Wednesday, August 8, 2018

Cleveland's growing home sales AND homelessness

Homelessness in a booming housing market? It's happening in
Cleveland, with the contrast no more stark than this location.
Across West 25th Street in Ohio City from St. Malachi Center,
which serves many homeless citizens, is The Quarter luxury
apartment complex. There will be affordable housing added
across Detroit Avenue, but more needs to be done in the
Greater Cleveland area to find a balance between a booming
residential market and a spike in homelessness (Google).
There is an incredible story playing out among the spreadsheets and city streets in the Cleveland. On the data side, real estate market observers are watching a remarkable rise in the number of housing sales and prices in the City of Cleveland. At the same time, social service organizations and agencies are witnessing a sad downside -- worsening homelessness -- that needs to be addressed very soon, preferably before another cold winter sets in.

First, consider the rate at which housing is being sold in Cleveland. It is increasing over the number of 2017 sales transactions at a pretty large clip, according to the Cuyahoga County Fiscal Officer's office. And it's being sustained from month-to-month, making for a hot spring/summer in the local real estate market:

July 2017 - 723 homes sold
July 2018 - 888

June 2017 - 828
June 2018 - 883

May 2017 - 742
May 2018 - 831

Apr 2017 - 691
Apr 2018 - 742

This doesn't include housing rentals. Just sales. And, as we know from all the construction/renovation projects around town, the apartment market is growing pretty quickly too while sustaining high occupancy numbers according to public- and private-sector sources.

Furthermore, I'm noticing a lot more $200,000+ houses selling in Cleveland too. I check property transactions each month to look for any anomalies and that's one that has stuck out at me in recent months.

In years past, I used to see the usual multi-million-dollar sales of downtown buildings and industrial properties, then it would drop off to $100,000-$150,000 houses and lower. Now there's up to a page (with 100 transactions per page) of houses selling for $200,000+ per month.

Considering this anecdotal evidence and the property revaluations being done by the county, especially on Cleveland's west side where property values have gone up by more than 10 percent in the past year, school officials are probably grinning a bit more these days. Real estate taxes comprise a bulk of public school funding in Ohio districts, with their inside/charter millage (up to 10 mills) and any new or replacement levies able to capture revenue from these increased property values.

Unfortunately, I'm also hearing more about low-income working people losing their homes as they get evicted/priced out of neighborhoods. While Cleveland keeps adding to the high-end supply of housing, little progress is being made to add to the affordable housing stock. There is a lot of substandard housing in Cleveland which doesn't meet basic housing codes and cannot be legally rented.

The Metanoia Project reports a 20 percent increase in the Cleveland-area homeless population in the last year. The Metanoia Project is a nonprofit organization that provides assistance to the homeless and is based at the St. Malachi Center in Cleveland's Ohio City neighborhood.

Metanoia says evictions are way up in the city of Cleveland. The working poor population is growing and poverty is on the rise. Rent has become unaffordable for many people, especially single mothers with children. Minimum wage cannot support market-rate rental housing. Evictions are creating a rise in homelessness. It is creating a crisis in Cleveland and Metanoia is scrambling to find shelter space for single people and families. Every overflow shelter is now beyond capacity, the organization reports.

A small homeless camp is growing on the closed pedestrian
bridge over the lakefront railroad tracks next to Cleveland's
First Energy Stadium (Ken Prendergast).
Another source, who wishes to remain nameless because he isn't authorized to speak for his employer, said that, while low wages are the primary reason for rising homelessness, the tight housing market is also a big factor.

"Many people who had been renting their houses after the meltdown are finally comfortable with selling since prices have risen," he said. "In South Euclid, the number of rental units has decreased by 4 percent so far this year. The former tenants have to go somewhere, but with a shrinking supply, rising rent prices and stagnant wages, they getting pushed out."

Unfortunately, many tenants end up falling into bad situations with bad landlords and subpar housing conditions. When a tenant complains about the condition of their housing unit, some are evicted. Too many tenants don't know their rights and don't fight the evictions. Once they have an eviction on their record, the working poor get stuck in a vicious cycle of going from one bad landlord to another.

Some would-be tenants get extorted out of extra money for repairs that are not their responsibility, or for higher deposits/down payments in order to be accepted with an eviction on their records. Another scam is the landlord doesn't pay their property taxes or mortgage, then tenants get evicted when the property is foreclosed on. The result is many former renters being pushed out of the market entirely when they should be able to afford a home.

To address this worsening situation, municipalities and Community Development Corporations (CDCs) in Cleveland are increasing their education efforts for tenants (and landlords too) as to what their rights and the laws are. In the long-term, employers need to pay more to their workers and communities need to build more affordable, quality housing to address shortages. The new housing should be located near employment nodes and/or near high-frequency public transportation routes to improve the region's poor linkages between residents and jobs.


