Lakewood Ohio's new residential boom times

One Lakewood Place, by Carnegie Development, would be the
largest development in Lakewood in more than 90 years. It
would help the city and its downtown businesses recover from
the loss of 660 well-paid Cleveland Clinic workers.

Lakewood's primary commercial district, Detroit Avenue, is becoming a lot more residential. The changeover in land use is due in large part to a change in business preferences, resulting in opportunities to offer contemporary housing in a stable, walkable community. The last time the city had so much land available for development was before the Great Depression of the 1930s.

There are eight large properties along Detroit Avenue that were or are in play for redevelopment. Most developments are for new uses, primarily residential. They include:
1. Fairchild Chevrolet -- Forest City Enterprises/Ryan Homes & Knez Homes
2. Educator's Music (and Spitzer Chrysler-Jeep?) -- Solove Development
3. McKinley School -- Liberty Development
4. Steve Barry Buick -- Unknown
5. Lakewood Center North office tower -- Lakewood Center North LLC
6. Lakewood Hospital -- Carnegie Management
7. Trinity Lutheran Church -- Unknown
8. Phantasy Cleveland -- Unknown

Fairchild Chevrolet -- The metamorphosis started more than a decade ago. Fairchild Chevrolet, located in the 12000 block of Detroit Ave., bolted for Westlake in 2005 and was soon sold and renamed as Pat O'Brien Chevrolet. General Motors was encouraging dealerships not already next to Interstate highway interchanges to move to them.

A four-acre hole was left in Lakewood's community fabric when
 Fairchild Chevrolet left for Westlake and the Great Recession
halted redevelopment of the former car dealership.

But its departure left a four-acre gaping hole along the oldest and most vulnerable part of Lakewood's main commercial corridor. That loss was felt both in terms of the corridor's physical appearance and in the level of economic activity. Suddenly and for the first time since the dealership opened in the 1940s, the area around it became a dead zone.

But Bob Fairchild, owner of the now-departed dealership, anticipated that and wanted to limit its duration. He paid to demolish all of the dealership's buildings so that they wouldn't leave a blighted landscape to be vandalized and reduce the value of surrounding properties. He also wanted to remove a barrier to the site's future redevelopment.

Rockport Square's original site plan, 2005
(CLICK TO ENLARGE ALL IMAGES)

What he couldn't anticipate was the coming of the Great Recession of 2008-10. Fairchild sold his dealership's properties to Cleveland-based Forest City Enterprises which began redeveloping four blocks of street frontage into Rockport Square luxury townhouses. When the recession hit, the development stopped cold, maxing out at 32 townhomes and leaving the two largest portions of the former Fairchild Chevrolet in limbo as weed-strewn, empty lots for nearly a decade.

When the real estate market recovered, Ryan Homes stepped in to finish the job. It built 51 more townhomes that listed for upwards of $200,000 each. All of them sold in a single year before Ryan's work was finished in 2017 (some landscaping remains incomplete).

The speed and price at which those homes sold piqued the interest of other developers in a tiny parcel that remains undeveloped from Forest City's original plan. Several houses on the east side of Fry Avenue were demolished in the mid-2000s for a part of the parking inventory to support a pair of six-story condo buildings, one on either side of Detroit, called the Lofts at Rockport Square. Those plans were scrapped in favor of Ryan Homes' townhouses.

At 1375-1391 Fry Ave., Knez Homes, Inc. will build The Mews at Rockport. The project will include nine townhouses, each three stories tall. City officials approved Knez's plans and zoning for the development in spring 2018.

Educator's Music, 13701 Detroit Ave., and the house behind it
are on land that was sold to Liberty Development Co. which
is building the luxury townhouse development, McKinley
Place. Liberty's plans for this site aren't yet known.

Educator's Music (and Spitzer Chrysler-Jeep?) -- But Fairchild probably won't be the last former car dealership to become a residential development. Farther west was the Spitzer Lakewood Chrysler dealership at 13815 Detroit Ave. Due to recession-induced restructuring in the auto industry, Spitzer lost his Chrysler Motor City franchises in Parma and Lakewood in 2010.

The Spitzer dealership leased its building and parking/inventory lots to Wingstar Transportation LLC which began in 2013 to provide trucking and logistics services. Joining Wingstar at the dealership is its sister company, Volens LLC. It began in 2015 to provide trucking equipment, trailers and tarps for shipping purposes. But Wingstar and Volens quickly outgrew the 1.6-acres of land south of Detroit, divided by Parkwood Road, and are looking for more space elsewhere.

They won't be expanding east on to the property of Educator's Music next door, at 13701 Detroit Ave.The reason is that this site's owner, the Stavash Family Limited Liability Co., has sold its land, store and house behind the store at 1406 Wyandotte Ave. An earlier rumor that Liberty Development Co. (see McKinley School/McKinley Place townhouses) was the buyer proved to be false. Instead, it is the Columbus-based Solove Development.

Educator's Music was started in the early 1950's by the late John Stavash Sr., once a member of the world-renowned Cleveland Orchestra. He built the store building in 1960. His son, John Jr., runs the store today and will relocate outside of Lakewood, though he said he hasn't decided where yet.

The retail business, including its music lessons, will continue at the current location until at least the end of May and most likely to the end of June. It may temporarily operate out of the house behind the store. The 0.4-acre property and its two structures have a tax value of $232,300, according to Cuyahoga County records.

If combined with the adjacent, former car dealership property, valued at $767,500 for taxes, these parcels would amount to a two-acre lot. That could provide enough room for several dozen townhomes or two or more multi-family residential buildings with ground-floor retail facing Detroit.

That doesn't include the 0.35-acre Bruce's Automotive & Fleet Services, 13919 Detroit Ave., at the highly visible corner of Detroit and Bunts Road. This property is valued at $165,600 for taxes and owned by G & M Property Management 3 LLC, which in turn is owned by George Shaker. Shaker has owned the property either directly or through a company for more than 40 years, county records show.

McKinley Place townhouses, while very dense, has a common
greenspace at the end of this new street where a stone remnant
stands from McKinley Elementary School that occupied this
site from 1918-2015.

McKinley School -- If the name Liberty Development doesn't ring a bell, then you might remember it as the developer that's nearly finished building the 40-unit McKinley Place Townhouses. They are rising on the 3-acre site of the former McKinley Elementary School property on West Clifton Boulevard, just north of Detroit Ave. Townhouses at this site are selling for between $314,000 and $483,000.

