Seeds & Sprouts XX -- Downtown moves signal project, Morgan Stanley shrinks office & more

This is the Twentieth 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.

Dave's Cosmic Subs and Souper Market will move in the coming
months from the Baker Building on East 6th Street to The Standard
on West St. Clair Avenue (LoopNet, SkyscraperCity.com).
CLICK IMAGES TO ENLARGE THEM

Downtown moves may signal historic renovation project

In the coming months, look for two downtown Cleveland tenants to switch addresses. And they're moving from one historic to another historic building, according to a tweet last week by the Downtown Cleveland Alliance.

Dave's Cosmic Subs and Souper Market will both move from the Baker Building, 1900 E. 6th St., to the Standard Apartments, 99 W. St. Clair Ave. At the Standard, they will join Simply Fresh Market CLE, a small grocer offering fresh and prepared foods. The Standard was renovated in 2018 for $60 million by the Weston Group into 287 apartments with ground-floor retail.

Other Baker Building tenants have moved or closed in the past few years. They include Moriarity's Pub which closed in December after 100 years in business and Sapporo Sushi which moved to Lakewood. The 11-story Baker Building was constructed in 1919 as the Fidelity Mortgage Building

The moves, according to a source who spoke off the record, are to get out of the way of a pending renovation and conversion of the Baker Building. The Baker Building was acquired in early 2020 by Walton Enterprises of WalMart fame.

The most recent reports are that the Baker Building could be converted into a boutique hotel, possibly a 21c Museum Hotel. However, no building permit or other applications have been submitted to the city for any work on the structure. The building is roughly 50 percent occupied by office tenants.

There is an application for federal historic tax credits pending for the Baker Building. No progress has been made to advance them to final approval since Walton Enterprises updated the owner of record for the property in March 2020, public records show.

Morgan Stanley is the latest tenant in 200 Public Square to reduce
its office size and give back floor space to the landlord (Google).

Morgan Stanley giving back downtown office space

In a sign of the times, investment banking giant Morgan Stanley is cutting back on its Cleveland branch office space by nearly one-half. Due to increased remote working instigated by the pandemic, the firm is reducing its space needs at 200 Public Square downtown.

In terms of floor area, Morgan Stanley intends to reduce its space by 11,776 square feet. The New York City-based global company has occupied the entire 26th floor of the Cleveland skyscraper. Floors in the main part of the 45-story tower measure about 24,440 square feet of usable space, leasing documents show.

Morgan Stanley is renovating its remaining space and adding partitions to give back space to the building's landlord, an investor group led by New York-based DRA Advisors called G&I IX Public Square LLC. For the renovations and partitioning work, Morgan Stanley is spending $225,000, according to a filing with the city by project consultant HSB Architects + Engineers.

In the same building, accounting powerhouse Pricewaterhouse Coopers, LLP (PwC) recently notified the city it is giving back to the landlord 8,040 square feet of space on the 18th floor. On that same floor, PwC will retain 9,334 square feet of office space.

A 1950s-era office building in Kamms Corners will be modernized
and expanded vertically with new apartments and amenities (Fischer).

Kamms medical building to add 2 floors, apartments

An unusual proposal to rebuild a vacant, one-story medical building in Kamms Corners with renovated offices and a restaurant topped by apartments and crowned by a swimming pool won final approval from Cleveland's City Planning Commission Sept. 3.

SSA CLE, LLC plans to convert the 1954-built, 7,300-square-foot Riveredge Medical Building, 17730 Lorain Ave. into a mixed-use structure over the next year. The building is located across Lorain from Fairview Hospital. SSA CLE acquired the property in 2019 for $375,000, county records show.

Project architect Gary Fischer of Lorain said the owner of SSA CLE, Samer Al-Aish, intends to reside in the largest of four apartments that fill out the newly added second floor. That apartment, according to schematic designs submitted to the city, would measure about 4,600 square feet. It will have three bedrooms, three full baths, a lounge, game room, study, large dining room, two living rooms and a fireplace, plans show.

The other three apartments will be a studio and a pair of two-bedroom units with two full baths. All units will have balconies. Above them will be an indoor pool and rooftop patio for tenants only, public records show.

On the ground floor will be four medical offices with higher ceilings than before, advanced technology connections and floor spaces per unit ranging in size from 1,157 to 1,874 square feet. At the west end of the first floor will be a deli/restaurant space measuring 840 square feet that will have a 196-square-foot outdoor patio along Lorain.

"The offices are not rented but we're getting requests for them," Fischer said.

The project also garnered support from the West Park Kamm's Neighborhood Development Corp. and Ward 17 Councilman Charles Slife.

"I think that there's a lot of older medical buildings of this era in town," Slife said. "So I hope that this is the beginning of a precedent to bring some new life to some of these buildings which really have lower ceilings and aren't well suited to modern medical equipment."

Cherie Wine Bar will join two other new arrivals, Cocky's Bagels
and ESPN Cleveland, in the vacant ground-level storefronts seen
at left in downtown Cleveland's Flats East Bank (Google).

Wine bar to open at Flats East Bank

Building permits were submitted to the city of Cleveland Aug. 31 for the development of a new restaurant and wine bar to be located in a ground-floor space at Flats East Bank facing the Cuyahoga River. Cherie Wine Bar will occupy a 3,000-square-foot space next to Beerhead by early next year.

About $270,000 will be invested to fit-out the space with owner-supplied equipment, decorations, overhead door/entrance plus interior and patio furniture. The existing spot is vacant. HSB Architects + Engineers is overseeing the design work.

Cherie's will be next to a space where Cocky’s Bagels is opening a second location, in addition to its North Olmsted establishment. It will also join ESPN Cleveland which is relocating its broadcast studios and corporate offices from the Galleria at Erieview to Flats East Bank by the end of this year.