Friday, August 3, 2018

Leveraging the Boomtown

A few blocks from the towers of boomtown University Circle
are some of Ohio's most impoverished neighborhoods. Efforts
are underway to leverage UC's prosperity to benefit Cleveland
neighborhoods. In fact, most of the long-neglected structures
in this 2014 scene along East 105th Street are gone, waiting
for public/private investment to reactivate this cleared area.

Cleveland's East Side, with one big exception, is a mess. It's got some of the worst urban poverty in the United States and is the reason for Cleveland's #2 ranking among America's biggest cities in terms of percentage of residents living in poverty. Only Detroit outranks Cleveland in that regard.

Indeed, Cleveland's East Side possesses large pockets of hyper-poverty, or concentrated poverty, where poverty rates exceed 40 percent. The national average poverty rate is 12.7 percent. Cleveland's poverty manifests itself in violent crimes and property crimes, drug abuse and trafficking, gangs, broken families, poor educational attainment, poor housing conditions and poor personal health.

But Cleveland's East Side also has one of the fastest growing job centers in the United States -- University Circle. This includes the immediately surrounding areas of Little Italy plus parts of Fairfax and Glenville. Since 2000, University Circle has been growing at the rate of about 1,000 jobs per year to put it over 42,000 jobs. That makes it the fourth largest employment center in Ohio, trailing the downtown central business districts in Cleveland, Columbus and Cincinnati.

This comparison of the Uptown portion of University Circle
in 1978 (left) compared to 2016 shows a glimpse of how
much the area has grown and developed in recent decades --
CLICK TO ENLARGE (photo arrangement by Scott Muscatello).

Employment in Cleveland's "Education and Health Services" sector, focused in University Circle, has been growing at rates comparable to the tech sectors in Austin and San Jose. There are now more than 200,000 "eds and meds" jobs in Greater Cleveland, making it the largest job sector in the metropolitan area. This boomtown manifests itself in new commercial and residental buildings under construction, rapidly rising real estate prices, lots of new cafes and stores plus worsening traffic.

It is an oasis of incredible prosperity amid incredible squalor. It is a "Tale of Two Cities" much like what Charles Dickens wrote about in describing the best of times and the worst of times.

Thankfully, surrounding neighborhoods and others are trying to find ways to build off the success of University Circle. Numerous Cleveland-area governmental entities, corporations, institutions and foundations have embraced this vision through the Greater University Circle Initiative to create a blueprint to improve social conditions -- workforce training, business development, education -- as well as physical conditions such as new and renovated housing, shopping, offices and schools. Physical developments resulting from this 2014 blueprint are already appearing on the landscape.

In Cleveland, the success or failure of neighborhoods depends on the successes or failures of the Community Development Corporation (CDC) overseeing them. Each CDC is like a neighborhood-level City Hall with its staff managing safety, economic development, planning, building code enforcement as well as oversight of neighborhood amenities like a farmers markets and festivals.

To the North:

Most recently, the Famicos Foundation and the Glenville neighborhood began looking at ways to leverage success from the growing University Circle district next door. They branded an area along East 105th Street northward to Superior Avenue as "Circle North" and secured federal planning funds for enhancing public transportation linkages to University Circle. Plans for a relatively low-cost, highly visible transit corridor called Thrive 105-93 were developed and are awaiting public and private funds for construction.

A long-range vision for a neighborhood downtown centered
on the East 105th Street-Superior Avenue intersection was
designed by RDL Architects for the Famicos Foundation. It
is close to University Circle jobs and next to recreational
amenities in the Cleveland Cultural Gardens (RDL).
A neighborhood land use plan was developed for the Circle North area along East 105th north to Superior, with a neighborhood-scale downtown proposed for that intersection. While the land uses currently at the intersection are underwhelming, the plans for developing that area are overwhelming. Famicos hired RDL Architects to develop the plans which are already seeing tangible progress.

The first development movement northward from University Circle actually began in 2008 when construction began on a new Veterans Administration Medical Center for Northeast Ohio, replacing a 50-year-old complex in suburban Brecksville. The new, $526 million Louis Stokes Cleveland VA hospital actually consolidates several Northeast Ohio facilities, including one renovated at Wade Park. It also provided a big economic boost to the north side of University Circle, bringing 1,350 employees and 200 residents.

Development and expansion of the VA hospital continues. Work is due to conclude by year's end on redeveloping the brand-new Mt. Sinai Skills and Simulation Center at 1551 E. 105th (southeast corner of Wade Park Ave.) into the VA Women's Health Center.

Looking southwest over the East 105th/Superior intersection,
this conceptual view shows Famicos' masterplan for creating
a neighborhood-scale downtown for the Circle North section
of Glenville (RDL).
Just north of the VA is the Heritage Lane development, the first "Model Block" of the Famicos Foundation in Glenville. It consists of more than a dozen rehabilitated, historic, stately homes as well as six newly built townhomes. Additional new single-family homes are planned.