One of three sections of the now-closed Steve Barry Buick.
This was their new car showroom on the north side of Detroit
Avenue. Their service/repair center was on the south side of
Detroit on the west side of Orchard Grove Avenue and the
used car lot on the east side of Orchard Grove.

Steve Barry Buick -- The last new-car dealership along Detroit in Lakewood was Steve Barry Buick, 16000 Detroit Ave. Steve Barry Buick stopped selling cars more than a year ago but it continued to service and maintain cars until earlier this year. Office equipment and furniture continue to be sold off into May.

Although the property isn't listed for sale publicly, it is common knowledge in local real estate circles that Steve Barry Buick and the neighboring Bobby O's Place tavern is for sale. The asking price is rumored to be several times higher than the $940,300 the county has it appraised for tax purposes.

The dealership's property, owned by Fairlane Realty, includes four parcels totaling 0.76 acres and a small building dating from 1927 on the south side of Detroit for the used car lot. The 1.2-acre parcel and dealership sales/service building on the north side of Detroit dates from 1948. At nearly 2 acres, the combined property is comparable in size to the Educator's Music/former Spitzer site.

Lakewood Center North has towered over downtown since
1974. Until 2017, it was exclusively an office building. Now,
10 of its 15 floors are being renovated with 153 apartments.
At left is Cleveland Clinic's Family Health Center, seen
under construction in August 2017.

Lakewood Center North -- But the single largest addition of housing units to Lakewood in many years didn't come from new construction. Instead, it came from a concept borrowed from nearby downtown Cleveland -- conversion of an aging office building into apartments. At 15 stories, Lakewood Center North, 14600 Detroit, was the tallest suburban office building in Greater Cleveland.

It lost its office building standing after the United Transportation Union's national headquarters went west to North Olmsted and New York Life insurance went east to downtown Cleveland. That left 10 floors of the office building vacant. An investor group, Lakewood Center North LLC led by Brad Kowit, acquired the building in 2013 for a mere $3.385 million from CW Capital Servicing Inc. of Bethesda, MD which bought the building seven years earlier for $14.45 million.

Ten floors in the middle of the building are being renovated with 153 apartments, offering one-bedroom and two-bedroom units. The top two floors of the building will remain as offices with the bottom three floors a mix of offices, retail and restaurants. Having apartments in downtown Lakewood, with its many restaurants and shops (including two full-service grocery stores, one of which is open 24 hours), is intended to attract more Millennials to Lakewood.

Preliminary site plan for Carnegie Management & Development's
proposed One Lakewood Place development on the site of the old
Lakewood Hospital. (CLICK TO ENLARGE ALL IMAGES)

Lakewood Hospital -- The biggest development in downtown Lakewood is yet to come -- One Lakewood Place. It's due to a different kind of shift in the commercial market -- outer suburban job sprawl. Cleveland Clinic's Lakewood Hospital pulled up stakes and relocated 660 employees of its highly paid workforce from this inner-ring suburb to exurban Lorain County. While 200 Cleveland Clinic employees will remain at its new $34 million Family Health Center at Detroit and Belle avenues, the loss of so much income tax and so many workers has hurt downtown Lakewood shops and restaurants.

So the city has named Carnegie Management & Development Corp. of Westlake to redevelop the city-owned Lakewood Hospital site. At 5.7 acres, it is the largest site in Lakewood to be developed in nine decades.

Planned is a $75 million mixed-used project featuring an apartment tower with hundreds of units, 60 townhouses, 100,000 square feet of offices and 84,000 square feet of retail. The only question at this point is how tall will the main building be -- six stories of offices with 200 residential units in other buildings to the south? Or will it be 18 stories with 200 residential units atop the six-story office pedestal plus the other 200 residential units south? Carnegie is considering the latter because it is more cost effective, the Lakewood residential market is strong and downtown Lakewood shops and restaurants need the business to make them whole from the loss of so many hospital workers.

Trinity Lutheran Church and its two single-level retail buildings
just beyond were listed for sale but are no longer on the market.
Instead, the site is under contract with an unidentified developer
to re-use the vacant structures or demolish them for a new land
use plan.

Trinity Lutheran Church -- Another development that could soon move forward is the repurposing of one or more parcels owned by Trinity Lutheran Church, 16400 Detroit, between Hall and Westlake avenues. Three parcels are here. They total 0.729 acres and are valued at $680,400 for taxes. The church is on the westernmost parcel and two, single-level storefront-type buildings are on the two easternmost parcels. Those two were to be razed and developed with a Wendy's fast-food restaurant but there wasn't sufficient space for parking and a drive-through lane.

The church sanctuary wasn't part of that discarded, conceptual plan. Trinity Lutheran is moving a half-mile west to Lakewood Congregational Church. An unidentified developer is under contract by Trinity Lutheran to find a new use for its old property.

Since 1980, the Phantasy Cleveland has helped launch many
fledgling music careers in rock, new wave and punk. But the
former movie theater complex is for sale and could soon be
redeveloped with residential or other uses (LoopNet.com).

Phantasy Cleveland -- Last on this list is the Phantasy Cleveland, 11794-11814 Detroit, a 55,000-square-foot live entertainment complex with three stages and three bars. Built in 1918 as the Homestead Theater, it continued to show movies until 1979. It was part of a theater district that also included the ornate, Spanish-style, 1927-built Loew's Granada Theatre at the southeast corner of Detroit and West 117th. It closed and was demolished in 1969 for a Shell gas station that succumbed in the 1980s to a Pizza Hut.

It's possible that the Phantasy, for sale for $1,050,000, could be redeveloped with apartments or remain as a theater. The theater complex itself is set on 0.52 acres of land. An adjoining 0.172-acre parcel is also owned by 11802 Detroit Ave. It is The Chamber Danceclub, formerly the Highland Studio, and appears to be part of the Phantasy sale listing.

Detroit Avenue, looking east from Beach/Winchester avenues
at the Rockport Square townhouse development. Compare this
view with the Fairchild Chevy scene near the top of this article.
More of Detroit Avenue, especially where the other two closed
car dealerships now sit, could soon look similar to this.

