Lakewood weighs Plan B for hospital redevelopment

Could the City of Lakewood go with Plan B -- the runner-up
development proposal submitted for the redevelopment of the
former Lakewood Hospital site? CASTO/North Pointe Realty
submitted this rendering as part of their proposal for redeve-
loping the hospital site. This view looks southward at the in-
tersection of Detroit and Belle avenues (Dimit Architects).
CLICK IMAGES TO ENLARGE THEM

Starting today, the City of Lakewood will begin the process of salvaging the redevelopment of the city-owned Lakewood Hospital site.

That redevelopment was left in limbo when Mayor Meghan George last week announced that the city and its first-choice developer had reached an irreconcilable impasse over the site clean-up costs. Carnegie Management and Development Corp. had terminated its agreement with the city.

City Council members will meet virtually today, forced by the COVID-19 crisis and governor's social distancing order, starting with a Finance Committee meeting at 5:30 p.m. That will be followed by a Health & Human Services Committee and then the regular meeting of City Council at 7:30 p.m.

While it is too soon know what course of action the city will take following Carnegie's departure, there are some possible outcomes being considered by city officials. One option is to reissue a request for qualifications from developers for the site and weight the proposals received. Another option is that the city could turn to one of the other development teams that responded to the city's request for qualifications in 2017.

From that process three years ago, the city chose Carnegie. One of the reasons the city picked Westlake-based Carnegie is because it was the only respondent that said it could develop the hospital site without any city subsidies, city officials said. However the city would clean the site and then sell it to Carnegie for $1.

Carnegie's proposal, called One Lakewood Place, included 200 housing units, 100,000 square feet of offices, 84,000 square feet of retail and the aforementioned hotel which would have re-purposed the historic but vacant Curtis Block, 14501 Detroit Ave.The development site is between Belle and Marlowe avenues, extending south of Detroit by about 750 feet.

Carnegie Management and Development Corp.'s plan for rede-
veloping the hospital site included an office building at center-
right and a hotel at the left with ground-floor retail. South of
those uses would be hundreds of housing units. This view is
southward from the intersection of Detroit and Belle (CMDC).

The runner-up development team was led by CASTO of Columbus, North Pointe Realty of Mayfield Heights and Dimit Architects of Lakewood. Its proposed $62 million project would have 280 residential units (apartments and townhomes), 23,673 square feet of ground-floor retail, restaurants and community spaces, 50,265 square feet of offices plus 569 parking spaces, according to CASTO/North Pointe's 2017 proposal.

Their proposal centered around a public plaza, public lawn and a 12-story building containing eight stories of apartments over three stories of offices over ground-floor community center, plus retail or restaurants. The uses in that building would amount to 108 residential units, 50,265 square feet of offices and 11,400 square feet of usable ground-floor space.

CASTO has built a wide variety of mixed-use developments on sites which hosted prior developments in Columbus, Cincinnati and now in Cleveland. Its first Cleveland development is The Dexter, a five-story, 116-unit apartment building over a ground-floor retail/restaurant space, now under construction at Fulton Road and Franklin Boulevard in Ohio City.

By comparison, this was Carnegie's first-ever development of a site that was previously developed. Its prior projects were on former fields and forests that required no costly removal of structures or pollutants.

A source in Carnegie's development team who was not authorized to speak publicly said Carnegie was not aware of how much more expensive it is to redevelop a previously developed site. But the same source said Carnegie's project budget of $72 million for the first phase was realistic. He also said the city caused Carnegie to incur additional costs.

"The added expenditures that the city continued to push to them (Carnegie) allowed this project to be in its current state," the source said.

CASTO/North Pointe Realty's site plan
for the hospital site extends south from
Detroit Avenue (top of image) between
Belle and Marlowe avenues (Dimit). 

According to Carnegie's development agreement with the city, the developer had to deliver to the city "a complete set of all surveys, title reports, environmental reports, soil studies and all other written materials, records or other documents related to the Project that are in Developer’s possession or under its control."

Carnegie was responsible for identifying any environmental problems with the site and communicating it with the city. The city was responsible for providing to Carnegie a clean site, ready for development within a required time frame. Furthermore, the developer released the city of responsibility for all liability for the site's environmental conditions.

The city budgeted nearly $4.6 million and hired SafeCo Environmental Services Inc. in November 2018 to remove asbestos and other hazardous materials as well as demolish the hospital buildings. Cleveland Clinic closed the hospital in 2016 in favor of a new, exurban location in Lorain County

During the demolition, the city's contractor reportedly discovered pollutants from the former Lakewood Hospital laundry facilities which needed to be cleaned and ventilated. Also, an old creek found under the site had to be relocated and a pump house added. That increased the city's site-preparation costs by about $2.4 million, with $1 million of that funded by the Cleveland Clinic.

If one party terminated the development agreement due to a failure by the other party, the terminating party is due up to $500,000 from the failing party. Carnegie will likely demand $500,000 from the city. Mayor George notified City Council members in writing of Carnegie's termination of the deal on April 16 but disputed Carnegie's reasons for walking away -- that the city didn't prepare the site within the required time frame.