The L-shaped green patch of land is
the subject of a development plan by a
partnership led by The Orlean Co. (Google).

Partnership seeks to finish Rysar's Southington Manor

In 2006, Rysar Properties began constructing a 20-unit townhome development at 3120 E. 135th St. in Cleveland's Buckeye-Shaker neighborhood. But the housing crash of 2008-10 halted the project after only five townhomes were built. The rest of the property totaling nearly 1 acre has remained vacant and undeveloped ever since.

But in July, a partnership of Christopher and Charles Ficklin, organized as CNT Construction Co., bought the undeveloped land for $20,000 from Southington Manor Development LLC. The latter firm is listed as the applicant for a building permit submitted to the city on Sept. 1 for a 71,000-square-foot multi-family residential development.

Southington Manor is what Rysar called its 2006 development. And the LLC still lists to Rysar founder Kenneth Lurie who is now chief operating officer of The Orlean Company. Orlean is a well-known urban infill developer in Cleveland which currently has numerous homes under construction.

The proposed development will be much more dense than the 2006 development which totaled only 8,247 square feet with each of the five units ranging in size from 1,482 to 1,913 square feet. The number of units isn't identified in the pending building permit and Lurie couldn't be reached for comment.

So even if units in the new development averaged 1,500 square feet like those in the 2006 development, the 71,000 square feet would equal 41 homes. If apartments are planned, averaging a typical 1,000 square feet per unit, the proposed development would equal about 71 apartments. It will be interesting to see the details of what is planned for this site south of Shaker Square.

Tyler Kapusta contributed to this article.

END

Large office building in the works for Cleveland's Midtown

Outlined in red with the text "parking garage" added, this site plan
for the MidTown Innovation District shows the location of a large
office building and parking deck planned between Euclid and
Chester avenues at East 66th Street (Merritt Chase).

What may prove to be the largest office building ever built in Cleveland's MidTown corridor is advancing toward a potential construction date early next year.

Wexford Science & Technology, LLC of Baltimore is moving forward in developing a 150,000-square-foot office building and multilevel parking deck at the northwest corner of Euclid Avenue and East 66th Street. The building could house anywhere from 700 to 1,000 office and research workers and add to the city's Health Tech Corridor.

Conceptual renderings of the project drawn up by Vocon Partners LLC of Cleveland show a five-story building with ground-floor retail/café spaces along Euclid. Behind the new office building would be a parking deck along East 66th and extending north to Chester Avenue. A source was unwilling to share the renderings with NEOtrans because the source was not authorized to do so.

But the designer's intentions were reportedly to emphasize Euclid as the pedestrian-oriented, transit-oriented setting as exemplified by the ground-floor retail-café spaces facing Euclid. A modern, windows-heavy façade along Euclid is also proposed. A HealthLine bus rapid transit station is right out front of the office building site.

Euclid Avenue at East 66th Street is a quiet setting except for the
construction work underway at far right on the new Cleveland
Foundation headquarters. Wexford's planned office building
would rise on the far corner of Euclid and East 66th, next
to a station on the HealthLine bus rapid transit (KJP).

Similarly, architects wanted to emphasize Chester, which is a fast, multi-lane roadway, as the car-oriented setting for the 700-space parking garage. The garage would measure about 175,000 square feet, making it larger than the office building in terms of square footage. But the garage's footprint would cover more ground. Thus its height would be about three levels.

No dollar figure was given by the source for the project. But given the space needs identified at this early stage, it could be a $50 million to $70 million development project.

The office building is planned to be built on land acquired in April 2020 by Lassi Enterprises LLC, the real estate arm of MidTown Cleveland Inc., a nonprofit community development corporation. The parking deck would rise on land acquired in December 2020 by the Cleveland Foundation.

"It's in the works but I can't discuss the details publicly yet," said MidTown Executive Director Jeff Epstein of the planned office building. "The types of tenants will be technology, innovation, entrepreneurial-type tenants. This project will add to the density and vibrancy of the area."

An early conceptual rendering, looking north up East 66th Street
from Euclid Avenue, shows the new headquarters for the Cleve-
land Foundation at right. At left, it also shows an early vision
of the proposed office building Wexford is pursuing (Vocon).

Wexford develops research and office facilities for institutional, corporate and community clients. The real estate developer generally does not move forward on projects unless it has at least 50 percent of the project leased before starting construction.

Wexford was selected by MidTown, the Cleveland Foundation and JumpStart Inc. to develop an innovation district around the Cleveland Foundation's new headquarters. This is Wexford's 16th innovation district it has developed in the USA.

The Cleveland Foundation is building a 54,000-square-foot, three-story headquarters for $21.8 million on the northeast corner of Euclid and East 66th. It will relocate its nearly 100 employees from its current office downtown when the new building is completed later next year.

Public realm improvements are also planned for the area, including the Dunham Tavern Museum and its surroundings. The area around the 1824-built tavern is being proposed as a "central park" for MidTown. 

A wider view of the Euclid Avenue-East 66th Street intersection,
taken from the eastbound HealthLine station in front of the
Gallucci's grocery store. Construction of the new Cleve-
land Foundation headquarters is seen at right (KJP).

That also includes an east-west public garden that is planned between the office building and parking garage to span multiple blocks. However, MPC Plating, Inc. is located immediately west of Wexford's proposed office building.

Numerous office buildings have been added in recent decades in MidTown to capitalize on its location between downtown Cleveland and University Circle -- Ohio's first- and fourth-largest employment districts. High-quality office inventory has been added either by new construction or renovation of older structures.

The largest office development in MidTown in recent decades was the MidTown Tech Park building at 6700 Euclid. Constructed by former Geis Companies affiliate Hemingway Development in 2012 for $20 million, the two-story building measures 128,000 square feet. It is part of Geis' 13-acre campus in which another 90,000 square feet of office space was carved out of historic commercial buildings in the 2010s.

