Thursday, September 12, 2019
Sherwin-Williams finally admits new HQ, R&D site search
In a press release shared today, SHW Chairman and Chief Executive Officer John G. Morikis admitted what has been reported here at NEOtrans for nearly a year -- that the global coatings giant has outgrown its scattered offices throughout Greater Cleveland and is looking for a new HQ+R&D.
“The company’s significant growth and global expansion over the last several decades has resulted in a less than optimal configuration of headquarters, offices and R&D facilities across multiple locations,” Morikis said.
This action comes as a result of the company’s ongoing review of its facilities requirements as it seeks to best meet the current and future needs of its customers and employees, the company said.
After multiple articles written here at NEOtrans, Morikis and SHW's public relations staff issued at least two intra-office e-mails (including one just last week) urging staff not to publicly discuss the company's HQ+R&D facilities search.
The reference to "other states" is likely to appease former Valspar workers now working for SHW in Minneapolis and other locales, according to several sources. The Cleveland suburb of Brecksville also has been mentioned, as the DiGeronimo family -- developers of the former Veterans Administration hospital -- have pitched their site for SHW's R&D facility and possibly the HQ as well.
Also, other sources reminded that SHW sent request for qualifications to the Cleveland offices of Turner Construction Co. and Gilbane Building Co. for the construction of 1.8 million square feet of HQ+R&D facilities. And, Cleveland-based architectural firm Vocon was retained to develop site alternatives for the new HQ+R&D facilities. SHW's attention to the Cleveland offices of those firms may be noteworthy.
Councilman Kerry McCormack, whose Ward 3 includes downtown Cleveland, didn't sound terribly worried about SHW leaving.
"We're in good communication with Sherwin-Williams," he said. "We'll do whatever it takes to keep them. But companies that want to attract talent are looking at moving into cities, not leave them. We are going to work closely with Sherwin-Williams to make sure they have a great new home in Downtown Cleveland."
While company officials claimed that they would consider building a new home anywhere, few expected Swagelok to leave the city where it was founded in 1965. Sure enough, Swagelok decided to stay put and build a new Solon facility for 400 employees now, and possibly growing to 1,000 in the near future.
SHW's roots go 100 years deeper into Cleveland's soil. To pull them out would be a tremendous blow to the city and possibly to SHW as well. And it wouldn't merely be a public relations stain on SHW. All of SHW's headquarters employees and most of its research workers are located here.
A high-level source last week informed NEOtrans that SHW reportedly favors building its HQ+R&D on the west side of Public Square, the same location where SHW had proceeded to advance detailed civil engineering for a new HQ in 2014-15 before the firm decided to direct its resources to acquiring rival Valspar. SHW is on an increasingly speedy glidepath to pay down debt from the Valspar acquisition, possibly by 2022.
SHW has been in its current headquarters in the Landmark Office Tower at 101 W. Prospect Avenue in Downtown Cleveland, Ohio since 1930. The company expanded and filled out that building after it acquired it in 1985 and has since spread its 4,400 employees to multiple facilities in Greater Cleveland.
These facilities include the neighboring Skylight Office Tower, offices for the Performance Coatings Group at 4780 Hinckley Industrial Parkway in Cleveland, plus the Automotive Division Headquarters, 4440 Warrensville Center Rd. in Warrensville Heights. SHW also operates the Breen Technology Center, 601 Canal Rd. and additional automotive research facilities in Warrensville Heights.
The new HQ+R&D facilities will reportedly house 6,000 workers, several sources said.
In its press release, SHW said the company will update employees and external stakeholders on an ongoing basis as the multi-year process goes forward. In the meantime, SHW will continue to focus its efforts on the service, quality and innovations that fuel the company’s commitment to help customers around the world succeed, the company said in its written statement.
END
Saturday, September 7, 2019
NuCLEus may be on hold for years
NuCLEus was proposed by a partnership of Stark Enterprises and J-Dek Investments five years ago, but appears no closer to seeing construction (KJP). CLICK IMAGES TO ENLARGE |
The apparent decision to wait on the State of Ohio by the partnership, called Gateway Huron LLC, comprised of Stark Enterprises and J-Dek Investments Ltd., means that the project could be on hold for two to three years. The project was first announced in 2014.
