City Club Apartments tower sees delays

CBD Cleveland, a high-rise tower planned by Michigan-based
City Club Apartments, is reportedly having difficulties getting
shovels in the ground more than 10 months after it won city
approvals to secure building permits. The developer has
yet to apply for the permits or get site control (Vocon).
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A 23-story apartment tower proposed to rise on Euclid Avenue in downtown Cleveland has seen potential groundbreaking dates come and go, delayed by several factors. While most of the factors are largely beyond the control of Farmington Hills, MI-based City Club Apartments (CCA), some of the delays are reportedly the developer's fault.

It's been more than 10 months since City Planning Commission gave approval to final designs for CCA's planned 240-foot-tall tower called CBD Cleveland. The 300-unit apartment tower with ground-floor retailers/restaurants would rise at 720 Euclid Ave.

Currently a parking lot, the site prior to 1981 was the location of the Hippodrome Building that contained the famous Hippodrome Theater. Next door is the 1901-built City Club of Cleveland which coincidentally has a name similar to that of the planned apartment building.

Since the city's Aug. 21, 2020 approval of the apartment tower's design, major construction bidding publications like the Dodge Reports have posted groundbreaking dates of May 1 and again for June 1 for CBD Cleveland, only to see those dates come and go with few visible signs of progress.

On May 7, city crews completed work to relocate utilities from
below the sidewalk to under Euclid Avenue so that a construc-
tion tower crane for the planned City Club Apartments could
be placed on the sidewalk (Ian Meadows).

So far, the only signs of work were done by the city. In February, crews began relocating utilities from below Euclid's south-side sidewalk so the construction tower crane pad could be located there. That work was completed in early May, lending credence to the notion that construction on the tower was imminent.

But as of today, no construction permit applications have been filed with the city for the affected parcel. A search of permit requests under the names of City Club Apartments, its project-specific affiliate CCA CBD Cleveland, LLC or even the current property owner David Goldberg, doing business as GSK 720 Euclid, LLC, revealed no permit applications.

Even more troubling is that no property transfer or long-term leases were recorded by the county as of today for the affected parcel. CCA does not have site control at this time. Once CCA gets it, construction permit applications could be filed.

The half-acre plat on which the new tower is proposed to rise was carved out of a 2-acre property last November. Goldberg's original parcel extended from Euclid south to Prospect Avenue and includes a six-level, 540-space parking garage in the middle of the property.

Ground floor uses in the proposed CBD Cleveland offer a more
 activated street scene along Euclid Avenue, including a res-
taurant proposed to be called The Hippodrome, named
after a building that stood here until 1981 (Vocon). 

"The effect of the plat is to consolidate the 10 historical parcels and to split the approximately one-half acre parcel fronting on Euclid Avenue for sale to and development by CCA CBD Cleveland, LLC of the City Club Apartments project," wrote Mara Cushwa, partner and chair of Calfee, Halter & Griswold LLP's Real Estate practice group, in a Nov. 18, 2020 letter to the Cuyahoga County Fiscal Office Department.

However, sources close to the project say CCA is pursuing a 99-year lease with Goldberg to gain the necessary site control. Those same sources say that CCA's founder, chairman and CEO Jonathan Holtzman has been extremely demanding and difficult to work with in getting deals done.

"He has unrealistic price expectations to the point where they've now selected non-union small-trades contractors and are trying to dumb-down the design to fit within the budget," said a source close to the project, but who was not authorized to speak publicly about it.

Designs being changed are interiors which presumably would not require the developer to submit revised plans to the planning commission which should help limit further delays. Instead, the developer reportedly is demanding interior furnishings and subcontractor outcomes based on cost formulas that are applied from project to project, city to city.

Other sources said that some subcontractors who were selected by general contractor Cleveland Construction Inc. are having trouble keeping up on their existing work demands. This is happening industry-wide, not just in Cleveland, according to subcontractors. They expect to be busy for the foreseeable future but are hiring to get more work done so new projects can begin.

Additional geotech drilling to gather core samples was conducted
by Frontz Drilling Inc. of Wooster at the request of GSK 720
 Euclid LLC, not by City Club Apartments or its contractors.
This work was done on March 2 below a parking lot at 720
Euclid Ave., site of the planned tower (Clifton Haworth).

Another factor redefining or delaying major construction projects nationwide is record-high steel prices. Yet, sources close to the CCA project have not specifically brought those up as a direct cause of delay for the Cleveland tower, even though the project has a tight budget estimated by Dodge Reports at $92.5 million.

That price tag is less than two other recent downtown Cleveland high-rise apartment developments -- The Beacon, a $95 million 19-story addition to the top of a 9-story parking garage and The Lumen, a $135 million 34-story apartment tower with a 540-space parking garage. Like The Beacon, CCA's parking will be availed by a nearby parking garage that is typically full during the day but underutilized at night.

Holzman could not be reached for comment and Cleveland Construction representatives did not respond to inquiries seeking clarification and more information.

Other sources who have discussed the CBD Cleveland tower directly with Holtzman said the third-generation real estate developer remains upbeat and optimistic about the prospects for delivering the Cleveland project.

CCA currently has four major projects in development, including the one in Cleveland. The others are a 17-story project in Chicago called the Lakeview, a six-story building in Detroit called the Midtown, and a 31-story redevelopment of the historic Union Central tower in Cincinnati. The first three projects involve new construction.

END