North of Heritage Lane is the first phase of the Circle North development. Now under construction, it features a four-story, 63-unit apartment complex with ground-floor retail being built by the Finch Group. Next stop on our northward trek is 1350 E. 105th, the Doan Classroom Apartments, 45 senior living units in the former Doan Elementary School redeveloped in 2012. And finally, just south of the intersection with Superior, is the new, permanent home of the Gateway/105 Farmers Market, with construction to be completed by year's end.

To the South:

Some of the region's most challenging socioeconomic conditions exist south of University Circle in mixed residential-industrial areas that were booming more than 100 years ago but faded after World War II. Much of this area is called the Forgotten Triangle and is so depopulated, parts have become an urban prairie.

But there are efforts underway to reverse this, led by the Fairfax Renaissance Development Corp. (FRDC) and the Burten Bell Carr Development Corp. (BBC). Both CDCs established long-range visions for redeveloping their neighborhoods then set forth in achieving those plans. Much of those plans center around the Opportunity Corridor -- not just the new boulevard but also the Greater Cleveland Regional Transit Authority's Red and Blue/Green rail transit lines in the corridor.

At the south end of a widened East 105th Street, where the new
Opportunity Corridor begins at left, the East 105th/Quincy Red
Line rail station is being expanded. The goal is to better serve
Fairfax's planned New Economy Neighborhood (GCRTA).
The new Opportunity Corridor is forcing the environmental cleanup of old industrial properties that have lain fallow for decades as few private sector investors would risk exposure to poisons and lawsuits from developing and using these polluted sites. Construction of the 3-mile, $330 million boulevard is directly cleaning dozens of properties it crosses or otherwise touches, making them viable for redevelopment. Investors are snapping up other properties near to the boulevard's alignment.

The first phase of the Opportunity Corridor, which involves rebuilding East 105th into a major thoroughfare south of Euclid Avenue to Quincy Avenue, is nearly done. This includes clearing land along it for future commercial and residential development as part of the New Economy Neighborhood masterplan. This will also benefit from investments resulting from the Thrive 105/93 plan, as well as expansion of the East 105th/Quincy Red Line rail station now underway.

This is what is proposed for Fairfax's Innovation Square/New
Economy Neighborhood. The photo at 
the top of this article
was taken on East 105th at roughly what is the 
middle of this
 conceptual rendering for the neighborhood (FRDC).
First to locate in the New Economy Neighborhood was the headquarters building for Explorys, a Cleveland company acquired by IBM. Its new headquarters is located on East 105th at Cedar Avenue. Additional developments and new housing are planned farther south toward the expanded RTA rail station.

Farther south in the Forgotten Triangle, an ambitious plan to fill an urban prairie with employers, urban agriculture and housing is slowly being realized by BBC. The neighborhood is home to an Urban Agriculture Innovation Zone, including large greenhouses and open-air farming to provide inner-city residents with healthy, affordable foods. The Green City Growers Cooperative greenhouse, 5800 Diamond Ave., sets on 10 acres and represents a $17 million investment including in innovating hydroponic technologies. Rid-All Green Partnership 8129 Otter Road, encompasses a 26-acre site and provides high-quality food to area stores and restaurants.

There are also growing corporate employers in this area who are focusing on food too, including Miceli Dairy and Orlando Baking Co. More light industries and warehouses are planned to meet the region's growing demand for more facilities and capacity in these market sectors. For decades, due to a lack of clean and green land in and near impoverished neighborhoods with underutilized labor, light industries and warehouses were built at the urban fringe where there is little or no transit access to their jobs.

Burten Bell Carr Development Corp.'s masterplan for the
Kinsman  neighborhood has residential planned south of
the Blue/Green rail lines and north of the Red Line with
commercial in between along the new boulevard (BBC).

The Cleveland Federal Reserve estimates that only one-fourth of available jobs in the Greater Cleveland area are within a 90-minute one-way transit trip. Because of urban sprawl, the county-based sales tax resources that support the Greater Cleveland Regional Transit Authority have fallen by $75 million per year. Simultaneously, the state offers tiny fiscal support for transit, forcing the transit agency to consider cuts in service or a tax hike to avoid those cuts. Expansion of service to chase outward-sprawling jobs is out of the question. So, to address the spatial disconnect between jobs and job-seekers, the jobs will have to locate nearer to existing transit and where the region's underutilized labor already resides.

The Opportunity Corridor could offer that opportunity, depending on how pedestrian access between transit stops and destinations is designed. It also may depend on where affordable housing and employers are located in regards to transit. BBC's masterplan for the Kinsman neighborhood has residential planned south of the Blue/Green lines and north of the Red Line with commercial (light industry/warehousing) in between, mainly along the new boulevard.

