and sits on older, sometimes distressed buildings before renovating them, said the source who was not authorized to speak publicly on the project.

"Walton's typical play is that they wait and hold the property, usually an older building or distressed property for 24 months for redevelopment as a future boutique hotel," the source said. It isn't known why Walton waits or what is the significance of the 24-month hold.

That boutique hotel could be a 21c Museum Hotel, according to rumors shared by Crain's Cleveland Business. Bentonville, AR-based Walton and Louisville, KY-based 21c did their first deal together in 2010, opening a new-construction boutique hotel in Walton's headquarters city two years later.
The Baker Building was built 101 years ago as the Fidelity
Mortgage Building on just 0.146 acres of land (42floors.com).
The hotelier tends to locate in older buildings that are in need of preservation, like the Baker Building, and creates contemporary art museums in its facilities. The Baker Building is ideally sized for a boutique hotel like 21c. Although it is 11 stories tall, Baker is a skinny building measuring only 53,779 square feet, county records show.

Although the hotel chain has favored second-tier markets since its founding in 2006, it is also expanding into larger domestic markets like Chicago as of last year. Sites in Los Angeles, New York City and international locations are planned. That's due to a capital infusion from multinational hotel firm Accor that acquired an 85 percent stake in the company for $51 million in 2018. Its only Ohio location is Cincinnati, so far.

Walton bought the Baker Building from local investor J. Scott Scheel, doing business as Diamond Investment Group, for $3.5 million through an affiliate called 1900 East 6th Street, LLC on Jan. 27. But the identity of the buyer remained a mystery until March 13 when the affiliate was listed publicly with the Ohio Secretary of State's office.

On its state filing are the names of four Walton corporate lawyers or filing clerks -- Christina Meeks, Bethany Marshall, Lynn Kariker and Sean Evans. No company executives or development-type managers were listed in any public documents associated with the acquisition, bolstering the possibility that Walton's play is a buy-and-hold transaction.
The 21c Museum Hotel at 609 Walnut Street in downtown
Cincinnati, located in the former Hotel Metropole. The 10-
story building was built in 1911. It was renovated and re-
 opened as the 21c Museum Hotel in 2012 (booking.com).
"We don't comment on rumors," said Kiki McLean, director of the Walton Family's political and communications office in Washington, D.C. When asked about the sale itself to a Walton affiliate, which isn't a rumor, she replied "It's not the sort of thing we comment on."

The Baker Building was constructed in 1919 as the Fidelity Mortgage Building at the intersection of East 6th and Short Vincent Avenue, then a thriving mix of financial businesses, restaurants and nightlife. Today it is a hub of mid- and high-rise residential buildings, both old and new like The Garfield Building, The Leader Building and the new Beacon apartment tower.

In October 2019, the Baker Building went up for auction at the starting bid of $900,000, according to its deactivated listing at LoopNet. The office building with ground-floor retail was renovated in 1988, 2005 and 2012 with a new roof, modernized elevators, restored lobby, heating and cooling systems, plus a restored Greek classical sandstone facade.

The building is only 53 percent occupied with office and retail tenants like Teahouse Noodles, Dave's Cosmic Subs, Sapporo Sushi, Moriarty's Pub, Scheel Publishing, Hochberg & Co. as well as Kehoe & Associates, according to its recent sale documents.


Wednesday, March 18, 2020

Big Duck Island development moves forward

This preliminary site/grading plan by Vocon Partners LLC
was commissioned by Chicago-area real estate developer
Stoneleigh Companies LLC, It shows the location, scale
and siting of an apartment building with a below-grade
parking garage on north side of Lorain Avenue at West
20th Street in Tremont's Duck Island enclave (Vocon).
A site at Lorain Avenue and West 20th Street in Cleveland's Duck Island enclave that has been considered for development for seven years, is back in play again under the stewardship of a real estate firm from Chicago's suburbs.