This overhead view from 2017 shows
the abandonment of MidTown which
had become a pass-through between
downtown and University Circle. But
new developments are turning it into
a place to live-work-visit (Google).

Hemingway also developed another nearby, new-construction office building called Link59, a 61,000-square-foot structure it opened in 2017. Located at Euclid and East 59th Street, it is next to the new University Hospitals' Rainbow Center for Women & Children and a new Dave's Supermarket.

Just north of those structures, the Manufacturing Advocacy and Growth Network (MAGNET) is relocating its headquarters, classrooms and work-study areas to a Cleveland Metropolitan Schools building. The former Margaret Ireland School, measuring 56,560 square feet, is at Chester and East 61st Street.

The last office building built in MidTown that was comparable in size to the one Wexford is pursuing was Applied Industrial Technologies' suburban-esque corporate headquarters. It was completed in 1996. But even Applied's 145,000-square-foot headquarters is slightly smaller than what Wexford is planning.

END

700 Lake tops off, and tops the metro area in condo sale price

Lakefront views, high-end finishes and a rock-solid community
combined at 700 Lake to yield Greater Cleveland's most expen-
sive condominium sale ever. Sales and construction work
continues at the Rocky River development (Brickhaus).
CLICK IMAGES TO ENLARGE THEM

As 700 Lake's development and sales team celebrated the structural topping off of their $35 million lakefront development in Rocky River this week, they had another reason to smile.

At the Sept. 1 topping-off event, the project's leading development principals Brickhaus Partners and the Carney family, plus real estate agent the Kim Crane Group at Howard Hanna announced they had sold a penthouse in the development for $3 million.

It was the priciest condominium sale in Greater Cleveland's history, they said. The project's partners are touting the building as offering the finest in lakefront living between New York City and Chicago.

View of the 700 Lake fdevelopment as seen from Lake Avenue,
with the condo building structurally topped-off in the back-
ground. Meanwhile structural work was getting under-
way on the eight townhomes in the foreground (KJP).

The project has a 5-story, 25-condo building perched above the Lake Erie shoreline, set behind eight, first-phase townhouses along Lake Road. Construction started on the condo building last year and on the townhouses this past summer. Each are due to be completed in the first quarter of 2022, said Brickhaus spokeswoman Corinne Kelly.

She also noted that, of the 33 total condos and townhomes now under construction, 19 have sold so far with condo prices starting at $1.2 million. Kelly said reduced, pre-construction pricing would end soon. Howard Hanna's property search engine shows all eight townhomes as available with list prices ranging from $900,000 to $1.9 million.

The development team received construction financing in April 2020 just as the economic shutdown from the pandemic was getting underway. To win the financing, the group had to pre-sell one-third of the condos. Project lenders include Erie Bank, Heartland Bank, CF Bank and Brown Gibbons Lang & Co.

Eastward view this week from the penthouse level of 700 Lake (KJP).

Brickhaus owns several properties to the east of 700 Lake along Breezevale Cove but Kelly said there are no plans for a second phase. The development is in the far northwest corner of Rocky River, between the Bay Village city line and Bradstreet's Landing.

"Each of the residences feature cantilevered balconies for private outdoor entertaining," Kelly said. "They overlook the infinity pool, the outdoor kitchen and private firepit at the lake’s edge."

Brickhaus is led by Andrew Brickman and Alexandra Yonkov. The Carney family is led by John J. Carney and his sons John M. Carney and Michael Carney. Architectural and interior design services were provided by ENV of New York City and Sapphire Pear of Rocky River.

This rendering of the ground-level view shows the lakefront patio
with pool and other outdoor amenities for 700 Lake (Brickhaus).

The 700 Lake development is located on 2.5 acres of land. The condos 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.

Townhomes will offer three bedrooms and measure from 2,100 to 2,800 square feet. They will have terraces ranging from 650 to 750 square feet and individual, indoor garages entered from behind, according to real estate listings.

Residences will have ceilings 9-foot-6 high, high-end interior finishes, over-sized windows, high-end appliances, Italian cabinetry, wide natural oak flooring, luxury designer tile, solid core Cofic doors, luxury plumbing fixtures and smart home technology. The 700 Lake building will have virtual concierge services, underground parking, pre-wiring for electric cars, lakefront pool, parcel drop-off area and storage lockers.

END

Cleveland: growing faster than the national average, and shrinking

Sometimes living in Cleveland is a walk in the park. Census data
shows more adults are choosing to live here as its economy
is producing more output per capita than the average among
106 of America's largest cities studied in a recent analysis.
And Clevelanders' wealth grew by $2.1 billion between
2017 and 2019 but dipped during the pandemic (KJP).
CLICK ON IMAGES TO ENLARGE THEM

In the simpler days of Census data, population numbers for a given metro area either went up or down in lockstep with that region's economic output. There were few wrinkles in the data to pull apart and analyze. Now, there's tons of data to grapple with, offering multiple story lines.

The local media has looked at several of those story lines. One of them is Greater Cleveland's growing diversity and an increase in occupied housing units in the city of Cleveland, even though its population went down.

Here's another story line — the city of Cleveland and Cuyahoga County are growing and shrinking at the same time.

Urban planning consultant Pete Saunders wrote for Bloomberg News a syndicated opinion piece titled "The 'best places to live' may not be the best places to live" noting that coastal juggernauts and long-booming Sun Belt cities are running low on economic fuel. The subhead read "The link between the popularity of cities and economic growth has been severed. Some of the most vibrant metropolises in the U.S. are actually shedding people."

Care to guess which urban areas he counted among the most economically vibrant -- as measured by rates of per-capita Gross Domestic Product (GDP) growth above the national average -- that were also losing population?

Cuyahoga County's fastest growing Census tracts
were in the city of Cleveland; as were some of its
fastest declining. That tale of two cities was one
of the reasons why it grew its adult population
but lost in terms of overall population (KJP).

