Sherwin-Williams' 2nd HQ tower may rise sooner, not later

Outlined in red at the center of this model is Sherwin-Williams'
proposed second headquarters office tower, located to the left
of its larger first-phase. The second tower is shown here as a
largely featureless massing as it lacks a pending construc-
tion start date. But there are indications that the coatings
giant may have some end-users for the tower and a de-
sire to build the tower sooner rather than later (TV20).
CLICK IMAGES TO ENLARGE THEM

In models and on graphics, it was presented almost as an afterthought. It was a featureless box standing in downtown Cleveland at the northeast corner of West Superior Avenue and West 6th Street. Next door, the 600-footer served as a magician's tool of misdirection, with its primary role as the global headquarters of Sherwin-Williams (SHW).

But that blank box, a future HQ tower standing what appears to be about 300 feet tall based on the height of the Rockefeller Building across the street, could not be ignored by a joint meeting of city planning review committees on July 20.

To put the size of that building into context, the Ernst & Young Tower (E&Y) built in 2013 at 950 Main St. as part of the Flats East Bank development stands 23 stories and 330 feet tall. It is one of downtown's few trophy-class buildings -- the only office class above Class A. E&Y has the third-highest rents downtown and is 97 percent full, according to real estate brokerage Jones Lang LaSalle.

SHW's proposed second office tower was labeled on site plans as "Future Sherwin-Williams Expansion TBD" -- To Be Determined. Committee members wanted to determine what it would be and how soon will SHW build it. The reason is that an ugly, unwanted surface parking was shown as temporarily occupying that spot until the expansion building could be built.

The phase two office tower is located at the lower-left portion
of this SHW HQ master plan. It also has for its future phases
sections of lower-level mixed-uses along West 6th Street and
St. Clair Avenue to be developed by others (SHW).

"I've been on this (city planning) committee for a long time," responded a skeptical Thomas Zarfoss, a retired landscape architect. "Whenever I hear the term 'temporary' it gets my attention."

How long would that parking lot remain as "temporary"?

Timothy Muckley, SHW's director of corporate real estate, declined to give a date of when that future expansion would be built. And that future expansion also includes the east and south flanks of West 6th and St. Clair Avenue, labeled on conceptual planning documents as "Future Commercial Retail & Office TBD" and standing several stories tall.

"We've made this mistake with manufacturing plants of not planning for the future," Muckley said. "We want this to be our headquarters site for a long time. It's important to be able to have that for growth."

For logistical reasons, the second tower may be difficult to build at the same time as the 616-footer. HQ design team sources said SHW construction firms need the space for materials staging for the main tower, parking deck and Public Square pavilion. A smaller construction staging area, such as north of Frankfort, might suffice for the second tower which Muckley said would have no additional parking of its own.

Here's where it gets interesting...

This model of the SHW HQ shows a slightly shorter phase two
office tower, standing between a massing of the first phase to
the left and the Rockefeller Building to the right (TV20).

Muckley told the planning committee members that SHW is encouraging companies with whom it does business about locating new sales/administrative offices or relocated corporate offices in those future expansion spaces.

"We work with a lot businesses and we'll urge them to locate next door," Muckley said.

For months, NEOtrans was hearing rumors that SHW was actively seeking leases in its HQ tower by other office tenants. The rumor didn't make sense at the time. Why would a company seeking to build a 1-million-square-foot HQ -- with all of the HQ space already spoken for by most Cleveland SHW offices including an 8 percent growth factor -- make that HQ tower available to other tenants?

Because SHW isn't making the main HQ tower available to other tenants. It's making the second HQ tower available to other tenants. An employee of one of those tenants, based on the East Coast, reached out to NEOtrans months ago saying their company would open an office in Cleveland once SHW opened its new HQ.

But SHW doesn't have enough tenants signed up yet or it would build that tower now. It may not be able to get more office tenants to commit until the building's opening is a year away, a real estate insider told NEOtrans.