Stoneleigh Companies LLC of Barrington, IL reportedly has a purchase agreement to acquire at least 3.4 acres of land assembled since 2013 and owned by Warrensville Heights-based Brickhaus Partners. That's according to two sources who spoke off the record.

Two Stoneleigh executives, Chief Investment Officer James O'Kane and Vice President of Development Ryan Swingruber, did not comment about the proposed project although they acknowledged receipt of an e-mail by NEOtrans requesting more information.

On the firm's Web site, the company wrote "Stoneleigh Companies operates 1,452 units, has two new communities under construction in Glenwood Springs CO, and Saint Paul MN, and is developing four new communities in Cleveland OH, Houston TX, and Frisco TX, which will bring the total Stoneleigh portfolio to 3,037 units."

However, some details are available about the project which is still in a preliminary stage. The project will be apartments offering up to several hundred units with a below-ground parking garage. It appears that the the building's footprint will be about 50,000-60,000 square feet, according to a preliminary site/grading plan being circulated among public agencies for review and comment.
One West Twenty, a joint development between Brickhaus
Partners and Integrity Real Estate, proposed 500 apartments
starting with this 300-unit, five-story building. That was on
the same site that Stoneleigh is reportedly seeking to deve-
loping now in Cleveland's Duck Island (Brickhaus).
With that size footprint and as many as several hundred residential units, that would involve a building about five to six stories tall. It could also mean about 160-170 parking spaces in the lower-level garage underneath the building and a possible first-floor garage offering additional parking spaces.

The site plan also shows the building having a significant street presence on Lorain which suggests some possible ground-floor commercial uses facing Lorain. That was the case with Brickhaus' past development plans.

As noted, the building would be located on 3.4 acres of land that Brickhaus had listed for sale until its public listing was deactivated on Feb. 17. Brickhaus also owns an adjoining 1.3 acres of land which wasn't advertised for sale. It is not known if that smaller parcel will be part of Stoneleigh's property acquisition. But that property is not part of the preliminary development plan.

Brickhaus first proposed for the site an ambitious plan called Brickhaus Towers with two high-rise residential buildings connected by ground-floor commercial uses. It was replaced by a more modest, two-phase plan called One West Twenty.

That plan, sought as a joint development with Beachwood-based Integrity Real Estate Group, envisioned 300 units in the first phase. Their first phase was proposed for the 3.4-acre parcel that Stoneleigh seeks to develop now. Another 200 units were considered for the second phase by Brickhaus and Integrity. One West Twenty is still shown on Brickhaus' Web site.
The site proposed for development by Stoneleigh overlooks
Scranton Peninsula with a clear view of Downtown Cleve-
land across the Cuyahoga River valley. This rendering
was for the previous development concept, One West
Twenty, by Brickhaus and Integrity (Brickhaus).
Andrew Brickman, principal at Brickhaus, did not respond prior to publication to questions posed to him by NEOtrans through his Web site's inquiry form. Dan Siegel, founder of Integrity Real Estate Group, was unable to provide confirmation about the site's current developers or any project specifics.

"There are developers looking at the site but I have confidentiality agreements in place so I can't discuss who they might be," Siegel said.

Last year, Brickhaus loaned $4 million to a company organized by Siegel using the Duck Island property as collateral for a deal Siegel did in Maryland in 2019. Siegel said that mortgage doesn't figure into what is happening currently with the site.

"The $4 million mortgage had nothing to do with this development," he said. "The loan has been satisfied and the mortgage has been released."

Integrity is developing a 58-unit boarding house for graduate students and interns in Cleveland Heights, just up the hill from Case Western Reserve University which is building a 600-bed, $72 million dormitory project. Integrity's development is across Euclid Heights Boulevard from Flaherty & Collins' $100 million Top Of The Hill mixed-use development.