All of these developments will help Lakewood stop and reverse a decades-long loss of housing stock and, more importantly, loss of population. Cuyahoga County's loss of population and households is well-known. It started with the city of Cleveland in the 1960s and continues to this day, albeit more slowly as the city rebuilds its aging, obsolete housing stock. Despite Cleveland being incorporated 100 years before Lakewood had, the average age of Cleveland's housing stock is actually one year newer (1940 vs 1939) due mass demolitions and extensive new construction.

Lakewood has the third-most housing units in Cuyahoga County (30,569 units or 5 percent of the countywide total), trailing only Cleveland (213,983 or 35 percent) and Parma (36,682 or 6 percent). Lakewood lost 1,725 households between 1990-2010, ranking behind Cleveland, East Cleveland and Euclid in housing loss, according to a 2016 study by the Cuyahoga County Planning Commission. More recently, the growing conversion of many Lakewood rental duplexes into for-sale, single-family homes is raising the value of housing but reducing housing units and population.

Lakewood has 28,144 living units, 30.6 percent of which are apartments, 33.3 percent are one-family homes and 23.5 percent are two-family homes. The only cities that have more apartments are Bedford Heights, East Cleveland, Highland Hills, Mayfield Heights, North Randall, Warrensville Heights and Woodmere.

With Lakewood as a benchmark, only four cities have a smaller share of their housing stock as single-family homes -- East Cleveland, Highland Hills, Linndale and North Randall. And only four cities had a greater share of their housing stock as two-family living units -- Linndale, Newburgh Heights, Cleveland and East Cleveland.

Cuyahoga County cities with the largest share of new living units constructed between 2010-2013 were Cleveland with 681 units (valued at $103 million) or 27 percent of the Cuyahoga County total, and Strongsville at a distant second with 251 units (valued at $81 million) or 10 percent of the countywide total. Lakewood added only 20 living units valued at $6 million during that period.

That shows how much catching up Lakewood has had to do. The existing and potential Detroit Avenue corridor developments listed in this article (plus others in Birdtown, Clifton Pointe and scattered sites) are helping to add nearly 1,000 modern housing units to this stable, walkable community.

END

Cleveland, redefined

Out-of-state license plates are everywhere in Greater Cleveland these days, especially in hot neighborhoods of Cleveland as well as inner-ring suburbs like Lakewood and Cleveland Heights. These photos were captured outside an apartment building in Ohio City where the number of cars bearing out-of-state plates equaled those with Ohio plates. CLICK IMAGES TO ENLARGE (Tom Moran photo)

Perhaps you've noticed it on the license plates of cars in your neighborhood. Perhaps you've noticed it while shopping for a new house. Perhaps you've noticed it in the new faces at your child's school. Perhaps you've noticed it on local dating apps.

Something is happening in Greater Cleveland that we're not accustomed to. They're coming. Many are already here. Lots of them. Lots of what?

People. Relocated, transplanted, moved.

If it is big enough to measure, we probably won't get a better feel for this population shift until the next Census count in 2020. But numerous unscientific sources of information are revealing that a recognizable change is happening in Greater Cleveland.

First, the license plates. If you live in some of the hot neighborhoods of Cleveland -- Downtown, Detroit-Shoreway, Little Italy, Ohio City, Tremont, University Circle -- or in inner-ring suburbs like Lakewood or Cleveland Heights, you have new, out-of-state neighbors. Parked in these areas are lots of cars with license plates from eastern states, especially New York, Pennsylvania or Maryland. Or you'll even see a few Illinois, Michigan, Georgia, California and Texas plates.

The out-of-state plates are more numerous in neighborhoods with plenty of apartments -- a favorite among new arrivals who aren't ready to buy in an unfamiliar city. At some larger apartment complexes or on streets with many smaller apartment buildings, up to half of the parked cars are from out of state.

Second, my younger friends have noticed on dating apps lots of Clevelanders looking for love or friendship, and starting out with "I'm new in town..." They couldn't cite numbers but said there were enough of them to be noticeable and to cause my friends to wonder "What is going on?"

Third, for those already married with children, they're probably noticing new faces at their child's day care. For example, at Lakewood Child Care Center, they're coming from New York, other eastern states as well as from Chicago, said Director Holle Brambrick.

"Our (facility) tours of potential new customers coming from out-of-state has definitely increased in the past year," she said.

And then there's the real estate. If you haven't checked the prices lately of homes in the above-mentioned neighborhoods and inner-ring suburbs, you are in for a shock. Until the last year or two, a home shopper could easily find a nice house in Cleveland or Lakewood away from the lake for under $200,000. Not anymore.

Thousands of residences are under construction in Greater
Cleveland, with many rising near the region's rail and bus
rapid transit stations to offer links to downtown, airport and
 more. Here, Centric apartments rise next to the  Little Italy
Red Line station that opened in in 2015.
 (Ken Prendergast photo)

Consider the story of my Lakewood veterinarian and her husband (they didn't want their names used). They live in a second-floor apartment in a ubiquitous Lakewood double. This one is located on Rosewood Avenue, near the intersection of Hilliard Road and Madison Avenue. The couple wanted to stay in their apartment, but the double was sold to a real estate developer for $170,000. The developer will do to this double what he has done to other Lakewood doubles -- gut it and convert it into a single-family home for sale. They are asking and getting sales upwards of $300,000.

So my veterinarian friend and her husband looked to buy new homes anywhere north of Lorain Avenue, whether it is in Cleveland, Lakewood, Rocky River or Fairview Park. As a young couple, they wanted to be close to the city and their jobs. Finding an affordable home is proving to be difficult. They thought they found the perfect home in Kamms Corners near the Metroparks, but they were outbid by $5,000 by someone offering all cash.

Howard Hanna realtor Emmanuel "Mike" Skantzos, based out of the agency's Rocky River office, says experiences like this are becoming more common. When a renovated historic house with quality finishes goes on the market, it may not last a week before a buyer snaps it up. And the asking price often doesn't get negotiated downward; instead it gets bid upwards by competing buyers.

Furthermore, Skantzos estimates that about 20 to 25 percent of the work at Howard Hanna's Rocky River office is handling relocations to the Cleveland area. While only about 5 percent of his business is relocations, there are realtors at his office who handle nothing but relocations and they are busy, he says.

Cars with New York license plates are parked in January next
to the 15-story Lakewood Center North  building that was
recently converted to apartments. (Ken Prendergast photo)

The change in the market is being noticed in Downtown Cleveland too. There, Greg Deming, property manager at the new Worthington Yards apartments in the Warehouse District, said he's surprised by the number of people relocating to Cleveland for new jobs this winter.

