Demolition for NuCLEus to start by mid-August

As demolition of the 114-year-old building in the foreground,
hosting Mr. Albert's Men's World clothier, awaits that store's
relocation, razing of the eight-level parking garage behind it
can begin within weeks to give way to the planned nuCLEus
development (Google). CLICK IMAGES TO ENLARGE

Two sources confirm that demolition is slated to begin by mid-August for the nuCLEus development in downtown Cleveland. While there is no news yet of a groundbreaking date for the $354 million development led by Stark Enterprises, most signals appear to be green for building the mixed-use project. But there are still some yellow signals, too.

NuCLEus will feature two 24-story towers, one with offices and the other with residential built atop a pedestal of parking and retail.

As noted last month, Cleveland Construction will be the general contractor for the nuCLEus development. A demolition subcontractor reportedly has been hired to raze a multi-story parking garage at 601-611 Huron Rd., a two-story mixed-use building at 620 Prospect Ave., and the Herold Building, 310 Prospect.

Demolition of the eight-level parking garage is scheduled to begin as soon as possible -- roughly three to four weeks from now, a source said. The Herold Building may be next, pending the city's concurrence.

The Herold Building was condemned by the city and the subject of a 2013 lawsuit by the city against LR 310 Prospect Investors, LLC that was dismissed without prejudice when L&R Group of Companies sold the building along with the parking lots to the east of it to Stark in 2014.

The dark structure the center-foreground is the Herold Building,
owned by Stark Enterprises. It is next to 300 Prospect Ave., at
far right, which was home to Record Rendezvous where some
of the first rock-and-roll records could be bought (Google).

The lawsuit was dismissed because Stark pledged to restore the Herold Building at that time. However, the condemned, vacant building has continued to decay in the five years since. It remains to be seen whether the Board of Zoning Appeals will approve demolishing the Herold Building.

To clarify, this building wasn't home to Record Rendezvous (1939-1987). Rather, the famous record store was next door at 300 Prospect where some of the first rock-n-roll records could be bought. The record store's building was acquired in 2012 by a partnership of Weston Inc. and restaurateur Bobby George for a future development that has yet to materialize.

The third structure due to succumb to the wrecking ball hosts Mr. Albert's Men's World clothing store as well as Nick's Sports Corner bar. While the bar is making way for demolition, the clothing store hasn't yet.

Store owner Ike Simmons apparently hasn't identified a new location for his urban clothier even though he owns the shuttered Goldfish Army & Navy Store just down the street, at 202-210 Prospect. Simmons couldn't be located for comment.

A streetview rendering of the planned nuCLEus development,
as seen from the corner of Prospect Avenue and East 4th Street.
NuCLEus' residential tower is seen here along with a future,
unidentified development barely visible at far right (Stark).

Stark reportedly wants Mr. Albert's Men's World to find a new location rather than pursue an eviction. Gateway Huron LLC, a partnership between Stark and J-Dek Ltd., own the building that hosts Simmons' store. The partnership owns all of the other properties needed for developing nuCLEus. Chief Operating Officer Ezra Stark didn't respond to an e-mail requesting more information.

The market for nuCLEus appears strong. Two-thirds of its office space is already leased, most of its retail spaces are spoken for, and the residential market continues to be strong. In his latest blog, Stark described factors affecting the residential market, especially in a low-cost market with big-city amenities like Cleveland.

"Primarily, we’re seeing a surge of millennials and fresh college graduates who are intent on escaping their suburban upbringing to live in a more convenient and convivial urban environment," Stark wrote. "While this does present development opportunities, high demand for high quality housing begets high rents."

Until all the structures are cleared, a groundbreaking date for nuCLEus cannot be set. But at least things are moving steadily in that direction.

END

Seeds & Sprouts III - Early intel on real estate projects

This is the third edition of Seeds & Sprouts - Early intelligence on Cleveland-area real estate projects. Because these projects are very early in their process of development or just a long-range plan, a lot can and probably will change their final shape, use and outcome.

After completion this summer of the $515 million Health Edu-
cation Campus, 9501 Euclid Ave., there are no cranes in the
sky over Cleveland Clinic's Main Campus. That will soon
change as several projects shown in red above come to the
fore (Google). CLICK IMAGES TO ENLARGE THEM

Fairfax: Cleveland Clinic shifts back into construction mode

For the first time in a long time, there are no construction cranes over University Circle or the Cleveland Clinic. Just don't get used to it.

In the coming months, look for movement on several Cleveland Clinic-related projects. There is already some visible movement starting on one of them -- the Brooks BioRepository proposed to be built at 10300 Cedar Avenue. The site is at the northwest corner of Cedar and East 105th Street.

City Planning Commission's Design Review Committee will review plans this week for Brooks Automation Inc.'s proposed 21,000-square-foot biorepository to enhance researchers’ study of human tissue samples and advance personalized medicine for an array of conditions -- including cancer, heart disease and epilepsy.