Monday, March 16, 2020

nuCLEus and Centennial projects may start this summer

The grand lobby of The Centennial, formerly the Huntington
Bank, is only a part of what was the largest bank lobby in the
world when the building was completed as the Union Trust
Bank in 1924. The Millennia Companies proposes a luxury
hotel, restaurant, condominiums and affordable apartments
in the 1.3-million-square-foot structure (LoopNet).
Two major development projects in downtown Cleveland could get underway this summer. And we're not just talking about the 23-story City Club Apartments, the 75 Public Square renovation NEOtrans reported on last November, or the site preparations for Sherwin-Williams' new headquarters tower on Public Square that NEOtrans nailed months before it was announced.

Not only are those projects still "go," but so may be the duo of 24-story, new-construction towers comprising the long-planned nuCLEus development. And so might the massive reconstruction of 925 Euclid Ave. into The Centennial be a go. According to several sources who spoke off the record, both projects are on track for the start of construction this summer.

No new features are known for nuCLEus as of yet, but two sources said that The Centennial, a 21-story, 1.3-million-square-foot former office building, is proposed to be renovated with a J.W. Marriott Hotel. That would be Cleveland's first five-star hotel brand since the 17-story Omni International Hotel was demolished in 2000 for the InterContinental Hotel, 9801 Carnegie Ave.

The luxury hotel would reportedly replace much of The Centennial's 400,000-square-foot office component that was on the outs, per recent media reports. The office component is no longer being actively marketed according to a listing on LoopNet which says the "Property is in the progress stages of development. Office space to become available in the near future." Retail spaces are still being actively marketed, however.
Proposed since 2014 and revised from a 54-story skyscraper
to two 24-story buildings, nuCLEus may be approaching a
summer groundbreaking according to sources (Stark).
The number of hotel rooms isn't known, but would benefit from the growing employment downtown, including that of Fortune 500 companies -- highlighted by the new Sherwin-Williams HQ and the recent combination of Cleveland Cliffs plus AK Steel.

The Millennia Companies also plans to establish a high-end restaurant in the former Huntington Bank lobby. It would be similar in luxury to Millennia's popular Marble Room restaurant it opened in 2017 in the former National City Bank lobby, 623 Euclid Ave.

A showcase of luxury automobiles, including historical ones from the nearly 100 years of The Centennial's lifespan, is proposed in the other wing of old bank building's massive lobby, once the world's largest. Upstairs, 68 high-end condominiums are planned, as well.

Interestingly, Millennia also reportedly will seek to expand the project's workforce housing component -- ie: affordable apartments -- amid all that luxury. That will bring into the project 4 percent noncompetitive Low Income Housing Tax Credits to be sought from the Ohio Housing Finance Agency. At last report, The Centennial's estimated project cost was $270 million.
In the larger wing of The Centennial's Grand Lobby, a show-
case of luxury automobiles is proposed. It would add to the
ambiance of the structure, once the world's second-largest
office building -- only Chicago's Merchandise Mart was
bigger. Also adding to the ambiance could be a five-star
J.W. Marriott Hotel, according to sources (LoopNet).
Both The Centennial and nuCLEus were considered likely candidates for the Transformational Mixed Use Development (TMUD) tax credit legislation inching its way through the Ohio General Assembly over the past few years. That legislation could be forwarded to Gov. Mike DeWine for his signature as early as next week.

And perhaps some or all aspects of nuCLEus and Centennial may still be candidates for the TMUD credit, if passed and implemented in a timely manner. But Stark Enterprises apparently has enough capital in hand and pledged to start activating contractors for nuCLEus as does Millennia to refine work schedules for The Centennial.

Indeed, the TMUD credit legislation was originally written by a law firm at the request of Stark to provide a new source of capital financing for significant real estate improvements that would cause a positive ripple effect on the surrounding neighborhood and city.

Messages left for Millennia Chief Executive Officer Frank Sinito with his media spokesperson Valerie Jerome were not returned as of March 16. The messages requested confirmation, comment and more information about a possible start of renovation and adaptive work this summer.
Stark Enterprises' cryptic Twitter
message "#StayTuned" regarding
nuCLEus combined with informa-
tion from sources offers new hope
that that the planned $354 million
 real estate development still has
a verifiable pulse (Twitter).
Ezra Stark, Chief Operating Officer for Stark Enterprises, replied to an e-mail from NEOtrans two weeks ago offering to "touch base next week to discuss" questions about a summer groundbreaking for nuCLEus. But he did not respond to three subsequent e-mails as of yet to learn more details.