A lonely Fire Station #26 sat in an urban prairie at Kinsman
Avenue and East 79th Street in November 2015. Since this
photo was taken, an expanding Heritage View Homes
development has risen behind the station. Across Kinsman
 from the fire station, dozens of homes are under construction
to be followed by a new senior housing complex at the corner
of Kinsman and East 79th (Google). 
BBC is leading the development of higher quality residential, both affordable and market-rate, along Kinsman Avenue. Currently, 36 single-family lease-purchase homes are being built between Kinsman and the Blue/Green lines. In 2016, a four-story, 60-unit apartment building was completed at Kinsman and East 79th Street. It continues the eastward march of new housing options along Kinsman built in phases under the Heritage View Homes brand. They include bright, spacious cluster homes and apartments that replaced decayed, outdated, crime-ridden public housing.

North of the Red Line, BBC led the renovation of the New Community Place apartments along East 79th and Woodland Avenue. This aging, inefficient apartment complex was de-densified from 147 units to 103. Next door, in 2015, BBC rehabilitated partially completed townhomes at Hill Place.

To the East:

Different suburban worlds exist east of University Circle. One is the vibrant, historic suburb of Cleveland Heights with its progressive citizenry living, working and playing in its many mixed-used districts centered on busy intersections set among beautifully forested residential streets. The other is East Cleveland, a city that has been home to some of Ohio's worst corruption, urban blight, industrial abandonment, crime and hopelessness for 50 years.

East Cleveland's condition, corruption and reputation deters
spin-off investment from University Circle. The posterchild
of East Cleveland is Chapman Avenue, where apartment
buildings are collapsing from neglect (Brodie Taco Slayer).
Some redevelopment has spread along Euclid Avenue into East Cleveland, but only modestly so. Twenty CircleEast townhomes were built in 2012 on Euclid at Lakeview Road. Next to CircleEast, a solar farm was built in 2014 on six acres by Evergreen Energy Solutions for Cleveland Public Power to provide sustainable energy to the Cleveland Museum of Art, Severance Hall and other University Circle institutions.

While Cleveland Heights is a much more stable community with many University Circle workers and students living there, it has seen little development next to University Circle. That could soon change with the planned Top of The Hill development. This is a four-acre, city-owned property at the corner of Cedar Road and Euclid Heights Boulevard at the top of Cedar Hill.

Top Of The Hill plan for a $75 million mixed-use development
proposed at Cedar Avenue and Euclid Heights Boulevard in
Cleveland Heights (Flaherty & Collins Properties).
As a highly visible property at the gateway between the Heights and University Circle, developing this property has been a goal of the city for 50 years. The growth of University Circle in the 21st century has finally caused more serious interest in this site. In April, the city reached a development agreement with Flaherty & Collins Properties and approved tax increment financing legislation.

Proposed is a $75 million development with 250 market-rate luxury apartments, 15,000 square feet of first-floor restaurant, retail and commercial space, a parking garage containing 750 parking spaces, a nationally branded or boutique hotel, possibly as many as 20 for-sale townhomes, all necessary sidewalks, driveways, access ways and utility connections, public gathering and green spaces and the potential opportunity to include Class A office space.

Case Western Reserve University proposes to relocate student
housing from the Hilltop site to the South Residential Village
next to the Cedar-University rail station (CWRU).
Another opportunity is Case Western Reserve University's plans to relocate student housing from the Hilltop site to the South Residential Village, next to the newly rebuilt Cedar-University Red Line rail station. This will concentrate hundreds of undergraduate housing units at the more accessible bottom of the hill while opening up the Hilltop site for recreation and/or future development.

To the west:

The best was saved for last, as most of the spin-off development from University Circle has spread westward along Euclid Avenue and the HealthLine Bus Rapid Transit line toward Midtown and Downtown. Not only has housing spread west but so has commercial development, especially new business start-ups that were spun-off by medical and other innovations led by UC hospitals Cleveland Clinic, University Hospitals and the VA Hospital. The redevelopment process has followed a strategy set in 2010 called the Health Tech Corridor and led by the Midtown Inc. community development corporation with the assistance of the city, county, state and federal governments.

Hundreds of housing units, including new and rebuilt apartment
buildings as well as market-rate townhouses have risen along
Euclid Avenue west of University Circle (Midtown Inc.).
One of the most daring investments was by the Geis Cos. and James Doyle. Leveraging public capital as well as their own, they built the Midtown Tech Park while the nation was still recovering from the Great Recession. It involved a 128,000-square-foot office and lab complex at 6700 Euclid Ave.

