Downtown-lakefront land bridge has momentum, funding

Lake Erie Plaza was a wide pedestrian bridge lined with statues
and vendor spaces over the lakefront railroad tracks. But it was
built for the Great Lakes Exposition of 1936-37 and dismantled
soon thereafter. A land bridge of similar design or even wider
may be sought by city officials and others to link the downtown
malls and North Coast Harbor including its museums, new
development and a long-planned transportation center (PD file).
CLICK IMAGES TO ENLARGE

If the city has its way, a $65 million land bridge linking Downtown Cleveland's malls to the lakefront could soon be the centerpiece of a multi-faceted plan to enhance the area around North Coast Harbor. Developments surrounding the proposed land bridge include expansion of the Rock & Roll Hall of Fame, Great Lakes Science Center, Cumberland Real Estate Development's next phases as well as a multi-modal transportation center.

The City of Cleveland has $25 million in city, county and state funds left over from an earlier plan to link downtown and the lakefront with a flamboyant, curving, skinny and ribbon-like pedestrian bridge designed by "starchitect" Miguel Rosales. The bridge's cost had ballooned to $33 million. Instead, the Cleveland Economic Development Department is pursuing a land bridge envisioned more like the statue-festooned and storefront-lined promenade that linked downtown to the Great Lakes Exhibition of 1936-37. In fact, the land bridge could be even wider -- as wide as the malls themselves. City officials seem confident they can get it built by 2022.

To do so, the city is seeking another $40 million from a variety of public and private sources. The land bridge, also dubbed "Mall D," would replace the now-closed pedestrian bridge that has connected Mall C (above the Huntington Convention Center, north of Lakeside Avenue) with First Energy Stadium and Cleveland Municipal Stadium before it.

Because of this connection, the Cleveland Browns are reportedly contributing funding to the land bridge and possibly to a partnership with Cumberland's lakefront development plans. The amount or conditions aren't yet known and the Browns aren't revealing anything yet. So far, Cumberland has built on the lakefront the two-story Nuevo Modern Mexican & Tequila Bar restaurant and the three-story, 16-unit Harbor Verandas apartment building at the foot of East 9th Street.

Cumberland Development's Harbor Verandas apartments over
retail are the latest phase of lakefront investments to turn North
Coast Harbor into more of a year-round setting (KJP).

Next phases for Cumberland and its partner Trammel Crow apparently include redeveloping two former Port of Cleveland warehouses into shops and restaurants. Full build-out shows 1,000 apartments, 80,000+ square feet of offices and 50,000 square feet of retail space. It also reportedly involves partnering with the Rock & Roll Hall of Fame and the Great Lakes Science Center on proposed museum expansions that would, among other things, connect their buildings with an enclosed, climate-controlled walkway.

Additionally, the latest of many iterations of a Lakefront Multi-Modal Transportation Center is part of the land bridge plan, sources said. The transportation center would unite Greyhound buses, Amtrak trains, Greater Cleveland Regional Transit Authority (GCRTA) buses and trains and possibly other regional transit agency buses.

Looking east toward East 9th Street from near the Amtrak train
station, and possibly from below where a new land bridge/Mall D
could be built, the Greyhound bus station portion of the planned
Lakefront Multi-Modal Transportation Center is seen. The Shore-
way is to the left and the rail tracks are to the right (CPC).

The 700,000+ combined annual passenger boardings (includes an anticipated 20 percent boost thanks to more convenient transfers between trains and buses) at this hub in downtown Cleveland would, for context, exceed the 619,000 enplanements at Akron-Canton Regional Airport in 2017. It would also exceed the attendance of 526,000 people at Cleveland Browns home games last year. With that kind of 24-hour, 365-days foot traffic, it could certainly attract a cafe, newsstand and possibly a convenience store that would also be supported by existing and planned lakefront tourism, housing and maybe a hotel.

The most recent plan has a refurbished Amtrak station and new Greyhound station built along and south of the Shoreway. The Greyhound station was assumed to be built in such a manner so that it could support a small building built above it, such as for a hotel, offices or residential. The transportation center at full build-out is estimated to cost less than $70 million. The Northeast Ohio Areawide Coordinating Agency, which oversees federal transportation spending in Greater Cleveland, has included the Lakefront Multi-Modal Transportation Center in its current funding priorities.

The city's most recent plan for a Lakefront Multi-Modal
Transportation Center with a possible location for the newly
proposed land-bridge/Mall D concept added (CPC/KJP).

In 1998, one of the most exciting variations of the lakefront multimodal transportation center was proposed (See the 1998 plan's Executive Summary here). Called the North Coast Transportation Center, it featured an enclosed station over the Norfolk Southern/Amtrak and GCRTA tracks plus a roadway for buses with a green roof that was nearly as wide as Mall C to the south. It could even feature meeting spaces to expand the convention center. In other words, it would provide indoor and outdoor pedestrian linkages between the central business district and North Coast Harbor.

Other transportation linkages are possible with this site. For example, the public transit advocacy group All Aboard Ohio has proposed a waterside terminal in Cleveland (possibly in the harbor) where high-speed catamarans could take passengers to Port Stanley or Shrewsbury to board Ontario's planned high-speed trains and be in downtown Toronto in less than four hours.

The 1998 plan for the North Coast Transportation Center that
would also feature a green roof and thus serve as Mall D over
the tracks and end at a boulevard that would have replaced
the Shoreway highway. A new lakefront hotel and parking
garage was also envisioned in this amazing plan (GCRTA).

Realizing the 1998 transportation center plan would cost about $200 million in today's dollars. But the $25 million already in hand could be used to fund the design/engineering and environment approvals. Then the city would be in a position to apply for and secure a no-match federal Railroad Rehabilitation & Improvement Financing loan (for which there is still $29 billion in direct loan authority remaining) to pay the entire cost of a transportation center. A $200 million loan would cost the city about $10 million per year. By the way, the $10 million per year to service debt that built First Energy Stadium in 1999 ends in 2028.