Sinito and Stark are likely awaiting news about the passage of the TMUD tax credit before confirming any rumors about two of the largest projects in their companies' respective histories.

And both men are also focused on the same thing that many corporate executives are focused in this ever-evolving coronavirus crisis -- establishing employees in settings where they can be productive yet adhere to federal and state social distancing requirements. But it is encouraging that executives at real estate companies are reportedly still moving forward with their plans and projects.

It is not yet known if there will be any new aspects to Stark's plans for the $354 million nuCLEus project, featuring two 24-story towers. One tower would have offices and the other apartments, both built atop a pedestal of parking and retail. Additional renderings were released by real estate broker Cresco last October.
On Oct. 17, 2011, Huntington Bank was in the
midst of packing up its bank teller operations
and offices at the Grand Lobby of 925 Euclid
Avenue. Days later, the magnificent lobby
would close to the public (KJP).
Stark Enterprises stirred new intrigue about nuCLEus Feb. 7 with a Twitter exchange that originally surrounded Sherwin-Williams' headquarters news. It started with Stark Enterprises congratulating Cleveland's 154-year-old corporate citizen and its hometown for putting the new headquarters here.

"Great news! Congrats to @SherwinWilliams and @CityofCleveland. The future is looking very bright in CLE! #ItsAllHappeningHere" Stark's official Twitter account tweeted.

In response, self-described Cleveland fanatic Mitch Rackovan tweeted to Stark "Your turn! #nuCLEus" which netted a cryptic reply from Stark Enterprises' official Twitter account: "#StayTuned."


Friday, March 13, 2020

How the Coronavirus is affecting construction in Cleveland

There are always rays of hope during a crisis. There are more
than a few available in this Coronavirus emergency (KJP).

As successful investor Warren Buffet says, "Be greedy when others are fearful."

So are Greater Cleveland's real estate developers fearful or greedy as Ohio and the country goes into Coronavirus emergency? And what might be the long-term implications of the pandemic on pending real estate developments?

Real estate developers didn't want to go on the record to share their thoughts regarding the Coronavirus pandemic, as they could be misconstrued as being insensitive or opportunistic.

But they welcomed the states of emergency declared by Gov. Mike DeWine and later, by President Donald Trump. The goal is to give health care workers a shot at containing and fighting the spread of infection and keep the number of infected persons from overwhelming health care facilities.

"You want a short recession or a great depression?" said the president of a real estate company who asked not to be named. "Governor DeWine did the right thing by getting ahead of this."

It is also apparent that no real estate companies plan to halt or even delay their development projects. Pre-development planning and coordination meetings are continuing without delay, although they are increasingly being held by teleconferences or by video such as Skype, according to several real estate firm representatives.
Construction is due to start within weeks on Intro, the project
formerly known as Market Square, in Ohio City (Harbor Bay).
All of them appear to be viewing this emergency as a short-term disruption that won't change or halt their plans -- if the economic downturn can be kept as short as possible.

To developers, major Cleveland projects that are due to get underway this year, such as the Sherwin-Williams headquarters and research facilities, the new City Club Apartments downtown, the Circle Square development in University Circle or Intro in Ohio City won't be finished for two years or more. Even some new projects are being put on the drawing board.

Developers aren't building for the economic conditions of today, but for what they anticipate will be conditions two years from now and continuing for years thereafter, they said. But there could be some long-term implications, however.

Existing office leases and new office projects may be scaled back as companies realize they can still be productive when employees work from home. But some companies ultimately like the interactions, idea-sharing and creativity that can best be achieved with sociable office settings. Other companies may still fear losing control of employees by allowing them to work from home.