"Usually, December through February are slow," Deming said in Crain's Cleveland Business. "I've never seen it like this. We'll be filled by springtime."

Anyone driving around the hot real estate areas noted earlier will see apartments, townhouses and new businesses popping up like daisies. And that's just what they can see. What they can't see are real estate developments moving more quickly from the drawing board, through financing and city approvals processes to the cusp of construction. The reason is because rents are rising to levels where fewer subsidies are needed due to the as-yet insatiable demand.

Most parcels of land along and north of Detroit Avenue in Cleveland in Ohio City and Gordon Square have a new real estate development on them or a real estate developer inquiring about them. Just about every under-utilized piece of land in Tremont has been or is being developed. Housing prices in Duck Island are bound to eclipse downtown's as large swaths of vacant land are giving way to large swaths of swanky new townhomes, some priced above $1 million.

Three apartment towers of 20-34 stories are under construction along Euclid Avenue between downtown and University Circle, with several more planned in the Flats and several more planned in University Circle. And if you wanted to get a house in Little Italy or Uptown for under $200,000, you've missed the train. Townhouses in the $300,000 to $800,000 range don't stay on the market for long, and hundreds of apartments rising near rail and bus stations in the area are leasing out before the paint dries on them.

So what's driving this change?

One economic shift is the amazing growth of "eds and meds" jobs, officially known in the U.S. Bureau of Labor Statistics data sets as the Education & Health Services sector. In the past decade, this sector has added more than 20,000 jobs in the Cleveland market. Year-over-year growth rates of 4 percent or greater in the past three years are comparable to the growth rates of the tech sectors in Austin, TX and Silicon Valley.

Roughly the same vantage points in University Circle, which has become
Cleveland's boomtown. The scene at left is from 1978 and the view at right
is from 2016. With upwards of 60,000 jobs, this area is now Ohio's fourth-
largest employment center, behind only the downtowns in Cleveland,
Columbus and Cincinnati. (Scott Muscatello graphic)

And it's not just growth at the Cleveland Clinic or University Hospitals pushing these numbers. Nor is it limited to their biotech spinoffs, although they're a significant driver. Regional employment has finally returned to where it was before the Great Recession but still 80,000 off from where it was in 2001.

One of the most exciting business announcements in a long time is the new biotech partnership between the Cleveland Clinic, JumpStart, and Plug and Play, one of the world's leading startup accelerators. Silicon Valley's Plug and Play Tech Center has moved into the Global Center of Health Innovation, now more than 80 percent full. One of the biggest fool's errands of economic development is to try to convince employers to relocate their jobs to your city. Most economic growth is homegrown. Instead, bring the money to Cleveland and the people will follow. Plug and Play will do that.

So financiers are noticing Cleveland. Consider San Francisco's 10,500-employee Bank of the West which is adding commercial banking hubs in only two metro areas this year -- Atlanta and Cleveland. NexTier Bank, a roughly $1.2 billion-asset bank based in Kittanning, PA, is opening a new commercial loan production office in Cleveland. It's NexTier's first foray into Ohio where it will help finance multi-family residential developments in downtown Cleveland.

Another San Francisco firm has chosen Cleveland and Atlanta as its two expansion markets this year. Divvy Homes, a new, tech-based real estate firm, provides creative financing so renters can buy their homes.

Real estate giant Marcus & Millichap's Institutional Property Advisors created a new operation to assist the development of multi-family residential buildings in the Midwest. It didn't locate its IPA Midwest-Multifamily headquarters in Chicago or any of the other major cities in the Midwest. Instead, it chose Cleveland.

More financial institutions opening up commercial loan operations in Cleveland include SunTrust Bank, Sandusky's Civista Bank, and Citizens Bank, one of the largest banks in Northeast Ohio, which acquired Cleveland M&A firm Western Reserve Partners to expand its presence in commercial lending. All of this will help homegrown employers grow.

Everything listed thus far has occurred just in the past year.

From Hingetown (foreground) to Downtown and beyond,
business and public investment in Cleveland is accelerating,
attracting new jobs and residents (Aerial Agents photo).

Also in the past year, many companies have chosen to follow the money here. Some are moving their back-office operations from eastern states, including more expensive locales like the New York City metro area. Most of these don't individually involve large numbers of jobs. But there are many of them which makes the shift all the more organic and sustainable.

"People don't realize Cleveland has a lot of money in it -- who would've thought so, right?" said DynamicVentures LLC CEO Brandon Short in Crain's. Short recently returned to Cleveland from Manhattan.

"But as more and more dust gets kicked up, you're seeing more eyes turned toward Cleveland," Short added. "I think that's part of why you're seeing the deal flow out here."

His story was similar to those of many other capital investors who have either returned, relocated to or expanded in Cleveland in the past year or so. Those stories were outlined in a comprehensive article in Crain's Cleveland Business. Investors said they were drawn, in part, by the city's new image, unleashed upon the nation and the world after the Cleveland Cavaliers won the championship and the Republican National Convention was held here, both in 2016.

One of the largest corporate relocations was actually due to an acquisition. KeyBank acquired First Niagara Bank for $4.1 billion in 2016, quietly making it the nation's 13th largest bank. It has been adding jobs and moving positions from its former Buffalo headquarters to Cleveland -- to both its downtown and Brooklyn locations.

Fund That Flip, a New York City real estate services company, has moved its back-office and sales operations to downtown Cleveland. The company which provides financing to "flip" or redevelop historic homes, is still small as it was founded in 2014. But the company is growing quickly.

"Cleveland offers a broad base of high-quality talent in a much more cost-efficient environment than New York City," said CEO Matt Rodak in Crain's Cleveland Business.

Old and new mix at University Circle, a setting offering
the extent of amenities found in bigger East Coast cities
but without the big prices. It's a big reason why some
are relocating to Cleveland. (UrbanOhio photo)

South Burlington, VT-based regional airline carrier CommutAir announced it is moving its headquarters to the Cleveland suburb of North Olmsted where it already has some sales and back offices. CommutAir, which recently entered into new agreements with United Airlines, expects to triple its operations here by 2020.

Health care technology company CoverMyMeds is bringing hundreds of new jobs to Cleveland after it was acquired last year for $1.1 billion by San Francisco-based McKesson Corp. The firm's software allows physicians issuing prescriptions to quickly check with insurance companies to learn if a patient's medication is covered.