The facility is located in Fairfax's New Economy Neighborhood on the under-construction Opportunity Corridor. Geis Construction is the general contractor and the biorepository will be built on Cleveland Clinic-owned land.

On East 105th's next block north, between Carnegie and Euclid avenues, Cleveland Clinic plans to build a new inpatient facility for the Cole Eye Institute. Dubbed the Cole Bed Tower, the structure will be about four or five stories tall but will fill a large footprint -- an existing parking lot just south of the existing Cole Eye Institute. The new building will be physically connected to the existing institute by walkways.

Cleveland Clinic CEO and President Tom Mihaljevic noted in his annual State of the Clinic address in February that the global health care system would pursue investments in the Cole Eye Institute as well as a new Neurological Institute. The site for a new Neurological Institute isn't known, but sources say that it might be where Buildings M and S are currently located off East 90th Street. Both of those buildings are apparently slated for demolition.

Building M is the old Children's Hospital and Building S is an inpatient facility in a 10-story brick tower with an H-shaped floorplan. It is just south of the historic T Building on Euclid that will not be demolished. Word is that the Cleveland Clinic will issue requests for proposals to construction firms for the Cole Bed Tower and the Neurological Institute by the end of summer or early fall.

Areas shown in red are properties
not yet acquired for the Irishtown
Bend Park. The large Ohio City
Farm, shown in the lower half
 of the image and owned by the
Cuyahoga Metropolitan Housing
Authority will likely remain
under its current ownership and
use (Google).

Ohio City: Properties transfer for Irishtown Bend Park

A notable event occurred June 17 in the progress toward building the 17-acre Irishtown Bend Park above the Cuyahoga River. That's when eight parcels totaling 6.9 acres located between Riverbed Street and West 25th Street transferred from the Cuyahoga Metropolitan Housing Authority (CMHA) to Riverbed West, LLC -- a dba for the West Creek Conservancy.

The transfer of June 17 also started an 18-month clock ticking, during which time West Creek Conservancy must demolish two structures on the CMHA parcels. The structures are a 27,600-square-foot CMHA office building at 1441 W. 25th St. and the Riverview Family Estates, a boarded-up, three-story apartment building at 1505-1525 W. 25th.

A demolition clock exists because a $1.4 million Clean Ohio grant awarded for the property acquisition and structural demolitions included the deadline. The grant was awarded in February 2017.

LAND studio applied for the grant but West Creek Conservancy took possession of the properties because it has better liability protections. The conservancy previously acquired 3 acres of land from private owners in December 2017 between Riverbed Street and the Cuyahoga River. It will eventually transfer all of the Irishtown Bend land to the City of Cleveland for the planned park.

But the grant clock started ticking one year later than hoped due to delays by the federal Department of Housing & Urban Development in signing off on the property transfer. The delay doesn't jeopardize the grant.

Although officials involved with the project hope to demolish the structures and clean the land by the end of this year, next spring is more likely, officials involved with the project said. The unstable hillside demands a careful demolition process, as do the significant foundations on which the newly acquired buildings set.

The Cleveland-Cuyahoga County Port Authority is organizing funding and implementation of a $49 million hillside stabilization effort. Another 4.5 acres of CMHA-owned land, called Ohio City Farms, will be a part of the park.

Three privately owned parcels are still to be acquired. They are each owned by separate firms -- Snavely Group, Mortgage Investment Group LLC and Front Steps (dba Womens West Housing Corp.). Snavely is donating its land, valued at $95,000, to the conservancy as part of the grant's local match. Snavely is developing multiple properties in the adjacent Hingetown neighborhood.

Front Steps is building a new facility farther south on West 25th and, when completed, its existing site will be vacated, sold to the conservancy for a yet-to-be-determined price and demolished. The future of a commercial building owned by Mortgage Investment Group at the southeast corner of West 25th and Detroit Avenue is unknown.

A Cleveland landmark for more than a century,
the grand old Rockefeller Building has faded with
time, as has the primary partner in its ownership
group. So the word on the street is the building
is for sale, albeit quietly (LoopNet).

Downtown: Shhh...the Rockefeller Building is for sale

Keep an eye on one of Cleveland's most famous and historic buildings -- the Rockefeller Building, 614 W. Superior Ave. You won't see it listed for sale on any real estate brokerage site or other public listing service. However, numerous spaces are available for lease.

But make no mistake about it, the Rockefeller Building is available for sale. At least a half-dozen potential buyers have toured the building in recent months but there have been no takers yet, according to real estate sources.

The current owner is the Rockefeller Building Associates, a partnership of Benjamin Cappadora and Diana Miller, Trustee. The former is of Cleveland; the latter of Brooklyn, NY. But the primary person in the partnership is Cappadora who, before 1988, owned the building as Cappadora Realty Corp.