"Seems like a no-brainer" to debt-finance the land bridge incorporated with a transportation center, said one planner involved with the city's lakefront projects who spoke off the record. "But everyone is waiting around for a grant. We need to just do it and pay it back over time."

END

Ten million square feet of downtown Cleveland construction

More than 4 million square feet of
development projects were recently
completed, are underway or about to
begin along Euclid Avenue in down-
town Cleveland. But that may be just
the appetizer for what's next. (KJP)
CLICK IMAGES TO ENLARGE

What if I told you that Downtown Cleveland could soon have more than six million square feet of buildings under construction at the same time? What if I told you downtown already has four million square feet of construction underway or about to begin? Yes, 10 million square feet total.

First, the second question. Here's a quick summary of current projects to add residential space only along Euclid Avenue and only between Public Square and Playhouse Square. In some cases, where the building is being completely rehabbed, I'm including the total square footage of the building which may include some ground-floor retail space or some co-working spaces. I'm not including all of the space in the Halle's and Terminal Tower buildings for example, because roughly half of each will not be touched by renovations and therefore is not subject to the construction investment.

May Company........800,000
Centennial/925....1,360,000
Euclid Grand..........308,000
Athlon/CAC............225,000
Beacon...................300,000
Lumen....................602,000
Halle Building.........200,000
Terminal Tower.......340,000

TOTAL.................4,060,000 square feet

There has been some publicity recently about how many construction cranes dot the skylines of America's largest cities. Cleveland counts only one tower crane currently up -- for The Lumen 34-story apartment tower at Playhouse Square. It went up shortly before the tower crane for The Beacon 28-story apartment tower came down last fall. Another will go up soon for the Church & State development now underway on Detroit Avenue at West 29th Street. This doesn't include the many shorter cranes positioned around the Quicken Loans Arena expansion.

Downtown Cleveland's many underutilized, obsolete commercial buildings can be renovated and repurposed for less cost than building new towers that would require construction cranes. All those old buildings have been or are filling up with residents to satisfy the still-insatiable demand for housing in our urban core.

Among 37 downtown Cleveland residential buildings 100 feet or taller, 21 of those became or are becoming residential since 2010, 27 of 37 since 2000, and 31 of 37 since 1995. Downtown has seven 20+ story residential developments completed or underway since 2006 with two more in advanced stages of planning. That's nine total. Only three 20+ story residential buildings were developed in downtown Cleveland before 2006 -- all from 1967-73. How many of 20+ story downtown residential developments since 2006 involved a construction crane? Two.

Downtown Cleveland, as seen from Voinovich Park at North
Coast Harbor in summer 2018 (KJP).

More are coming, however. The unmet demand for housing amounts to 6,800 residential units by 2030, which would equal another 21 Lumen-sized apartment towers to meet that demand. Cleveland's suddenly robust job growth and near-exhaustion of the supply of obsolete commercial buildings is timely. It coincides with new financial tools like the Opportunity Zone tax breaks or the fact that real estate investment trusts are willing to take lower, longer-term returns. These changes bode well for meeting the residential demand with new construction as the supply of obsolete, convertible commercial buildings runs dry.

So when someone says it's a bummer that Cleveland doesn't have more construction cranes dotting our skyline, we probably would have them if we didn't already have so much obsolete, lower-cost commercial space available for conversion to meet the demand for residential.

Now, the first question. What might the six million square feet of new construction involve? Right now, we're looking at a much more feasible, scaled-down but still massive nuCLEus development, potentially measuring 2 million square feet of offices, residential, retail and parking.

A preliminary massing for Stark Enterprises' scaled-down
nuCLEus development between Prospect and Huron at
East 4th Street. Plans are still being finalized (Stark).

In the last two years, Stark Enterprises tried to initiate two innovative financing schemes to provide additional public funding to his original, $500+ million plan for nuCLEus. Those schemes suggest that Stark had a $50 million to $100 million gap in his capital stack for nuCLEus. In other words, Stark Enterprises was able to amass upwards of $400 million of capital for the project. At current construction prices, the revised design for nuCLEus could cost as little as $350 million. If so, it's possible that Stark may have enough capital to move forward with this new, smaller plan.

What's next? It's possible that another 4 million square feet of downtown development could be in the cards and, at their rates of apparent progress, they could both see construction at roughly the same time.

In talking to city officials and consultants hired by Sherwin Williams, the Fortune 500 company was ready to move forward in 2016 with a new 900,000-square-foot headquarters tower on the Jacobs Group-owned parking lot on Public Square. The global coatings company was quickly outgrowing its 86-year-old headquarters in the Landmark Building on lower Prospect Avenue.

Then, Sherwin Williams saw an opportunity to build its market share and revenue by acquiring rival coatings firm Valspar for $11.3 billion. All planning for the new HQ was put on hold. The Valspar acquisition was approved by various governments around the world in 2017, and all of the legal work and internal reorganization was wrapped up by mid-2018.

To accommodate the year-over-year growth of 615 new jobs
in Greater Cleveland, Sherwin Williams added a fourth office
building to its local inventory, on Hinckley Industrial Parkway
in Cleveland. This came two years after the coatings giant
shelved plans for building a new consolidated headquarters
tower on Public Square in downtown Cleveland (LoopNet).

But Sherwin Williams is now carrying more than four times the average debt that the rest of the coatings industry was carrying. At current trendlines, it could take the coatings giant until the end of 2022 before its debt-to-equity reaches levels more typical of its competitors.

But with 615 additional employees now spread across four office locations in Greater Cleveland in 2018 compared to a year earlier, Sherwin Williams has more of a need for a consolidated headquarters tower than ever before. And it needs to be an even larger headquarters than the one it planned in 2014-16. It is likely to be 1 million square feet or even larger so it can accommodate future growth of the company.