That financial incentive is a so-called transformational tax credit, Senate Bill 39. It would create a new tax credit to incentivize the construction of transformational mixed-use developments (TMUD) in Ohio. NuCLEus would likely qualify, but it's not that simple.
NuCLEus is proposed to feature two 24-story buildings, one for residential and the other for offices, atop a muli-story pedestal of parking and retail between Prospect Avenue and Huron Road at East 4th Street.
According to Thompson Hine LLP, which helped draft the bill at the request of Stark, for a development to be considered a TMUD it must include a mix of land uses, have a development cost of more than $50 million and be 15 or more stories in height or at least 350,000 square feet.
The bill authorizes a nonrefundable insurance company tax credit of up to 10 percent of total eligible project costs for contributions of capital to eligible projects. The legislation still has to pass both the Ohio House of Representatives and the Ohio Senate in the same legislative session, then be signed into law by the governor.
Assuming that happens, it still doesn't guarantee that nuCLEus would be one of the certified TMUDs. Ohio's next biennial appropriations (budget) bill would have to authorize the number of TMUD credits the state will allow per year. Ohio just passed a biennial budget law this summer. The next one won't be passed until June 2021. A "budget corrections bill" is often passed in the intervening years, however.
Ask developers John Carney, Bob Rains and David Goldberg who urged the creation of a $25 million Catalytic Historic Tax Credit to help finance their planned renovation of the May Co. building in downtown Cleveland. But their development project got passed over twice for the credit and ended up having to resort to a special earmark three years later at the conclusion of the program.
Ironically, the TMUD tax credit legislation has passed both the Ohio House and the Ohio Senate. It just hasn't done so in the same legislative session. House Bill 469 was passed by the House 91-0 in June 2018. But the term of the 132nd General Assembly expired at the end of 2018 before the Senate could pass it.
So in the 133rd General Assembly, Senate Bill 39 was introduced by Sen. Kirk Schuring. The Senate passed the nearly identical TMUD legislation by a 32-1 vote in July. The legislation was then introduced in the Ohio House and referred to the its Economic and Workforce Development Committee. No committee hearings have been scheduled for the remainder of the year but that can and probably will change.
Even if SB39 becomes law by year's end, the number of TMUD credits per year still has to be authorized by a budget bill sometime thereafter. Then, hopefully nuCLEus would win one of the TMUD credits perhaps as early as 2021 -- seven years after the project was first announced.
NuCLEus' prospective anchor tenant, Benesch Friedlander Coplan & Aronoff, has been remarkably patient. In 2015, it agreed to occupy 66,500 square feet in nuCLEus' office building, estimated to measure 400,000 square feet. A 250-unit residential building also is proposed.
Stark has attempted different public financing schemes to help pay for nuCLEus' construction costs. They included a tax-increment financing scheme involving the school district in 2017 when nuCLEus was proposed as a 54-story tower. Earlier this year, Stark sought a $12 million forgivable loan from the city. Neither scheme won acceptance.
These are the proposed uses in the two towers, representing Stark Enterprises' current plan for nuCLEus (Stark). |
As an example, Stark cited the city's blocking of the introduction of Bird electric scooters which had chosen Cleveland among its first 100 cities for its e-scooters. Despite that the scooters would improve the city's quality of life, Stark said "bureaucratic red tape, political posturing and a very unfortunate accident" kept Bird from introducing them here for many months.
Earlier this summer, Stark said he would not comment on the status of demolitions involving nuCLEus, citing a "delicate" political matter involving the city.
In related news, on Sept. 6, the City Planning Commission unanimously tabled a request by Stark Enterprises to demolish its vacant Herold Building, 310 Prospect Ave., next to the proposed nuCLEus site.
It did so a day after the commission's Design-Review Committee voted 7-3 against the demolition. The committee's vote was only advisory whereas the commission's vote would have been binding.
Stark asked the commission to table its request following the committee's negative recommendation so that it could work with the Historic Gateway District on seeking tax credits to renovate the building. The demolition was proposed in response to the city's condemnation of the Herold Building due to its many building code violations.
Rebecca Molyneaux, vice president of development at Stark Enterprises, told the committee it would cost $6 million merely to address the code violations. It could cost another $1 million to mothball the structure or millions more to renovate the building into a marketable property.