"After many months of negotiation over possible modifications to the development and use agreement (DUA) between Carnegie Management and Development Corporation and the City of Lakewood relating to the One Lakewood Place project, Carnegie ceased negotiations with the city," George wrote.

Under CASTO/North Pointe Realty's plan, a five-story apart-
ment building would extend south from Detroit Avenue along
Marlowe Avenue. This view looks south (Dimit).

"Carnegie is taking the position that Carnegie has terminated the DUA. The city disputes Carnegie’s basis for termination, but has expressed an interest in working with Carnegie to facilitate an amicable parting of the ways during these extraordinary times," George added.

"Our Plan B is that we will identify another developer," said Council President Dan O'Malley. "We may go our with second choice (CASTO and North Pointe). The site is prepped and ready for development."

Council's Finance Committee Chair Tom Bullock said that the city established a reserve fund following Cleveland Clinic's closure of Lakewood Hospital to soften its impact on the city's budget. But with with recent real estate developments and more young professionals moving into the city, officials haven't had to touch that reserve fund which has more than $2.5 million in it.

"The closure of the hospital, which was one of the city's largest employers, has brought no additional tax burden to city," Bullock said. "Lakewood should have confidence in itself that we are still appealing and attractive. We weathered the Great Recession better than most communities and we'll weather this (COVID-19) crisis."

He added that the public should expect the best from the redevelopment of the former Lakewood Hospital site. When redeveloped, it will add to the city's taxbase that supports city services and the schools.

"We can and should pursue the original development objectives which were ambitious," Bullock said. "The objectives are to realize a rare opportunity. For every reason we can and should pursue those development objectives which include providing a public square, to add jobs, housing and economic activity. The city has a significant amount of control over what gets built here because it owns the land."

END

Carnegie exits One Lakewood Place, new developer sought

The most recent rendering of One Lakewood Place with an
office building (center-right) and a late-addition boutique ho-
tel (left). Unfortunately, city officials may have to go back to
square one in negotiating with a new developer as Carnegie
Management and Development Corp. has withdrawn from
the project in a dispute over site clean-up costs (CMDC).

UPDATED APRIL 17, 2020

Lakewood Mayor Meghan George will reportedly announce tomorrow that Carnegie Management and Development Corp. is withdrawing as the city's chosen developer of the $72 million One Lakewood Place project, according to two sources.

The divorce is due to irreconcilable differences over who should pay upwards of $2 million worth of clean-up costs after pollutants were discovered late in into the inspection, clean-up and demolition of the 5.6-acre site at Detroit and Belle avenues in downtown Lakewood. Also, an old creek was found under the site.

It comes at a particularly unfortunate moment for the One Lakewood Place project as Carnegie had joined forces two months earlier with lodging developer Ceres Enterprises LLC of Westlake to add an eight-story boutique hotel to the project.

Also, Carnegie had a tentative deal with a global insurance company to relocate more than 100 employees from a suburban Cleveland office to One Lakewood Place, according to a third source who spoke off the record.

Timing of the separation is especially bad as businesses and municipalities are tightening their belts as they face reduced business and tax revenues from the economic shutdown to mitigate the spread of the COVID-19 virus. It will be difficult for the city to come up with additional money to clean up the site, and for any replacement developer to financially contribute what Carnegie would not.

A clear sign of trouble was the removal of this sign on or about
April 9 at Detroit and Belle avenues. However, there were other
signs of trouble brewing months before (The Lakewood Citizen).

"The city will have to identify another developer," said a source close to the project. The source, who wasn't authorized to speak publicly about the project, did not wish to be identified in this article. "The city may go with its second choice (of developer)."

One Lakewood Place was proposed with 200 housing units, 100,000 square feet of offices, 84,000 square feet of retail and the aforementioned hotel which would have re-purposed the historic but vacant Curtis Block, 14501 Detroit Ave.

The site for the mega-development was the former Lakewood Hospital that was demolished a year ago. The source noted that, when the city solicited for development proposals for the site, none of the developers proposed retaining the hospital's buildings. They all wanted the site cleared and cleaned so they could start anew.

This was Carnegie's first-ever development project on a site that had been previously developed. Its prior experience was in developing farmlands and forests at or beyond suburban fringe. Another source said that Carnegie was not aware of the higher costs of developing previously developed land in older, established communities.

A message left with a receptionist for Rustom Khouri III, director of business development at Carnegie, was not returned prior to publication.

Aerial view of Carnegie's vision of what One Lakewood Place
would have looked like. A new developer will have to take
over from where Carnegie had left off (Carnegie).

Per Carnegie's development agreement with the city, the developer must deliver to the city "a complete set of all surveys, title reports, environmental reports, soil studies and all other written materials, records or other documents related to the Project that are in Developer’s possession or under its control."

Also, per the agreement, Carnegie was responsible for identifying any environmental problems with the site. Furthermore, the developer released the city of responsibility for all liability for the site's environmental conditions.