Sherwin Williams isn't going to take on new debt from constructing or long-term leasing a new headquarters, possibly costing $1 billion, until it pays down the Valspar debt. But it might revisit planning for a new headquarters before the Valspar debt is paid down to a reasonable level. At its current rate of paying down long-term debt, and considering that the design and construction of a skyscraper takes three to four years, we might start hearing more substantial rumblings from Sherwin Williams about a new headquarters in about a year.

The existing Justice Center, including the courts tower (center-
left) and jail (part of which is visible in the foreground) is a
massive complex at 2.3 million square feet. Its replacement
will likely be even larger, perhaps up to 3 million square
feet and built at separate locations (Google).

That project could also coincide with what may be the largest single real estate construction project since the Cleveland Union Terminal complex and associated rail rights of ways were built in the late 1920s and early 1930s. All signs are pointing to the county building a new Justice Center consolidated courts tower and a regional jail complex rather than rebuilding its existing center.

The reason is that the existing facility, despite measuring 2.3 million square feet, is too small for Cuyahoga County's vision. Its goal is to regionalize all municipal courts and jails, thereby eliminating duplicative functions and saving taxpayers money. It's quite possible that a consolidated courts tower and regional jail complex would add up to 3 million square feet, including parking.

That doesn't mean that both facilities would be under one roof as they are now or even across the street from each other. The county hired Project Management Consultants to present alternatives, ranging from reconstructing the existing Justice Center courts tower and/or jail facilities to building new in adjacent sites or separated by miles. The consultant began their work in early 2018 and must wrap it up by Jan. 31, 2020. Their to-do list includes developing build/rebuild specifications for a possible request for proposals from developers.

If the county does favor new construction for both the courts tower and jail complex, the cost could be more than $1 billion. According to a 2014 report by Cleveland-based Osborn Engineering Co., maintaining the 26-story court tower, central atrium, the two 11-story jails, the city's seven-story police headquarters (now leased for county probation offices) and 432,500 square feet of underground parking over the next 10 years would cost nearly $179 million.

Leasing a new courts tower and jail, as the county does with its administration building, could cost upwards of $75 million per year. And, as with its administration building, the county could buy a new courts tower and jail for $1 at the conclusion of the lease.

One option proposed about a decade ago was the construction
of a new courts tower and jail tower built over a parking deck
and transit center along Superior Avenue, between West 3rd
and West 6th streets in the Warehouse District (GCRTA).

County officials have prioritized keeping a consolidated courts tower downtown because of its central location, accessibility by public transportation and car, the presence of many restaurants for workers, visitors and juries, and the proximity of offices for attorneys/public defenders, bail bondsmen, social services and other support services.

A location that might make sense for a 30-story consolidated municipal and county courts tower is on the Weston-owned parking lots on Superior Avenue at West 3rd Street, one block west of Public Square. It is also right next to the Public Square lot where Sherwin Williams planned to build its headquarters tower and might revisit that site again.

Where might the new regional jail be put? Anywhere in or near downtown is a logical guess. But if a new regional jail isn't built next to a new courts tower, look for a jail facility for unsentenced inmates to be included inside the courts tower so that the accused and their attorneys can have proximate access to each other. The consolidated jail would offer 200 more beds than the existing jail. It will be a massive complex, measuring more than 1 million square feet.

In 2026, just seven short years from now, the Justice Center will be 50 years old. By that time, it may already be vacated. And as part of a request for proposals, the winning developer may get the keys to that complex, perhaps at a vastly reduced price, to do with it what they will. Given its age by then, the building would qualify for historic tax credits to reduce its cost of redevelopment. And given the building's rapidly decaying condition, its redevelopment will have to be extensive.

END

Old Westinghouse plant may soon be in developer's hands

The former Westinghouse plant near Edgewater Park is
sought by a real estate developer that specializes in
renovating and converting historic factories into
residential properties (CLICK TO ENLARGE)

One of the most visible historic factories in Cleveland may soon be in the hands of a developer that has a proven track record of restoring such buildings.

The former Westinghouse Electric and Manufacturing Co. at 1200 W. 58th St. near Gordon Square in the Detroit-Shoreway neighborhood is best known for its eight-story structure towering over the Westinghouse Curve of the West Shoreway (aka State Route 2) near Edgewater Park. Or, perhaps you recall the Black Widow interrogation scene from the 2012 Avengers movie that was filmed here.

On Jan. 22, a Certificate of Disclosure was filed with the city regarding Sustainable Community Associates' purchase of the 3.62-acre property from Paramount-Breakwater Properties LLC, according to the city's Division of Records. Certificates of Disclosure must be processed by the city prior to a property transfer taking effect. The certificate was processed Jan. 25.

Motorists on the West Shoreway (State Route 2) know the old
Westinghouse plant well. It towers over the highway and the
Norfolk Southern Railroad tracks just west of Whiskey Island.

Considering the sale hasn't taken effect, Josh Rosen, one of three partners in Sustainable Community Associates with Naomi Sabel and Ben Ezinga, couldn't comment on his company's interest in the property.

"I am not at liberty at this juncture to discuss this or our involvement with this," Rosen said. "As soon as I am able to, I would be delighted to reach out and discuss any and all of this."

Because the transaction has yet to be recorded by the county, the sale amount isn't known either. The Westinghouse plant was listed for sale as an industrial property at $6 million. However, its land and structures were appraised for taxes in 2018 by the county at $1.18 million, up from $981,100 the year before.

One of 59 residences (plus 12,000 square feet of office
space) at the newly renovated Wagner Awning
Building in Tremont (SCA).

Sustainable Community Associates has built new and renovated old structures for housing in Oberlin and Cleveland. Until recently, their Cleveland projects have been all been renovations of vacant light-industrial structures, including the Mueller Lofts in Asiatown (80,000 square feet) plus the Fairmount Creamery (100,000 square feet) and Wagner Awning in Tremont (88,000 square feet).

The latter will soon be complemented by a $20 million, new-construction project by Sustainable Community Associates on the other side of Scranton Avenue. The Tappan will feature 95 residential units and a corner bakery. Rosen says his firm is putting a lot of effort into attracting a retailer, the bakery, to this new-construction neighborhood development.