"Most surprisingly, a handful of Rust Belt metros — Chicago, Detroit, Cleveland and Pittsburgh, among others — outpaced the average per capita GDP gains yet actually lost population," he wrote.

A minor correction — the five-county Cleveland metro area actually grew in population, adding 11,000 people over the past decade. As recently as 2019, the U.S. Census Bureau was estimating that Greater Cleveland would lose 25,000 people between 2010 and 2020.

How could Cleveland and Cuyahoga County be producing more economic output while still losing population?

Easy. Look at where we're growing — and shrinking. 

Cuyahoga County saw its 18-and-older population — aka the adult working population — grow 2 percent from 989,534 people in 2010 to 1,008,892 people in 2020. Yet, total population in the county fell 1.2 percent from 1,280,122 to 1,264,817.

The same thing likely happened in the city of Cleveland too, based on the increased number of occupied housing units but with a 6 percent decrease in population since 2010. Look at downtown, for example. When it comes to demand for apartments in Greater Cleveland, downtown was king. After a hiatus in 2020, downtown was back in power in 2021, accounting for one-third of all apartment demand in Greater Cleveland.

Population growth in the city of Cleveland and a reversal of the
region's no-growth urban sprawl depends on construction of
more housing in the city. This year, downtown Cleveland
accounted for one-third of all demand for apartments
in the Greater Cleveland area (NorthShore647).

Joanna Ganning, associate dean and associate professor of urban planning at Cleveland State University, noted the growth-decline paradox in a recent tweet. She said the number of households in the city increased 6.3 percent just in the six most recent years of available data, from 2012-18, even as population fell.

"So much subtext to those simple stats," she wrote.

One takeaway of course is there's been a decrease in household size — a trend that's been continuing in the USA for hundreds of years. And it has taken a sharper turn since our parents and grandparents were raising families of three, four, five or more children per household. Not anymore. In 2010, 77.3 percent of Cuyahoga County residents were 18 years and older. Last, year that number jumped to 79.8 percent.

Increasingly, Americans aren't getting married until later in life and we aren't having as many kids as our parents or grandparents did. In fact, we aren't having enough babies to replace deaths of older Americans. The only reason why America is gaining population anymore is because of immigration.

One reason why Cleveland and Cuyahoga County aren't growing in population is because they aren't attracting families and immigrants like they did decades ago. But they are still becoming more diverse. Cuyahoga County's number of Latinos more than tripled, the multi-racial population nearly tripled and the population of Asians grew by one-third, according to a recent report.

Cleveland's "best of times and worst of times" is evident in this
map showing population change in each Census tract during the
2010s. Cleveland accounted for the fastest growing and some of
the fastest declining Census tracts (Cuyahoga County GIS).

Census data also shows a new phenomenon — the number of white people increased in Cleveland, now comprising nearly 40 percent of the city's population, up from 37 percent. Meanwhile, the black population dropped, falling from 53 percent of the city's share to below 49 percent. Latino residents grew from 10 percent to just shy of 12 percent of Cleveland's population.

Those are reflective of Cleveland in general — where it was the best and worst of times. No city in Cuyahoga County saw census tracts with more growth and decline than those in Cleveland. In and near downtown, population grew 45 to 185 percent in eight Census tracts since 2010. There were only 13 other Census tracts in the rest of the entire county achieving such population increases of more than 45 percent.

At the same time, there were 12 Census tracts in Cleveland that lost 25 percent or more their population since 2010. All of them were on the city's East Side. In the suburbs — actually only one suburb, East Cleveland — had any Census tracts losing 25 percent or more of their population. That city had four of those big-loser tracts.

While the percentage of black residents dropped in Cleveland, it increased in 28 out of 37 municipalities in Cuyahoga County. The data strongly suggests black people, probably with children, moved out of Cleveland — especially from the troubled East Side — and moved to the suburbs or elsewhere.

As for Cleveland's average GDP gains per capita, Saunders noted that Rust Belt cities have stopped focusing on saving their old-school manufacturing jobs and instead are diversifying their economies. In the 1950s, shortly after Cleveland's population peaked, one-third of its jobs were in manufacturing. Now it's just 11 percent.

Cleveland has a number of unique economic strengths, including
its global port facilities. They could become more prominent as
direct, year-round sea lanes open up to Asian ports -- one of the
few bright spots of climate change (Marinerong Turagsoy).

Since then, Cleveland and other cities are "investing in knowledge sectors such as tech, finance, and 'eds and meds' to match today’s economic landscape. That’s led to productivity gains even without adding more people," Saunders wrote.

Today, the eds and meds sector comprises 20 percent of Cleveland's employment. The epicenter of that sector is in and near Cleveland's University Circle. There, developers are estimating that there's a demand for up to 10,000 housing units in the next 5-10 years that would require at least several dozen large apartment buildings plus hundreds of townhomes to satisfy that demand.

And while lower-income and working-class families are moving out of Cleveland, they appear to be replaced by professional singles and couples. Those middle- to upper-class arrivals are usually without children, as noted in this NEOtrans analysis from late-2019. This gentrification is reflected in city income tax data.

Even before a 2016 income tax rate increase, Cleveland was getting wealthier from the back-to-the-city movement. It continued unabated until the start of the pandemic in early 2020. For people living and working in Cleveland, their wealth grew by $2.1 billion, or 13.6 percent from the start of 2017 to the end of 2019, based on city of Cleveland income tax collections.

City of Cleveland income tax revenues grew from $389 million in 2017 to nearly $442 million in 2019. It dropped in 2020 to $410 million due to the pandemic. Revenues aren't expected to recover to pre-pandemic levels until 2023, according to conservative city estimates. Even last year's numbers, albeit unaudited, were far higher than 2017's.

