Could Cliffs' acquisitions bring another downtown tower?

Although Cleveland-Cliffs' name adorns the atrium of 200 Public
Square, its headquarters plays second fiddle to the building's lar-
gest tenant -- Huntington Bank. Cleveland-Cliffs may not remain
in this tower much longer as it continues to expand with a pair of
recent, significant corporate acquisitions (Google).
CLICK IMAGES TO ENLARGE THEM

When you look at several critical aspects behind Cleveland-Cliffs Inc.'s recent acquisitions of AK Steel and ArcelorMittal USA, you can see how it's possible, if not probable, that Cliffs won't be a tenant of 200 Public Square for much longer.

The critical aspects behind the acquisitions include the post-assimilation staffing needs of the combined company measured against the office space vacancies in Cliffs' headquarters building. The data for populating this equation were gathered from online sources and by interviewing Cliffs staffpersons, real estate brokers and others familiar with Cliffs and its acquired companies.

Cleveland-Cliffs is an old company in an old line of work. It was founded by Samuel L. Mather in 1847 -- back when ironmaking and later, steelmaking, were high-tech industries. That was back when Cleveland, Youngstown, Pittsburgh, etc. were the places where raw materials like iron ore from the northern Great Lakes and coal from Appalachia collided to create metals, incredible population growth and economic wealth. 

As we all know, steel faded under the strain of aging mills, foreign competition, increased use of plastics and environmental protection. The Great Lakes-Northeast industrial belt, with some of the highest blue-collar wages in the world, soon decayed into the Rust Belt.

Cliffs is one of the survivors of that downsizing, focusing on mines and shipping that delivered raw materials to the mills. Its second-largest customer is AK Steel of West Chester, OH, near Cincinnati. Cliffs acquired AK Steel, completing the transaction in March. The firm has roughly 700 employees at its West Chester headquarters.

Earlier this year, Cleveland-Cliffs finalized the acquisition of AK
Steel, headquartered in this West Chester building in the northern
suburbs of Cincinnati. Most of the roughly 700 employees in this
 building have yet to move to Cleveland-Cliffs' HQ (Google).

By creating an integrated company, from mining to shipping to steel production to marketing, Cleveland-Cliffs has greater control over its market. AK Steel also was the only remaining U.S. manufacturer of electrical steels that form the cores of electric motors, transformers and generators. They are easy to magnetise and demagnetise, resulting in lower temperatures that reduce power loss.

Cleveland-Cliffs continued shopping last week, acquiring a majority of the U.S. operations and assets of its largest iron ore customer -- ArcelorMittal, based in Luxembourg. ArcelorMittal has its US headquarters in downtown Chicago plus a regional headquarters in Richfield, between Cleveland and Akron. In the two offices they have about 300 employees -- although the official numbers cited for the Richfield office may be low.

With this latest acquisition, Cleveland-Cliffs will become the largest manufacturer of flat-rolled steel in the USA. This steel is used primarily in automotive markets -- a similar area where AK Steel excelled, albeit for engine components.

And that's what these acquisitions are all about -- the automotive industry or, more specifically, the future of it. That future includes new government fuel economy standards that take effect in 2025, requiring the production of stronger, lighter steel in cars. It also means increased production of electric cars, and Cleveland-Cliffs is now the only U.S. maker of electrical steels.

Steel produced in blast furnaces is much higher quality than that which is produced in electric arc furnaces (typically remelts scrap metals). Blast furnaces, like those that Cleveland-Cliffs just bought, are ideal for producing steel for the cars of the future. And those blast furnaces will become cleaner and more efficient under Cleveland-Cliffs ownership.

ArcelorMittal USA's regional headquarters occupies a signifcant
part of an 82,217-square-foot building built on 8 acres of land in
1996 on Kinross Lakes Parkway in Richfield, OH (LoopNet).

Cleveland-Cliffs feeds blast furnaces from its iron mines and shipping. Its first hot-briquetted iron production plant, under construction in Toledo for $700 million, will position the firm as the dominant player and sole supplier of merchant iron units to blast furnaces in the Great Lakes.

Cleveland-Cliffs has done a lot more than just make itself the second-largest Fortune 500 company headquartered in Greater Cleveland (Cleveland-Cliffs' annual revenues of $2 billion; AK Steel's $6.3 billion, and ArcelorMittal USA's $10 billion = $18.3 billion), trailing Progressive Insurance's $39 billion. The integrated firm is now positioned for growth.

Despite its revenues, Cleveland-Cliffs doesn't have a huge staff in its downtown Cleveland corporate headquarters. By some estimates, it's just over 600 employees. The firm is spread out among three floors (6, 33 and 34) in 200 Public Square, the former BP America tower.

Those are large floors however. The sixth floor is about 50,000 square feet which Cleveland-Cliffs uses for training and conferences. The floor plates in the main part of the tower offer about 29,300 square feet of usable space. Cleveland-Cliffs had more space in the tower until it downsized by half in the early 2010s, and subleased the 31st and 32nd floors to the Gottlieb Group, Northern Trust and AML RightSource.

A breakdown of available spaces in 200 Public Square
as reported in a brochure about the property (Colliers).

Parts of the 32nd floor remain open. So while Cleveland-Cliffs hasn't moved AK Steel's staff up to Cleveland yet, it is replacing departing AK Steel administrative employees in West Chester with new hires in Cleveland. Part of that delay in assimilation is due to the coronavirus pandemic. But is also due to the fact that 200 Public Square has only three open floors (10, 13 and 41), a large fourth floor that is mostly available, a few half-empty floors (12, 26 and 38) and a smattering of vacancies elsewhere.

In a big building, companies want contiguous office spaces, not offices scattered all over the place. So while Cleveland-Cliffs could move employees from its acquired companies into 200 Public Square today, it wouldn't be in a very efficient or orderly way.

How many employees might it add? When a company acquires or merges with another, it typically reduces total employment by 10-30 percent. So when Cleveland-Cliffs acquired AK Steel, the total office employment exceeded 1,300. Considering these were dissimilar companies, the reduction in office staff was probably closer to 10 percent, dropping the combined office staff to about 1,200 people.