In 2015 (above), redevelopment north of Gordon Square had
yet to spread east toward the foreground in this view. Now,
everything visible here has been targeted or redeveloped by
real estate investors. The extent of redevelopment was already
visible in this March 2018 view (below) by Aerial Agents.

Redevelopment of the vacant Westinghouse property will be, by far, Sustainable Community Associates' largest project to date. In total, the site contains 303,000 square feet of buildings, the oldest of which dates to 1882. The most notable is the eight-story, 122-foot-tall, 112,000-square-foot tower built in 1915. Until recently, it featured multi-story, lighted Christmas decorations, visible to motorists on the West Shoreway.

Presumably, the tower would be converted to residential because of its amazing views of Lake Erie, Edgewater Park, Wendy Park, Downtown Cleveland and the rapidly developing north end of the Detroit-Shoreway neighborhood. Hundreds of new apartments and townhomes have been built, are under construction or are planned nearby.

In fact 10.5 acres of the former Westinghouse property was sold five years ago to Cleveland-based NRP Group, one of the nation's largest apartment developers. On that land, NRP Group built The Edison at Gordon Square, a 306-unit apartment complex. NRP plans to build phase two, a 323-unit complex on the south side of Breakwater Avenue and west of West 58th.

The 1915-built, 122-foot-high Westinghouse tower,
as seen from the West Shoreway (LoopNet).

The Westinghouse plant's tower could easily accommodate more than 100 residential units, depending on how the first floor is redeveloped. Its floor plates measure 14,000 square feet and the walls are 2 feet thick in some places. Skylights and/or walk-out sun decks could be offered thanks to a saw-toothed portion of the roof. A two-story penthouse could be added in a cupola-like structure on the rooftop.

How Sustainable Community Associates intends to develop the remaining 200,000 square feet of the Westinghouse complex will be interesting to see, too. If historic tax credits are used to fund the property's redevelopment, there will be restrictions on how much of the site's original architecture can be altered.

Interior of the Westinghouse tower (LoopNet).

It is possible that some of it could become parking for tenants. But perhaps some could be used for offices, restaurants or even retail like a convenience store, considering how many people already live in the neighborhood and how many more housing units are planned. Perhaps there could be a community space such as an active sports center and/or indoor farmers market.

The shorter buildings in the Westinghouse plant actually pre-date Westinghouse's ownership of it. The factory at the foot of West 58th (previously called Waverly Avenue) dates to 1882 when John Walker founded Walker Manufacturing Co. to produce power-transmitting machinery for street railways. His company substantially rebuilt and expanded the plant in 1891, three years before Westinghouse sued Walker Manufacturing for patent-infringement.

Westinghouse plant circa 1920s (LoopNet).

Walker lost the case. Court-ordered constraints on the firm's activities led to its sale to Westinghouse for about $1 million in 1898. Westinghouse manufactured aluminum and brass castings at Walker's plant but transitioned in the 1930s to become the headquarters of the Westinghouse Lighting Division. It produced lights for use in industry, at airports and along highways, including the 1939-built West Shoreway. More than 500 people were employed at this plant. It closed in 1979 and the Lighting Division was relocated to 5901 Breakwater Ave. from 1980-82, according to the Encyclopedia of Cleveland History.

Westinghouse plant circa 1970 (CLICK TO ENLARGE)(WikiMedia).

In 1986, the plant was sold to the Kole family of Westlake, county records show. Peter Kole was president & CEO of Paramount Stamping, Welding & Wireforming Co. He was born in Pogradec, Albania in 1937 and came to America with his mother the following year. In 1978, Kole purchased a manufacturing company, Farco, located in Elyria and in 1981 moved the company to the Westinghouse plant where he started another company, Paramount, that manufactured steel automobile seat frames. He employed 300 people. Kole also was Honorary Consul Consulate of the Republic of Albania in Cleveland, according to a biography by his alma mater Idaho State University.

Kole sold off pieces of the 14-acre factory property to developers, with the remaining portion of the plant transferred in 2016 to a company Kole created -- Paramount-Breakwater Properties LLC. That company was renamed on Jan. 7, 2019 as Paramount-Breakwater LLC, according to Ohio Secretary of State records. Presumably, the LLC, not the property, could be sold in an Entity Sale to reduce the transaction fees and property taxes on Sustainable Community Associates.

END

Stark's nuCLEus has a smaller, more achievable concept

With its scale reduced to about 2 million square feet and to a
price tag as low as $350 million, Stark Enterprises has value-
engineered its planned nuCLEus development in downtown
Cleveland in line with available fiscal resources. For orien-
tation, the intersection at the bottom of this south-easterly
view is Prospect Avenue and East 4th Street. (Stark)
(CLICK IMAGE TO ENLARGE)

After months of speculation and rumor about a scaled-down design for Stark Enterprises' downtown Cleveland megaproject called nuCLEus, revised conceptual site plans for the project were briefly posted on Stark's web site earlier today. They apparently were posted in error or posted prematurely because they were since taken down. All references to nuCLEus were briefly removed from Stark's website but since restored using an aerial graphic showing only the existing parking lot at the proposed site.

Stark representatives have yet to respond to an e-mail seeking updates about the nuCLEus project. Nor did they comment on why the new conceptual graphics and promotional brochure were posted earlier today and soon removed. Before they were removed, the nuCLEus page was shown as updated in January 2019. So clearly there is activity regarding this project.

In fact, it's possible that Stark has enough resources to build the scaled-down version of nuCLEus, which is still a very large project measuring approximately 2 million square feet. The old design showed a single 54-story residential tower connected by a four-story hotel suspended like a bridge to another, shorter building with office space. The vertical structures were to built on top of a pedestal of parking over ground-floor retail and restaurants.

The original plan for nuCLEus, as viewed from Huron Road
looking east at East 4th. It featured a 54-story residential
tower and a 4-story hotel bridge building over to a 7-story
office building (Stark).