But it was the city that had hired SafeCo Environmental Services Inc. in November 2018 and budgeted nearly $4.6 million to remove asbestos and other hazardous materials as well as demolish the hospital buildings. Their work was completed in mid-2019. Construction of One Lakewood Place was due to start by the end of 2019.

Former Mayor Mike Summers chose not to seek re-election last fall. He was succeeded by Mayor George, who narrowly defeated former Council President Sam O'Leary; she was sworn in this past January. George, an outspoken critic of the project, took a new look at the One Lakewood Place development after taking office.

On March 11, Mayor George along with then-Planning Director Bryce Sylvester co-wrote a letter to City Council members advising them that the One Lakewood Place project was in trouble. Sylvester was since hired for another job outside of the city; he did not return a phone message requesting more information.

A later phase of development of One Lakewood Place included
dozens of townhomes to the south of the office building and
a housing-wrapped parking garage. This concept view looks
northward on Belle Avenue (RDL).

George said that, on Feb. 7, the city delivered the final certification letter that the demolition, abatement, and the site preparation work at the former Lakewood Hospital site has been completed per the development agreement between Carnegie Management and the City of Lakewood.

"Environmental concerns uncovered during the demolition required additional steps and costs, pushing back our delivery date to February 7th, but still within the timeline established in the development agreement," George and Sylvester wrote.

"As you recall, (city) council approved additional contracting authority to support environmental cleanup of the site in December 2019. Even with these additional city funds contributed to the project for environmental mitigation, the developer has identified a significant financial gap, which represents a challenge to executing on the project as originally contemplated. Carnegie and the city have been exploring ways to move forward and make the project a reality," the letter added.

The newly discovered pollutants reportedly were from the former Lakewood Hospital laundry facilities which needed to be cleaned. The old creek found under the site had to be relocated and a pump house added, sources said.

Several city officials contacted by NEOtrans said they would not comment until after the mayor's official announcement tomorrow.

Developing in a built-up, densely populated inner-ring suburb isn't easy. For example, the City of Cleveland Heights had spent 20 years and is now on its fourth developer, Flaherty and Collins, to proceed with constructing the Top of The Hill mixed-use development atop Cedar Hill. That project is scheduled to break ground this spring.

END

New nuCLEus, sans apartments, eyed for summer start

Stark Enterprises wants to get started on building nuCLEus to

meet the timetable of its anchor tenant. So the Cleveland real

estate developer has slimmed the planned office building and

removed the apartment tower to trim more than $100 million

from the prior plan's $353 million construction cost (Cresco).

CLICK IMAGES TO ENLARGE THEM

If at first you don't succeed, try, try, try again.

Stark Enterprises has publicly released a third iteration of its proposed nuCLEus development. And sources say that Stark has the resources to move forward with a groundbreaking based on this plan as soon as the city's design review boards can meet again and act on it.

This version eliminates or delays residential in the project, now focusing on a single tower for offices only, rising above a large parking deck with ground-floor retail. Each new mixed-use concept by Stark for nuCLEus has eliminated a use from the prior variation.

The first, 2014 version was envisioned as a $500 million, 54-story structure with a hotel bridging between office and residential buildings, above a pedestal of parking and retail. The second version retained the retail/parking pedestal but perched atop it two separate 24-story towers of office and residential, costing $353 million.

The pedestal remains as does one tower -- an office building called One nuCLEus Place. But it would stand alone atop the far north end of the pedestal. Spaces were left open atop the east and south portions of the pedestal, perhaps for a future residential tower to rise someday.

The office tower, named One nuCLEus Place, would rise 25
stories and feature 340,000 square feet of Class A space, 73
percent of which is already spoken for, Stark says (Cresco).

E-mails sent to Stark Chief Operating Officer Ezra Stark seeking more information were not returned prior to publication. He acknowledged receiving them, however.

Stark is seeking to get shovels into the ground this summer for the office tower-only plan for a pressing reason. Its prospective anchor tenant, Benesch, Friedlander, Coplan & Aronoff, one of the region's largest and fastest-growing law firms, is quickly approaching the end of its lease at 200 Public Square. That lease will expire in July 2022.

It will take about two years for the pedestal and office tower to be built. But Stark executives apparently aren't worried about losing Benesch to another building in downtown Cleveland. They said they're worried about losing them to another city such as Chicago or San Francisco where Benesch also has offices.

Stark executives said recently they are concerned that Benesch will go the way of other major Cleveland law firms like Jones Day and relocate their growing number of employees to larger cities. A trophy office building could be a major recruiting tool for Benesch, Stark executives said in recent media interviews.

New site plan for nuCLEus shows the ground level uses, most
of which are for the 103,000 square feet of retail and restaurant
uses. The plan preserve the "laneway" linking Prospect Avenue
and Huron Road. But it also shows the Herold Building, at 310-
320 Prospect, expanded as an office building with a larger foot-
print and a vertical addition giving it eight stories (Cresco).

Benesch pledged to take 180,000 square feet of office space at nuCLEus. Another 68,000 square feet of office space was spoken for by other potential tenants, including Stark Enterprises for its headquarters. In total, those tenants would have filled 62 percent of the previously planned, 400,000-square-foot nuCLEus office tower.