When aggregates company Fairmount Santrol, based in Chardon, merged with Unimin of New Canaan, CT (located in the New York metro area), the board of directors decided to relocate the headquarters of the newly combined company in the Cleveland suburb of Independence. Lower costs and high-quality regional amenities were cited as the reason.

Yet another corporate combination between a New York City-based company and a Cleveland company is benefiting Cleveland. ABM Industries Inc, an international provider of building maintenance and operational services, acquired Cleveland-based GCA Services Group for $1.25 billion. GCA, with 37,000 employees, is a relatively small version of ABM. While ABM's headquarters will remain in the Big Apple, many back-office functions and workers are being relocated to Cleveland to save money.

There are several thousand new jobs coming to Greater Cleveland this year and next with the opening of Amazon's two Fulfillment Centers -- massive distribution hubs for Northeast Ohio's 4 million people. The Fulfillment Centers are taking the places of failed shopping malls in North Randall and Euclid.

Huge Amazon Fulfillment Centers are under construction in
Greater Cleveland. This one, on the site of the former Randall
Park Mall, is farther along. The other is being built where
Euclid Square Mall stood. (Aerial Agents photo)

But there are plenty of homegrown expansions, not the least of which are the 1,300 new jobs that Mayfield Village-based Progressive Insurance plans to fill in Northeast Ohio this year.

The last year saw the acquisition of Valspar Corp. of Minneapolis by Sherwin-Williams Co., founded in Cleveland 152 years ago. While the corporation reorganization and the reassignment of employees is continuing, Sherwin-Williams is expanding its headquarters in Cleveland with hundreds more employees spread among several buildings downtown and at a satellite building on Hinckley Industrial Parkway on the south side. A new headquarters tower downtown to consolidate the offices has been rumored but apparently is not in the company's immediate plans, however.

Tech-startup BoxCast, which delivers high-definition streaming services, outgrew its offices at Burke Lakefront Airport and is moving to Ohio City. There, its new headquarters will add 71 new jobs.

Another is the growth of information technology firm MCPc Inc. It has outgrown its headquarters space on Superior Avenue downtown and is moving to Midtown's Link59 development on Euclid Avenue near East 55th Street. Perhaps just as exciting, it bought the Greater Cleveland Regional Transit Authority's 117,000-square-foot bus garage in Cleveland's Old Brooklyn neighborhood. MCPc will redevelop it into an electronics recycling hub, adding 150 jobs.

There are many more success stories like these happening throughout Greater Cleveland or are about to. Many of them are following the money by either directly relocating jobs to Cleveland or are causing people to relocate to the metro area in search of affordable opportunities. Cleveland has the infrastructure and amenities of cities with far larger populations and costs of living.

The reason is because Cleveland had a far larger population not long ago. Yet even after it shrank, Cleveland maintained and improved its world-class museums, orchestra, sports, theater district, libraries, Federal Reserve Bank, city/metro/state/national parks, ethnic cultural offerings, restaurant scene and more. Those things are helping the city reshape its industrial past into a new, more diverse future. Based on the out-of-state license plates and other indicators, people elsewhere are noticing.

END

Could the Western Reserve return to Connecticut, please?

Today's Northeast Ohio was part of a state 15 years before it
was recast into the state of Ohio. It became so through an odd
 process that was at best ambiguous and at worst illegal as no
public vote was held by citizens of the state of Connecticut
to shed its Western Reserve. (CLICK TO ENLARGE)

No one in Cleveland or Akron or Ashtabula complains to or congratulates Connecticut Governor Dannel Malloy. No one in Warren, Medina or Sandusky cares if U.S. Senator Chris Murphy should be re-elected in 2018. There is no sharing of state offices between Cleveland and Hartford and thus, only one direct flight between Cleveland Hopkins and Hartford Bradley. And we sure don't call ourselves the Nutmeg State, or even the exclave of same.

Perhaps we should have been. For more than 200 years, people living in cities like Cleveland, Akron, Ashtabula, Warren, northern Youngstown, Medina, Lorain, Elyria, Norwalk, Sandusky and Put-In-Bay have lived in the state of Ohio. What if Connecticut relinquished these lands, called the Connecticut Western Reserve or New Connecticut without following proper procedure?

There is no question that Northeast Ohio is different from the rest of the Ohio. Its politics are more liberal. It's more urban. Its culture is faster-paced than the rest of Ohio. Its architecture is different, with old and modern buildings alike copying the white-trimmed, brick, colonial structures 400 miles farther east.

"If you drive through the area of Ohio still called the Western Reserve today, you will find towns named Norwich, Saybrook, New London, Litchfield, Mansfield, and Plymouth," wrote Barbara Austen, the Florence S. Marcy Crofut Archivist at the Connecticut Historical Society. "Many of these communities have a town green or square and the ubiquitous white-steepled church common to Connecticut."

Built in the early 1800s, Western Reserve Academy in Hudson,
Ohio was called the "Yale of the West." Its architecture is straight
of out of Connecticut too, featuring white-steepled churches,
white trim on light-brick buildings, and all surrounding a public
commons of greenspace. Many towns in the 5,280-square-mile
Western Reserve were built with the same land use theme.

There is also no question that Connecticut removed all public governance over this 3,366,921 acres (5,280 square miles) in 1795 without a vote by the citizens of its state -- including in the Western Reserve. This great expanse of land was left in limbo, perhaps illegally. Connecticut's haste in ridding itself of its Western Reserve was due to its desperate need of money.

In 1787, four years after the Revolutionary War officially ended, states began entering the United States of America. But some eastern states originally were much larger than they are today. For example, Georgia (entered USA in 1788), Virginia (1788) and North Carolina (1789) extended west all the way to the Mississippi River. New states were carved from their western expanses, including Kentucky (1792), Tennessee (1796), Mississippi (1817), Alabama (1819) and West Virginia (1863). All of the eastern states handed over governance of their western lands either to another, new state or to the federal government and they did so either by a vote of the state legislature, Congress, the people in the western lands -- or all three.