The committee on Sept. 5 offered to table Stark's demolition request but Stark initially refused. The committee then advised the Planning Commission to deny the demolition at its meeting the following day. At the Planning Commission meeting, Stark finally agreed to table its request.
portfolio of properties it acquired in 2014 from L&R Group of Companies for $26 million. L&R also tried to demolish the Herold Building but was rebuffed by the city. It discovered that it is extremely difficult to demolish a building in a designated Cleveland historic district.
That portfolio not only included the 3-acre parking lot where nuCLEus is proposed to rise, but also a 2.33-acre parking lot at West 9th Street and St. Clair Avenue. The latter site is reportedly involved in discussions for a possible high-rise residential development.
Stark also has experienced delays in Downtown Pittsburgh in trying to develop the $63 million Smith & Fifth project, previously called the Icon on Smithfield. The project would renovate the former Frank & Seder department store into apartments over restaurants. Stark bought the property nearly three years ago.
The start of construction has been postponed further, now expected to start in early 2020. The delays in developing the vacant building have become a source of impatience for some, according to an August article in the Pittsburgh Post-Gazette.
END
Wednesday, September 4, 2019
Sherwin-Williams HQ, R&D sites identified
The source also confirmed an earlier report that the HQ plus research and development center would measure 1.8 million square feet total. And he also confirmed that they were the subject of a request for qualifications (RFQ) sent several weeks ago to Cleveland-area construction management firms.
Additionally, the source said two firms received the RFQ -- Turner Construction Co. and Gilbane Building Co. No other construction management firms were identified. It should be noted that those two companies have the most experience locally not only in building high-rise structures, but also in digging caissons to bedrock for buildings nearly 30 stories and taller.
It shouldn't come as a surprise that SHW prefers to build its new HQ on Public Square to address its worsening space needs. It's the same location that SHW had advanced planning for a 900,000-square-foot HQ tower in 2014-15 before it redirected corporate resources to the acquisition of rival coatings firm Valspar. Today, SHW is a larger, faster-growing company than it was in 2015.
But what is a surprise is that a consolidated R&D center will supposedly come with it. And that's no small facility. It would combine the 140,293-square-foot Breen Technology Center, 601 Canal Rd., with the 170,000-square-foot former Valspar Applied Science & Technology Center in downtown Minneapolis. And it would add extra space for elbow room and future growth, presumably totaling about 330,000 to 350,000 square feet.
Consider that the General Services Administration approved building the 430-foot-tall Carl B. Stokes Federal Courthouse tower across narrow Canal Road from the Breen Technology Center. The research center is more like a college laboratory which often shares the same building with classrooms and offices.
But the big reasons why SHW executives want the R&D next to the HQ are to preserve and improve interaction between research and corporate. That's important for ensuring innovation as well as for security. Electronic transmittal of research findings can be vulnerable to outside attack, such as for corporate espionage or by garage-based hackers. And, consider that SHW has numerous government contracts, including the military.
Lastly, the 1.8 million square feet of space noted in the RFQ does not include parking, another source said. The parking component alone will be a massive structure. For example, providing a parking structure for just half of the 6,000 SHW employees involved in this project would mean a garage measuring more than 1 million square feet. But, at this early stage, it isn't known what the parking needs will be.
A new SHW HQ tower could make a colorful state- ment. An example would be the Wilshire Grand Center in Los Angeles. At night, its LED strip can change colors for certain occasions (UrbanOhio). |
Yes, it is always possible that something could come along and slow, stop or redirect this project to another community, such as a Cleveland suburb. But, increasingly, that doesn't appear to be the case.
This HQ+R&D project is going to be a gigantic undertaking, involving some gigantic amounts of money coming from a corporate cash flow whose volume boggles the mind. It is quite likely that this project will cost somewhere in the vicinity of $2 billion.
While that sounds like a lot, a $2 billion construction cost could be funded by SHW as a current liability (ie: debt paid off in less than a year). That's thanks to SHW's post-Valspar net operating cash flow.
SHW's cash flow is so voluminous that even a major recession let alone a city's public incentives are unlikely to move the needle much for SHW. However, SHW is still reportedly listening to offers from other communities.
The company's net operating cash flow is nearly $2 billion per year -- a 49 percent increase from 2016, the last full year before SHW absorbed Valspar. And it's almost double the cash flow from 2014.
Even more impressive, during the depths of the Great Recession in 2008 and 2009, SHW's net operating cash flow was $876 million and $859 million, respectively. That was well before the Valspar acquisition.