But the new nuCLEus office tower is proposed to be 340,000 square feet. With the commitments in hand, Stark has 73 percent of that building already spoken for.

Another factor involved in Stark's desire to move forward immediately is the historically low interest rates. The low "cost of money" reduces the cost of borrowing for construction projects. For those projects like nuCLEus that have been just shy of their capital financing goals, low interest rates can help them stretch over the fiscal finish line.

There is no publicly available construction cost estimate for the new nuCLEus plan yet. Stark had all but about $15 million in hand or pledged to build the previous version -- a gap which it had hoped to fill with a Transformational Mixed Use Development tax credit, the legislation for which is pending in the Ohio General Assembly but stalled because of the COVID-19 crisis.

This image, showing the outdoor greenspaces on the rooftop
of the parking garage, is oriented with north at the bottom.
The top, or south side of the deck, may be reserved for a
future building such as apartments, hotel or additional
offices atop the parking structure (Cresco).

Eliminating or delaying the apartment building from the project certainly helps Stark deliver the rest of nuCLEus sooner. Although the cost of the discarded apartment tower isn't publicly known either, it represents a hefty savings.

For comparison, Stark spent $95 million building the 19-story, 187-unit, roughly 260,000-square-foot Beacon apartment tower atop the existing, 9-story 515 Euclid garage a block away. That tower was completed last year.

And, at Euclid Avenue and East 17th Street, the Playhouse Square Foundation is spending $138 million to build the 34-story, 318-unit, 602,000-square-foot Lumen Apartments and associated 550-space garage. This tower is scheduled to receive its first residents in June.

Based on the scale of those projects and their construction costs, less the cost of a garage, nuCLEus' discarded 250-unit apartment tower would have measured about 350,000 square feet and cost upwards of $100 million to build.

Outdoor greenspaces on the roof of the parking garage would
provide private terraces for the fourth-floor office tenant while
the eighth-level observation deck would open to all tenants of
One nuCLEus Place office tenants (Cresco).

According to a presentation made publicly available by Stark's real estate brokerage Cresco within One nuCLEus Place's listing, the new design for nuCLEus shows a still-large development totaling roughly 1 million square feet among all proposed uses including parking.

That breaks down to 340,000 square feet of highly sought after Class A office space downtown, 103,000 square feet of retail and 34,000 square feet of amenity space. Despite the office building's reduction and the elimination of the 250-unit apartment tower, the number of parking spaces in the six-level deck would remain roughly the same at 1,375 parking spaces, equaling about 450,000 square feet.

One nuCLEus Place would rise on 2.18 acres of land owned by a partnership of Stark and J-Dek Investments Ltd. Most of that land is used for parking, totaling 600 spaces in a surface lot and a 7-level garage on Huron Road that would be demolished. Also succumbing to the wrecking ball would be a two-story commercial building on Prospect Avenue featuring Mr. Albert's Mens World clothing store.

It's interesting to note that, when compared to the previous plan, Stark seeks to decrease the amount of office space from 400,000 square feet to 340,000 square feet while increasing the height of the remaining high-rise by one story to 25 floors. The number of office floors within that high rise would also increase from 16 to 18 while the new floorplates are about 500 square feet smaller. The building's height would remain at 350 feet, however.

One nuCLEus Place is a 25-story
tower (18 floors of offices atop a
seven-level pedestal of retail and
parking). Compared to the previ-
ous design for nuCLEus' office
tower, the new version is a little
skinnier but is the same height in
feet but one story taller (Cresco).

On the other hand, the amount of retail Stark proposes would increase from 77,820 square feet to 103,000. No retail tenants were announced or names otherwise depicted in the new nuCLEus presentation. Cordish Companies previously pledged to lease 48,000 square feet for a sports-entertainment venue called Cleveland Live! at nuCLEus.

While Stark retained a "laneway" -- an alley lined with shops, restaurants and courtyards -- in its new design, it abandoned the idea of opening up East 4th south of Prospect to pedestrians. The first nuCLEus plan would have closed East 4th to vehicular traffic between Prospect and High Street. The second plan narrowed East 4th as a southbound-only, one-lane street. The new plan has East 4th as a two-way street south of Prospect.

In one of the e-mails to Stark, NEOtrans also inquired about a rendering recently posted on the real estate listing service LoopNet, showing a renovation and expansion of the historic but vacant and condemned Herold Building, 310 Prospect Ave.

As shown, the four-story Herold Building would become an eight-story building, and expanded laterally on to the neighboring parking lot at 320 Prospect. The Stark/J-Dek partnership also owns the Herold Building and the parking lot at the southwest corner of Prospect and East 4th. Expanded, the Herold Building would be about 60,000 gross square feet -- possibly accounting for the 60,000 square feet reduction of One nuCLEus Place.

Stark and J-Dek Investments propose to expand the Herold
Building vertically (by four more stories -- note the eighth
story is set back) and horizontally onto a parking lot at East
4th Street and Prospect Avenue (NBBJ Architects).