The reason why the office building is available is because it is half vacant, it cannot leverage high rents as an aging Class C office product, and Cappadora is 87 years old. Miller apparently is not an active partner. It is not listed for sale publicly because Cappadora reportedly doesn't want to spook existing tenants.

Although the 261,261-square-foot building is dirty and in need of updating, it is an architectural gem. It was built in 1905 by the Rockefeller family and named after Standard Oil founder John D. Rockefeller. When it first opened, it was the city's tallest building at 17 stories and 212 feet.

It was briefly named the Kirby Building (1921-23) by Josiah Kirby, founder of the Cleveland Discount Co., then a large mortgage firm. But that angered the Rockefeller family who bought the building back and renamed the structure. It has been called the Rockefeller Building ever since.

END

City Block at Tower City, announcement Monday; sneak peak

The view looking up at Terminal Tower from The Avenue
at Tower City Center may not change. But everything inside
The Avenue shopping mall is due to change in a big way as
shops give way to spaces for entrepreneurs in City
Block, a hub for startup businesses (KJP).
CLICK IMAGES TO ENLARGE.

On Monday, July 1, BlockLand Cleveland will announce that The Avenue at Tower City Center is the group's chosen site for a hub for entrepreneurs called City Block. The hub could someday grow to be the world's largest incubator under one roof.

Bernie Moreno, founder and leader of BlockLand Cleveland, a volunteer effort, confirmed in a personal message via Twitter that the project would be announced at 4 p.m. Monday at the group's next regular meeting. The meeting will be held on the second floor of the former Plain Dealer building, 1801 Superior Ave.

In April, Moreno acknowledged to this blog that Tower City was the preferred site for City Block. The chosen site was first reported in this blog and then announced on April 18 by Cuyahoga County Executive Armond Budish during his State of the County speech.

Moreno said that the site announcement will be made at Monday's meeting after he was asked to confirm some specific information from a source about the project. Moreno said the project's details would be revealed at the meeting.

The information is that Bedrock Real Estate, which owns The Avenue at Tower City Center, has agreed to lead the City Block redevelopment of the former railroad station-turned-shopping mall. Furthermore, Bedrock, founded in 2011 by Cleveland Cavaliers owner Dan Gilbert and Bedrock Chairman Jim Ketai, hired Vocon Partners, LLC to design the conversion of The Avenue into the hub for entrepreneurs, not just those involved in technology.

A harder cost figure for the conversion will be available in the coming months. A year ago, Moreno estimated that the development costs for City Block could be about $150 million.

The Avenue's airy concourses and large
skylights will soon illuminate aspiring
entrepreneurs and their new businesses
being incubated in City Block (KJP).

Bedrock shelled out $56.5 million in 2016 to acquire The Avenue at Tower City, the adjoining Ritz Carlton Hotel and parking lots along the Cuyahoga River to the south of the Tower City complex. Bedrock bought The Avenue and riverfront properties associated with the former Cleveland Union Terminal from Forest City Realty Trust Inc. Forest City converted the 1930-built railroad terminal into The Avenue shopping mall for $400 million in 1990.

Also in 2016, K&D Group acquired Terminal Tower, the old main Post Office and other Tower City properties from Forest City for $38.5 million. K&D is renovating the 13 lowest floors in Terminal Tower with 293 apartments, with the first units available for occupancy in September. The other buildings will remain as offices.

Reportedly, Bedrock's vision for The Avenue is to eventually remove all of the retail from the lower portions of the mall and instead line both sides of Prospect Avenue through the Tower City complex with storefronts, possibly retail spaces for technology companies like Apple or Microsoft plus non-tech-related examples. That includes redesigning the skylight rotundas with new facades, said a source familiar with the planning.

Station F in Paris, France is a large tech startup incubator that
is located in a former railroad freight terminal. The concourse
features old railroad carriages as well as settings to collaborate
with other entrepreneurs or to relax and recharge (Station F).

Replacing the retail in the mall will be a massive business startup center, focusing on digital technologies but others as well. Another source, one who serves on the BlockLand Place Committee, noted that the group researched other tech incubators around the world, especially Station F in Paris, France.

Opened in 2017, Station F is so-named because it is in a former freight railroad terminal previously called La halle Freyssinet. It was named after French structural and civil engineer Eugene Freyssinet, a pioneer in the use of pre-stressed concrete.

Station F is already the world’s biggest startup campus hosting thousands of entrepreneurs, venture capitalists and partners Facebook, Zendesk, Amazon, Vente-Privée, HEC, Microsoft, and others. Those big tech companies pick young startups to come to Station F and collaborate with them. French billionaire Xavier Niel spent hundreds of millions of euros to purchase and convert the railroad terminal.