Two of Ohio's largest employment districts are visible here -- with
downtown Cleveland at the west end of the Health Tech Corridor
and University Circle at the east end (Cleveland Clinic).

So while Cleveland and other large, affordable Rust Belt cities were diversifying their economies with wealthier economic activities, Saunders said popular Sun Belt cities like Orlando, Tampa/St. Petersburg, Dallas, Las Vegas and Phoenix saw their average per capita GDP gains rise less than the overall average for the 106 largest metros he studied.

"The places we’ve traditionally thought of as 'winners' — the big coastal cities (New York, Los Angeles, etc) and Sun Belt metros — may soon face problems," Saunders wrote. "The former are rapidly becoming unaffordable and driving out middle-class families. The latter could suffer from a glut of under-skilled workers in an environment that increasingly demands high-skilled labor."

By contrast, he said Cleveland and other cities in the middle of the country are beginning to generate real economic opportunity while remaining affordable and livable, he said. Cities like Buffalo and Cincinnati saw their first population gains since 1950.

Cleveland, while losing population overall, saw a moral victory in the growth of its working population. And its better-than-average growth in GDP per capita is real and important, even though it won't be captured in Census data. It could be just what's needed to draw more new arrivals seeking a high quality of life at an affordable price.

"If they (Rust Belt metros) haven’t started drawing new residents yet, they will soon," Saunders said.

END

Seeds & Sprouts XIX -- Cleveland apartment demand soars, downtown expansions & more

This is the Nineteenth 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.

From Ohio City to downtown Cleveland and beyond, people are
renting Greater Cleveland apartments in record numbers so far
this year. Nowhere is that more true than in downtown Cleve-
land which accounted for nearly one-third of all rental
activity in Greater Cleveland (Adam Greene).
CLICK IMAGES TO ENLARGE THEM

CoStar report: Cleveland apartment demand set to break records

International real estate research, marketing and analytics firm CoStar released a report this week showing that demand for apartments in the Greater Cleveland market is on track for a record-breaking year.

So far in 2021, more than 2,500 apartments have rented in Greater Cleveland, keeping pace with 2015 which holds the most recent record. The pandemic was a dominant factor in this year's performance. After a sharp drop in demand in 2020, CoStar cites "a return to the office and to downtown living are fueling demand in the market."

One-third of all apartment demand in Greater Cleveland in the first half of 2021 was generated by downtown activity, the report showed. Downtown vacancy remained higher compared to historical trends as the pandemic combined with the addition of several large new apartment buildings to reduce demand and increase supply.

The largest of those projects was the 34-story, 318-unit Lumen Apartments tower in downtown's Playhouse Square District. Leasing at The Lumen began in early March 2020, only days before the economy was virtually shut down by the pandemic.

Leasing at The Lumen started slowly but soon took off; about 85 percent of the apartments are now leased and at monthly rents of $1,400 for a studio to more than $7,000 for a penthouse, according to leasing agent Greystone Properties. See more about The Lumen later in this Seeds & Sprouts under "Retail spaces in two new Cleveland buildings are gaining tenants."

This year, the combination of a slowdown in construction activity and a sharp rise in demand have pushed Greater Cleveland apartment vacancy to an historic low of 5.1 percent. Vacancy in downtown Cleveland in the third quarter was dropping quickly below 14 percent, down from its peak of more than 20 percent in the fourth quarter of 2020, CoStar's report said.

CoStar predicted that demand should remain healthy for the foreseeable future despite multiple large downtown apartment buildings that are due to see construction in the coming months, including City Club Apartments, The Centennial, 55 Public Square, 45 Erieview and the Rockefeller Building. Those and other projects represent 60 percent of the planned apartment units in Greater Cleveland and may keep downtown vacancy rates above historical averages.

Growth is growth, pandemic or not, and the
downtown money management firm Clearstead
needs to add more office space to accommodate
its double-digit employment growth (FindGlocal).

Clearstead to expand downtown Cleveland office by 40 percent

To accommodate its continuing growth, a prominent financial management firm is significantly expanding its office space in downtown Cleveland. Clearstead Advisors, LLC will increase its presence in the 21-story Oswald Centre, 1100 Superior Ave. by expanding from the seventh floor into the sixth floor, according to building permit applications submitted to the city this week.

Monica Fletcher, senior associate of marketing at Clearstead, confirmed the expansion. She said the institutional and independent investment consulting advisory firm will grow from 24,546 square feet it currently leases to 34,415 square feet.

The reason for the additional space is that Clearstead has grown from 80 Cleveland employees in April 2020 to 93 today and expects to add at least four more employees after the office expansion. Company-wide, employment has grown from 85 people in 2020 to 101 today, Fletcher said.

"Clearstead has had double-digit growth in the past few years and having a downtown location has been important to its growth," Fletcher said in an Aug. 27 e-mail to NEOtrans.

Overseeing the expansion and office retrofit work is Ullman Electric Co. of Cleveland. Much of the work focuses on installing new electrical fixtures, receptacles and breakers, according to the building permit application. Cost of the renovations was estimated in the application at $56,400.

International real estate information firm CoStar reported this past week that office leasing velocity in the Cleveland market remains healthy despite the lingering pandemic. Downtown properties remain attractive despite some firms reducing their office spaces and/or subleasing those spaces with the growth in remote working.

Local Development Partners is proposing to develop
vacant land along the east side of West 44th Street,
just south of Lorain Avenue. It is one of many
new developments in the growing south-
western part of Ohio City (CoUrbanize).

Ohio City grows southwest with Harbor 44 phase 2, The Clermont

Two proposed developments would respond to the growth of population and demand for higher-quality urban housing in the southwest part of Cleveland's Ohio City neighborhood. But unlike many new housing units built in Ohio City, these two developments propose to offer a mix of market-rate and affordable units.

