Friday, January 22, 2021

Bedrock considers Tower City Riverview TMUD project

In 2019, Bedrock Real Estate Services commissioned this
conceptual rendering as part of planning for Tower City's
Riverview area below Huron Road and above the
Cuyahoga River in downtown Cleveland (Vocon).

With the news breaking this week that Quicken Loans' affiliate Rocket Mortgage may add at least 700 jobs over the next few years, many are asking where would these new jobs be located.

Meanwhile, Bedrock Real Estate Services, one of the many Dan Gilbert-owned partner companies of Quicken Loans, has ramped up the hiring of development subcontractors to conduct due-diligence activities in Cleveland. That's according to two sources who were not authorized to speak publicly about those activities.

Those activities are being focused on a narrow strip of land owned by Bedrock partner Rock Ohio Caesars Cleveland LLC, below Huron Road and above the Cuyahoga River. Within that strip yet split by Canal Road are two parcels owned by Rock Ohio -- the 8.5-acre, 678-space Tower City Riverview Parking public lot and the 11-acre, 1,330-space Tower City Riverview South employee parking lot.

Over the past two years, Bedrock has contracted with Cleveland architectural firm Vocon Partners, LLC to explore ways to use that land. Their vision involves a potential Transformational Mixed Use Development (TMUD) including an office building, a high-rise apartment building, a hotel and recreational public spaces along and above the river.

According to one of the two sources, Bedrock has extended its agreement with Vocon. The other source said Bedrock has also hired design and engineering firm IBI Group of Toronto to provide construction and engineering services. Both sources said the due-diligence work at this stage is very preliminary and consists of geotechnical and environmental analyses.

Location of major real estate features in this article (KJP/Google).

Thus, the sources say it is unlikely that Quicken Loans or Bedrock have made any decisions about where Rocket Mortgage will be located in the future. Ken Till, senior vice president of development at Bedrock, did not respond prior to publication of this article to a LinkedIn message.

"I'm not sure where they will go," said Ward 3 Councilman Kerry McCormack who represents downtown. "But obviously it's very, very good news for downtown and the City of Cleveland. That's 700 brand-new, well-paying jobs."

According to a interview of Cleveland City Council President Kevin Kelley, he estimated the new employment at "700 to 1,000 jobs." Council is reviewing an ordinance that would provide a $975,000 Job Creation Incentive Program grant from the city to Quicken Loans.

The Detroit-based lending firm's local office and its 400 employees relocated in 2016 from the former main post office between Prospect, Huron, West 3rd and West 6th street to 81,000 square feet of space in the 90-year-old Higbee's Building, 100 Public Square.

Since then, Quicken Loans/Rocket Mortgage added another 300 jobs in the Higbee's Building. That brought its footprint in the building to about 150,000 square feet. More than doubling existing employment by adding another 700-1,000 jobs could exceed the remaining available office space in the Higbee's Building.

In 1990, Forest City Enterprises envisioned a major real estate
development to follow its Tower City project (KJP collection).

According to Jones Lang LaSalle's (JLL) 2020 Cleveland Skyline Report, there's only about 130,000 square feet of office space not yet leased in the Higbee's Building. Of the total 815,000 square feet of space in the 13-story building, 527,000 square feet is used for offices; the rest is the Jack Casino. Floors four, six, eight and nine are fully leased with offices, JLL's report says.

Even if the Higbee's building had room for the lending firm's expansion, there's another reason why it may move. A Gilbert-owned firm no longer owns the Higbee's Building and has also sold the casino operations.

Gilbert's Rock Ohio sold the building and the Thistledown Racino property in a lease-back deal in October 2019 for $843 million to Vici Properties. The casino operations sold this month and will move its headquarters and about 90 jobs from Detroit to Cleveland. 

Those sales plus a newly created TMUD tax credit to support real estate megaprojects means that Bedrock Cleveland has the resources to move forward on developing properties under Gilbert's Rock Holdings' umbrella.

After the sale, Rock Holdings said it "will continue to invest significant capital into these (Cleveland) properties which will have a lasting positive impact on the city and Cuyahoga County."

A diorama showing another vision by Forest City Enterprises for
the Riverview phase of its Tower City development (KJP collection).

There are several other matters affecting potential development of the Riverview properties. One is the apparently reactivated $110 million proposal to convert most of The Avenue at Tower City into a technology hub called CityBlock.

Another are the post-2024 departures of Sherwin-Williams' (SHW) headquarters in the Landmark Building, 101 W. Prospect Ave., to the west side of Public Square and the coatings firm's John G. Breen Technology Center, 601 Canal Rd., to Brecksville.

When SHW vacates and sells the 91-year-old Landmark Building, the 900,000-square-foot structure may be converted to housing. That could leave several of its tenants in the lurch, however.

SHW occupies about 800,000 square feet of the Landmark Building. The remaining spaces are filled by the offices of three law firms -- McCarthy, Lebit, Crystal & Liffman Co., Weisman, Kennedy & Berris Co. and Reminger Co. -- plus Century Federal Credit Union. It isn't known yet if or where those tenants of the SHW-owned building may relocate.

Lastly, along the riverfront is SHW's Breen research facilities, set on 9.2 acres of land. SHW donated nearly 6 acres of this property to the City of Cleveland in July 2020 including the land on which the 140,000-square-foot research center sets.

Most of Breen's land is used for surface parking and greenspace but the entire site could be converted to a park. The city, Cuyahoga County, Cleveland Metroparks and Canalway Partners are developing the Canal Basin Park and Towpath Trail nearby.


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