Since then, Baker Electric, 7100 Euclid, was renovated with a business incubator. The Agora building, 5000 Euclid, was renovated with offices and re-branded The Offices at Penn Square. Dealer Tire relocated its headquarters to the Victory Building, 7012 Euclid. The Phoenix, a rehabilitation of the Ace Fixtures building into offices, is at 1975 E. 61st St. Holiday Inn-Cleveland Clinic opened at the west end of the health campus, at 8650 Euclid. Farther west, on Euclid at East 70th, a Tru By Hilton is under construction.

A HealthLine bus rolls by the Midtown Tech Park at Euclid
Avenue at East 66th Street. Behind the bus is the Dealer Tire
Headquarters, some of many of the commercial investments
made west of University Circle (Midtown Inc.).
The MidTown Tech Hive has opened in a renovated commercial building at 6815 Euclid. Link59, a newly built 60,000-square-foot office building has opened at East 59th and Euclid with a Dave's supermarket rising just north of it on Chester. Next door, the UH Rainbow Center will open by the end of 2018. Meanwhile, old buildings north of Chester near East 90th are being demolished for a 94,000-square-foot office development called Core 90.

That's just some of the commercial development. The residential development west of University Circle has been growing too. It started before the Great Recession with the Beacon Place/Woodhaven townhomes as the most notable. Located in the East 80s between Euclid and Chester, 172 market-rate townhouses were built from 2000 to 2017, with construction interrupted by the recession. One Midtown Luxury Townhomes, a 23-unit development at Euclid and East 73rd, has prices starting at $400,000. They are selling before construction has finished on them.

The first phase of Greenbridge Commons, a 70-unit apartment building at Euclid and East 75th, was built in 2011 with the second phase, a 60-unit apartment building next door, completed this year. And, following a devastating fire in 2011, the historic Erie Square Apartments, 7621 Euclid, were completely rebuilt with modern interiors and features and has a waiting list for occupancy.

While there is a lot of work left to do to rebuild the neighborhoods surrounding University Circle so that they can share in the prosperity of that booming district, there is progress being made. If the national and local economy continue to grow and the public/private sectors remain organized to capitalize on it, there is every reason to expect that the projects and plans outlined in this article will continue to leverage the boomtown.


Friday, July 13, 2018

Lakewood commercial conversions continue

The Phantasy Cleveland, including The Chamber nightclub at
left, will end their nearly 40-year run as a performing arts venue
as the Detroit Avenue property has reportedly sold to a buyer
who wants to redevelop it with offices, residential and parking.
North Coast College, including its newest property at Detroit
and Hird avenues, is at center-right. (Howard Hanna photo)

In a follow-up to an earlier posting here at NEOtrans about Lakewood redevelopment, there is new activity to report. Two significant properties for sale are reportedly under contract to buyers who want to redevelop these with new uses.

After roughly three years on the market and listing most recently for $1,050,000, the Phantasy Cleveland, 11794-11814 Detroit Ave. (including The Chamber nightclub), has an unidentified buyer who a real estate source says will end the property's run as a performing arts venue. Foremost among the buyer's plans to substantially alter the 55,000-square-foot building, the three performing arts theaters and three bars will be removed.

In their place will be retail, offices and parking, possibly retaining the historic facade along Detroit Ave., the real estate source says. Additional details were not available at this early phase.

Built in 1918 as the Homestead Theater, the main theater continued to show movies until 1979. It was part of a theater district that also included the ornate, Spanish-style, 1927-built Loew's Granada Theatre at the southeast corner of Detroit and West 117th. It closed and was demolished in 1969 for a Shell gas station that succumbed in the 1980s to a Pizza Hut.

The east end of Detroit Ave. in Lakewood has been seeing an uptick in development activity in recent years, including the construction of 83 luxury townhouses in the Rockport Square development on the old Fairchild Chevrolet property. Another nine high-end townhomes will see construction by the end of this year on Fry Avenue, just north of Detroit, to be built by Knez Homes and be called the Mews At Rockport.

North Coast College (NCC--formerly Virginia Marti College) also showed interest in buying the 0.7-acre Phantasy Cleveland property but the seller wasn't willing to significantly lower its asking price. So NCC acquired a building at 11730 Detroit Ave., used until 2005 by Vedda Printing before it relocated to a new home on Berea Road.

Cloaked in an advertising wrap, North Coast College's latest
acquisition is the former Vedda Printing at Detroit and Hird
avenues, bringing more life to the east end of Lakewood.
(Ken Prendergast photo)
Vedda's old building at Detroit and Hird avenues had fallen into disrepair. It was originally built in 1911 as the Reify Brothers and Flanigan Building, a furniture and appliance store. NCC bought it for $220,000 and will invest $2 million to redevelop it for a culinary school, studio and classroom spaces, plus offices along with a student-run restaurant and bar, according to a recent article in Crain's Cleveland Business.

But NCC's project isn't the second new sale and potential redevelopment teased in the lede paragraph. Steve Barry Buick is...but details are even more sketchy as to its potential new future.