But when Cleveland-Cliffs acquired most of ArcelorMittal USA, its 300 office workers in Chicago and Richfield will probably get reduced to about 200 people. That makes the reduction closer to 30 percent given the redundancies with AK Steel and given the fact that Cleveland-Cliffs didn't acquire ArcelorMittal's tubular plants, its Calvert, AL mill and its research center in East Chicago, IN. 

ArcelorMittal USA's HQ is located in One South
Dearborn, a 39-story, 828,538-square-foot tower
 built in 2005 in The Loop (IP Design Group).

In total, Cleveland-Cliffs headquarters staff may amount to roughly 1,400 people by the time everything shakes out. And that doesn't take into account the business growth that Cleveland-Cliffs is counting on as a result of these acquisitions.

"We don’t acquire to cut, we acquire to grow," said Cleveland-Cliffs CEO Lourenco Goncalves.

Considering that Cleveland-Cliffs is taking a long view on its business, it may not be unreasonable to assume a 20 percent growth factor in its office employment going forward. A headquarters staffing count of perhaps 1,700 people in the next 5-10 years is possible. At 150 to 200 square feet per employee, that's 255,000 to 340,000 square feet total. There is only about 207,000 square feet available at 200 Public Square -- again, scattered throughout its 46 floors.

And that's why Cleveland-Cliffs probably can't stay where it is.

Where could it go? Potentially, anywhere. But if anything, the company has been committed to Cleveland for its entire 173 years, supporting local civic and charitable initiatives. And of course, it would be blasphemous for a company with Cleveland in its name to be headquartered anywhere but in Cleveland.

The Steamship William G. Mather, now a floating museum, is named
after the son of Cleveland-Cliffs founder Samuel L. Mather. William
was Cleveland-Cliffs' president and chairman from 1890-1947 (KJP).

Practically, however, its corporate executives aren't as dependent on international air service as other local companies such as Sherwin-Williams, a global company that chose to build its new HQ in Cleveland. Most of Cleveland-Cliffs' customers and operations are within a day's drive or at most a couple hours flight from Cleveland.

On the other hand, it's less clear as to whether a consolidated, growing Cleveland-Cliffs could warrant the construction of a new office tower in downtown Cleveland. Consider these numbers...

Downtown Cleveland office towers built in the last 30 years have average floor plates of 20,000 to 25,000 square feet. If Cleveland-Cliffs needs 255,000 to 340,000 square feet of office space in the coming years, that could require an office building measuring anywhere from 10 to 17 stories high -- not exactly a skyscraper.

There aren't any existing Class A office buildings downtown that could easily accommodate Cleveland-Cliffs' office needs in contiguous spaces. One that could -- The Ellipse, the completely empty, 496,000-square-foot, 16-story former Ameritech Building constructed in 1983 at 45 Erieview Plaza -- had its lease listing deactivated from some Web sites last month. It has been the subject of auctions and could be subjected to another. If so, it could be a suitable building for Cleveland-Cliffs including an unobstructed view of Lake Erie which its ships plied since the 19th century.

But if we want to dream, perhaps Cleveland-Cliffs could be the anchor tenant someday in a trophy-class tower it shares with other, smaller tenants and reach 20 to 30 stories high. It wouldn't stand up to the possibly Key Tower-rivaling height of the new Sherwin-Williams headquarters. But it might add to the city's skyline and get rid of another windswept, life-sucking surface parking lot in the process.

END

Dream Hotel development delayed more than a year

Construction of a 19-story Dream Hotel next to the Masonic Temple
at 3615 Euclid Ave. has been delayed by more than a year (Bialosky).

Given the current state of the pandemic-ravaged hospitality industry, it probably shouldn't come as a surprise that the proposed 19-story Dream Hotel next to the Masonic Temple in Cleveland's Midtown has been delayed.

According to the construction database The Dodge Reports, the delay will be more than one year. The site reported that design work on the hotel will be on hold until Summer 2021. That means the earliest construction could start would be Summer 2022, it said. Last spring, officials at New York-based Dream Hotels hoped to start construction in early 2021.

Dream Hotel spokesperson Megan O’Malley, who works for Rubenstein Public Relations in New York, was out of town an unable to comment on the report. A secondary contact at Rubenstein, Kati Waldenburg, did not respond to an e-mail prior to publication of this article.

MidTown Inc. Executive Director Jeffrey Epstein confirmed the news today by e-mail, saying he was aware of the delay.

Site of the proposed Dream Hotel and Masonic Temple (Google).

When the $60 million project was announced in May, Epstein said the Dream Hotel and adjoining Masonic Temple, 3615 Euclid Ave., could be a destination unto itself. In other cities where Dream Hotels are tied into Masonic halls, visitors come to see unique musical and theatrical performances, enjoy on-site meals and nightlife, and stay the night in the adjoining hotel.

Beaty Capital Group of Fort Smith, AR acquired Cleveland's 99-year-old, 2,300-seat Masonic Temple and an adjoining parcel for $725,000 in 2017. It renovated the auditorium last year for $8 million and plans another $10 million worth of improvements. That activity attracted attention.

Epstein said real estate investors began proposing projects in the surrounding area, although he could not identify the projects several months ago because they were in early development. He still can't identify them now because the projects remain active despite Dream Hotel's delay.

"Everything else we’re working on is still full steam ahead," he said.

One development project could be a renovation of the 10-story University Hotel and Suites, across the street from the Masonic Temple at 3614 Euclid. An affiliate of Crimson Rock Capital acquired the property last year and may renovate the 56-year-old building by tapping historic tax credits. That part of MidTown, from the Inner Belt to East 55th Street, was recently designated by the City Landmarks Commission as an historic district.

Another view of the proposed Dream Hotel, this time looking
west with the Masonic Temple directly behind it (Bialosky).

Crimson Capital's Web site says it "invests in properties for experiential travelers in emerging neighborhoods and up and coming U.S. domestic markets." It is a global company based in Atlanta.

Other developments in the surrounding blocks may include new-construction mid-rise apartment buildings. Renovations of additional historic and post-war, international-style office buildings are already under way. One of the largest is an eight-story office building being converted into The Midtown apartments by the Inspirion Group at 3101 Euclid.

Dream Hotel officials propose a 207-room lifestyle hotel including restaurants, nightlife venues, a fitness center and 100,000 square feet of meeting and event space. The project, called TempleLive, will also include a 400-space parking deck. Beaty Capital Group acquired the auditorium and adjacent property via an affiliate named TempleLive Cleveland LLC.