SHW is a very resilient company. So even if there is a recession, SHW could probably still afford this 1.8-million-square-foot HQ+R&D facility with little difficulty -- and without public incentives.
END
Thursday, August 29, 2019
Market Square tax abatement isn't the issue; it's about control
The bonds would finance most of the $200 million Market Square development, including a 10-story office building and seven-story apartment building, at Lorain Avenue and West 25th Street in Ohio City. The innovative project, using timber framing, would reduce emissions by 40 percent mostly from reduced heating and cooling, but also from avoiding the manufacture of steel and concrete.
That's what made the project attractive to OAQDA. That, along with 13 letters of support from the likes of Ward 3 Councilman Kerry McCormack, Cleveland Building & Construction Trades Council Executive Secretary David Wondolowski, Ohio City Inc. Executive Director Tom McNair, Cleveland-Cuyahoga County Port Authority CEO William Friedman, and economics professor Daniel Shoag, Ph.D. from the Weatherhead School of Management at Case Western Reserve University.
But moments later, three letters of opposition arrived by e-mail. Their authors were the City of Cleveland's Chief of Regional Development Ed Rybka, Cleveland Metropolitan School District CEO Eric Gordon and Cleveland Metroparks CEO Brian Zimmerman.
All complained bitterly about lost future property taxes -- taxes they would never get if Harbor Bay's development, being undertaken under the name Ohio City Legacy LLC., didn't win tax abatement.
OAQDA tabled Harbor Bay's request (click here for a draft of Resolution 19-47), not only putting the $200 million investment by the Chicago-based company in jeopardy, but also several other nearby proposed developments that were triggered by the Market Square project.
Among those catalyzed are a housing conversion of the closing Voss Industries, a new-construction transit oriented development by Carnegie Management, a tax-increment financed renovation of the West 25th-Ohio City Red Line rail station, plus several developments along West 25th that have yet to be announced publicly.
Harbor Bay Project Director Dan Whalen noted that all of Market Square's office and retail tenants will be new to Greater Cleveland, bringing more than 1,000 jobs and nearly $11.8 million per year in new sales and incomes taxes to the city and county. More than 300 residents would live across the street from the West Side Market, the Red Line station and new greenway trail.
And just like the city's 15-year, 100 percent tax abatement which it routinely awards to similar developments, the state's exemption wouldn't apply to land -- only to buildings.
That means the Market Square project would increase the value of the land which currently pays only $85,000 in property taxes. The new development would double that amount of property taxes to the school district and the Metroparks while tripling the property's existing $17,000 contribution to the Ohio City's Special Improvement District, Whalen said.
"We're willing to be flexible on the duration of the tax exemption," Whalen offered. "And this exemption eliminates the need for tax-increment financing which the city routinely gives to new construction projects of this size."
Gordon and Zimmerman also offered to be flexible on the public financing, which Whalen said is necessary for Cleveland projects that cost as much as those in Chicago to build, but lack the high rents of Chicago.
"We are more than willing to work with all of the interested parties and believe it is important that the community as a whole be engaged in this discussion," Gordon wrote in an Aug. 13 letter to OAQDA.
Harbor Bay has an educational program called Project Classroom that uses skilled professionals to teach real estate development, design and construction while on the job. In Cleveland, Whalen says his company would partner with the school district, vocational schools and the union trade organizations to expand that program here. Each seemed excited at that prospect, he said.
Zimmerman said in an Aug. 13 e-mail to OAQDA that he was willing to accept a shorter bond and tax-exemption term of 20 years, or better yet, 10 years, with conditions including an annual audit of the project's performance measures.
"(OAQDA should) require Harbor Bay/Ohio City Legacy LLC to contribute a meaningful amount for (Red Line Greenway) trail enhancement/construction in the vicinity of their project," Zimmerman wrote.
Rybka made no offers in his Aug. 13 letter to OAQDA. Instead, he flat-out told OAQDA to deny the financing request.
Worse, just hours after a meeting Tuesday (Aug. 27) between Cleveland city officials and the Harbor Bay development team, a cleveland.com reporter was tipped off to the proposed exemption and the city's claims about the project, Whalen said.
That resulted in an article that was heavily slanted in favor of the city's position. It lacked any information about the new taxes that the project would bring in, or that no new property tax would be generated if the project never happened. In fact, less tax revenue would result after a demolition of the retail plaza, already approved by the city.