Another real estate source says Steve Barry Buick, 16000 Detroit Ave. (owned by Fairlane Realty) the last new-car dealership along Detroit in Lakewood, is under contract to a buyer who wants to redevelop the large, 2-acre site, possibly with high-end residential. A site that large and which includes Bobby O's Place tavern on the south side of Detroit could fit at least 30 townhomes on it.

Lakewood's last new-car dealership has reportedly sold to a
buyer who apparently wants to redevelop the nearly 2-acre
site with high-end housing to justify the rumored high asking
price for the site. (Ken Prendergast photo)
The reason for constructing residential here is that the housing market in Lakewood is hot and inventory is low, meaning that high-end townhomes with quality finishes can easily command prices upwards of $300,000 and possibly up to $500,000. That's how much townhouses are fectching at McKinley Place on West Clifton, just north of Detroit.

That may justify Fairlane Realty's rumored high asking price of about $3 million. The property was never listed for sale publicly, so the actual asking price was not officially known. But realtors were reportedly told it was several times higher than the $940,300 the county had it appraised for tax purposes.

Steve Barry Buick stopped selling cars more than a year ago but continued to service and maintain cars until earlier this year. The dealership's property includes four parcels totaling 0.76 acres and a small building dating from 1927 on the south side of Detroit for the used car lot. The 1.2-acre parcel and dealership sales/service building on the north side of Detroit dates from 1948.


Friday, June 1, 2018

Cleveland's core entering new-construction mode

The latest report from the Downtown Cleveland Alliance (DCA) on the progress of downtown had an especially interesting data set in it. That report, for the First Quarter of 2018, showed that the last of downtown's obsolete commercial buildings (offices, warehouse, department store, etc.) being converted to residential (along with several new construction projects) will put the population of downtown Cleveland at about 20,000 people by 2020.

That's a great accomplishment considering the dead zone that downtown used to be, especially after 6 p.m. when the sidewalks could be rolled up for the night. Today, residential growth supports grocery stores, clothing stores, furniture stores, drug stores, theaters, and of course restaurants and taverns. Some of those are amenities that also make downtown more attractive to office tenants. Downtown has added 7,726 jobs, an 8.7 percent increase between 2011 and the end of 2017, according to DCA.

Reaching the 20,000 figure is more than a psychological threshold. Retailers will also more seriously consider downtowns that have at least 20,000 residents for larger, national retailers such as a City Target, H&M, Zara, Apple, Urban Outfitters and the like.

But 20,000 people is still a small number. Consider that the Cleveland-Elyria-Mentor  Metropolitan Statistical Area (MSA) has 2 million people (that rises to 3.5 million if the Consolidated Metropolitan Statistical Area data is used, including Akron and Canton). Downtown Cleveland, with 15,000 residents in 2018, has only 0.75 percent of the MSA's population. If downtown reaches 20,000 by 2020, as expected, it will still have only 1 percent of the MSA's total.

The national average for metropolitan areas is to have 1.3 percent of their populations living in the Central Business District (CBD). If downtown Cleveland was average, it would have 26,000 people living in it.

Look for more new-construction residential
developments rising in downtown Cleveland
and the surrounding urban core like The
 Lumen in Playhouse Square. The reason is
that the inventory of functionally obsolete
office buildings is running out to enable low-
cost residential projects. Meanwhile, rents
are rising, demand remains strong, and
more public and private financial resources
 are becoming available for new construction.

Put another way, the 34-story Lumen apartment tower now under construction in Playhouse Square will have 319 living units. There's an average of about 1.5 people per downtown unit. So a 34-story tower should bring nearly 480 residents. For downtown Cleveland's population to reach the national average for a metro area its size, it would take a dozen more Lumen towers filled with residents. Or, if developers were more conservative, it would take two dozen 17-story towers. Logically, developments will probably be somewhere in between, give or take. That gets downtown Cleveland only to the national average. Of course, we want to be better than average.

And it would take new construction for downtown Cleveland to reach the national average. The reason is that the supply of zombie office buildings (ie: functionally obsolete office buildings no longer being marketed as offices) is dwindling fast. Every zombie office building has either been converted to residential, is being converted, or has an active plan to be converted. Once all of these buildings become residential, the only ways to add new residents downtown is to wait for more office buildings to age and become obsolete, to convert active office buildings to living spaces (not a good idea, as DCA says the downtown office market is tightening up) or to build new apartments and condominiums.

But how realistic is that? Consider that downtown apartment rents still average only $1.52 per square foot, well below the $2/SF threshold necessary to support a privately financed residential development. Fortunately, some of the most recently developed units are leasing for $2/SF as downtown residential occupancy remains a robust 94 percent. And, consider that the major source of subsidies to support residential development has been state and federal historic tax credits. Those apply only to buildings more than 50 years old. So where does the financing come from?