"It is exciting to look beyond this recent period of anxiety and uncertainty to bring such an iconic project to MidTown Cleveland," said Lance Beaty, president of Beaty Capital Group, in a written statement last May.

END

Seeds & Sprouts XI - Early intel on real estate projects

This is the Eleventh 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.

UPDATED OCT. 8, 2020

The proposed, 23-story City Club Apartments tower is on schedule
to break ground before Thanksgiving, according to a recent
notice sent out to potential subcontractors (Vocon/CPC). 

City Club Apartments tower sets groundbreaking

A specific date for a groundbreaking of the 23-story City Club Apartments, 720 Euclid Ave., has been scheduled -- as has an important date that confirms the downtown Cleveland project is getting close to the start of construction.

Notice went out via The Dodge Reports this week that a Dec. 1 groundbreaking has been tentatively set. And, last week, Dodge and other construction industry media reported that subcontractor bids for all related trades are to be submitted to the project's construction manager Cleveland Construction Inc. by 4 p.m. Oct. 14.

Last month, City Planning Commission gave unanimous approval of final designs for the high-rise, market-rate apartment building. Prior to the arrival of the global pandemic, the project was on track to start construction this past summer. There were rumors that the project might be delayed until early 2021.

"The developer is doing everything they can to start construction in November," said Denver Brooker, a principal at Vocon Partners LLC, the project's architect, at the last month's City Planning Commission meeting.

However, the latest estimate according an update this week from The Dodge Reports is that construction of the apartment tower's foundation will start in December. The work will involve the pouring of a thick mat concrete foundation to support the tower above.

The 250,000-square-foot City Club Apartments tower is designed to reach to 241 feet in structural height but a rooftop decorative element could bring that to about 250 feet. The apartment building is named after the Michigan-based developer City Club Apartments, not the 108-year-old debate forum next door in the 13-story, 117-year-old City Club Building, 850 Euclid.

This would be the tallest, all-new building built by Cleveland Construction from the foundation up. It built the 22-story AC Hotel and Residence Inn Charlotte City Center in North Carolina 2018. But those 22 stories include a pre-existing, five-story podum and foundation on which the new tower was built. It also was responsible for the interior work at the 20-story Broward County Courthouse in Florida.

City Club Apartments will offer about 313 market-rate units, roughly half of which will be 400-square-foot studio apartments. The smaller units will be marketed to younger residents who have been priced out of the downtown market. According to a recent WEWS-TV report, the downtown Cleveland residential market appears to be weathering the pandemic pretty well.

Landmark Management's proposed apartment complex on the lakefront
east of downtown Cleveland is shown in this site plan as the backward-
facing 4. It would add to its existing The Shoreline residential offerings
which is at the left with the planned five-story complex (CPC/Vocon).

Lakefront apartment project shelved

Landmark Management's efforts to develop 214 apartments on the lakefront at East 55th Street and Interstate 90 in Cleveland have been shelved but not abandoned, according to an update this week in the construction database The Dodge Reports.

The reason for the move was not reported. E-mails sent to Landmark's Managing Partner John J. Carney and to Vice President Michael Carney were not responded to prior to publication although Michael Carney acknowledged receiving the e-mail.

It is possible that Landmark may revisit developing here or partner with others. In December 2019, the company paid $1.67 million for 4 acres of lakefront land for the development, originally called Shoreline Apartments Phase II and later named Landmark At The Lake. It is next to The Shoreline apartments, a converted warehouse called Quay 55 which Landmark bought in 2017 and expanded the next year with 29 more apartments.

Landmark usually doesn't pursue new-construction projects. Instead, it renovates historic buildings into apartments or buys and updates already converted buildings. It also renovated the Colonial Arcade into the Colonial Marketplace two decades ago before selling its interest in the property in 2012. It is now part of the 5th Street Arcades.

The area where the apartment complex was proposed is the subject of a planning effort by the Cleveland Metroparks to improve lakefront between Burke Lakefront Airport and the Dike 14 at Gordon Park. Called the Cleveland Harbor Eastern Embayment Resilience Study (CHEERS), it is due to be completed next summer.

Site plans were submitted to the city last week for the Cleveland
Foundation's new headquarters in Midtown (B&H).

Cleveland Foundation HQ project advances

Site plans for the Cleveland Foundation's new headquarters facility in Cleveland's Midtown neighborhood were submitted to the city last week for zoning reviews. The submission was one of the first public signs that the project is moving forward following recent litigation.

The plans confirm an earlier concept for the development. They show a three-story, 50,500-square-foot building at the northeast corner of Euclid Avenue and East 66th Street. The first phase of the development site is just under two acres and touch on adjacent properties, including the Dunham Tavern Museum land. But zoning reviews show side or rear setbacks may not be needed.

Cleveland Foundation proposes to relocate its offices from the Hanna Building at Playhouse Square to Midtown in 2023. Future phases of development include civic and community uses on both sides of East 66th, expanding north to Chester Avenue.

However, a surface parking lot is proposed as an interim use on the southwest corner of East 66th and Chester. Plans show there will also be a 52-space underground parking garage below the new office building as well as bicycle parking.

Property was acquired for the office and civic development in December 2019 following the dismissal of a lawsuit filed by several members of the Dunham Tavern Museum who contested the property transaction.

Ground-floor commercial space at Centric is visible from this view
looking northeast from the intersection of Mayfield Road and Circle
Drive in University Circle. Little Italy is just east of here (Google).

Centric to add ground-floor office tenant

Two years after opening, the mixed-use Centric development in Cleveland's University Circle will build out its office space for a new tenant. The move comes as office users worldwide are taking a hard look at their office space needs.

The tenant, according to permit applications submitted last week to the city, appears to be Midwest Development Parters and Five Forty Investments LP. The two companies share a number of executives and functions, namely real estate development and investment. The tenant will fill a 9,130-square-foot, ground-floor space at the southwest corner of Centric, 11601 Mayfield Rd.

Ryan Fair, manager of construction and development at Five Forty and at Midwest, did not return an e-mail seeking more information but did ackowledge receiving the e-mail. Fair also briefly worked as an owner's representative at Chicago-based White Oak Realty Partners in 2019 -- the same firm that proposes to build a 24-story apartment tower at Midwest's Circle Square development.