"We've already invested $10 million on the project in terms of buying the property, architectural fees, getting City Planning Commission approvals and so on," Whalen said on Aug. 19. "This (OAQDA) financing was the last piece. We have to commit in the next 30 days on whether to proceed. The project is 70 percent bid and we can hold those prices for only a limited time."
OAQDA has already approved significant financing requests this summer, including $100 million in bonds for a southern Ohio utility development project by the Ohio Valley Electric Corp. and a $350 million bond issue and 30-year tax exemption for expansion of AMG Vanadium's industrial recycling center in Muskingum County that would create 100 jobs. Harbor Bay's project would create more than 1,000 jobs.
Ironically, the city seemed less concerned about "lost tax revenues" when it was willing to offer a 100 percent property tax abatement to the Market Square development before Harbor Bay investigated the state bonding opportunity. But apparently, city officials feel that only they should be allowed to abate tax revenues to the schools, Metroparks and others.
“We really think it’s overstepping,” Rybka said in the cleveland.com article.
OAQDA could take up Harbor Bay's request again at its next meeting, scheduled for Sept. 10.
END
Monday, August 26, 2019
Sherwin-Williams seeks builders for HQ + R&D project
That process suggests that SHW is on a schedule that could have them start construction on a new HQ and R&D project by 2022. And some aspects of the process point toward downtown Cleveland as the site for most, if not all of this massive project.
According to a source, a Request For Qualifications (RFQ) was sent to a small number of construction management firms in Greater Cleveland for the construction of a new headquarters and research center for Sherwin-Williams. The source didn't identify which firms received the RFQ, but it was reportedly sent by SHW's real estate broker CBRE.
An RFQ is intended to reduce the number of bidders on a project to only those with the expertise to qualify for the project. So then why issue it to so few firms to start with?
A logical assumption is that an RFQ was issued because SHW needs a highly specialized construction manager. Furthermore, considering that so few firms received the RFQ, it suggests that SHW apparently needs a level of expertise that few local construction management firms have.
What expertise? It isn't known for certain, but the temptation is point to firms that know how to build supertall skyscrapers, like those that reach up to 900 feet tall and require caissons excavated 200 feet down to Cleveland's bedrock.
Either number is large enough to mean that the project includes both the HQ and the R&D. It doesn't mean they'll be in the same building or even on the same property. But it does mean they could be part of the same construction bid.
Another source says that if an office campus of shorter buildings for an HQ+R&D near downtown or in the suburbs was under serious consideration, then the RFQ probably would have been sent to many more local construction management firms. It apparently wasn't.
That all leads to the next big question: where would the HQ+R&D be built? The RFQ apparently didn't identify the project's location except that it would be in the Greater Cleveland area and it would total 1.8 million square feet. The construction firm, when selected, will then presumably learn where the project will be built.
Vocon Partners, LLC is reportedly designing conceptual alternatives, including for different locations downtown. It isn't publicly known where those sites are. One site that is likely to be strongly considered is the site where SHW planned in 2014-15 to consolidate its scattered offices -- the Jacobs lot on Public Square.
Councilman Kerry McCormack, whose Ward 3 includes downtown Cleveland, didn't sound terribly worried about SHW leaving downtown Cleveland for the suburbs.
"We're in good communication with Sherwin-Williams," he said. "We'll do whatever it takes to keep them. But companies that want to attract talent are looking at moving into cities, not leave them."
While there are a lot of moving parts at work here, and based on the timeline of past projects, it is possible that facility conceptual designs, programming, infrastructure and other components could be ready for delivery to a city's planning commission in as soon as a year from now.
SHW representatives would likely request approval of conceptual plans, then refine them into more detailed schematic designs. Approval of the conceptual plans will first require releasing them publicly. That's when the public will probably get its first official notice of the project. The 6,000 SHW employees involved, as well as civic-minded Clevelanders, will have to wait until then.
Thankfully, at least SHW is no longer officially denying that there may be an HQ+R&D project on the horizon. They've confirmed they are analyzing their HQ space needs, but are peddling the theme that they do such analyses regularly. That's pretty unlikely considering the last time SHW moved into a new HQ building was 1930.
several facilities beyond its aging, 900,000-square-foot Landmark Office Tower HQ where employees have complained of uncomfortable climate controls, lack of open floor layouts and even roaches. SHW's apparently random leasing of additional offices since 2014 doesn't scream "coherent plan."