James Bond (yes, that really is his name), a director at the law firm Fennemore Craig, wrote today that there will be a significant number of people who try online shopping for the first time as a result of Coronavirus fears.

"This could be a tipping point that forever alters some brick-and-mortar stores and how they accommodate the online consumer," Bond wrote. "As at-home and curbside deliveries increase in popularity, retailers will need to consider store sizes, layouts, and pick-up points when they design stores."
A massing of the proposed Sherwin-Williams headquarters in
downtown Cleveland, showing phasing of the project (Vocon).
He also noted that if online shopping becomes more prevalent as a result of the Coronavirus, more industrial space will be required to house inventory at distribution centers. It could also spur the construction of more distribution centers, making hotter an already hot market, as Cleveland's WEWS-TV reporter Kevin Barry reported recently.

On the down side, some Greater Cleveland-area projects might be slowed by the disruption of supply chains. Those disruptions depend on the construction materials and where in the world they are sourced.

Some real estate firms are looking at sourcing their materials from different countries and regions or increasing their cost projections for delays in deliveries and U.S. Customs screening. Lenders are monitoring the situation as well.

According to Bisnow, officials at Avana Capital which provides construction financing for Marriott International's AC Hotels around the country expect that development projects will be impacted by supply disruptions.

“We do anticipate it coming down the line," said Avana Capital co-founder Sanat Patel. "Our concern is really delivery times. If projects are already in production, there is nothing you can do. But if I were starting a project today, as a lender, I would advise them to get ahead on the lead time because of this.”

But softening the blow from these concerns -- if not creating an outright opportunity to "buy the dip" -- are the historic lows in interest rates and low oil prices that directly impact construction costs.
Construction is due to start this summer on the City Club
Apartments (at right), located at 720 Euclid Ave. (Vocon).
The Coronavirus outbreak has led to a sharp decline in U.S. Treasury rates, which has driven down the interest rates on real estate loans. The housing market has responded with its best year since before the 2008-10 Great Recession.

"There's lots of things going on behind the scenes," said the vice president at another real estate company. "With interest rates going down, money just got a lot cheaper. We're in the trenches working on social distancing right now. Our project delivery schedules are delayed maybe a week."

The Greater Cleveland area ranked third in the United States in Nationwide Insurance's Fourth Quarter 2019 Leading Index of Healthy Housing Markets (LIHHM). But that data was from before the Coronavirus outbreak reached the U.S.

"While the risk that the Coronavirus outbreak will disrupt economic activity has increased significantly, the national LIHHM projects that the housing sector will remain a source of growth for the economy in 2020," Nationwide's report noted. "The key to this positive outlook is strong underlying housing demand factors — including above trend household growth, solid job gains and low mortgage rates."

Similarly, low oil prices can be a construction stimulus. The benchmark West Texas Intermediate crude oil price has stayed between $50-64 over the past year. It began falling from $53 on Feb. 17 to the low $30s on March 13. Oil prices haven't been this low in four years. Nearly all construction costs are oil-based to varying degrees.

There is every reason to believe that the world will return to normal when this emergency fades. From SARS to Bird Flu to Ebola, there is always another health scare around the corner. As Abraham Lincoln once remarked in much darker times of the Civil War, "And this too shall pass."


Wednesday, March 11, 2020

Legal dispute ends over building at edge of Sherwin-Williams HQ site

Looking across the sea of parking in the Jacobs (right) and
Weston (center) lots is 1350 W. 3rd. The Superblock is the
two blocks of parking in the center, divided by Frankfort
Avenue. Sherwin-Williams proposes to build its massive
global headquarters on these parking lots (Google).

A legal dispute over a small building at the edge of Sherwin-Williams' (SHW) new headquarters site in downtown Cleveland has been resolved. But the long-term future of the building at 1350 W. 3rd St. remains in question.

The building is at the southwest corner of West 3rd and St. Clair Avenue and is the sole survivor of multiple historic buildings demolished for parking lots over the past 70 years on the so-called "Superblock."