Although employment data is unavailable, the permit application shows that the space has a maximum occupancy of 92 people. Midwest has its offices at 2191 Murray Hill Rd. in Cleveland's Little Italy while Five Forty's offices are currently split between Midwest's location and Eton Tower, 28601 Chagrin Blvd., in suburban Woodmere. It appears that these offices will be consolidated at Centric.

Centric was a $50 million development that opened in late-2018. It features 272 apartments that leased out in one year despite top-of-the-market rents. The development also has a ground-floor cafe for residents, a Tremont Athletic Club fitness center plus a 360-car parking garage. The development is next to the new Little Italy Red Line rail station.

Five Forty is led by Principal Morry Weiss, formerly chairman of American Greetings Corp. as well as by Chief Operating Officer for Real Estate, General Counsel and Secretary Steve Rubin. Centric was developed by Midwest Development Partners, a collaboration led by Rubin, Elie Weiss and Zac Ponsky.

END

CityBlock at Tower City is back on track

 

Efforts to redevelop Tower City Center into a entrepreneurship
hub called CityBlock were put on hold in recent months. But
the effort has been reactivated. This is a conceptual rendering
of the Prospect Avenue entrance to CityBlock (Vocon).
CLICK IMAGES TO ENLARGE

Bedrock Real Estate Services' planned remake of The Avenue shopping mall at Tower City Center into an entrepreneurship hub is showing signs of life again.

Chatter surrounding the proposed $110 million redevelopment of the 350,000-square-foot downtown Cleveland retail center had gone silent since last winter, and the global COVID-19 pandemic wasn't the primary reason why.

"Bedrock had another management change, which set us back," said tech entrepreneur and City Block promoter Bernie Moreno. "But they are fully committed to moving forward."

Matt Cullen departed as Detroit-based Bedrock's CEO in July to lead Cleveland-based JACK Entertainment LLC, which will continue to operate the Cleveland casino adjoining Tower City and Thistledown Racino in suburban North Randall following their 2019 sale to VICI Properties Inc. for $843 million.

Also departing Bedrock was Mark Dunkeson, who was recently president and chief operating officer of the real estate company founded by billionaire Dan Gilbert. Bill Emerson stepped in as Bedrock's interim CEO July 2, holding the position for a second time within a year.

Conceptual rendering of the interior of The Avenue shopping
mall at Tower City Center, redesigned as CityBlock (Vocon).

Then, on Sept. 21, Emerson was replaced by Kofi Bonner, formerly of California-based FivePoint Holdings LLC and was executive vice president and chief administrative officer of the Cleveland Browns. 

"I look forward to working with him to positively impact Detroit and Cleveland," Gilbert tweeted on Aug. 26.

The changes followed Gilbert's ischemic stroke in the right side of his brain over Memorial Day weekend 2019. Gilbert has since recovered. But the corporate stabilization that appears to be occurring at Bedrock wasn't guaranteed to reactivate plans for CityBlock.

According to sources close to Bedrock who were not authorized to speak publicly, Ken Till, Bedrock's vice president of development for Cleveland, considered alternatives to City Block in recent months. They included conventional office spaces, retail and other uses. But Moreno's proposed entrepreneurship hub retained their interest.

Till could not be reached for comment.

The CityBlock plan would redesign the interior of the existing The Avenue shopping mall with collaborative workspaces plus more strategically placed escalators and ramps while getting rid of its hidden elevators. The goal is to make the 1990-reconstruction of the former Cleveland Union Terminal railroad station more easily navigable.

"Ironically, COVID helps as there is no need for elevators!" Moreno joked.

This view shows what a Riverside portion of the CityBlock
redevelopment could look like. This scene along the Cuya-
hoga River could be the result of a future phase (Vocon).

Sources said Bedrock tried to lure Sherwin-Williams' (SHW) new headquarters plus research and development (HQ+R&D) facilities. But when SHW chose to put its HQ on the west side of Public Square downtown and its R&D facilities in Brecksville, Bedrock lost out on landing a major anchor tenant for CityBlock.

The same sources said that SHW's decision are what caused Bedrock to review its options about the CityBlock project, especially the Riverside phase, and to suspend pre-development planning work. Moreno disputed that in February, contending that Bedrock was following up on securing letters of intent from potential tenants.

Since then, more businesses have closed at The Avenue including the Brooks Brothers high-end clothier and the 10-screen Tower City Cinemas. By some estimates, the mall is about half empty although no official data could be located. Some retail will likely be retained in CityBlock.

Technology companies continue to grow in Greater Cleveland, however. For example, the Flats West Bank has become a mini tech hub in recent years with small but growing businesses like BoxCast, EmployStream, Fathom, Kloud9, Snip Internet and TPI Efficiency establishing offices within a few blocks of each other.

Fledgling biotech firms like Athersys Inc. and Abeona Therapeutics Inc. are growing locally too. Also, a Lakewood-based life sciences collaboration firm called Within3 just raised $100+ million in capital for expansion.

END

Sherwin-Williams HQ height to "rival Key Tower"

 

Insiders report that Sherwin-Williams' new HQ tower will rival
the height of the 948-foot-tall Key Tower on the other side of
downtown Cleveland's Public Square. This is an unofficial
massing of what SHW's HQ complex (shown in orange
at the center of this eastward-looking image) at that
approximate height could look like. Properties
shown in red are surface parking lots on
downtown's west side (Geowizical).
CLICK IMAGES TO ENLARGE

For those who wanted another skyscraper in Cleveland that approaches "supertall" status, you just might get your wish.

Ten days ago, Sherwin-Williams Co. (SHW) announced it is restarting development of its global headquarters plus research and development facilities (HQ+R&D). As part of its announcement, SHW confirmed insider information NEOtrans has been reporting for nearly a year, including SHW's HQ+R&D construction manager is a new partnership called Welty Gilbane. It was formed last year by Welty-Testa Builders, LLC of Akron and the Gilbane Building Co., a global firm with offices in Cleveland.

Welty Gilbane is already reaching out to materials suppliers in Cleveland and around the country to determine their availability, capacity and costs. For Welty Gilbane to learn that information, they have to give suppliers a sense of the scope of SHW's HQ+R&D project.

Looking south from the lakefront, Key Tower will likely continue
its reign as Ohio's tallest skyscraper. But reports are that SHW's
new HQ tower will challenge its dominance (Geowizical).