Local Development Partners, LLC's (LDP) of Cleveland is proposing both. The larger of the two is Harbor 44 project-phase two. The 22,000-square-foot first phase was entirely commercial -- offices over retail spaces -- at the southeast corner of Lorain Avenue and West 44th Street. The building has nearly filled up all spaces.

"Building upon the success of the first phase of Harbor 44, this development will build new residences -- both for-rent apartments (called Harbor Flats) and for-purchase townhomes (called Harbor Row) -- along two vacant blocks of W. 44th Street," LDP's Principal James Asimes wrote.

Just south of the first phase will be Harbor Flats, a 12-unit apartment building with studios plus one-bedroom and two-bedroom suites. Each apartment will have a private terrace or balcony space. Harbor Row will offer 11 for-sale townhomes. Seven larger townhomes will front West 44th, each with a garage and terrace. Along West 43rd Place will be four smaller townhomes, known as mews, with an eye towards affordability.

"We've been trying to come up with more small, for-sale products," Asimes said. "This (the mews) is a good way to accomplish that. We want to roll out more of these (mews)."

Nearby, a dozen Horton-Harper-designed townhome-style apartments are planned to replace two existing houses at 2222 Fulton Road. Called The Clermont, named after Robert Fulton's first steamship, each unit will have a large living room, modern kitchen, full bathroom, plus a washer and dryer. First-floor units will have a front patio with more outdoor space for all residents in the rear of the building.

"The Clermont is designed to provide a more affordable new apartment -- with price points that better appeal to the budget of a teacher, nurse, or civil servant compared with other new apartments in the area," according to a project brief published on CoUrbanize.

Seven off-street car parking spaces and bike parking will be behind the building and the developer has an agreement with an adjacent property owner for three additional off-street car parking spaces, or 10 total. Removing the existing curb cut on Fulton Road will open up additional street parking. The Clermont is located on the Greater Cleveland Regional Transit Authority's frequent Nos. 22 and 45 bus services.

An artist's rendering showing only the First National Bank of
Pennsylvania's proposed ground-floor bank branch in The
Lumen apartment tower. None of the 34-story building
above the bank branch is shown (David Fuller).

Retail spaces in two new Cleveland buildings gain tenants

Two new buildings that opened in the past year in highly visible locations are gaining ground-floor retail tenants that will likely increase the foot traffic and enhance the vibrancy of those locations.

One retail addition is First National Bank (FNB) of Pennsylvania which is leasing 804 square feet of space in The Lumen apartment tower in downtown's Playhouse Square. The Hermitage, PA-based financial institution is investing $165,000 to remove interior walls and construct a new bank branch, according to a permit application filed yesterday.

In keeping with the district's unique and sometimes theatrical lighting, the branch will feature several LED-illuminated marketing displays. They include a ticker-like ribbon above the glassy façade, plus an LED wall and 65-inch digital monitor inside the bank branch, as noted in planning documents submitted to the city.

Since 2013, FNB has had a regional headquarters and bank branch in the 55 Public Square building which is undergoing renovation into a mix of apartments and upgraded office spaces. While the Playhouse Square branch will help provide an alternative banking location during 55 Public Square's construction, the new branch is far enough away and in an area of strong population growth that will allow it to remain permanently.

Playhouse Square Foundation and Houston-based Hines Interests included two retail spaces at The Lumen. With this space leased, it leaves 1,135 square feet of ground-floor commercial space available in Ohio's tallest residential tower, according to a LoopNet listing.

The other addition is AT&T which is opening a store in the Euclid3 apartment building that was completed last year in the Uptown section of University Circle. City records show AT&T will be taking a 1,610-square-foot ground-floor space in Euclid3 at 11601 Euclid Ave. and invest $75,000 to build-out the space.

The global telecommunications firm will join a local merchant that opened up earlier this year in the new 49-unit apartment building developed by Bluewater Capital Partners, LLC. New Millennium Studio, a small chain of beauty salons, leased 1,211 square feet, leaving about 580 square feet available on the ground floor.

Site plan for the new home for MedVet Cleveland West,
to be located on EmeraldParkway, just north of the
Interstate 480-Grayton Road interchange (M+A Architects).

Animal emergency hospital to relocate from Brook Park to Cleveland

Responding to growth needs, MedVet Cleveland West, a 24-hour animal emergency hospital, plans to relocate from a small, difficult-to-find facility in Brook Park to a new, much larger building on Emerald Parkway in Cleveland.

MedVet Cleveland West is located in a cramped, 11,700-square-foot building at 14000 Keystone Pkwy. on a dead-end industrial street that ducks under Interstate 480. The hospital would like to hire more staff to handle more patients but it simply doesn't have the room.

So the hospital's parent company, Southlake TX-based Cleveland Healthcare I, LLC, plans to invest $6 million to build a new animal hospital that's triple the size of the existing one, according to documents submitted to the city. The 35,000-square-foot facility would rise on a 4-acre site at 1234 Emerald Pkwy., near Interstate 480's Grayton Road interchange and Hopkins Airport.

MedVet is a chain with more than 30 animal hospitals located across the United States. It has three locations in Northeast Ohio -- Cleveland-Brook Park, Akron-Copley and Youngstown-Girard. A fourth location in Mentor recently closed.

END

Sherwin-Williams HQ plans offer busy 2 weeks of review, debate

Sherwin-Williams new headquarters will join the family of downtown
Cleveland skyscrapers after construction starts early this winter. It will
be the fourth-tallest tower in Cleveland's skyline once construction is
completed in 2024 (ClevelandSkyscrapers.com).
CLICK IMAGES TO ENLARGE THEM

For Clevelanders who love to "ooh" and "ahh" over photo-realistic renderings of proposed skyscrapers, the first two weeks in September are going to unwrap an early Christmas present for them. That's when a joint committee of city planning review panels will receive and review more detailed designs for the new Sherwin-Williams (SHW) headquarters.