Connecticut was the exception. As a British colony, its land rights included a 70-mile-wide strip north of latitude 41 across what is now northern Pennsylvania, northern Ohio and beyond. This 1662 Charter of Conveyance by King Charles II theoretically extended across uncharted lands to the Pacific Ocean. It was considered a "sea to sea" charter. This document, called the Charter Oak, was deemed to be so valuable that it was hidden in 1685 inside a 1,000-year-old white oak tree in Hartford during a fierce dispute with King James II over the revocation of royal charters that allowed the colonies to govern themselves. Its value didn't last.

Two years before it entered the USA as a state on Jan. 9, 1788, Connecticut gave up all of its western land to the federal government in exchange for wiping its Revolutionary War debts clean. But it didn't give up its Western Reserve. Connecticut’s claim to all other western lands was ceded to the Unites States by a deed dated September 13, 1786 and signed for the state by its delegates in Congress.

Despite being a part of Ohio for 23 years already, the makers
of this 1826 map fondly recalled the Connecticut Western
Reserve in great detail, including its towns, roads and history.
CLICK it to view the map in a larger, more detailed format.

This instrument conveyed to the United States: "All right, title, interest, jurisdiction and claim which the said State of Connecticut hath in and to certain western lands (all lands lying west of a line beginning at the completion of the forty-first degree of north latitude, 120 miles west of the western boundary of Pennsylvania and from thence by a line drawn north parallel to and 120 miles west of the said west line of Pennsylvania and to continue north until it comes to 42o 02' north latitude.)" 

So when Old Connecticut became a state, so did the Western Reserve, also known as New Connecticut. The Western Reserve enjoyed sovereign jurisdiction, including legal and military protections, as part of the state of Connecticut. It was also granted those by its new nation. The frontier wilderness that today is heavily urbanized by 3.3 million people was a part of the state of Connecticut for seven years.

How did it cease being a state? At best, ambiguously. At worst, illegally.

The reason, as one might expect, was due to money. Like other former colonies, Connecticut relinquished its western claims (except the Western Reserve) to the federal government to wipe clean its debt from the Revolutionary War. Connecticut also needed cash to rebuild after the war.

The British had burned many of Connecticut's cities and towns and, with them, its schools and universities. If this fledgling state was going to survive and grow again, it needed an educated populace. So it sold for $1.2 million the eastern 2.867 million acres of the Western Reserve to the Connecticut Land Company, newly formed by 35 investors. The western portion remained with Connecticut and, after 1792, was offered to suffering citizens who were burned out of their homes and businesses by the British. That western portion, measuring 500,000 acres, was appropriately named The Firelands.

By selling the Western Reserve to the Connecticut Land Co. in 1795, Connecticut ceased to govern the land. It was no longer a state. No one else governed it either. Most of it wasn't even Indian land as the Treaty of Greenville extinguished Indian rights to land east of the Cuyahoga River in 1795. The land remained in limbo until 1800 when the federal government absorbed the former Western Reserve into the Northwest Territory which had covered the rest of the Ohio Country as well as today's Indiana, Illinois, Michigan, Wisconsin and part of Minnesota since 1787.

Connecticut did not amend its state Constitution or pass any statutes to cede the Western Reserve. It relinquished governance of this area, larger than Connecticut and Rhode Island combined, by deed.

After the original Connecticut Land Co. failed in 1809, a new
one was formed and established this land office in 1817 on
East Main Street (Ohio Route 84) in Unionville, Ohio, in Lake
County east of Cleveland. Note the text in the decorative oval. 

"The (Connecticut Land) company issued to the state of Connecticut a mortgage on the land as security for the purchase price. From time to time as payments were made on this obligation, the state gave its deed of release and discharged the mortgage. Copies of such deeds are still on hand in the Recorder’s office in Cleveland," according to the Web site of the Cuyahoga County Fiscal Officer.

No legal documents mentioned inclusion of the Western Reserve in the Northwest Territory until a year after Connecticut sold it, according to The Corporate Birth and Growth of the City of Cleveland: An Address to the Early Settlers' Association of Cleveland, Delivered July 22nd, 1884 by S.O. Griswold.

Settlers were reluctant to purchase Connecticut Land Co. properties because the title to the land and the right to govern it were unclear, according to Case Western Reserve University historical records. Settlers did not recognize the authority of the governor of the Northwest Territory while Connecticut refused company pleas that the state exercise the territorial rights it had already ceded.

This "ambiguity" lasted until 1800 when Congress passed the Quieting Act. In it, the U.S. restored Connecticut's claim to the Western Reserve so that the company's land titles would be quieted and guaranteed. Connecticut then granted the U.S. jurisdiction over the Western Reserve on July 10, 1800. The Western Reserve became a sprawling Trumbull County, seated at Warren, and a part of the Northwest Territory. 

Although the Connecticut Western Reserve was extinguished
in the Quieting Act of 1800, its legacy remains in this 1802
map of Ohio in the Northwest Territory. This may have been
the last map before the creation of the state of Ohio in 1803.

But the Western Reserve was in fact a state or, more accurately, part of a state. Its cessation as a state and reversion to territorial status was done without a popular vote. It's true that the Constitution gives Congress power to determine the process for creating states out of lands that were U.S. territories.

"The Congress shall have power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States…" — U.S. Constitution, Article IV, Section 3, clause 2.

The Constitution and federal statutes are silent on how a region loses its status as a state.

"As far as I can tell, the only way that a state can cease to exist is for that state to adopt, according to its own law, a binding resolution that it has ceased to exist," wrote Forbes journalist Kelly Kinkade at quote.com. "As far as I know, this would require the State to adopt an amendment to its Constitution, as no State has any provision for declaring its own dissolution within its present Constitution."

So, logic suggests that for a region to lose statehood, it would have to undergo the same process of territories seeking statehood -- only in reverse. Historically, Congress has applied the following general procedure when granting territories statehood:

• The territory holds a referendum vote to determine the people's desire for or against statehood.
• Should a majority vote to seek statehood, the territory petitions the U.S. Congress for statehood.
• The territory, if it has not already done so, is required to adopt a form of government and constitution that are in compliance with the U.S. Constitution.
• The U.S. Congress — both House and Senate — pass, by a simple majority vote, a joint resolution accepting the territory as a state.
• The President of the United States signs the joint resolution and the territory is acknowledged as a U.S. state.

The Western Reserve was absorbed into the state of Ohio in 1803 and the Connecticut Land Co. was finally dissolved in 1809 as a financial failure. But is Connecticut's cessation of governance what the citizens and investors of the Western Reserve wanted?