The preliminary new design shows two disconnected towers -- one for residential (much shorter) and the other for offices (about twice as tall as before) -- atop the parking pedestal over ground-floor retail, restaurants and food halls. There are about seven floors of parking topped by an amenity/lobby level. The taller tower is the office building, offering 15 floors and higher ceilings than the 14-story residential building. The larger office and smaller residential components jibe with recent rumors about the project being scaled down. 

From street level, an observer would look up to a 25-story office tower and a 22-story residential tower, including the parking, amenity and retail levels below, according to the preliminary design. The residential building would also cascade down over the Prospect Avenue side of nuCLEus' parking structure, effectively hiding it. The Huron Avenue side, however, would have the parking deck exposed as its facade, albeit with ground-floor retail/restaurants. A six-lane ingress/egress for the parking garage and loading docks would be on East 4th which Stark had previously proposed closing to vehicular traffic north of High Avenue.

A scaled-down nuCLEus would no longer be the tallest tower
on Huron Road (the AT&T Building, to be renovated into a
Canopy by Hilton hotel, is 27 stories). However, nuCLEus
would still be a major presence and a dramatic improvement
compared to the 3-acre parking crater there now (Stark).

Between the residential and office towers, Stark would retain his Melbourne, Australia-inspired laneway -- a narrow pedestrian walkway lined with shops, restaurants and food halls. It will compete with the historic East 4th District that's popular most evenings, but especially with people attending the many sporting events, concerts and other shows at Gateway (Quickens Loans Arena and Progressive Field).

Stark signaled some possible momentum on nuCLEus last month when he sold his downtown Cleveland headquarters to Rlfed Manager LLC, a firm controlled by Yaron Kandelker, an Israeli investor with property holdings in Northeast Ohio. Stark Enterprises planned to move its nearly 20,000 square feet of headquarters offices from 1350 W. 3rd St. to nuCLEus upon completion of the $500+ million project.

Also motivating Stark to move forward on nuCLEus is an agreement with law firm Benesch to occupy 66,500 square feet of office space at the new development. The agreement remains in place despite Benesch extending its lease at 200 Public Square until 2022. Meanwhile, a nearly 50,000-square-foot entertainment venue called Cleveland Live! also agreed to locate at nuCLEus, as did the Ohio debut of Starbucks Reserve, an upscale coffee bar, and HopCat, a restaurant and craft beer bar. Shake Shack also sought to open at nuCLEus but grew impatient with its lack of progress and opened instead in the Garfield Building on Euclid Avenue and East 6th Street. 

Building cross-section view of the scaled-down nuCLEus
development in downtown Cleveland. (Stark)

In the last two years, Stark tried to initiate two innovative financing schemes to provide additional public funding to his original plan for nuCLEus. The first was a $120 million Cleveland school district property tax increment financing mechanism from which Stark would give back $18 million to help finance school facility construction.

When that fizzled, Stark presented to the Ohio General Assembly a bill that would encourage insurance companies to finance up to 10 percent of large real estate developments that met certain transformational characteristics. NuCLEus could have benefited from more than $50 million in tax credits from that scheme which passed the Ohio House unanimously but didn't pass the Ohio Senate before the clock ran out on the 2018 legislative session.

Those proposed schemes suggest that Stark had a $50 million to $100 million gap in his capital stack for nuCLEus. In other words, Stark Enterprises was able to amass upwards of $400 million for the project from public and private pledges, commitments and resources already in hand or available to the firm. That might also include new capital from Opportunity Zone funds (downtown Cleveland is located in an Opportunity Zone) and from real estate investment trusts that are increasingly willing to take lower returns from longer-term investments in low-rent markets like Cleveland.

A smaller nuCLEus would produce less revenue, but it's still a very large project. The new conceptual massing for the scaled-down shows that the roughly 2 million square foot development would be split roughly evenly between parking and non-parking uses. At current construction prices, the revised design for nuCLEus could cost as little as $350 million. If so, it's possible that Stark has the resources necessary to move forward with this new plan.

END

County engineer's Ohio City property hits the market

The former Cuyahoga County Engineer's headquarters
in Cleveland's Ohio City neighborhood is for sale and
is expected to attract a lot of interest from real estate
developers to build new housing on the site (Allegro).
CLICK IMAGES TO ENLARGE THEM

It's official. Cuyahoga County has put on the market one of the most attractive properties for redevelopment in years. The former Cuyahoga County Engineer's headquarters at the west end of the Detroit-Superior Veterans Memorial Bridge is expected to fetch the most interest by real estate developers among four sites in the county's latest disposition of surplus properties.

Last month, I wrote that the engineer's office and its 2 acres of land at 2429 Superior Viaduct would soon go on the market. It is one of five major development locations or projects emerging along the West Rim of the Cuyahoga River valley, in Cleveland's Ohio City neighborhood.

The property at 2429 Superior Viaduct is surrounded by recent and planned developments including the newly opened, $60 million apartment complex to the west called The Quarter. Its developed area is slightly larger than the county engineer's property. Just east is the multi-building Stonebridge development built in the early 2000s.

To the south is the planned and partially funded, 20-acre, roughly $100 million Irishtown Bend Park. To the north is 2210 Superior Viaduct, a proposed 11-story apartment building proposed by Activity Capital, an investor group led by Daryl Kertesz who says this project is still active.

These are two views of the former county engineer's
site that were included in the marketing flyer designed
by the county's real estate consultant (Allegro).

According to a new listing by Allegro Realty Advisors Ltd., all four of the county's excess properties will be sold through an open-bid Requests For Proposals (RFP). Bids must be received by March 18. Each property can be toured in person on one of two dates later this month. The tour dates are different for each property, per their listings.

"The one (county engineer's property) is definitely exciting," said Damon Taseff, a principal at Allegro Realty Advisors. "It's redevelopment will help keep building momentum in the area."

Taseff notes that there are two issues with the site. One is that its 2.03 acres of land includes easements that extend out into the roadways for West 25th Street and old Detroit Avenue. Those easements cannot be built upon, reducing the developable land area to 1.6 acres.