For many suppliers, the conceptual-level data that SHW has already shared publicy will suffice for now -- that the downtown Cleveland HQ will measure upwards of 1 million square feet (not including structural parking) and the Brecksville R&D facility will be about 500,000 square feet.

But when reaching out to specialty companies who might build the HQ tower and supply certain construction equipment and materials for them, Welty Gilbane had to be a little more specific. So it reportedly told them that SHW's skyscraper will "rival Key Tower" in height.

Although Key Tower, 127 Public Square, is 57 stories tall when it comes to usuable space, it also has another six stories for maintenance and equipment inside its pyramidal crown. The top of that crown reaches 888 feet into the sky. But the tower's spire brings the total height to 948 feet (290 meters) above the ground.

From far out in Lake Erie, the potential height of SHW's new HQ
tower shows it rivaling the scale of Key Tower (Geowizical).

That's just shy of what is considered to be a "supertall" -- any building that is 300-600 meters (984-1,969 feet) tall. Only a "megatall" is higher.

This information confirms a prior report published here at NEOtrans in which insiders said the main HQ building will tower 45-55 stories high. Even a building as "short" as 45 stories could rival Key Tower if its floor heights average 16.5 feet like those of Cleveland's Fifth Third Tower -- 1 foot greater than the average floor heights at Key. Also, rooftop architecture could include decorative features that dramatically increase its height, as was also done at Key.

SHW's HQ will be on the west side of Public Square on 7 acres of land now used only for surface parkings lots. Public Square is where Cleveland's three tallest towers continue their reign. In addition to Key Tower, there is the grand dame of Cleveland skyscrapers, the 708-foot-tall, 52-story Terminal Tower and the 659-foot-tall, 46-story 200 Public Square (formerly the BP America HQ).

From the south side of downtown Cleveland, the potential scale of
SHW's HQ tower is especially evident. Other new and proposed
buildings in downtown are also shown in orange (Geowizical).

Beyond the 1.17-acre former Jacobs-owned lot on Public Square, it isn't known what form the rest of SHW's HQ might look like. Insiders say that architects started their massing work on the Public Square lot and are now working their way into the 6-acre former Weston-owned Superblock bounded by Superior and St. Clair avenues, plus West 3rd and West 6th streets.

Another insider said that SHW HQ architect Pickard Chilton Architects, Inc. of New Haven, CT was hired months ago, like Welty Gilbane and the HQ's programming/interior architect Vocon Partners LLC, of Cleveland. NEOtrans also reported on SHW's hiring of Vocon more than a year ago.

Considering Pickard Chilton's hiring was made well before it was announced and that massing work has revealed the scale of the main HQ building, it is possible that renderings of the HQ could be publicly released this winter or perhaps even sooner.

Site analysis for the new SHW HQ complex dug deeper
in July, below a parking lot at the northeast corner of
Superior Avenue and West 6th Street. It exposed soil
that hasn't seen sunlight in nearly 200 years. Key
Tower soars above this scene (Ian Meadows).

Those renderings may also reveal why crews did exploratory work in July below the surface parking lot at the northeast corner of Superior and West 6th. Speculation by those in the real estate industry was SHW may construct a second large building here, potentially 20 stories or taller, as part of its HQ complex.

It is also likely that the HQ complex will be built in phases to accommodate future growth at SHW and/or future consolidations of employees. SHW has noted that the HQ+R&D will be designed to handle that growth, conservately estimated at a minimum of 400 additional employees in the future.  

Ancillary uses could also be built as part of the SHW HQ complex, including a hotel/extended-stay suites for the 100-plus person-stays per day on average from employees, salespeople and executives visiting Cleveland per day for training and skills development. There will also likely be restaurants, cafes, shops and other uses incorporated into the new HQ complex.

In 1990, while Key Tower was still under construction, this rendering
of the proposed 1,198-foot Ameritust Tower (at left) was drafted. The
new Ameritrust Tower would have been built on the same site where
SHW now plans to build its skyscraper (Evan Heintges Architects).

While Key Tower was under construction in the late 1980s by the Westlake-based Jacobs Group, a skyscraper even taller than Key was in advanced planning -- on the site proposed for SHW's tower. Jacobs planned a 63-story, 1,198-foot-tall (365 meters) supertall as the new headquarters for the Ameritrust Corp.

After One Public Square (12 stories) and 33 Public Square (13 stories) were demolished in 1990 to make way for the supertall, Ameritrust was acquired by Society Bank and then merged with Key Corp. of Albany, NY.

The combined bank was consolidated into the former Society Center tower and renamed Key Tower. That killed the proposed Ameritrust Tower project. This lot on downtown's Public Square has sat empty ever since.

END

Lakewood reaches settlement with hospital site developer

 

This sign at the corner of Detroit and Belle avenues in downtown
Lakewood was removed in April as the city and a developer of the
former Lakewood Hospital property parted ways. A settlement be-
tween the two will allow the city to move forward with another de-
veloper to return the site to productive use (The Lakewood Citizen).
CLICK IMAGES TO ENLARGE THEM

According to a statement released today by the City of Lakewood, the city has reached a settlement agreement with Carnegie Management and Development Corp. of Westlake regarding the redevelopment of the former Lakewood Hospital site. The settlement resulted from the early termination of an agreement between the two parties before construction began.

City officials were happy to move on, noting that the settlement allows the city to "cleanly" move forward in developing the site with a new development partner. NEOtrans broke the story in April that Carnegie withdrew as developer of the 5.6-acre, city-owned site at Detroit and Belle avenues in downtown Lakewood. The development project was called One Lakewood Place.

The settlement agreement must still be ratified by City Council, which will likely take place in October. The matter has been the subject of recent executive session meetings between Mayor Meghan George's administration and council members.

City officials touted the deal, stating that it is "a great outcome because it lets us move forward with the process" of redeveloping the hospital site, said a Lakewood City Hall source who was not authorized to speak publicly about the matter.

However, a dollar amount associated with the settlement has not been publicly released and city officials declined to provide the number at this time. The source could say only that "it's not a big number." However, the source acknowledged the settlement amount will become public in October when it appears in legislative form for council to approve.

The last rendering of Carnegie's vision for One Lakewood Place,
featuring a late addition -- an eight-story boutique hotel incor-
porated into the historic Curtis Block at left (CMDC).