Architecture and history aren't the only differences between
Northeast Ohio and the rest of the state. It's electorate is more
balanced among Democrats (blue districts) and Republicans
(red districts). It's another legacy from the Western Reserve's
Connecticut origins that remains more than 200 years later.

One could argue that, following successful litigation, the former lands of the Connecticut Western Reserve should revert to the governance of its eastern counterpart so that it could be properly ceded to an interested governing authority. If no popular vote is taken, the Western Reserve should remain a part of Connecticut until people in the enclave of Connecticut and in the exclave of the Western Reserve both say otherwise. Or, perhaps a vote should be taken in both old and new Connecticut to determine the wishes of its electorate?

The key here is "an interested governing authority." Earlier this year, the Cleveland Plain Dealer argued in a series of articles, driven in part by humor but also by serious concern, that red-state Ohio is disinterested in providing governmental services and investment in the more liberal, urbanized lands of the Western Reserve. The PD postulated what the Western Reserve would look like as a separate state.

But no additional state is necessary if the ambiguities if not illegalities outlined in this blog means that the Western Reserve should revert to Connecticut. It would become part of Connecticut again and governed by its Governor, state legislature (without gerrymandering) and two U.S. Senators. Our Congresspersons would likely remain, but again without all of the Republican gerrymandering to divide up and weaken Democratic constituencies.

Might Connecticut be interested in having the Western Reserve back? Possibly, since it would nearly double the state's population and give it a larger Congressional voting block with at least three more Congresspersons. But it would be a bit difficult to govern since the Western Reserve and Connecticut are separated by two states and 400 miles. Then again, these aren't the early days of the Republic when small states were favored to make access by horse-power to state capitals easier. One can fly back and forth between the Western Reserve and Connecticut at 500 mph.

The Western Reserve might also be interested in having Connecticut govern it again. After years of losing population, Connecticut is engaged in an aggressive urban redevelopment strategy to attract creative young people, boost investment in older urban cores, as well as revitalize public transportation to improve job access for all. These are all things that Ohio is neglecting in its governance of the urbanized Western Reserve.

The Quieting Act probably resolved the fate of the Western Reserve to the satisfaction of Congress. But shouldn't a state's citizens have the right to vote on whether it will no longer be a state? If not, who wants to file a lawsuit to test this theory?
__________________

APPENDIX

Here are the 14 Ohio counties (or parts thereof) which are part of the former Western Reserve and their 2016 populations:

Ashtabula - 98,231
Ashland (northern 1/6th) - 8,942
Cuyahoga - 1,249,352
Erie - 75,107
Geauga - 94,060 
Huron - 58,439
Lake - 228,614
Lorain - 306,365
Mahoning (northern half) - 130,004
Medina - 177,221
Ottawa (eastern 1/6th - 6,773
Portage - 161,921
Summit - (northern 5/6th) 535,798
Trumbull - 201,825
---------
3,332,652 TOTAL WESTERN RESERVE 2016

END

Downtown Cleveland's next big building may surprise

The existing Cleveland Police headquarters at 1300 Ontario St.
is an eight-story structure with large floorplates. The police HQ
needs to move to a new site, as does a police garage/storage and
employee/public parking. Such a large structure(s), measuring
more than 500,000 square feet, may require new construction
downtown. And given recent events, that may be exactly
what's being considered by the public and private sectors.

Among three or four residential towers and a new skyscraper for a Fortune 500 headquarters, the next big building to rise in downtown Cleveland may surprise many. It grew out of a learning process by city officials that downtown didn't have more than 500,000 square feet of office and garage space ready-made for the needs of its police department. And a single real estate company holds the key to making a new building happen.

Early in spring 2017, the city agreed to sell to Cuyahoga County its police HQ and garage (for police and visitor's vehicles) at 1300 Ontario St. for $9.25 million. The county wanted to move departments (adult probation, corrections planning, substance abuse and other programs) from the Marion Building, 1276 W. 3rd St., to a vacated police HQ by Oct. 31. The reason is the county sold the Marion Building to Weston Inc. The 1913-built, seven-story, 100,000-square-foot building is ideal for conversion to housing using historic tax credits.

The county had hoped to move out of the Marion Building by Oct. 31 when its lease with Weston expires. So it pushed the city to find a new home for its police HQ and garage. The city issued a request for proposals last spring, hoping that owners of downtown buildings would jump at the chance to land a huge tenant like the Cleveland Police Department. But none could meet the city's requirements, including:

• Both facilities located east of the Cuyahoga River, west of East 55th Street and north of I-490;
• 180,000 square feet of office space for HQ operations;
• 115,000 square feet of separate space for storage, garage and supportive offices;
• Secure parking for 400 passenger cars separate from public parking (equal to a 160,000-square-foot parking garage);
• Private elevators and secured stairwells if multiple floors in a shared building;
• Ability to separate staff from the public portions of the operations;
• Ability to install high-technology and work in an efficient, high-quality, healthy environment;
• Occupancy by Dec. 31, 2017 or March 31, 2018 at the latest.

Those were the requirements. Its preferences were to find leased space for up to 20 years near the municipal and county courts as well as the city's Emergency Operations Center at the Justice Center. It also preferred lots of public parking, flexible office floor plans, plus back-up communications, power, water and heating systems. And if both the HQ and garage/storage could be co-located, so much the better.

Some real estate market observers speculated that the 55 Public Square building across St. Clair Avenue from the police HQ was the city's preferred site, but neither side could make that building fit the city's needs. In fact, no existing building did in the timeframe the city specified. So the city ended up hiring Colliers International to help it find a new police HQ and garage.

Weston graciously extended the county's lease at the Marion Building, even though it slows and complicates Weston's plans for converting the building into residential. The county has agreed to shift its offices to the lower floors while Weston rehabilitates the building's upper floors. The city, having already sold its police HQ, subsequently extended its stay at its current location for at least another two years for $1 per year.

The irony and coincidence in all of this is remarkable. Weston controls the clock for this game of real estate hop-scotch. Of course Weston was happy to extend the county's lease at its Marion Building. Why?

The reason is because the site that could best meet the city's requirements for a new, consolidated police HQ and storage/garage is at the NE corner of the Weston-owned Superblock in the Warehouse District, bounded by West 3rd, St. Clair, West 6th Street and Superior Avenue. The city's two-year-plus lease extension (in turn enabled by the county's extended lease at the Marion Building) buys Weston the time to develop a great proposal to the city.