How will the committee react when it reconvenes Sept. 14? And how might these detailed designs compare to the broad-brush concepts that were conditionally approved by the city in July? Will the designs appear to them as a shiny diamond gift or a lump of coal that needs more pressure to become the diamond?

City Planning Commission will receive schematic-level plans Aug. 31 from SHW's HQ design team, led by SHW's Building Our Future Committee and the architectural firm Pickard Chilton. SHW is eyeing an early-winter groundbreaking for its 1-million-square-foot, $300-million-plus global headquarters on the west side of downtown's Public Square.

NEOtrans learned from sources on the SHW HQ design team that they acquiesced to few of the city's conditions it made July 20 in approving the HQ's conceptual plans. Rather than yield to the conditions, SHW offered compromises instead, according to sources who spoke on the condition of anonymity because they weren't authorized to speak publicly about the project.

A conceptual rendering of the first phase of Sherwin-Williams'
new global headquarters, including the four basic components
of the $300-million-plus phase-one complex (SHW).

Much of the city's concerns were centered on how the new HQ would relate to the streets, sidewalks, pedestrians and Public Square. The city was concerned about blank walls and a lack of public interaction with the new HQ. It urged more ground-floor retail spaces, rooftop cafes/restaurants open to the public, landscaping, public art/screening along sidewalks and the like.

Last month, the city urged SHW to demonstrate via the use of designs the street-level experience of the entire site, especially the temporary parking lots at the western and northern edges of SHW's property along West 6th Street and St. Clair Avenue. The city also recommended SHW enhance the experience for pedestrians along Frankfort Avenue between West 3rd and West 6th that was recently vacated by the city. And the city urged SHW to adopt a retail strategy for the HQ site.

SHW will offer landscaping between the parking lots and sidewalks along West 6th and St. Clair. Those parking lots are considered temporary by SHW as it weighs their future use. Proposed uses include a phase-two SHW office tower roughly 20 stories tall at West 6th and Superior Avenue and future development by others around the west and north flanks of a new 920-space garage for SHW employees.

While the company recognized Frankfort is an important pedestrian route between the Warehouse District and Public Square, it was unwilling to add retail spaces to the HQ tower's base or to the proposed employees' parking deck along Frankfort. SHW considers Frankfort to be its HQ service lane accessed by trucks and where cars entering the parking deck will line up each morning.

Site plan of Sherwin-Williams' HQ property, located to the west
of Public Square in downtown Cleveland (SHW).

As a compromise, SHW's design team is proposing some streetscaping features to Frankfort including vegetation and artistic screening along the walls. Additionally, SHW proposes aesthetic storefront display windows on the Superior-facing podium of the HQ tower, similar to the Euclid Avenue side of the PNC Tower to see how the city will respond.

Design team members also appear willing to add a small retail space to the Superior side, sources said. And there will likely be a second-floor, employees-only outdoor lunch area above this area, also facing Superior.

Members of the city's joint planning committee, comprised of the Cleveland City Planning Commission, Cleveland Landmarks Commission, Downtown-Flats Design Review Committee and the Warehouse Historic District Design Review Committee, also urged SHW to consider adding public roof access to and increasing the height of a glassy, two-story, nearly 50-foot-tall pavilion facing Public Square.

SHW considered it and rejected it. The global coatings giant is extremely security conscious especially when it comes to industrial espionage and does not want any public access to any structure within its new HQ complex. If it weren't for design standards in the city's building code, SHW presumably would not have included a bare-minimum retail space on the West 3rd side of its planned parking garage.

Site plan showing all phases of the proposed Sherwin-Williams HQ (SHW).

Again, as a compromise, SHW is proposing to expand the pavilion's second-floor private terraces that face Public Square. The pavilion will be the HQ's cultural hub, offering a learning center, conference facility, a barista and retail store possibly open to the public and a Center of Excellence to showcase the company's history and achievements to VIPs and new recruits.

And while the committee urged a height increase to the pavilion, SHW reduced its overall square footage, originally proposed to be 50,000 square feet. The goal is to allow for a larger landscaped area with a water feature in front of the pavilion, just across West Roadway from Public Square.

Although the city expressed its displeasure at the HQ's inclusion of two pedestrian skybridges, it has no legal authority to block them. The city's building code does not prohibit them for downtown buildings. SHW proposes a short skybridge over Frankfort, from the parking garage to the HQ tower, and a longer skybridge over West 3rd between the HQ tower and the pavilion.

Last month, the city's joint committee embraced the conceptual design of the 616-foot, nearly 40-story HQ tower. So, few schematic changes were made to its basic form. As has been reported here at NEOtrans since January, the tower will have a glass curtain wall exterior. Above the lobby, the tower's glass will have a blueish tint, as is common in buildings designed by Pickard Chilton. The lobby's glass windows will be clear, design team sources said.

A 3-D model showing all proposed phases of the Sherwin-Williams
HQ complex, including a second-phase office tower about 20
stories tall at Superior Avenue and West 6th Street (SHW).

The tower's V-shaped crown will have some illumination, separate from any illumination in the rest of the tower. Some design alternatives showed illumination of a vertical design feature to break up the middle of the curtain wall on the tower's east and west sides.

Sources also said some earlier renderings have had company logos facing east and west, located near the top of the tower. But signage is not a part of the design requests being made of the city at this time. Often, a new building project's signage applications are submitted much later, sometimes well after construction starts.

Cleveland's City Planning Commission has a three-step design review and approval process for proposed new or renovated building projects. Conceptual plans are submitted first, followed by much more detailed schematic designs.

If the schematic designs are approved, with or without conditional changes, the applicant returns weeks or months later for final approval. But at final approval, the applicant will have made design changes to address the city's conditions. SHW's HQ project is on a schedule that would have it appear before Planning Commission for final approval on Nov. 30.