"We are very excited about recent news related to this site," an official statement from the city. "As you likely know, after an exhaustive search and selection process for development, the city previously entered into agreements with a developer. Unfortunately, this project was not able to move forward."

"Our focus then turned to how we could most efficiently and expeditiously proceed with development without any concern or worry of further difficulties related to any agreements," the statement continued. "We were able to achieve this."

"In exchange for this clean walkaway, subject to legislative approval, the city obtained due diligence materials and market studies, all of which will provide great value and time savings to any future developer of the site and positions the city perfectly for discussions and negotiations with a new development team. This outcome is wonderful news and we believe is in the best interest of the city moving forward," the city's statement concluded.

Council President Dan O'Malley did not return a phone call seeking comment prior to publication of this article.

Carnegie was selected from among several development teams by previous Mayor Mike Summers to redevelop the hospital site. An agreement was reached with Carnegie which planned a $72 million first phase of development including 200 housing units, 100,000 square feet of offices, 84,000 square feet of retail and an eight-story boutique hotel. All buildings on the site were razed except for the historic and vacant Curtis Block, 14501 Detroit Ave.

The runner-up plan to Carnegie's was this one, proposed by CASTO
and featuring a 12-story mixed-use building fronted by a public plaza
on Detroit Avenue. City officials reportedly like this plan (Dimit).

After clearing and excavating the property, soil pollutants from the hospital's basement laundry facilities were discovered late into the inspection. That necessitated $2 million worth of clean-up costs that each side said was the responsibility of the other. Also, an uncharted creek was discovered under the site. A pump house was built on the site to redirect the stream's water flow.

On April 16, four months after she took office, Mayor George said the city attempted to modify its development and use agreement (DUA) with Carnegie Management and Development Corp. relating to the One Lakewood Place project. She said it was Carnegie who ceased negotiations with the city.

Although Carnegie President and CEO Rustom Khouri did not respond to requests for comment, a member of his development team spoke off the record to NEOtrans, saying the city caused Carnegie to incur additional, unplanned costs. The source said Carnegie's project budget of $72 million for the first phase of One Lakewood Place was realistic.

City officials reportedly have not decided their next course of action. One option is to re-bid a request for proposals from development teams. But privately some administration officials and council members said they liked the 2017 runner-up bidder for the ex-hospital site -- a team led by CASTO of Columbus, North Pointe Realty of Mayfield Heights and Dimit Architects of Lakewood.

This is the site plan submitted by the runner-up
team seeking to redevelop the former Lakewood
Hospital property. Detroit Avenue is at the top
with Belle Avenue on the left and Marlowe
Avenue on the right (Dimit).

That group proposed a $62 million project with 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.

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.

A CASTO spokesperson did not respond to an e-mail prior to publication, asking if the company was still interested in being considered as a developer of the hospital site. 

CASTO's first Cleveland development is The Dexter, a five-story, 116-unit apartment building over a ground-floor retail/restaurant space at Fulton Road and Franklin Boulevard in Cleveland's Ohio City neighborhood. It is pursuing other development opportunities in Greater Cleveland. CASTO recently pursued acqusition and development of riverfront property on the Flats West Bank but walked away from the deal.

END

Why does Circle Square get love and nuCLEus doesn't?

 

These are the original visions for nuCLEus (left) in 2014 and Circle
Square in 2015, then-called University Circle City Centre (UC3).
Both developments evolved over time yet neither project has
turned a shovel of dirt so far. Despite their similarities, there
are differences that have put more scrutiny on nuCLEus
and given more love to Circle Square (Stark/Midwest).
CLICK IMAGES TO ENLARGE THEM

Two births were noted in 2014. Ideas for a pair of major urban core real estate developments in Cleveland -- nuCLEus and Circle Square -- were set into motion, leading to much excitement and debate by everyone from urbanistas to media to fellow developers to elected officials.

Since those births six years ago, neither project has turned a shovel of dirt for new construction. Yet nuCLEus gets publicly criticized and doubted while Circle Square doesn't. Is that fair? Let's take a look at that....

First, let's go back in time six years. Most Clevelanders first heard about nuCLEus in the summer of 2014 when Cleveland-dot-com published an article about a partnership of Stark Enterprises and J-Dek Investments Ltd. buying two separate swaths of downtown parking lots from a Los Angeles firm.

One of those swaths was the proposed site for nuCLEus -- a 3-acre plot bounded by Prospect Avenue, East 4th Street and Huron Road just north of today's Rocket Mortgage Fieldhouse. The other swath was next to West 9th Street in the Warehouse District. The article was followed by another with graphics showing a massive, $500 million mixed-use development marked by a 54-story Jenga-styled residential tower and a hotel bridging over to a second, shorter tower for offices.

At about the same time of Stark's announcement, a new development team was already in the process of buying pieces of land in University Circle under different names, apparently to disguise the scale of an emerging development.

Stark Enterprises' original site plan for nuCLEus that featured
the 54-story residential tower and a hotel bridge building
extending over a laneway to an office building (Stark).

I noticed those purchases in August 2015 during my regular scouring of public records and posted the potential implications of them on UrbanOhio. My posting about that discovery became the first of what would become a forum discussion thread about Circle Square.

Public records revealed there was something in the works that would measure about 7 acres -- far larger than the upcoming sale of two neighboring public parcels -- a police station and Cleveland Public Library branch. A month later, in September 2015, the massive development concept was announced as University Circle City Centre (UC3) when Midwest Development Partners won the bid to acquire the police station and library sites.

The initial conceptual vision showed roughly eight new buildings constructed around parking garages along with a handful of townhouses. Most of the buildings were proposed to be shorter than the neighboring 1920s-era Fenway Manor and Judson Manor apartment buildings that measure 13 and 11 stories, respectively. The exception was one proposed tower approaching 20 stories.

And then began the separate paths on which the two developments traveled for the next five years and how people reacted to those developments.

CONCEPTS/VISIONS: Both projects have seen their plans evolve over time as most projects do. But Stark Enterprises' plans have evolved significantly or, more accurately, de-evolved. It started as a stunning Jenga-style tower that would have been Cleveland's second-tallest building featuring 500 residences, 200,000 square feet of offices and a mid-tower six-story bridge with a hotel in it. The complex would be constructed atop a massive podium of parking for 1,600 cars and 140,000 square feet of retail.