Last summer, Stark sought to demolish the Herold Building but was turned down by the Landmarks Commission. The Historic Gateway Neighborhood Corp. offered to work with Stark on securing tax credits and other financing to help rehabilitate the building.

Tom Yablonsky, executive director of Historic Gateway, did not return a phone call and an e-mail seeking more information prior to publication.

An expanded Herold Building is proposed to be renovated and expanded as an office building with a ground-floor retail or restaurant space, according to the new site plan for nuCLEus. It specifically identifies an office lobby entrance off East 4th and a 5,895-square-foot ground-floor retail space. The Herold site is across 4th Street from the nuCLEus site.

Just west of the Herold Building are several more decaying, low-level buildings. One of them, 300 Prospect, is listed for sale. The owners, a joint venture between the Weston Group and Bobby George, reportedly would take the building off the market and redevelop it if nuCLEus goes forward, said a source who spoke off the record because he wasn't authorized to speak publicly about it. The vacant building, once home to Record Rendezvous, served as one of the cradles of Rock n' Roll.

END

Demolition, groundbreaking this week for big Ohio City project

Site preparation is already under way, and demolition of the
Market Plaza retail strip will be followed by excavation of the
Ohio City site for the first phase of Harbor Bay's huge Market
Square project. It's across the street from the West Side Market,
seen in the background of this northward-looking view (KJP).
CLICK IMAGES TO ENLARGE THEM

Demolition work is scheduled to start today for the $140 million Intro phase of the Market Square development in Cleveland's Ohio City neighborhood. But if you wanted to attend a groundbreaking ceremony for this mixed-use project, the coronavirus crisis has made that risky and unnecessary.

There's still going to be a groundbreaking in the coming days, just not a ceremony, said Dan Whalen, vice president of design and development at Chicago-based Harbor Bay Realty Advisors LLC.

"No formal groundbreaking is scheduled at this point due to COVID-19," he said. "We're pushing onward quietly."

But not invisibly. Crews were busy in the past week with site preparation -- putting up construction barriers and fencing around the roughly 2-acre site at Lorain Avenue and West 25th Street.

Also, workers have been installing larger sewers below West 25th, Lorain and Gehring avenues since March 23 to accommodate the 558,000-square-foot development. Most of that work was set by the city to occur during the overnight hours, scheduled before the pandemic and its sharp reduction of vehicular traffic made that workaround moot.

The project includes a 350,000-square-foot first phase, comprised of a nine-story residential building over ground-level retail and 550 below-ground parking spaces. When an anchor office tenant is signed, Harbor Bay will pursue a roughly 208,000-square-foot second phase in an 11- to 12-story building just south of the mostly residential first phase.

The suburban-scale Market Plaza has occupied the southeast
corner of Lorain Avenue and West 25th Street for more than
30 years. Larger-scale developments that would be more befit-
ting of this urban, high-profile site were proposed over the
years until the Ohio City residential market evolved to the
point where a large, mixed-use development like Market
Square finally became feasible (KJP).

Demolition of the 1989-built Market Plaza retail strip will take only a few days. Once the debris is cleared, construction crews will start excavating the site for the underground parking garage, Whalen said.

Ward 3 Councilman Kerry McCormack said he remembered the first rendering that came out for the site from a different developer in 2013.

"Seven years later, it's beyond exciting to see that work is starting," McCormack  said. "West 25th and Lorain is one of the best locations in the City of Cleveland and it will finally be the intersection it deserves to be. This corner is now reaching its potential."

At the intersection is the iconic West Side Market, the United Bank Building, Market Ave/Market Sq. Park and now a bustling mixed-use, transit-oriented development, he said.

The first phase consists of a 290-unit apartment building over 36,000 square feet of ground-level commercial spaces. Some of the commercial spaces are two stories tall, namely those facing Lorain and the south side of the West Side Market. Most of the commercial spaces will be retail and restaurants. But Whalen wasn't ready to reveal who they might be.

"Can't say just yet," he said. "The names are coming soon. But we're definitely going to gear towards local-service, neighborhood, daily-use-type stuff. A few (will be) food and beverage businesses, but a handful of other stuff."

Compare to the same view above, the corner of Lorain and
West 25th will look vastly different by the middle of 2021.
Indeed, the corner is already looking different as the Mar-
ket Plaza retail strip comes down (HBREA).

Exterior renderings of the development are being refined to reflect tenants' space usage needs and signage. However, getting city approvals may be difficult for some time as the city design review boards aren't meeting -- virtually or otherwise.

Existing zoning allows a building on this site up to 12 stories tall. But the height of the second phase -- the office building -- could be less depending on the tenant mix. There also is no minimum square footage of office leases Harbor Bay needs to have signed before it can move forward on the office building, Whalen added.

"There's no set number," he said. "It depends on any number of things. It's completely subjective on our part."

Cost of building the entire development is estimated at $175 million. On March 20, Harbor Bay closed on the bulk of its project financing -- up to $130 million in taxable lease bonds from the Cleveland-Cuyahoga County Port Authority. Some of that could be used for the second phase when the need arises.