Many spaces at Station F aren't offices for tech startups; those
that are can be quite small. Other spaces are available to venture
capital firms, or provide on-demand meeting spaces, or merely
are spaces for entrepreneurs to let off some steam (CityLab).

Visiting Station F caused BlockLand's Place Committee to focus on the former Cleveland Union Terminal, once the city's principal railroad station which still hosts a smaller station for rapid transit trains today. The 366,000-square-foot The Avenue at Tower City met the group's space requirements, namely that it would offer about 300,000 square feet and could include a separate wing for a technology school called Genesis.

The Avenue at Tower City will offer three times more floor space, as measured in square feet, than Station F. BlockLand will market Cleveland's lower cost of living as a draw to entrepreneurs and startups. Tower City has under one roof two hotels, hundreds of new apartments, 2 million square feet of offices, plus direct rail service to Cleveland's airport and rail and bus rapid-transit services to two universities and the booming eds-n-meds cluster in and near University Circle.

It is not yet known which corporate sponsors will further legitimize and energize City Block. But having Bedrock lead the project is a significant development. In Detroit, Bedrock has attracted to its properties businesses and retailers in which Gilbert has equity by offering discounted (or free) rent at the outset to create a critical mass of activity. That includes retailers like Stock X, Shinola, Apple, Microsoft and others.

The Avenue at Tower City Center's Prospect Avenue entrance
is due to be remodeled into storefronts and sidewalk cafes,
according to sources. Details about the project are scheduled
to be announced on Monday (KJP).

Funding for City Block is coming mostly from investors and foundations. A new $50 million partnership was announced in March between NCT Ventures of Columbus and the Cleveland Foundation to help boost the city's technology scene. It is not yet clear how much of this funding could be used directly for developing City Block, however.

Also, Moreno sold in April seven of his car dealerships to focus on his technology initiatives. No sale amount was publicized, but other recent sales of car dealerships have netted anywhere from $10 million to $40 million per dealership. If Moreno netted somewhere in the middle, he could have grossed something in the neighborhood of $150 million to $200 million.

Jumpstart and Flashstarts also announced they'll make available millions for blockchain and other technology startups, Budish said. Ironically, Flashstarts' StartMart is already located at Tower City Center.

END

NuCLEus gets financing, possible August groundbreaking

After facing complications in securing a $12 million city loan,
it appears the nuCLEus development in downtown Cleveland
is back on track (Stark). CLICK IMAGES TO ENLARGE

To paraphrase Mark Twain, the reports of the nuCLEus development stalling were greatly short-lived. For those of us who welcome investment in downtown Cleveland, we're grateful for the news.

Just last week, sources said all signs indicated that the $354 million project to build two 24-story towers between Prospect Avenue, Huron Road and East 4th Street had stalled. The delay apparently was the result of complications surrounding a $12 million loan from the city. It was among the final pieces of financing for the project.

But this week, a source says that real estate developer Stark Enterprises has significantly closed that $12 million gap without the city loan and is likely to close the remainder soon -- soon enough to tentatively plan an August groundbreaking for the mixed-use development. Two sources confirmed the August groundbreaking.

The complications surrounding the city loan also weren't what they seemed. Reports that the city was reluctant to give the loan to Stark because it wasn't going to pay workers prevailing wages, or that Stark was reluctant to accept the loan for the same reason don't hold water.

NuCLEus will be a mixed-use development, with its
uses stacked vertically. Its most prominent features
on the skyline will be its 354-foot-tall office tower
and its 311-foot-tall residential tower (Stark).

Stark reportedly has hired Cleveland Construction, Inc., a firm with seven offices nationwide but is based in Mentor, to be its general contractor for nuCLEus. Cleveland Construction is a prevailing wage contractor, meaning they aren't signatory with the trade unions. But it can use union labor or non-union labor.

Even if Cleveland Construction wasn't a prevailing wage contractor, the construction market in Greater Cleveland is booming and demanding higher wages. So there isn't much difference right now between prevailing and non-prevailing wage firms.

Furthermore, Stark was awarded and is gratefully accepting other forms of public financing including loans and tax-increment financing from the city, county and state that are likely triggering prevailing wage requirements.

It should not be a surprise that Stark has closed the financing gap on nuCLEus, a project featuring a residential tower and an office tower atop a pedestal of structured parking and ground-floor retail. The reason is that Stark is quickly leasing out its downtown projects' residential, office and retail components.

The Beacon apartment tower, as seen from the
site where the much larger nuCLEus develop-
ment may soon soon rise (mack34/UrbanOhio).

Stark's other big project downtown is The Beacon apartment tower -- a $94 million 19-story building atop an existing nine-story parking garage. It is filling up quickly.