An early massing for Circle Square showing existing and pro-
posed buildings alike, looking south on East 107th Street with
the Epworth-Euclid United Methodist Church in the left-fore-
ground and Judson Manor on the right forground (Midwest).

Developer Robert Stark said nuCLEus would have "the kind of architecture that lets the world know that Cleveland is back, and that Cleveland is in competition with Chicago and New York." With that lofty goal, Stark set the bar high yet couldn't jump over it.

In University Circle, Midwest's Steve Rubin, former chief operating officer of Stark Enterprises, originally proposed a development even larger than nuCLEus if structured parking wasn't included. Envisioned was 717 apartments, about 150,000 square feet of retail and community space (including a new MLK library) and 17,500 square feet of office.

That doesn't include the $40 million renovation of the 144-unit Fenway Manor apartments. Refurbishing of the senior housing technically represented the first phase of Circle Square. That was completed two years ago which implies that Circle Square is already underway. But the new construction hasn't begun.

Although set at a bar numerically higher than the total usable square feet of nuCLEus, Midwest designed the project so it could be achieved one or two buildings at a time. For Stark, it had to first build NuCLEus' massive pedestal of structured parking and downtown retail -- two uses that have proven to be tough to make money at -- before it could construct anything on top of them.

FINANCING: Both nuCLEus and Circle Square depend on public financing, as do most projects in Cleveland which has the nation's 15th-highest construction costs but the nation's third-cheapest rents among major metros. And since Greater Cleveland isn't growing, any new development that doesn't draw from outside the metro area is going to leave a vacancy somewhere else within the region.

The second announced plan for nuCLEus featured two 24-story
towers -- one for offices (at left) and the other for residential.
Gone was the hotel bridge and the 54-story tower (Stark).

Two of Stark's principal office tenants -- the law firm Benesch, Friedlander, Coplan & Aronoff LLP and Stark's own headquarters -- would relocate from elsewhere downtown, raising its vacancy numbers. Media has scrutinized Stark for tapping subsidies that poach tenants. Stark has proposed creative new public financing methods so it could build nuCLEus.They include a Tranformational Mixed Used Development (TMUD) tax credit at the state level, a tax-increment financing mechanism involving the Cleveland schools and a forgivable loan from the city. None of the public financing methods have yet been enacted.

Midwest also has proposed a unique public financing arrangement for Circle Square as well as attracting a tenant from a nearby property. In this case, they are one in the same. The Cleveland Public Library sought to relocate its MLK branch and Midwest offered to incorporate it on the ground floor of one of Circle Square's apartment buildings, now called Library Lofts. The library's financing will also contribute some public dollars and pedestrian activity to Circle Square just as the developer's exterior structure for Library Lofts will benefit the new library.

The scale of both projects required non-conventional subsidies. Circle Square has found its subsidy to get the project going toward a publicly identified groundbreaking, tentatively scheduled for March 2021. Stark never found its public subsidy magic bullet. But that's not what's holding back the project anymore. Instead, the project is reportedly in need of more leases before Stark can announce a groundbreaking date.

RECORDS OF ACHIEVEMENT: When it comes to the historical record of achievements by both developers, there isn't much of a comparison for a couple of reasons. First, Midwest doesn't have much of a history. The company itself wasn't incorporated until February 2015 (although it was preceded by Intesa Holdings LLC in 2012). Secondly and ironically, its principal partner Rubin was the chief operating officer at Stark for 12 years until Fall 2014 before he formed Midwest.

So Midwest's history is in many ways Stark's history. Rubin was able to hit the reset button on his own corporate development history by creating a new real estate entity. He could enjoy all of the benefits of a clean slate while touting his accomplishments at Stark.

When Centric was called Intesa, it proposed an ambitious develop-
ment vision between Little Italy and the Uptown section of Uni-
versity Circle. It was scaled back to a single 7-story building of
apartments over retail, fronting a parking garage (Bialosky).

Rubin joined Stark while the firm was partnering with the Carney Group on its biggest development ever -- the Crocker Park lifestyle center in Westlake. The first phase of the development opened in 2004. It was built south of the Promenade, originally planned by Stark in the late 1980s as an enclosed mall but built as an outdoor strip mall. Stark gained the reputation of a strip-mall developer. Crocker Park helped Bob Stark shed that reputation.

After Crocker Park opened, Stark publicly set its eyes on downtown Cleveland for the first time. There, Stark proposed to build Y-Cleveland, an incredibly grand vision. The Y represented a shaped on a map showing areas of downtown to be developed. The bottom of the Y would start on Scranton Peninsula. The right arm of the Y would extend over to the Campus District.

The left arm would reach up through the Warehouse District to the lakefront where Stark proposed to develop the surface parking lots and extend the street grid over the lakefront railroad tracks to the water's edge. He called that arm Pest (pronounced Pesht), a whole new city like Pest became to the older Buda, in Budapest, Hungary.

Stark was so committed to the idea that the firm relocated its headquarters from its Eton Collection development in east-suburban Woodmere to the Gilman Building, 1350 W. 3rd St. It partnered with parking lot owner Weston to achieve its grand vision. Stark had hoped to secure a development anchor in the form of one of the half-dozen or so large downtown firms that considered relocating from their aging office buildings. Alas, Stark was unable to reel in any of them.

So Stark moved on to nuCLEus in 2015. A year later, Weston joined with Citymark Capital to come up with its own big plans for the Warehouse District parking lots. But Weston's plans already had been on life support for a year or two when it sold the parking lots this spring to Sherwin-Williams Inc. for its new global headquarters.

A 2005 site plan for the upper-left arm of Y-Cleveland Stark's grand
vision for downtown Cleveland ending with "Pest" -- a new city
to complement downtown's existing central business district
and to better link downtown with the river and lake (Stark).

Even as Stark continued to add to Crocker Park by building more residential, retail and securing the American Greetings headquarters, it was still stung by its failure to build Y-Cleveland and especially Pest. Stark may consider that project unfinished rather than abandoned. It still owns Warehouse District parking lots on West 9th. It built The Beacon apartment tower. And nuCLEus is still an active project.

PLAN EVOLUTION: This is one of the starkest differences between the two projects. One project's plan has grown since it was first announced while the other has shrunk. The growing project is Circle Square.