The project also has a $10.8 million loan from the Ohio Development Services Agency and a $2 million loan from the city of Cleveland. Harbor Bay is contributing up to $30 million, Whalen said.

Construction is due to take about 18 months. When completed, Market Square will be the largest mass timber-framed building in the United States. The wood is being imported from Austria through the Port of Cleveland.

END

Coronavirus crisis casualties in Cleveland real estate

The 12th+AVE condos on East 12th Street downtown will
instead be apartments as Geis Companies anticipates that
renting the homes will be easier than selling them in the
economic aftermath of the coronavirus crisis (GLSD).
CLICK IMAGES TO ENLARGE THEM

UPDATED APRIL 10, 2020

While the temporary scaling back of spending for the Sherwin-Williams' (SHW) new headquarters+research (HQ+R&D) project is probably the most notable impact from the coronavirus crisis, it isn't the only one in Greater Cleveland.

It's important to note that no real estate development project, so far, has completely succumbed to the crisis. But several have been delayed or modified to deal with our suddenly changed economic reality.

With the SHW HQ+R&D project, CEO John Morikis said in a video and a letter to employees this week that its sales remain solid during the crisis. However, SHW is reducing spending on HQ+R&D consultants to support the company's social distancing and remote staffing activities.

The need for the HQ+R&D remains -- to consolidate employees from multiple locations into fewer facilities -- and SHW staff continue to work on it. So SHW's plan to move into its new HQ+R&D facilities in 2023 also remains intact.

A preliminary massing of the Sherwin-Williams headquarters
in downtown shows a potential first phase in blue/green with
later phases in red and yellow. The project continues albeit
with less use of outside consultants to save money for the
company's coronavirus recovery efforts (WKYC).

The London Stock Exchange Group's (LSEG) ELITE initiative headquarters project has reportedly been pushed to the back burner during the crisis. The international business support program had hoped to establish its Cleveland's presence in the first quarter of 2020.

A downtown office with about 40 employees at the outset was envisioned -- and reportedly still is. But with domestic travel severely reduced, international travel virtually halted and the need to help businesses and employees recover from the crisis, the LSEG's attention is not focused on expansion at this time. There is every reason to believe that its Cleveland headquarters project will restart when the "all-clear" is given.

A Transformational Mixed Use Development (TMUD) tax credit pending in the Ohio House of Representatives isn't likely to pass anytime soon, due to the crisis.

Backers had hoped that the legislation could be moved out of the House's Economic and Workforce Development Committee and passed by the full House last month, with a possible signature by the governor in early April. That could allow three years of tax credits, starting before the end of the state's current fiscal year that ends June 30.

Renovation of 925 Euclid into The Centennial would get a big
boost from the passage of the Transformational Mixed Use
Development tax credit pending before the Ohio General
Assembly. Unfortunately, the legislation isn't going any-
where anytime soon as all non-essential work by the
legislature has been halted. But an Ohio economic
recovery program may offer a boost (LoopNet).

But the Economic and Workforce Development Committee hasn't met since Feb. 12 and won't be meeting again anytime soon. Not only has the crisis suspended all non-essential activity by the state legislature, but committee Chairman Paul Zeltwanger was named on Monday as chairman of the Ohio 2020 Economic Recovery Task Force.

"I cannot answer any questions about when the Economic and Workforce Development Committee will meet again or what will be on the agenda. I genuinely do not know and would not want to speculate," said Josh Ferdelman, Rep. Zeltwanger's legislative aide.

However, Ferdelman said the new task force and Rep. Zeltwanger's leadership of it could move forward some new economic development initiatives to spur growth in the wake of the crisis.

"I imagine there’s significant overlap of interest between the two committees," he said.

Two Cleveland projects that were considered candidates for the TMUD tax credit were Stark Enterprises' nuCLEus and Millennia Group's The Centennial. However, both reportedly had secured other equity to possibly move forward as early as this summer. It is not known if either project is still a go as there was no response to e-mails seeking comment from principals of both companies.

Proposed since 2014, Stark Enterprises' nuCLEus development
in downtown Cleveland may have hit a new snag as the corona-
virus crisis has slammed the retail sector. That comprises a sig-
nificant portion of Stark's business revenues (KJP).

More recently, Chief Operating Officer Ezra Stark didn't respond to an e-mail requesting more information about Stark Enterprises' financial and employment situation. Rumors have swirled recently about layoffs of property managers and other staff as the company owns many retail properties whose tenants had to close under governmental orders and may not be able to pay their rent.

Of Stark's 36 properties, 19 are retail centers and three are student housing complexes. That doesn't include Stark Restaurant Group's ownership and operation of 11 Menchie's Frozen Yogurt franchises in Ohio and Pennsylvania which are still open for take-out, pick-up or delivery.

Another sign of the times is that Geis Companies' 12th+AVE condominiums, now under construction on East 12th Street and Hamilton Avenue in downtown Cleveland, won't be marketed as condos. Instead, Geis will rent them out as apartments due the economic fallout from the coronavirus crisis as fewer buyers are likely to have the money to afford the condos when they hit the market. Previously, 31 condos were planned.