Offices are located among three non-contiguous floors totaling 51,810 square feet in the Skylight Office Tower, a remodeled 151,830-square-foot flex space at 4780 Hinckley Industrial Parkway in Cleveland, as well as in 30,000 square feet of the Automotive Finishes Corp. facility, 4440 Warrensville Center Rd. in Warrensville Heights.
That doesn't include the 140,293-square-foot Breen Technology Center in downtown Cleveland and the former Valspar Applied Science & Technology Center in downtown Minneapolis. That complex includes several renovated historic structures and totals more than 170,000 square feet.
If combined into a new facility that offered more elbow room plus space for future expansion, it could mean an R&D center of 330,000 square feet or more. Parking for thousands of employees and visitors would add roughly 350 square feet per parking space in a multi-level structure. It isn't publicly known if the 1.8 million square feet figure for the HQ+R&D includes parking.
What is known is that SHW's debt burden from the 2016-17 Valspar acquisition is shrinking at an increasing rate. Six months ago, SHW had been on a glidepath to get its long-term debt-to-equity (D/E) ratio down to 2:1 by December 2019.
But it's already five months ahead of that pace. Last year, SHW looked like it would reduce its long-term debt to $8.12 billion by June 30, 2019. Instead, it fell to $7.2 billion. Shareholder equity is only slightly below where it was destined to be on June 30. It was on target to be about $3.77 billion. Instead it was at $3.75 billion at the mid-year point.
SHW debt-to-equity ratio on June 30 was already below 2:1 -- at 1.92:1, thanks to strong cash flow from the Valspar acquisition.
According to second-hand sources, SHW officials have said that the company wouldn't consider building a new HQ until its debt was down to reasonable levels. "Reasonable" may well mean the coatings industry average of a 1:1 D/E ratio.
Last year, it appeared SHW was on a glidepath to hit that 1:1 D/E ratio at the end of 2022. But if cash flow continues to be strong and shareholder equity continues to rise steadily, SHW should get its D/E down to 1:1 in a little more than two years from now.
That's roughly when the planning, programming, design and procurement should allow for construction of the HQ+R&D facilities to begin. Fingers crossed.
END
Tuesday, August 20, 2019
NuCLEus development stalls -- again?
The nuCLEus development, as seen from Huron Road at East 4th Street and next to the expanded Rocket Mortgage Field House (Stark). CLICK IMAGES TO ENLARGE |
One source says the project is on hold. The other says the project is dead. The reason why the project apparently has stalled isn't completely clear.
However, according to one rumor, it appears that there may be differences of opinion between the city and Stark as to how helpful one has been to the other. Some of that was suggested by recent events.
On Aug. 15, and at the request of Ward 3 Councilman Kerry McCormack, the Downtown/Flats Design Review Committee tabled a request by B&B Wrecking Inc. to demolish a condemned, four-story building at 310 Prospect Ave.
B&B Wrecking is a Stark contractor. Stark owns the property and the structure, called the Herold Building, through an affiliate Herold Building LLC. The structure was built in 1900 and measures 15,720 square feet, according to Cuyahoga County records.
Stark and its nuCLEus partner, J-Dek Investments Ltd., own the neighboring 16-space parking lot property through a partnership Gateway Huron, LLC. Both properties would reportedly serve as a single staging area during the construction of nuCLEus.
The Herold Building is within a National Historic District and is a designated National Historical Landmark. The previous owner, Los-Angeles-based L&R Group of Companies, tried to demolish the Herold Building for a new but smaller building. It was rebuffed by the city. Stark pledged to refurbish the building when it bought the property in 2014. Since then, however, the building has only decayed further.
Outlined in green, the Herold Building at 310 Prospect Ave. is proposed for demolition, apparently to help create a staging area for the construction of nuCLEus (Stark). |
"The city is looking for a detailed plan," McCormack said in an Aug. 19 interview. "I have not been briefed on what the plan is. In general, if you're going to demolish a building, the last thing we need is a surface parking lot. I don't know if that's what they propose. We just want to see a plan."
In an interview several weeks ago, following an article reporting that demolition for nuCLEus was scheduled to start in mid-August, Stark Enterprises' Chief Operating Officer Ezra Stark declined comment about the possible demolitions that could also include a 418-space parking deck at 611 Huron and an historic building at 618 Prospect featuring Mr. Albert's Men's World clothier.