Brian Weisberg, vice president of residential operations at Stark, said at the 5th Annual Commercial Real Estate Summit held June 27 that The Beacon is 60 percent pre-leased. Stark began soft-leasing (without advertising) The Beacon in February and immediately got 550 prospects for apartments in the 187-unit tower.

Weisberg said he anticipates leasing out The Beacon in the first year, despite commanding premium rents. A normal lease-out for a multi-family tower takes 18-24 months. He also noted that Stark is getting more interest for its downtown residential and office spaces than it is for its many suburban properties. NuCLEus will have 250 residential units, most of which will be apartments but some will be for sale.

In the other tower, two-thirds of nuCLEus' 400,000-square-foot office component is pre-leased, with the large law firm Benesch Friedlander Coplan & Aronoff as the anchor tenant. Stark's own offices will relocate to nuCLEus once it is completed. The national developer and capital group has temporarily relocated from 1350 W. 3rd St. to 629 Euclid Ave, Suite 1300.

There also is 80,000 square feet of ground-floor retail, with much of that leased out as well. The biggest portion will be occupied by Fox Sports Midwest, a national chain of sports and entertainment venues. Other retail tenants so far include HopCat and Starbucks Reserve. More are retailers coming, Weisberg said.

END

Seeking opportunity in the Opportunity Corridor

The Opportunity Corridor is finished between East 93rd Street
and Chester Avenue. Construction is starting on the boulevard
between Interstate 490 and East 93rd (ODOT).
CLICK IMAGES TO ENLARGE

This week I took a tour of the completed portion of the Opportunity Corridor, a project whose side mission is to change land use and turn dirt in a part of the city where the dirt hasn't been turned in a very long time.

Road construction started by widening East 105th Street to four lanes with a landscaped median between Chester Avenue and Quincy Avenue. Work in this area included replacing a straight bridge with a wider, curving span over the Norfolk Southern railroad tracks and Greater Cleveland Regional Transit Authority Red Line. Here, the rail station at East 105th-Quincy was expanded.

Then, the new boulevard extends southwest along the RTA Red Line to East 93rd Street. The next phase will link East 93rd to East 55th Street and finally to Interstate 490. That work is just getting underway.

Community development corporations along the Opportunity
Corridor have developed land use plans in preparation for the
completion of the roadway. Slavic Village CDC developed its
Hyacinth Transit Oriented Development plan with multi- and
 single-family housing to capitalize on access to the East 55th
rail station next to the Opportunity Corridor. Both the station
and roadway are just out of view beyond the top of the image
that looks northwesterly (Slavic Village Development).

Burten, Bell, Carr Development Inc. plans a mixture of housing,
light-industrial and agricultural uses north of the Kinsman Ave.-
East 79th intersection, at center-left. The RTA Green-Blue lines
curve through the middle- to upper-right of the image with the
Opportunity Corridor to the upper-right of it. This view also
looks northwesterly (BBC).

Fairfax Renaissance Development Corp. is advancing work on
Innovation Square starting with the two apartment buildings at
the left side of the image, next to an expanded Red Line station
at East 105th-Quincy. On the bottom of this westerly looking
image is East 105th/Opportunity Corridor (Fairfax RDC).

As you can see from the pictures below, the development signs and for-sale signs are already starting to pop up along the roadway. The city and the three community development corporations along the route have their land use plans. But property owners have their own ideas. How this road project will be able to "leverage the boomtown" that is University Circle for the benefit of nearby neighborhoods is still a work in progress.

So will the Opportunity Corridor be lined with gas stations and convenience stores? Or with biomedical labs and advanced manufacturing? Or with scrap processors and aggregates dealers? Or with light-industrial/warehousing? Or with townhouses surrounding apartment towers over retail near the Red Line stations?

What future will this $350 million investment by the Ohio Department of Transportation bring to this forgotten part of Cleveland? The following views are the "before" images. The "after" images will be interesting to see in the coming years and decades.

At the northeast end of the Opportunity Corridor-East 105th is
Ohio's fourth-largest concentration of employment -- University
Circle. The road will improve access to University Circle for
Northeast Ohioans with cars but how will it benefit residents
in the adjacent neighborhoods? (KJP)

Remnants of once-crowded neighborhoods surround University
Circle, often within sight of it. Plans are afoot to "reboot" those
neighborhoods, including with affordable housing (KJP).

One of the few transit-related components of the Opportunity
Corridor includes the expansion of the East 105th-Quincy Red
Line station that lengthens the trackside platform and adds this
secondary street access to reach the future Innovation Square
district south of University Circle (KJP).

The area surrounding the East 105th-Quincy intersection where
the entirely new section of roadway of the Opportunity Corridor
begins. This view looks northeastward (KJP).

A sign of things to come? A sign for Innovation Square adorns
the widened stretch of East 105th where a dense mix of homes,
stores, schools, churches and businesses stood. The goal is to
rebuild this neighborhood with 21st-century needs, such as
homes, stores, schools, churches and businesses (KJP).