The other issue is that there is an abandoned street running diagonally through the site. He said the county is working with the city on vacating the street and removing the right of way. That will cause its ownership to revert to the adjoining parcels, all owned by the county and which are the subject of the RFP. Taseff expects the right of way to be removed by the March 18 RFP deadline, so it is shown as "to be vacated" on Allegro's marketing materials.

A 2017 satellite view of the county engineer's property. (Google)

The Cuyahoga County Personnel Review Commission still has offices in the building but Taseff said it will be moving out soon. The Cuyahoga County Engineer, which plans, builds and maintains all Cuyahoga County-owned roads, bridges and structures, was changed into the Department of Public Works during the county's reform in 2009. Its offices were relocated to the new county administration building at East 9th Street and Huron Road downtown.

Actually, there are four structures and six parcels which comprise the former county engineer's headquarters. According to the Cuyahoga County Fiscal Officer, the structures were built between 1947 and 1964, with the two largest buildings remodeled in 1970 and 1993. In total, there are 21,616 square feet of usable buildings on site. The entire property was appraised by the county at $732,300 in 2018 but was valued at $1,015,200 in 1999. The appraisals didn't include the street right of way.

The other three county-owned properties to hit the market in this latest offering are at 4000 Brookpark Rd. in Cleveland, 6100 W. Canal Rd. in Valley View, and 14875 York Rd. in North Royalton. These three are being advertised as potential light-industrial/warehousing sites.

Cuyahoga County hired Allegro Realty Advisors to help it review its real estate needs and recommend follow-up actions. After an analysis, Allegro identified dozens of properties countywide as no longer essential to the operation of county government. Many properties have already been sold off. Taseff said the four properties in this latest RFP will be the last to be disposed of for the foreseeable future.

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Stark Enterprises sells its HQ, but to whom? And why?

Stark Enterprises' headquarters building at 1350 W. Third St.
in downtown Cleveland's Warehouse District as seen in 1964
 (left) and in 2017 (CPL, Google). (CLICK TO ENLARGE)

A potentially strategic property transfer in downtown Cleveland nearly slipped under the radar last week. Not only was the transfer publicly filed the Friday right before the Christmas holiday weekend, perhaps to avoid attention, but it was sold using a process that concealed the details of the transaction.

On Dec. 21, Stark Enterprises sold its 18,290 sf headquarters building at 1350 W. 3rd St., according to public records filed with the Cuyahoga County Fiscal Officer. The buyer is a company called 1350 W6, LLC. The person who formed that company on Dec. 13, per Ohio Secretary of State records, was none other than Stark Enterprises' founder Robert L. Stark.

No dollar amount was included. So anyone scanning the hundreds of property sales at the end of the month would probably look for transactions with larger dollar amounts first. Stark 1350 LLC bought the property in 2007 for $1.3 million and was asking $2.9 million, according to its since-removed listing on LoopNet.

Why would Stark sell a property to his own company? Because the company that Stark created in order to buy the property is probably going to be sold to another party. Why do that? Because the buyer can acquire the company for less money than the property. Acquiring a property incurs more transaction fees and potentially a higher property tax burden if the sale price is known. It's a process called Entity Sales.

The presence of another party is also inferred by the fact that Stark sold the property via a "Limited Warranty" exchange. If no other party was involved, Stark would have probably sold it via a "General Warranty" deed transfer. A limited warranty protects the seller in the event that some unknown liability could be passed on from the building's past. The Stark headquarters building was built in about 1900 and modernized with a new façade in the late 1960s.

The location of Stark Enterprises's headquarters is visible in
this map courtesy of the Cuyahoga County Fiscal Officer.
All of the parking lots visible in this image are owned by
subsidiaries of Weston Investments. West 6th Street is
in the buildings' shadows on the lower left (CCFO).

It begs the question why Stark didn't just sell the company that had previously owned his HQ. A possible reason is that the company, Stark 1350 LLC, had Stark's name in it. The new buyer probably didn't want any reference to Stark in the company's name. That name, 1350 W6 LLC, is also an enigma. The property isn't at 1350 West 6th. It's at 1350 West 3rd. Both are at the corner of St. Clair Avenue. Unless it's a typo, the company's name suggests that the buyer has plans for the south side of St. Clair, all the way from West 3rd to West 6th.

The property along the south side of St. Clair from next to Stark's HQ west to West 6th is owned by a subsidiary of Weston Investments, a major real estate developer based in Warrensville Heights. None of these properties have transferred in the last two years and there's no indications from any other public records databases that these Weston subsidiaries were sold, added new partners or transferred to new statutory agents.

Stark Enterprises' proposed nuCLEus development in down-
town Cleveland will includes about 200,000 square feet of
offices, including for Stark's new headquarters (NBBJ).

I have reported on recent rumors about the Dream Hotel chain being interested in a site on "St. Clair Avenue in the Warehouse District" but had no further details regarding its location. I have contacted Stark Enterprises to learn more about the sale of it headquarters property but have yet to hear a reply.

Stark Enterprises plans to relocate its HQ offices from 1350 W. 3rd to its massive nuCLEus mixed-use development just north of Quicken Loans Arena. But Stark has been unable to fill a gap in their capital financing stack. It isn't yet known if this sale will contribute to it or otherwise affect Stark's timetable for building nuCLEus and relocating its HQ to it. But, unless Stark Enterprises moves to temporary offices, any redevelopment of Stark's HQ building is unlikely to occur until after nuCLEus is built.

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Pop goes the West Rim

Click to enlarge all graphics (Google).

A skeptical Clevelander would look at the above map where five potential major real estate developments may rise atop the West Rim of the Cuyahoga River valley and question how many will actually get built. An optimistic Clevelander would be certain that most, if not all, will get built. And an older, lifelong Clevelander would look at that map and be amazed that there are five potential major projects at all.