Stark 1350, LLC, an affiliate of Stark Enterprises, had filed a foreclosure action Feb. 6 against 1350 W6 LLC, an affiliate of Realife Real Estate Group. On March 10, Stark filed a notice of voluntary dismissal with the Cuyahoga County Common Pleas Court to end the dispute. Judge Cassandra Collier-Williams presided over the case.

Stark's lawyers on the case, Robert Kracht and Nicholas Oleski, acknowledged receipt of e-mails from NEOtrans seeking information on the dismissal but offered no comment. Stark Chief Operating Officer Ezra Stark also did not reply to an e-mail seeking comment.

According to a source who was not authorized to speak publicly about the matter, the foreclosure action was resolved amicably out of court. Terms of the resolution were unavailable. However, the source added that SHW's imminent HQ development on adjacent properties did not figure into the resolution of the dispute.

"There was no discussion of a possible sale to Sherwin-Williams," the source said.
The building at 1350 W. 3rd in 1964 was a soot-covered but
architecturally ornate, Victorian-era structure that served some
of the many printing companies in the neighborhood. Today,
the modernized structure awaits its fate amid a sea of parking
in the Warehouse District (CPL/Google).
Realife's building is the former Stark Enterprises headquarters. Stark relocated its offices to 629 Euclid Ave.

Coinciding with the December 2018 sale, affiliates of Stark Enterprises and Realife entered into a mortgage in which Stark lent $1,650,000 to Realife and awarded a deed to 1350 W. 3rd. The building's sale price was $2.65 million, according to broker Newmark Knight Frank.

Per the mortgage, which is publicly available through court and Cuyahoga County Fiscal Officer records, Realife must make regular payments to Stark of $11,052.74 and get Stark's permission for any improvements, demolitions or any other changes made to the property. According to court filings by Stark, Realife had failed to make payments on the mortgage when due.

On Jan. 23, Stark Enterprises filed a complaint on a cognovit promissory note against affiliates of Realife Real Estate Group, court records show. A cognovit promissory note favors the lender. It was agreed to by Stark and Realife as part of the mortgage.

On Jan. 27, Common Pleas Judge Joseph D. Russo rendered a cognovit judgment of $1,671,782.25 plus 14 percent interest against Realife and associates. A cognovit refers to a judgment entered after a written confession by the defendant without the expense of ordinary legal proceedings.
1350 W. 3rd St. was originally built as the Gilman
Building for the A.S. Gilman Printing Co., 182-
184 Seneca St. in 1882. The structure was de-
 signed by the anarchist and architect John
Edelman (Steve McQuillin collection).
Another source said Realife reportedly had a potential tenant recently for 1350 W. 3rd. An Austin, Texas-based eCommerce firm named Zilker Technology was apparently intending on signing a lease here for its first Midwest office. But on or about Jan. 20, Zilker walked away due to some unfavorable stipulations in the lease and instead signed a lease in the Caxton Building, 812 Huron Rd.

"The language allowed for the lease to be terminated at any point, a result of developing situations with a future neighbor,” the source said. The future neighbor he referred to was SHW's HQ.

A Realife representative disputed this when he told Crain's Cleveland Business last month that the company had no plans to sell the building.

The property at 1350 W. 3rd is at the northeast corner of the Superblock. Despite its 1960s-era cladding in an attempt to modernize it, the building is 132 years old. It measures five stories and 18,000 square feet.

It's all that's left of a diverse collection of 19th-century and early 20th-century ornate warehouses, offices and other commercial structures that covered the nearly 6 acres of Superblock. Clearance of the Superblock, bounded by West 3rd and 6th streets, plus St. Clair and Superior avenues, began in the 1950s as highways and more cars began to intrude into the urban core.

It was built in 1882 as the Gilman Building for the A.S. Gilman Printing Co., publisher of the weekly American Sportsman. The structure was designed by anarchist/socialist architect John Edelman, mentor to the famous architect Louis Sullivan, who credited Edelman with the concept of “form follows function,” according to building preservation consultant Steve McQuillin.