The Opportunity Corridor is going to be an opportunity for
someone. Whether it is an opportunity for those who need it
most will take more effort than just putting up a sign (KJP).

In 2019, this is as far west as the Opportunity Corridor goes--
to East 93rd Street. Construction is already underway to link
this roadway to the highway system at I-490 and I-77. Making
the Opportunity Corridor useful to surrounding areas, called
the Forgotten Triangle, where poverty rates of 40 percent or
 are common will take years if not decades (KJP).

 END

Downtown's nuCLEus stalls with impasse, tiny Stark equity

Leasing signs for nuCLEus went up on Prospect Avenue at
East 4th Street -- in October 2014. Five years later, no dirt
has yet been turned for the ambitious, mixed-use real estate
development (UrbanOhio). CLICK IMAGES TO ENLARGE

Another bump in the road has stalled the massive nuCLEus development in downtown Cleveland. This time it has stalled from an impasse over a city loan, even as the project has garnered more than 95 percent of its funding and was scaled down to two-thirds of its previous size. The last piece of financing seems to be eluding the joint venture of Stark Enterprises and J-Dek Investments Ltd.

That's even more difficult to comprehend when considering Stark's equity contribution to the project may be no more than 1-2 percent, according to a source reportedly familiar with Stark's financing for the project, called the capital stack.

In dollar terms, Stark's contribution may be as little as $3.5 million to $7 million of the $350 million nuCLEus project. In other words, when Stark sold its former headquarters building at 1350 W. 3rd St. for $2.65 million in late-2018, it either came close to equaling its equity in nuCLEus or allowed Stark to almost double it.

Ezra Stark, Stark Enterprises' chief operating officer, did not answer questions for this article submitted by e-mail, including a request to confirm Stark's equity contribution. Stark, however, acknowledged that he read and received that e-mail. In other words, he has no comment.

Yes, Stark touts that nuCLEus has a $100 million equity contribution. But the sources of those funds is opaque. NuCLEus is actually being sponsored by a joint venture between Stark and J-Dek Investments Ltd. called Gateway Huron, LLC. Stark touts that Stark, J-Dek and their equity investors are making a sizable contribution to the project. That also includes their $26.7 million purchase of more than 3 acres of land in 2014.

This is a simplified breakdown of the capital stack for
nuCLEus, as presented to the City of Cleveland and that
appeared in an attachment to a proposed ordinance for
awarding a $12 million loan to the nuCLEus project. The
breakdown doesn't show who contributed the equity nor
does it show in what amounts (City of Cleveland).

And it includes $9.5 million which J-Dek raised in a public offering of a shares in Nucleus Jdek LLC in 2014-15, according to its Notice of Exempt Offering of Securities and subsequent amendment filed with the Securities and Exchange Commission.

The source familiar with Stark's equity contributions for nuCLEus and other projects said Stark typically doesn't contribute large amounts of equity to its projects. Stark also reportedly didn't contribute more than 1-2 percent of its own equity to build the $94 million Beacon apartment tower above the existing 515 Euclid parking garage, he said.

"Stark seems to be more of an organizer of equity from others, then Stark does the work to deliver the project," the source said.

It's not uncommon for project sponsors to deliver sweat equity in a project, only to get paid at the back end. By comparison, limited investors typically contribute 80-95 percent of the capital yet don't get their hands dirty on a project. Instead, they receive a preferred 5-10 percent return on their investment from a majority of the cash flow and profits as well as most of the tax benefits.

But that often means the project sponsor puts 5-20 percent of its own equity in a project -- not 1-2 percent. If Stark contributed just a shade more than 5 percent of the equity in nuCLEus, perhaps it might not need the $12 million city loan.

The latest plan for nuCLEus is scaled down by one-third
compared to the previous version. It has two 24-story
towers (actually a 16-story residential tower and a 16-
story office tower above a lobby, six levels of parking
and ground-floor retail (Stark).

Stark's desired final piece of the financial puzzle likely isn't going to happen, barring a miracle. That piece is the $12 million loan it has requested from the City of Cleveland. But City Council seems to be arbitrarily attaching a prevailing wage provision for this construction loan.

The city probably isn't going to back off that condition. City council members have said, given the scale of the nuCLEus project, they can't easily award the loan without the prevailing wage attached.

That's odd. The prevailing wage issue hasn't come up before. Stark has already been awarded two city loans totaling $360,000, a $19 million city-sponsored tax-increment financing deal, as well as two $6 million loans -- one pending from the county and another from the state. None have come with prevailing wage strings attached.

But apparently the wage condition is a deal-killer for Stark. It can't seem to make the numbers work on its nuCLEus project if it paid all construction workers the prevailing wages for their trades and crafts.

So the $350 million project has stalled because the city and Stark are at an impasse.