Weston Inc. and Citymark Capital plan a massive development
of offices, residential and possibly a hotel on the Warehouse
District's Superblock, now just surface parking lots. This is a
view from the northwest of the Superblock masterplan. The
Justice Center complex is just out of view to the left.

What makes it so great? It can meet all of city's the requirements AND all of its preferences for a new, consolidated police HQ, garage, storage and parking facility. All of those features taken together require a structure of some 535,000 square feet (180,000-sf police HQ, 115,000-sf police garage/storage/office, 160,000-sf employee parking, and roughly 80,000-sf public parking). At $200 per square foot, a new building of this scale could cost $107 million, although given the building's need for extra security and communications technology, a higher cost wouldn't be surprising.

Guess what? The city already has most of the money to afford a new-build, consolidated police HQ-storage facility. Consider that the city now has $9.25 million from the sale of its police HQ and will save $5.1 million per year by closing the downtown municipal jail and paying the county to house its prisoners. That $9.25 million can be part of the upfront lease payment to a private developer (like Weston) to construct the building, with payments of $5 million per year over a term of 20 years, which is what the city is willing to do, per its RFP (noted above).

With separated public parking and employee parking/storage, a garage with up to 50,000 square feet per level is reasonable. That might mean that the parking structure could be about 6-7 stories tall. An ideal floorplate for offices for efficient heating, cooling and natural lighting is between 25,000 and 30,000 square feet. With about 200,000 square feet of offices for the HQ and storage administration, that would involve an office structure about 7-8 stories tall. If the offices were built atop the parking structure, the consolidated police HQ/storage/parking could measure about 15 stories high.

Site plan for the Weston/Citymark Superblock.
An ideal location for the consolidated Cleveland
Police HQ/storage/parking structure could be at
the northeast corner of the site (circled), closest
to the existing Justice Center complex.

The other benefit of building this structure on the NE corner of the Weston Superblock is that it could jump-start development on the rest of the Superblock. If the city expanded its public parking structure so it could also create a pedestal for another tower (ala 515 Euclid serving as a pedestal for The Beacon apartment tower), it could spur further Superblock development as Weston has envisioned.

Or, the consolidated police HQ/storage/parking could even set the stage for relocating the entire Justice Center complex to the Superblock, possibly in a trade with Weston to redevelop the old 26-story Justice Center tower and demolishing the jails for redevelopment or green space.

Who would have thought a consolidated police HQ facility could be so catalytic for downtown Cleveland's continued development? Based on circumstantial evidence, it appears that Weston did.

END

Zombies say: start building a downtown Cleveland office tower soon

Based on market trends, including a big chunk of zombie
office space, it's time to build a large amount of new office
inventory in downtown Cleveland. The new inventory could
be anchored by a major tenant such as with the $450 million,
1.1 million-square-foot, 32-story Northwestern Mutual Life
tower now  under construction in downtown Milwaukee.
(PHOTO: Milwaukee Business News)

In the movies, zombies can't put two words together. In Cleveland real estate development, they are sharing a subtle yet compelling message of encouragement.

Zombies in downtown Cleveland are former office buildings awaiting renovation with significant portions of them due to be converted to non-office uses, usually residential and occasionally hotel. Some of them will retain some office uses. But the portion of these buildings due to be converted is the zombie portion. It's a zombie because it's no longer being marketed as an office property. It's dead as an office building, but won't be demolished. It's coming back to life.

So what are these zombies saying? "Start building a large amount of new office inventory in downtown Cleveland."

Why? Because the rule of thumb in real estate development is that, when an office market's vacancy drops below 10 percent and rents are rising, it can support a speculative new office building.

Downtown Cleveland (referred to as the Central Business District or "CBD" in real estate reports) in 2017 has more than 19 million square feet of office space, according to major real estate firms Colliers International and Newmark Grubb Knight Frank (NGKF). That 19+ million square feet is the total among all office classes -- Class A (highest quality spaces with above-average rents), Class B (average office space with average rents) and Class C (lowest quality spaces with below-average rents).

By the way, the Cleveland CBD office inventory exceeds the total suburban office inventory of 17 million square feet, a fact that many people may not realize.

NGKF Vice Chairman Terry Coyne said the zombie office inventory in the CBD is huge, measuring more than 1.28 million square feet, with 827,553 square feet in Class B and 452,692 in Class C. Downtown Cleveland’s zombie properties include some or all space within each of the following:

• Standard Building
• Leader Building
• 75 Public Square
• Garfield Building
• Halle Building
• Former Cleveland Athletic Club
• 925 Euclid Avenue
• Superior Lofts
• Tower at Erieview
• Terminal Tower
• 3101 Euclid Avenue

"Zombie space adversely impacts the vacancy rate of the Class B and Class C CBD markets," Coyne wrote in a recent document he calls his Zombie Placemat. "The amount of vacant and available space in the CBD is overstated when the zombie properties are included."

The Class B CBD market has 24 percent vacancy. But when the zombie property space is removed from the data, the Class B vacancy rate declines to 18.2 percent. Similarly, Class C CBD market vacancy drops from 22.4 percent to 15.4 percent when the zombie properties are removed, the report notes.

And when figured into the total downtown office inventory -- including all three classes -- the overall CBD market vacancy drops from 17.5 percent to 12.6 percent.

NGKF wrote in its most recent report that, year over year, the overall Cleveland (CBD and suburban) "office market vacancy was down a hefty 140 basis points from 17.8 percent in second-quarter 2016. In fact, second-quarter 2017's 16.4 percent vacancy rate marked the lowest vacancy percentage the office market has seen since third-quarter 2001, when it dipped to 15.6 percent."

Furthermore, NGKF notes the CBD once again paced the market in terms of rental rate, both in terms of increases and highest rent. In the Greater Cleveland market, average asking rent rose $0.18 per square foot from $17.88/SF in first-quarter 2017 to $18.06/SF. Downtown, the average rent now sits at $19.20/SF, up $0.37/SF from first-quarter 2017. The Class A average asking rent in the CBD increased by $0.50/SF, coming in at $22.50/SF.

If the office market continues to support growing rents and available space tightens at current rates, CBD vacancy could drop to or below 10 percent in just two years. Considering it takes 18-24 months to build a significant new office building in downtown Cleveland, now would be a good time for a real estate developer or two to get a project or two rolling.

END