END

Why Cleveland Construction's new office is an amazing sign for downtown

Crews install a sign for Cleveland Construction Inc.'s new field
office on Prospect Avenue in downtown Cleveland. The sign is
a visible indication about the current and future opportunities
for the Mentor-based construction firm (Jordan Abbott).
CLICK IMAGES TO ENLARGE THEM

Sometimes a sign about the future prospects of downtown construction is just that -- a sign. And what better place to put that sign about future prospects than on Prospect Avenue?

Crews this week were working inside and out while renovating a 3,160-square-foot storefront at 645 Prospect Ave. for Cleveland Construction Inc. which signed a three-year lease in June for a ground-floor space in the parking deck for K&D Group's Residences at 668 on Euclid Ave. Among the renovations is a sign for the Mentor-based construction firm, affixed above the storefront.

The renovations, according to plans submitted to the city and a building permit issued in June, are for a field office for Cleveland Construction. It is the general contractor (GC) for multiple downtown projects that are planned or underway.

Currently, it is the GC for Millennia Companies' 75 Public Square that's already underway. And it's the GC for several big upcoming projects including K&D Group's 55 Public Square, Roy Group's Art Craft Building in the 2500 block of Superior Avenue and the next project of Farmington Hills, MI-based City Club Apartments.

Floor plan for Cleveland Construction Inc.'s new field office in
downtown Cleveland, with the Prospect Avenue entrances
visible at the top of the image (Cleveland B&H).

That project is CBD Cleveland, a 23-story apartment tower due to rise at on a surface parking lot at 776 Euclid Ave. Final designs for the project were approved by City Planning Commission a year ago. Aside from the relocation of sewers below Euclid and its south-side sidewalk, no visible construction has occurred.

The first permit for City Club Apartments was issued July 14 for catch basins, storm/sanitary sewers and a grease interceptor. But the "big permit" is being issued now. That is for the building's foundation and utilities, plus an earth retention system and protection of neighboring structures.

"This office will house our project teams managing the construction of the new City Club Apartments, the historic restoration of 55 Public Square and the upcoming renovation of the ArtCraft Building in the first quarter of 2022," said Shawn Zbasnik, marketing director at Cleveland Construction. "The new office location reflects our dedication to supporting our current projects and the restoration and growth in downtown."

Floor plans submitted with the application show eight offices identified as a "CCA Team Office" and a meeting room marked as "CCA Conference Room." CCA is an abbreviation for "City Club Apartments."

City Club Apartments' 240-foot-tall CBD Cleveland project on
Euclid Avenue is just one of many potential developments in
and near downtown's Gateway District (Vocon).

The field office will also have a reception and waiting area, data and document submittal areas, plus two other offices and a conference room for an unidentified purpose identified as "BD Office" and "BD conference room," apparently referring to "Business Development."

The 300-unit apartment CBD Cleveland (CBD means Central Business District) apartment building will connect to the existing parking garage behind, have balconies for some of the units, pool, fitness center and ground-floor retailers/restaurants.

One of the restaurants may be called The Hippodrome, a nod to the building and its ornate theater which stood on the site until 1981. Next door is the 1901-built City Club of Cleveland which coincidentally has a name similar to that of the planned apartment building but is not affiliated. Construction of the roughly $100 million tower could take about two years.

"Cleveland has been in our name for over 40 years," Zbasnik said. "For the past 15 years, we have developed an extensive portfolio of work in downtown Cleveland using only temporary jobsite offices. We're excited that our management teams now have a permanent downtown office location to collaborate as we continue building and evolving our services in the city."

K&D Group is starting work on the renovation and partial conver-
sion of 55 Public Square, a 1958-built Modernist office tower. The
top half of the 22-story building will offer 105,000-square-feet of
renovated office spaces with 156 apartments, tenant amenities and
a new restaurant on the lower floors. Cleveland Construction is
the renovation project's general contractor (Costar).

A field office on Prospect offers a strategic location for Cleveland Construction potentially for years to come. The provision of the business development offices/conference room with a separate street entrance shows that work can be carried out on more than one project at time.

More opportunities could come as early next year when construction may finally start on Stark Enterprises' long-awaited nuCLEus development, between Prospect and Huron Road, just east of East 4th Street. Stark first proposed nuCLEus in 2014. Cleveland Construction is the general contractor of that project too.

Stark has sought a creative public financing component for its mixed-use nuCLEus project. That financing, called the Transformational Mixed-Use Development (TMUD) tax credit, is due to become available in the next month or so. If nuCLEus fails to win a TMUD credit, Stark will reportedly pursue development of a smaller version of nuCLEus.

Cleveland Construction is also reportedly well aware of the potential redevelopment surrounding the planned $435 million renovation of Progressive Field. That renovation may depend on revenue from the creation of a Tax Increment Financing (TIF) district around the ballpark to capture the increase values from significant developments within that district, according to a source familiar with the vision.

A view of the original proposal for the nuCLEus project, as seen
from Prospect Avenue where Cleveland Construction is put-
ting its new downtown field office (Stark).

Three potential groups, one local and two out-of-town, are pursuing a minority ownership stake in the Cleveland Guardians to position themselves at the front of the line to acquire the team whenever the current owner Paul Dolan decides to sell. The source declined to identify the three groups.

Major League Baseball and all three potential ownership groups are heavily pushing the proposed TIF district for development, replicating the ballpark villages in Atlanta, Boston, San Diego, Washington DC and St. Louis.

Potential development sites include nuCLEus, the Caxton Building parking lot, the parking lot south of the garage City Club Apartments will use for residents' parking, Carnegie-East 9th and East 9th-Bolivar. The last site was apparently put up for sale by Geis Companies two weeks ago to take advantage of the ballpark village opportunity.

Cleveland Construction's new field office location could position itself to capitalize on those opportunities in the coming years. And it has a flashy new sign on Prospect that signifies the potential of those coming projects.

END