Then again, some may argue that a sixth has already been built -- The Quarter, a $60 million, 194-unit apartment building with ground-floor retail that opened earlier this year on Detroit Avenue at West 25th Street. The developer, Snavely, also bought the Forest City Savings and Trust Building across Detroit and is renovating it with 38 affordable apartments and a food hall for start-up restaurants.

Or, that a seventh major real estate development is under construction here -- Church+State, a $57 million, 161-unit apartment complex (one 11-story building and a six-story building) rising on Detroit, north of Church Avenue at West 29th (formerly State) Street. Hemingway Development is leading this project.

Others might say the above map omits an eighth major project that is actually a stimulus of several of the proposed big projects on the West Rim -- Irishtown Bend Park. This large park along and between the Cuyahoga River and West 25th, from Detroit Avenue south to Columbus Road, has amassed tens of millions of dollars in funding commitments. It will get built in some form over the coming years. But the full slate of proposed improvements to realize the vision for Irishtown Bend carries a price tag in the neighborhood of $100 million and will require more fundraising.

Point is, there is going to be a large park here. And quality public spaces draw residents and investments. The West Side Market is one such quality public space -- an ethnic, European-style fresh food market house that has few equals in the USA. It is at least party responsible for two of the major developments planned at the southern flank of the valley, across from downtown Cleveland.

But the biggest factor in all of this is Cleveland's improving job market. It is diversifying and growing at rates that rank it with the fastest-growing metropolitan-area economies in the USA. Plus, the two biggest demographic sectors in American history -- Millennials and Baby Boomers -- want to live in downsized housing in walkable urban settings that offer quality biking and public transit amenities.

So here are the five West Rim development sites and what is or may soon be happening there:

In 2019, Cuyahoga County may dispose of excess properties,
including the former County Engineer's office at the west end
 of the Detroit-Superior Veterans Memorial Bridge (Google). 

Cuyahoga County Engineer's property -- If you've ever taken one of the subway tours in the lower deck of the Detroit-Superior/Veterans Memorial Bridge, then you've set foot on this 1.75-acre property. The entrance to the subway tour requires stepping across this land, owned and once used by the Cuyahoga County Engineer's office.

Not only does the engineer's office no longer use this property, but they're not even called the county engineer anymore. It's called the Department of Public Works and in 2014 it was consolidated along with many other county offices into the administration headquarters at East 9th Street and Prospect Avenue downtown.

So it, along with dozens of other properties countywide, has been deemed no longer essential to the operation of county government after a year-long analysis by the county's real estate advisor, Allegro Realty Advisors Ltd. The six-parcel county engineer's site will likely be the subject of an open-bid Request For Proposals by the county in early-2019.

However, a number of details about its disposition are not yet known, including if the six parcels will be sold individually or as a package, and if the county will seek to vacate the unused right of way of Superior Viaduct that separates parcel 00315046 from the other five county parcels. Or will that be up to the winning bidder to pursue? Either way, vacating this right of way will cause this land to be absorbed by the adjoining parcels, regardless of who owns them.

Questions about the disposition of the county engineer's property, directed at the county's Public Works Public Information Officer Koula Celebrezze, were referred to Damon Taseff who is heading up Allegro's county real estate advisor team. He said more details about this site will be publicly available very soon.

"I will be able to speak to more of this (disposition) in the coming weeks," Taseff wrote in an e-mail.

The Cuyahoga County Engineer's site which, if redeveloped,
could offer commanding views of Downtown Cleveland,
Irishtown Bend Park and the Cuyahoga valley (Google).

The county engineer's property is in a prime location for a major development. The Quarter apartment complex was built on 2 acres -- only slightly larger than this site (if the unused part of old Superior Viaduct is vacated).

And just east of the county's land is Stonebridge, a multi-structure mixed-use complex built in the early 2000s. Its closest building to the county engineer's site is an 11-story condominium building called Stonebridge Waterfront but is set on land lower in elevation. So a similarly sized building (or taller) on the county's land would tower over it and offer amazing views of downtown Cleveland, Irishtown Bend Park and the Cuyahoga Valley.

Downtown Ventures' proposed mid-rise apartment building at
2210 Superior Viaduct would be comparable in height to the
neighboring Stonebridge Waterfront building. Also visible is
the County Engineer's property, seen just above the massing
for 2210 Superior Viaduct (CityArchitecture).

2210 Superior Viaduct-Kertesz -- Daryl Kertesz's Downtown Ventures LLC paid $350,000 in June 2016 for a small industrial building at 2210 Superior Viaduct a short distance from the county engineer's site. Activity Capital, an investor group led by Kertesz, has proposed to replace the small industrial structure with a 64-unit apartment building perhaps 11 stories tall. He chose that height because it would come up to the 115-foot restriction for the current zoning height district. But Kertesz said he would like to get a variance and build up to 20 stories if the market allows for it.

Kertesz's conceptual designs for the project won approval from Cleveland Planning Commission's Design Review Committee. But that was nearly three years ago in February of 2016. Kertesz said he was attracted to the Detroit-West 25th intersection due to residential momentum in the area. That includes Stonebridge and the newly completed The Quarter, as well as traffic calming improvements to the intersection to enhance pedestrian safety.

"It's still an active project," Daryl Kertesz said in a phone interview. "It just has to be the right project. There's a lot going on in that area and I'm not sure if more of the same (Class A multi-family) over there is the right answer given the market saturation. We will only get one bite at the apple and when we have the right project, we will pull the trigger."

If the county engineer's site is developed, it may further boost the area as an attractive, high-density urban neighborhood or it could over-saturate it. Nearby is Lakeview Terrace public housing, including the 19-story, 204-foot Lakeview Tower built in 1973. But now the area is attracting residents with more disposable income that should attract more retailers, restaurants, so-called "Creative Class A" loft offices and jobs to the north end of Ohio City. It remains to be seen if that could, in turn, nurture a feedback loop of attracting more residents.

The 5-acre, 530-space Lutheran Hospital parking lot will offer
an unobstructed view of Downtown Cleveland when buildings
on the east side of West 25th Street are demolished for the new
Irishtown Bend Park (Google).