There may be other options. Stark could further reduce the scale of the project and thus reduce its cost (albeit scaling back its eventual revenue, too). But it has already been substantially scaled down from a $500+ million project that would have put the city's second-tallest skyscraper on downtown's second-biggest parking crater, across Huron Road from the Rocket Mortgage FieldHouse.

NuCLEus would eliminate downtown Cleveland's second-
largest parking crater, filling it with 400,000 square feet
of offices, 250 residential units and 80,000 square feet
of retail, bringing new life to an area that is a dead
zone much of the time (Stark).

Or perhaps Stark could create a new company to receive the $12 million city loan and to quickly build at prevailing wages the least lucrative part of the development, likely to be the foundation pad. Then Gateway Huron LLC could build nuCLEus above the pad, similar to how Stark built Beacon using the air rights above 515 Euclid, which is owned by another company (an investor group led by Reuven Dessler).

Stark will likely have little trouble filling nuCLEus' duo of 24-story towers -- one for offices and the other for residents. The office tower is two-thirds pre-leased in a tightening office market and the residential tower is likely to lease out quickly, just as other new housing products downtown keep filling up within a year or two despite rising rents.

But apparently Cleveland's real estate market isn't recovering as quickly as we'd hoped. And Stark is no stranger to finance. Stark created a capital group four years ago to raise money from institutional investors and high-net worth individuals and families. The firm knows where to find money if it wants to come here.

If Stark doesn't want to contribute more than a few million dollars and can't find $12 million from investors (including through Opportunity Zone funds) to top off the few remaining percentage points in his capital stack, then maybe Cleveland still isn't ready for projects like nuCLEus.

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Seeds & Sprouts II - Early intel on real estate projects

This is the second edition of Seeds & Sprouts - Early intelligence on Cleveland-area real estate projects. Because these projects are very early in their process of development or just a long-range plan, a lot can and probably will change their final shape, use and outcome.

Nautica Entertainment LLC has secured financing and possibly
a joint development agreement to move forward on at least one
part of its Waterfront District project, possibly starting with this
building (AODK). CLICK IMAGES TO ENLARGE 

Flats West Bank: Nautica Waterfront District seeks Joint Venture

On May 13, Nautica Entertainment LLC recorded with Cuyahoga County the issuance of $35 million in five-year notes from a line of credit it collateralized through Wilmington Trust, National Association. The debt was mortgaged against all of Nautica Entertainment's properties on the Flats West Bank. A portion of the financing could reportedly help build the first phase of an ambitious, high-end community on the West Bank. Most of the rest will help capitalize the firm's other interests.

The first phase could be a 17-story residential building, located between Jacobs' Nautica Entertainment Complex (FirstEnergy Powerhouse & Jacobs Pavilion live stage) and the Main Avenue High Level Bridge (State Route 2).

Nautica Entertainment, chaired by Jeff Jacobs, isn't an active real estate developer in Ohio anymore. So it is seeking a joint development agreement with an active real estate developer to achieve a grand vision for its Flats West Bank properties. The issuance of short-term notes suggests that Nautica may be dangling some capital as a carrot to attract a deal. No joint development partner is yet confirmed.

David C. Grunenwald, vice-president of development at Nautica, did not return a phone call seeking comment.

The financing was secured as an amendment to a $350 million line of credit that Golden, Colorado-based Nautica Entertainment collateralized through Wilmington Trust, headquartered in Minneapolis. The amendment boosted the line of credit, established in 2017, to $385 million.

Nautica announced plans in 2016 for a $405 million complex of mid-rise buildings offering residential, office and hotel uses plus several parking garages. Once a joint development partner is in place, Grunenwald recently said he hopes to realize the grand vision for Flats West Bank in about seven years.

"We opened Nautica in 1987, and it has evolved from there," Grunenwald said in a cleveland.com article in 2016. "We've spent a lot of time evaluating the site and potential uses, and we've also watched as the city has emerged. This is not the same city as it was 36 months ago. Young people have discovered the city."

The former Cuyahoga County Engineer's headquarters
 in Cleveland's Ohio City neighborhood is for sale. The
 recommended bidder will likely build mid-rise housing
on the highly visible site (Allegro).

Ohio City: Hemingway favored to acquire county land

The former Cuyahoga County Engineer's headquarters property at the west end of the Veterans Memorial Detroit-Superior bridge is recommended to be sold to Hemingway Development, a county source said. The property, at 2429 Superior Viaduct, went on the market in an open-bid request for proposals (RFP) last winter.

Damon Taseff, a principal at Allegro Realty Advisors which serves as the county's real estate consultant, said he had no information he could share, but added "I presume the county will make a formal announcement in the future."

Mike Panzica, a principal at Hemingway, said he could not comment on the possible sale at this time.