"We’ve decided to move forward with the building as an apartment project rather than a condominium project," said Mollie Neale, executive vice president of Geis Residential Management, LLC. "The property will be comprised of 35 one- and two-bedroom units with high-end features and finishes. We have not finalized pricing yet. However, the units will be around $1.90 per square foot and we anticipate opening winter 2020-21."

Construction on the 12th+AVE building at left has been under-
way since December. But the building will be marketed as
apartments rather than condos. That's a similar fate to
the building at right that was constructed in 2008
as condos but is now apartments (KJP).

Condos were removed from the Multiple Listings Service and the 12th+AVE Web site has been taken offline to redesign it around the apartment offerings. Condos were to range in size from 1,147 to 2,495 square feet with list prices from $300,000 to $685,000.

Construction continues as it has since December. It is doubtful that a full recovery from the coronavirus crisis will occur by the time the time the building opens. That is what makes it different from a more expensive condo development in Rocky River which could see construction start by summer. It isn't due to be completed until mid- to late-2021, hopefully after an economic recovery is underway.

Ironically, 12th+AVE is next to a 62-unit, 10-story residential building in the Avenue District that hit the market as condos at the start of the Great Recession in 2008. Difficulties in selling the condos and other financial problems forced then-developer The Zaremba Group to market the remaining units as apartments.

It was another blow to efforts intent on developing a stronger for-sale residential market in downtown Cleveland. Geis bought the 10-story building, which cost Zaremba $25 million to build in 2006, for $15 million last year. There, monthly apartment rents range from $1,450 for the smallest one-bedroom unit to $3,675 for a penthouse, according the Avenue District Web site.

END

Chester75 sounds University Circle's boom in Hough

Proposed at the northwest corner of Chester Avenue and
East 75th Street in Cleveland's Hough neighborhood,
Chester75 is the latest development to capitalize on
growing rents and shortages of quality housing in
and near booming University Circle (Famicos).
CLICK IMAGES TO ENLARGE

UPDATED APRIL 13, 2020

A significant, multi-phase residential development is proposed on the border of the Hough and Fairfax neighborhoods, in the vicinity of Chester Avenue and East 75th Street. It and other developments represent a continued spillover effect from booming employers and residential investments in neighboring University Circle.

The Famicos Foundation, a nonprofit community development corporation, submitted building permit applications to the city this week for the first phase of Chester75, to rise on the northwest corner of Chester and East 75th. The site at 1914 E. 75th St. previously was home to the Cedar Congregation of Jehovah Witnesses.

In its place, Famicos is proposing a four-story, 56,700-square-foot market-rate apartment building. According to its permit application, the building will offer a mix of studio, one-bedroom, two-bedroom and two-story townhome-style units.

Included in the proposed apartment building's designs are ground-floor common areas, a fourth-floor community room, roof deck and 50 off-street parking spaces, the permit application shows. City Architecture is the architect.

Famicos acquired the 0.84-acre site on May 10, 2019 from JW Congregation Support Inc. of Ulster County, New York for $300,000, according to a deed transfer filed a week later with the Cuyahoga County Recorder.

Chester75 is the result of a partnership among multiple entities. However, the project's developer is not yet known. It has one, otherwise permit applications wouldn't have been submitted to the city. But Knez Homes founder and president Bo Knez refuted a recent report in Ward 7 Councilman Basheer Jones' newsletter that his firm will be the developer. He said he bid on the project but hasn't heard any response since.

Site plan for the first phase of Chester75 (CPC).

The principal financier of the project is AES Management Corp. and its President Vanessa Whiting, according to a source, confirmed by Cuyahoga County records. On April 16, 2019, AES Management loaned $350,000 to Famicos which used 1914 E. 75th as collateral.

AES Management Corp. is the owner and operator of 15 Popeyes Louisiana Kitchen franchises in the Cleveland-Akron area according to Whiting's LinkedIn page. The firm also supports local affordable housing developments. This market-rate development is reportedly a different direction for AES Management.

However, Whiting's son, Tony Smith II, is a development associate with First Interstate Properties which recently developed the luxury 20-story One University Circle apartment tower on Euclid Avenue at Stokes Boulevard. The firm is currently pursuing a $20 million, 88-unit, mid-market apartment building up the hill from University Circle called 121 Larchmere. Smith reportedly is working on Chester75 independently of First Interstate.

As noted earlier, the northwest corner of Chester and East 75th is considered to be the first phase of Chester75. At least two more corners and possibly the fourth corner are also in play for residential development and possibly some ground-floor commercial uses. It is too early to know yet if and where multi-family buildings or townhomes would be placed on which quadrants of the intersection.

At a public meeting held last fall about the development, Famicos' Executive Director John Anoliefo said the nonprofit development organization was in the process of acquiring additional properties for the Chester75 development, according to the Ward 7 newsletter.

Conceptual usage of the area around Chester Avenue and
East 75th Street, looking generally east (Ward 7 Observer).