Lutheran Hospital parking/Weston -- While many urbanists lament the parking craters downtown, there is a large crater in Ohio City too. The 5-acre Lutheran Hospital surface lot acts like a moat between the long-established neighborhood around the West Side Market to the south and the emerging Detroit-West 25th intersection to the north.

The property has gained greater prominence with the development of Irishtown Bend Park, as well as the impending demolition of several buildings on the east side of West 25th. Front Steps Housing and Services will move by 2020 to its new address in the 2500 block West 25th. Its old facility at 1545 W. 25th will be demolished as will the abandoned, three-story, eight-unit Riverview Family Estates, 1505-1525 W. 25th. (not to be confused with the 15-story, 498-unit Riverview Tower, 1745 W. 25th.).

Once those buildings are gone, Lutheran Hospital's main parking lot or whatever development that may someday replace it will have a tremendous view of downtown and be right across the street from the new 20-acre hillside park. City Planning Commission's vision, per a rezoning done a few years ago, is for ground-floor retail along West 25th topped by multi-story buildings. To ensure enough parking remains, a significant parking deck would be needed.

There may be real interest in a development in that area. A company recently bought a half-acre of land at 1550 W. 25th that's surrounded by the Lutheran Hospital parking lot. On that small parcel is a former auto parts supply house that was bought in October 2017 for $435,000.

The buyer was I.B. Development LLC, which was registered with the state on Sept. 19, 2017 by Nadine Ezzie. She was general counsel for national real estate developer Weston at the time and the filing listed Weston's Warrensville Heights' address. Two other companies were also registered at about the same time with similar names, including Weston-I.B. Development, LLC and AK My Place I.B. Development LLC.

Clinton West Apartments are at left (the upside-down U-
shaped roof) and The Vine luxury townhouses are to their
right, or west (apartments.com).

My Place Homes was founded by Chad Kertesz (cousin to Daryl Kertesz) in 2010 and has been developing housing in Ohio City. That includes The Vine townhomes, a joint venture among Kertesz family members and their respective companies, rising on Vine Court at West 32nd. It is just west of the 70-unit Clinton West apartments, a project My Place developed with the Geis family in 2017. Crain's Cleveland Business reported in June that My Place Homes is a partner in I.B. Development with an unidentified national developer. But the state registrations show that developer is Weston.

"It's too early in pre-development to talk about it (the West 25th site plans) in detail," Chad Kertesz said to Crain's. He didn't respond to an e-mail request for an interview prior to publication.

A challenge for any future development here will be securing at least $20 million for a large parking garage to replace Lutheran Hospital's 530-space surface lot. South of Franklin Boulevard, two additional surface lots front West 25th and serve the hospital as well as the Cinecraft Building. They contain another 220 spaces. It is unlikely the hospital would pay for a new parking deck because they are not causing the change to the parking situation.

One funding possibility is to use tax-increment financing to secure a loan from a public sector partner, such as a port authority or from the U.S. Department of Transportation which offers Transportation Infrastructure Financing & Innovation Act (TIFIA) loans, credits and guarantees for transit-oriented developments near rail and bus rapid transit stations. This development is on the Greater Cleveland Regional Transit Authority's MetroHealth Line BRT-lite.

While local officials hope that many visitors will access the Irishtown Bend Park via walking, biking and transit, larger events will require a large parking facility. So while a new parking deck could serve Lutheran Hospital by day, it could also serve a new real estate development and the park in the evening and at night.

Harbor Bay's Market Square development (HPA)

Market Square-Harbor Square REA -- Look for the existing strip shopping center called Market Plaza at Lorain Avenue and West 25th to be demolished in Fall 2019. Following that, Chicago-area Harbor Bay Real Estate Advisors hopes to start construction on Market Square, a 3-acre development at West 25th Street and Lorain Avenue with a 12-story office building, 10-story apartment building, ground-floor retail and a 550+ car parking deck just above the west side of the Red Line tracks.

The reason why this development is moving forward is due to the persistence of Cleveland-area native Dan Whalen who is director of Harbor Bay. Whalen encouraged his employer, which builds major projects around public transportation in the Midwest, to look at Cleveland and, specifically, Ohio City. The project site is next to the Ohio City Red Line rail station.

A new feature may be added to the project's plans -- a walkway from Columbus Road and the rail station to Market Square. This development will be similar in height to the United Bank Building across West 25th from the project site. That renovated building has attracted new office tenants and leads credence to the notion of attracting more to the Market District.

Original plan for Brickhaus Towers/One Twenty West (HPA)

One West Twenty-ex-Brickman -- It's possible that we may hear an announcement in 2019 regarding the former Brickhaus Towers/One Twenty West development. This project was proposed by Andrew Brickman who has a lot on his plate already. There have also been reports that an investor withdrew from this project. Brickman scaled back his original plans for Brickhaus Tower to a smaller plan called One West Twenty.

Instead, a national developer is seeking to take over this site to deliver as many housing units as possible to the booming near-West Side. Sources asked that this developer not be named publicly as the company doesn't like to announce a project unless it is more than 90 percent certain the project will happen.

Word is that the new developer will likely go back to something similar to Brickman's original vision for this site -- a larger-scale mixed-use development with mid- to high-rise towers offering 500-600 apartments with ground-floor retail and live-work units facing Lorain. The new developer is not concerned about the scale of this project, citing increased interest by New York City investors in Cleveland and its newfound job growth.

If the larger-scale development is achieved, along with at least several of the others mentioned above, a number of substantial buildings will ring the West Rim of the Cuyahoga Valley in the coming years.

In addition to the 11-story Stonebridge Waterfront, 11-story Church+State, 19-story Lakeview Tower, 15-story Riverview Tower and the 10-story United Bank Building, we could soon see more big buildings here. The West Rim could see as many as six or seven large buildings in the five development sites discussed in this article. If so, Ohio City could have an impressive skyline for an urban neighborhood.

END