One University Circle, a 20-story
apartment building that opened this
year on Euclid Avenue is one of three
new high-rise residential buildings
on Cleveland's main thoroughfare.

One possibility is a transformational tax credit on insurance companies that invest in development projects. The tax credit idea was originally pushed by Stark Enterprises which seeks to develop nuCLEus, a $500+ million mixed-use project on downtown Cleveland parking lots just north of Quicken Loans Arena. NuCLEus would feature a 54-story apartment tower, plus offices, retail, hotel and parking. Creation of the transformational tax credit would require the Ohio General Assembly to pass House Bill 469.

Before being passed by the House of Representatives' Government Accountability and Oversight Committee on May 22, HB469 was refined so that a transformation tax credit could benefit a project that:

  • Includes all territory located within a radius of not less than one-fourth of one mile and not more than one mile centered on the site of a transformational mixed use development;
  • Will have a transformational economic impact within the project area, as approved by Ohio's director of development services;
  • Is a mixed-use development that integrates some combination of retail, office, residential, recreation, structured parking, and other similar uses;
  • The minimum project cost will be at least $50 million (10 percent of which can be funded by the transformational tax credit); and
  • Includes at least one building that is 15 or more stories in height or has a floor area of at least 350,000 square feet.

A taxpayer can claim only one credit per year. HB469 assigns the limitation on the number of credits that can be awarded per year to all taxpayers to the operating appropriations act, aka the General Revenue Fund (GRF) budget, which is passed by the legislature every two years (a biennium). Next year is when the next biennial GRF budget comes up for a vote. Unless the General Assembly authorizes some tax credits in this year's budget reconciliation, the earliest that transformational tax credits may be available is the start of the 2020 fiscal year (July 1, 2019).

Financial aid has already arrived as Congress rolled back some lending restrictions for community banks in the Dodd-Frank regulations act passed after the financial crisis of 2008. That will make it easier for more people to get financing from smaller banks to buy a home.

The Finch Group's Residences at Park Lane is proposed as an
11-story condominium building, a break from the apartment
developments that have dominated Cleveland's high-rise
residential offerings for decades. This is due to a stronger
real estate market and liberalized private sector financing.
Some new-construction residential projects, in addition to those already mentioned, are starting to pop up on the radar in Cleveland's urban core. Among these are:

  • Flats East Bank Phase III -- Two residential towers (one at least 20 stories tall) over a grocery store, movie theaters and restaurants, totaling $150 million;
  • Two University Circle -- A residential tower (possibly condominiums) plus offices and a convenience store next to the newly opened, 20-story One University Circle at Euclid Avenue and Stokes Blvd.;
  • University Circle City Centre -- At least one residential tower built atop a new Martin Luther King Jr. branch library on Euclid just west of East 107th St.;
  • Residences at Park Lane -- An 11-story condominium building a block north of Chester Avenue and just east of East 105th St. 

A lot more will be needed if downtown Cleveland is to reach the national average of metro area population located in the CBD. But at least rents are rising faster to justify more new construction and some financing resources are becoming available to lenders and developers to help downtown pass 26,000 residents, and so that nearby neighborhoods can repopulate too.


Thursday, May 17, 2018

Lakewood Ohio's new residential boom times

One Lakewood Place, by Carnegie Development, would be the
largest development in Lakewood in more than 90 years. It
would help the city and its downtown businesses recover from
the loss of 660 well-paid Cleveland Clinic workers.

Lakewood's primary commercial district, Detroit Avenue, is becoming a lot more residential. The changeover in land use is due in large part to a change in business preferences, resulting in opportunities to offer contemporary housing in a stable, walkable community. The last time the city had so much land available for development was before the Great Depression of the 1930s.

There are eight large properties along Detroit Avenue that were or are in play for redevelopment. Most developments are for new uses, primarily residential. They include:
1. Fairchild Chevrolet -- Forest City Enterprises/Ryan Homes & Knez Homes
2. Educator's Music (and Spitzer Chrysler-Jeep?) -- Solove Development
3. McKinley School -- Liberty Development
4. Steve Barry Buick -- Unknown
5. Lakewood Center North office tower -- Lakewood Center North LLC
6. Lakewood Hospital -- Carnegie Management
7. Trinity Lutheran Church -- Unknown
8. Phantasy Cleveland -- Unknown

Fairchild Chevrolet -- The metamorphosis started more than a decade ago. Fairchild Chevrolet, located in the 12000 block of Detroit Ave., bolted for Westlake in 2005 and was soon sold and renamed as Pat O'Brien Chevrolet. General Motors was encouraging dealerships not already next to Interstate highway interchanges to move to them.