On the northeast corner of Chester and East 75th in the Hough neighborhood is 2.7 acres of vacant land that is mostly in the city's Land Re-utilization Program.

On the southeast corner in the Fairfax neighborhood are mostly underutilized properties except for the designated historic landmark Charles Frederick Schweinfurth house built in 1894. Schweinfurth was a famous architect. The home on East 75th was his personal residence.

On the southwest corner is a mix of developed and vacant properties. But the next block west starts a collection of properties owned by local and national developers and investors including Berusch Development Partners LLC (dba Euclid 71 LLC), Vazza Real Estate Group (dba BD Euclid Ave LLC and BD Cleveland LLC) and David Chesler.

The Chester75 development is a direct result of fast-growing employment at the nearby Cleveland Clinic, University Hospitals and its spin-off businesses, as well as from University Circle seeing some of the fastest-rising rents in the country. Rents there grew 44 percent last year.

NEOtrans first reported the Chester75 development last November in a news brief about University Circle-area growth spilling over into neighboring Hough where new rental listings rose nearly 8 percent last year to $1,415 for a one-bedroom apartment, according to Rent.com.

END

Lakefront luxury development secures construction financing

Looking east towards downtown Cleveland along Lake Erie,
700 Lake in Rocky River offers 25 condominiums and eight
townhouses on Lake Road. Already, one-third of the for-sale
residences have pre-sold (Brickhaus). CLICK TO ENLARGE

A real estate partnership announced this week in a written statement that it has finalized its construction financing and hired its general contractor for a luxury condominium and townhouse development on the west-suburban lakefront.

The partnership Carney Brickhaus along with its contractor Infinity Construction are due to start construction by summer on 700 Lake in the City of Rocky River. Comprising the partnership are developers James Carney and Andrew Brickman. The latter is principal of Brickhaus Partners.

Construction of the $35 million first phase of the development is expected to take about 15 months. Construction financing was provided by Erie Bank after Carney Brickhaus hit its pre-sales requirement, selling one-third of the development's residences.

This is occurring despite the pandemic crisis which is, at best, slowing down real estate development activities nearly everywhere.

First phase of 700 Lake is outlined in red, between Bradstreet's
Landing Park and the Bay Village city line. A possible second
phase featuring townhomes is proposed where a half-dozen
homes on Breezevale Cove now stand (Google/KJP).

"When life is unusual and all the rules for conducting business and living life are changing every
day, the Carney Brickhaus team and their strategic partners are moving along with the construction
of the long-awaited 700 Lake condo on Lake Erie in Rocky River," said the Carney Brickhaus partnership in a written statement.

Located on 2.5 acres at 22700 Lake Road, the 700 Lake development took its name from one of two lakefront estates that previously occupied this site. Both were demolished two years ago, followed by two smaller homes on Breezvale Cove in late-2019. All were acquired by an affiliate of Carney Brickhaus called Rocky River Preservation Partners II LLC.

On that land, Carney Brickhaus will build eight townhomes fronting Lake Road, just west of Breezevale. Behind them will rise the 25-unit condominium building built of concrete which will be three stories in front, facing Lake Road and five stories in back, facing Lake Erie.

Site plan for the first phase of 700 Lake. Note that north is
to the right in this image (Brickhaus).

A later phase comprised of townhouses is planned on 2.1 acres just east of the first phase. It will first require the acquisition of six private homes on Breezevale. Carney has acquired one of those homes while Brickhaus has acquired three, according to Cuyahoga County property records. The other two are not yet under the developers' control.

Just east of Breezevale is the 1975-built, eight-story Beach House Condominiums, the 1997- to 2000-built Harbor Village townhomes and Bradstreet's Landing Park. The park is about to undergo $3.4 million worth of improvements including a reconstruction of the closed fishing pier.

At 700 Lake, the townhomes will all offer three bedrooms and measure from 2,000 to 2,200 square feet. They will have terraces ranging from 650 to 750 square feet and individual, indoor garages entered from the back. Pricing for the townhomes start at $750,000, according to the Kim Crane Group at Howard Hanna's Rocky River office.

The condos will range in size from 2,200 to 3,600 square feet. Each offers three bedrooms, private outdoor spaces and lake views from every residence. There will be indoor and outdoor parking for condo residents and visitors. Condo pricing starts at $1.2 million.

Rendering for 700 Lake with Lake Road at the bottom-left of
the image and Breezvale Cove to the right (Brickhaus).

Interior finishes for the townhomes and condos will be high end, imported from Italy. They include
kitchens by Aran Cucine, wood flooring by Garbelotto Pavimenti and tile by Fiandre. Appliances and climate controls will all be state-of-the-art offerings from Wolf, Sub-Zero, Thermador and Bosch.

A sales office has been established at 19204 Detroit Road in downtown Rocky River.

"Infinity is pulling permits, and in the coming weeks will be completing a variety of different preconstruction activities," according to the written statement from Carney Brickhaus.

"The construction fence to secure the property will be installed along with additional construction
trailers," the statement said. "After that, clearing will begin, followed shortly thereafter by the grading and installation of all utilities and infrastructure."

END