Since it's only a massing, there is no definitive size for the phase
two office tower. But this image gives a sense of what SHW
seems to want -- a tower that's roughly half the size of 
its first phase HQ tower (SHW).

"They are building expansion capacity into the new HQ, perhaps to relocate other people here to Cleveland or for another acquisition down the road," the insider said. "And they would be looking to lease that space in the short term. I've heard a few companies mentioned as possible tenants in the building. It would be the nicest, newest office building downtown, not to mention any firms that regularly do business with SHW would like to be close."

As for which companies, he declined to provide names but said they're basically any firm that is willing to pay top-of-the-market rents for a trophy-class office building. In other words, think law firms, technology, marketing, real estate and accounting firms, he said.

And, let's not forget that SHW hasn't yet included the relocation to its new HQ roughly 250 employees based in a 128,000-square-foot flex-office space on Hinckley Industrial Parkway on Cleveland's south side. SHW leased that property in 2017 for an unknown term after it acquired coatings rival Valspar for $11 billion.

Some of Valspar's employees were relocated from Minneapolis to Hinckley Industrial, according to SHW sources. Most of Valspar's corporate headquarters and research staff remain in Minneapolis. It is difficult to get a hard number on how many there are. The estimates range from 400 employees to 600 employees.

SHW is understandably very sensitive about saying anything publicly about the future location of Valspar's employees. Since it will take several years before any new SHW office space is available, SHW wouldn't want to tell its Minneapolis employees now that they'll be moving in a few years.

Until SHW builds its phase two office tower plus the low-level
development by others along West 6th and St. Clair, those
spaces will remain as surface parking lots (SHW).

That could lead to a situation where SHW would lose a lot of workers in the next several years because they have the chance to look for another job close to home. And it would be difficult for SHW to hire for those openings that will eventually relocate.

If anything, SHW has tried to reassure its Valspar employees and others in Minneapolis that they value that location.

"Minneapolis is like our second headquarters. We continue to invest in our people and product there," said former SHW spokesman Mike Conway in 2018 who also denied to NEOtrans in 2019 that SHW was even considering building a new HQ. That was months before SHW was ready to make the new HQ official.

Relocating 250 SHW flex-office workers from Hinckley Industrial Parkway and 400-600 Valspar employees from Minneapolis could fill 150,000 to 200,000 square feet of office space. That would provide a significant anchor office presence to the second tower.

Three sources reported to NEOtrans months ago that two HQ towers were planned all along, although two of the sources said neither tower would be very tall or iconic. That part turned out to be false. One of the sources said Cleveland-based architectural firm Vocon Partners was hired by SHW to do programming and spatial/massing work on a five-year contract which started last year.

In late June, SHW subcontractor Independence Excavating was
working near the northeast corner of West Superior Avenue
and West 6th, site of the phase two office tower. Next door
the 616-foot SHW HQ tower will soon join its three sky-
scraping neighbors around Public Square (KJP).

If Vocon's work was limited to the first-phase HQ tower, then it probably wouldn't need a five-year deal. If Vocon is also going to be providing services to SHW for the second tower, then it makes sense to keep them on board for more than just two to three years. It also suggests SHW wants to move forward sooner rather than later on the second tower.

So do the actions of geotechnical firms. They've drilled test bores to collect soil samples and measure the depth of bedrock at multiple locations throughout the 7-acre SHW HQ site west of Public Square. In late June, crews were doing site preparation work at the northeast corner of West Superior and West 6th -- right where the phase two tower would rise.

SHW has a lot more to gain from underselling its new HQ than from overselling it. SHW is more concerned with impressing its shareholders than those of us who admire and count the number of shiny towers in the downtown Cleveland skyline.

So whatever SHW is going to do and when is going to be determined on the potential for increasing value for its shareholder. If having more of its partner companies setting up offices next door will do that, then look for construction to start on this tower very soon.

END