However, Stark said the reason why he declined comment on the demolitions was due to a delicate "political" matter. He offered no further details.
"I don't even know how to answer that question anymore -- I hear it a lot," said the councilman whose ward includes downtown. "My understanding is it's still alive."
Stark first announced nuCLEus five years ago, long before it or J-Dek had most of the financing in place to develop the project. That was when nuCLEus was planned to be a 54-story skyscraper.
The current plan for NuCLEus is that it would feature two 24-story towers atop a pedestal of retail and parking between Prospect Avenue and Huron Road at East 4th Street. One tower would feature 400,000 square feet of offices; the other 250 residential units.
While it was reported in late June that nuCLEus now has most of its financing in place, others in Cleveland real estate circles dispute this. Some believe that nuCLEus is far from finalizing its capital stack.
In yet another of the rumors surrounding nuCLEus, Stark apparently is redirecting capital resources -- including Opportunity Zone program funds which have time constraints on their use -- to projects in other cities including Pittsburgh.
"I think we have a solid economic development package" that's been offered by the City of Cleveland, Cuyahoga County and the State of Ohio to aid nuCLEus, McCormack volunteered.
Saturday, August 17, 2019
Midtown property sale designed to spur new development
This a conceptual masterplan of the Penn Square area of Cleveland's Midtown, with the Greater Cleveland Regional Transit Authority's property outlined in blue (Pennrose). CLICK IMAGES TO ENLARGE |
The sale is the latest example of intensifying interest in rejuvenating this once-vibrant neighborhood that's been relegated to pass-through status for more than 40 years.
GCRTA has a tentative deal with Civic Property Development LLC to sell seven parcels totaling 2.38 acres at 5508-5810 Euclid Ave. for $550,000. The Cleveland Foundation will also contribute $50,000 to aid in the planning of a transit oriented development (TOD) project or projects on the site, in partnership with GCRTA.
The foundation created Civic Property Development, filing incorporation documents with the state on May 15, to support this development site and possibly others in the future. The Cleveland Foundation has for years supported programs and projects to boost Cleveland neighborhoods, especially Midtown.
The Cleveland Foundation's conceptual plan for its new head- quarters (at right) and a new Center for Innovation. This view looks north up East 66th Street from Euclid Avenue (CF). |
The Cleveland Foundation proposes a three-story, 50,500-square-foot headquarters building on the northeast corner of of Euclid and East 66th. On the northwest corner, the foundation proposes a future Center For Innovation measuring 100,000 square feet.
While the immediate vicinity of Midtown and Hough has seen more than $400 million worth of development in the last decade, 40 percent of area residents and 66 percent of children live in poverty, according to the city.
It isn't known yet what would be planned for the GCRTA property, but TOD typically features dense, mixed-use residential and commercial development with less emphasis on parking and more attention to walkability and, thus, transit access. The site is next to the East 59th Street station stop on GCRTA's HealthLine bus rapid transit.
Looking east on Euclid Avenue in September 2018 from below the Norfolk Southern railroad overpass. The vacant, GCRTA- owned property is visible at right (Google). |
The Euclid-East 55th area was called Penn Square for more than 100 years because the main Cleveland railroad passenger station for the Pennsylvania Railroad was located here. Travelers could board and alight 24 daily passenger trains to/from places as far west as St. Louis and as far east as New York City.
Two busy streetcar lines also crossed here, carrying as many riders as all of Northeast Ohio's transit agencies combined do today. The neighborhood once had the density and activity of a 24-hour, satellite downtown, with large apartment and commercial buildings, shops, cafes and theaters.
It was sold in 1977 to the DiGeronimo family, doing business as Ace Realty, and leased it to several tenants. The properties continued to decline. DiGeronimo, in turn, sold the land in 2002 to Lassi Enterprises, LLC, a subsidiary of MidTown Cleveland Inc., a community development corporation.
Midtown transferred it to GCRTA in 2005 so that it could demolish the handful of decaying buildings remaining on the property. Here, GCRTA established a construction staging site for its $200 million Euclid Corridor (later called HealthLine) that was completed in 2008. The properties have remained vacant ever since. GCRTA put the land up for sale in 2017.
END
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