The site is in a prime development location, at the edge of the booming Hingetown neighborhood and uphill from Flats West Bank (see previous news brief). It is also across the street from the planned $100 million, 20-acre Irishtown Bend Park and The Snavely Group's multi-phase Hingetown development.

Current zoning for the site is a mix of local retail-D and semi-industry-B, but both are in a height district allowing the construction of structures up to 115 feet tall, or roughly 11 stories.

Although the property is listed at 2 acres, it 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.

Also, there is an abandoned street running diagonally through the site. The county has yet to vacate the street. Once vacated, its ownership would revert to that of the adjoining parcels, all owned by the county and which are the subject of the RFP.

The Cuyahoga County Personnel Review Commission had offices in the building but Taseff said in January that it would 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 rights of way.

Cleveland Clinic's Fairhill Facility, 11203 Stokes Blvd., is due
to be redeveloped with 38 housing units called North Park
Place by Premier Development Partners (Google).

University Circle: Cleveland Clinic partners in residential project

A former medical office building uphill from the heart of University Circle is proposed to be redeveloped with 38 housing units, both for-sale and rental. Cleveland Clinic Foundation's Fairhill Facility, 11203 Stokes Blvd., and its two acres of land will be redeveloped as North Park Place by Premier Development Partners of Cleveland.

As proposed, the 50,752-square-foot medical office building will be converted into 23 apartments with indoor parking and a three-level, 43,560-square-foot parking deck will be demolished to make way for 15 townhouses. Both the office building and parking deck were built in 1965 for Kaiser Foundation Health which sold it to the Cleveland Clinic in June 2001 for $3.25 million. The land and buildings are appraised by the county at $4,815,000 for taxes.

The project requires several zoning variances before development can proceed. The Board of Zoning Appeals will consider those variances at its next meeting, scheduled for June 17. North Park Place's architect is Kaczmar Architects, Inc.

Cleveland Clinic used the Fairhill Facility for its Sleep Disorders Center and Ohio Renal Care Group. The medical building was remodeled in 2006 for $897,900. Additional improvements, including to interior electrical systems, elevator and sleep lab plus dialysis facilities, were made in 2013-14, according to county records.

North Park Place Partners, LLC was formed in April by Premier Development Partners's Chairman Emeritus Ross Farro to deliver the project. Farro did not respond to a request for more information about North Park Place.

Premier was formed in 2006 with the acquisition of 330 acres in Northeast Ohio, previously owned by Duke Realty Corporation. As Duke exited the Northeast Ohio market, Farro, who was then Duke's senior vice president of Duke's office development and Spencer Pisczak, Duke’s then-senior vice president of industrial development, joined forces to create Premier, according to an online company history.

Although North Park Place is located in the city's University Circle planning district, it is across the street from Cleveland's Buckeye-Woodhill planning district in one direction, Buckeye-Shaker Square planning district in another, and the City of Cleveland Heights in yet another direction.

A small portion of the Tinnerman Building on Fulton Road,
just south of Lorain Avenue, is visible from the street. Most
of the historic building, owned by The Dalad Group, will be
 rehabilitated with apartments (Google).

Ohio City: Dalad Group submits plans for Tinnerman Building

Nearly three years after purchasing the historic Tinnerman Building, 2038 Fulton Road, The Dalad Group of Independence has declared its intentions to redevelop the largest portion into 53 apartments. The "announcement" came in the form of a zoning variance request to the city's Board of Zoning Appeals (BZA).

Of the 62,550-square-foot, seven-building complex that extends south behind homes to Chatham Avenue, 54,101 square feet are proposed for renovation, according to Dalad's filing with the city. The seven buildings range from one to three stories and were built from 1903 to 1938, county records show.

The Tinnerman Building was used most recently by Vista Color Imaging and Able Packaging. Vista moved to Brooklyn Heights and Able closed. It was named the Tinnerman Building because the Tinnerman Steel Range Co. was located on the site from 1880 to 1957, then moved to a new plant on Brookpark Road. It merged with Eaton Corp. in 1969.

The BZA filing was submitted by Paul E. Gallo LLC. The Gallo family has owned the property since at least the 1970s. However, property tax mailings are sent to Neal Viny, president of The Dalad Group at the firm's Independence address, per county records.

Next door to the Tinnerman Building is a long-vacant store built as a Rite Aid drug store and became a Hollywood Video store after 1998. It was bought in December 2016 by paper company FRE Holdings II created by MetroHealth System.

MetroHealth is moving most of its neighborhood clinical services from the city-owned Thomas F. McCafferty Health Center, 4242 Lorain Ave., to its new facility at the Urban Community School campus. However, a MetroHealth dental clinic will move into the the former drug/video store. The Veterans Administration also has services at McCafferty but their new home isn't yet known. Once vacated, McCafferty will likely be sold by the city for redevelopment.

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