When it started as UC3, Circle Square was estimated to be a $225 million project, not including Fenway Manor. It since has grown to be a $300 million project with buildings originally proposed at eight stories growing to 11- to 13-story buildings, and 17-story apartment towers rising further to 24 stories. Add another $40 million with Fenway Manor's inclusion.

The reason for the growth is the success of other projects in University Circle including First Interstate's 20-story One University Circle. Midwest also contributed in 2018 by opening its Centric development. Although, first proposed to be larger than what was ultimately built, the project is considered to be a great success. Centric, despite having rents ranging from $2.29 to $3.18 per square foot, leased out 95 percent of its 272 apartments in one year.

That success attracted attention, including from out of town. With Circle Square, Midwest Development is joining forces with White Oak Realty Partners of Chicago which has a great deal of experience in building high-rise apartment towers in cities throughout the nation. White Oak is taking the lead on developing a 24-story tower at Circle Square, to rise on the site of the former police station, 10600 Chester Ave.

An updated Circle Square masterplan was approved by the City
Planning Commission earlier this month. It features taller apart-
ment buildings in the background along Chester Avenue with
an office building proposed in on the right side on Euclid
Avenue between Stokes and MLK boulevards (Midwest).

Also, the mostly residential-retail/civic land uses at Circle Square added another use and more scale in its latest iteration. A 13-story office building is proposed to be built where Midwest had previously envisioned townhouses.

By contrast, Stark's original plan for nuCLEus has been scaled back from its catalytic goal. It wanted nuCLEus to be a globally prominent development whose catalytic impact on downtown would rival that of the Cleveland Union Terminal Group (topped by Terminal Tower) of the 1920s and 30s. It started out with a mammoth price tag of $500 million but has since shrunk to less than $300 million, although a current dollar value hasn't been announced.

While Circle Square grew and added planned uses, nuCLEus went in the other direction. In its first scale-down, it lost its hotel "bridge" between two towers, one of them the 54-story skyscraper. So by early 2019, nuCLEus was re-cast with two 24-story towers -- one residential, the other offices -- atop the parking/retail pedestal. The price tag shrank to $353 million.

The development was scaled back again in early 2020. NEOtrans broke the story that nuCLEus would shed the apartment tower and cut 60,000 square feet from the office building while adding a story to it. The skinnier office tower, still atop the parking/retail pedestal, would likely require an investment of less than $300 million to build.

That apparently matched the financing Stark had in hand to build nuCLEus. With most of the office tower pre-leased and a residential component still under consideration, Stark appeared ready to start construction in early 2020. Then the pandemic hit and put everything on hold.

The latest announced conceptual plan for nuCLEus shows a single,
skinnier, 25-story office tower over a pedestal of parking
and ground-floor retail uses (Stark).

There are companies seeking office space in and near downtown, but the newest arrivals want to move within a matter of months, not wait years that it will take to build a skyscraper. Others want their name atop a building, not play second fiddle to Benesch or anyone else. And while opinions vary, some real estate brokers who spoke off the record say Bob Stark and his son Ezra, now Stark's chief operating officer, are difficult to work with in getting lease deals done. 

Stark also hasn't added partners to its development. To be fair, nuCLEus didn't start out with only Stark Enterprises' name on the marquee. It began as a partnership between Stark and J-Dek Investments. But make no mistake that nuCLEus is run by Stark.

Its previous project nearby was The Beacon -- downtown Cleveland's first new-construction residential high-rise since The Park (now Reserve Square) was completed in the early 1970s. The Beacon was a result of making lemonade from a lemon. The lemon was the 542-space 515 Euclid parking garage, built in 2005 for $26 million to accommodate a residential tower above it. Not only did the Great Recession halt plans for the tower, it put 515 Euclid's owner, AmTrust Financial Corp. into bankruptcy.

As part of the bankruptcy, the parking garage was sold at auction to the Harbor Group for a bargain $8.15 million. Stark partnered with Harbor Group to build the 19-story Beacon atop the 9-story garage that was full during the day but mostly empty at night when The Beacon's residents would park there. Few places downtown offered a low-cost parking garage that could be used to support a new residential tower (the planned City Club Apartments will use a similar arrangement at 720 Euclid Ave.).

But while Centric leased out in a year, Stark is offering up to six months free rent to try to fill up The Beacon with tenants. Granted, it's still early. The Beacon held its formal opening ceremony less than a year ago in November 2019 -- four months before the pandemic reached America.

While Circle Square's plan (at left) got bigger and more ambitious
and has a March 2021 target date for groundbreaking, nuCLEus'
plan got smaller and doesn't have a start date (Midwest/Stark).

And there are significantly more apartment units coming on the market in downtown Cleveland than there are in University Circle. That may not hold true for much longer, as Cleveland Heights adds new housing like The Ascent at Top of The Hill and Integrity House, Cleveland Clinic looks to enter the housing market while surrounding neighborhoods like Glenville, Hough and Fairfax restore their housing stock.

CONCLUSION: The short answer as to why Circle Square gets the love that nuCLEus doesn't comes down to the reasons why each gets their press coverage. Circle Square got headlines for mostly positive reasons; nuCLEus got headlines for mostly controversial reasons. Each time Stark sought a new public incentive idea to replace the last brainstorm, the media and its readers grew more skeptical.

Ironically, Stark's latest public incentive idea was arguably its best -- the TMUD tax credit. It has won broad support from developers, chambers of commerce, city officials and state lawmakers throughout Ohio. If it wasn't for the pandemic, the tax credit would almost certainly have become law by now. The legislation would have to pass by the end of this year for it to become law or the whole lawmaking process for the TMUD tax credit will have to start all over again.

So while Circle Square's developers are working towards a March 2021 groundbreaking per their latest plan, Stark has put nuCLEus on indefinite hold, awaiting an end to the pandemic to see which of its many retail and college housing properties emerge from the economic slowdown unscathed.

If Stark is able to get a groundbreaking date announced before Circle Square puts shovels in the ground, a lot of the criticism -- or at least skepticism -- Stark has received and continues to receive may go away. Given the extensive and fascinating history of cities, a timeline of decades or longer is not an unusual measuring stick for gauging a development of significant scale. After all, the Cleveland Union Terminal Group still isn't finished a century later.

END