A four-acre hole was left in Lakewood's community fabric when
 Fairchild Chevrolet left for Westlake and the Great Recession
halted redevelopment of the former car dealership.
But its departure left a four-acre gaping hole along the oldest and most vulnerable part of Lakewood's main commercial corridor. That loss was felt both in terms of the corridor's physical appearance and in the level of economic activity. Suddenly and for the first time since the dealership opened in the 1940s, the area around it became a dead zone.

But Bob Fairchild, owner of the now-departed dealership, anticipated that and wanted to limit its duration. He paid to demolish all of the dealership's buildings so that they wouldn't leave a blighted landscape to be vandalized and reduce the value of surrounding properties. He also wanted to remove a barrier to the site's future redevelopment.

Rockport Square's original site plan, 2005
What he couldn't anticipate was the coming of the Great Recession of 2008-10. Fairchild sold his dealership's properties to Cleveland-based Forest City Enterprises which began redeveloping four blocks of street frontage into Rockport Square luxury townhouses. When the recession hit, the development stopped cold, maxing out at 32 townhomes and leaving the two largest portions of the former Fairchild Chevrolet in limbo as weed-strewn, empty lots for nearly a decade.

When the real estate market recovered, Ryan Homes stepped in to finish the job. It built 51 more townhomes that listed for upwards of $200,000 each. All of them sold in a single year before Ryan's work was finished in 2017 (some landscaping remains incomplete).

The speed and price at which those homes sold piqued the interest of other developers in a tiny parcel that remains undeveloped from Forest City's original plan. Several houses on the east side of Fry Avenue were demolished in the mid-2000s for a part of the parking inventory to support a pair of six-story condo buildings, one on either side of Detroit, called the Lofts at Rockport Square. Those plans were scrapped in favor of Ryan Homes' townhouses.

At 1375-1391 Fry Ave., Knez Homes, Inc. will build The Mews at Rockport. The project will include nine townhouses, each three stories tall. City officials approved Knez's plans and zoning for the development in spring 2018.

Educator's Music, 13701 Detroit Ave., and the house behind it
are on land that was sold to Liberty Development Co. which
is building the luxury townhouse development, McKinley
Place. Liberty's plans for this site aren't yet known.
Educator's Music (and Spitzer Chrysler-Jeep?) -- But Fairchild probably won't be the last former car dealership to become a residential development. Farther west was the Spitzer Lakewood Chrysler dealership at 13815 Detroit Ave. Due to recession-induced restructuring in the auto industry, Spitzer lost his Chrysler Motor City franchises in Parma and Lakewood in 2010.

The Spitzer dealership leased its building and parking/inventory lots to Wingstar Transportation LLC which began in 2013 to provide trucking and logistics services. Joining Wingstar at the dealership is its sister company, Volens LLC. It began in 2015 to provide trucking equipment, trailers and tarps for shipping purposes. But Wingstar and Volens quickly outgrew the 1.6-acres of land south of Detroit, divided by Parkwood Road, and are looking for more space elsewhere.

They won't be expanding east on to the property of Educator's Music next door, at 13701 Detroit Ave.The reason is that this site's owner, the Stavash Family Limited Liability Co., has sold its land, store and house behind the store at 1406 Wyandotte Ave. An earlier rumor that Liberty Development Co. (see McKinley School/McKinley Place townhouses) was the buyer proved to be false. Instead, it is the Columbus-based Solove Development.

Educator's Music was started in the early 1950's by the late John Stavash Sr., once a member of the world-renowned Cleveland Orchestra. He built the store building in 1960. His son, John Jr., runs the store today and will relocate outside of Lakewood, though he said he hasn't decided where yet.

The retail business, including its music lessons, will continue at the current location until at least the end of May and most likely to the end of June. It may temporarily operate out of the house behind the store. The 0.4-acre property and its two structures have a tax value of $232,300, according to Cuyahoga County records.

If combined with the adjacent, former car dealership property, valued at $767,500 for taxes, these parcels would amount to a two-acre lot. That could provide enough room for several dozen townhomes or two or more multi-family residential buildings with ground-floor retail facing Detroit.

That doesn't include the 0.35-acre Bruce's Automotive & Fleet Services, 13919 Detroit Ave., at the highly visible corner of Detroit and Bunts Road. This property is valued at $165,600 for taxes and owned by G & M Property Management 3 LLC, which in turn is owned by George Shaker. Shaker has owned the property either directly or through a company for more than 40 years, county records show.

McKinley Place townhouses, while very dense, has a common
greenspace at the end of this new street where a stone remnant
stands from McKinley Elementary School that occupied this
site from 1918-2015.
McKinley School -- If the name Liberty Development doesn't ring a bell, then you might remember it as the developer that's nearly finished building the 40-unit McKinley Place Townhouses. They are rising on the 3-acre site of the former McKinley Elementary School property on West Clifton Boulevard, just north of Detroit Ave. Townhouses at this site are selling for between $314,000 and $483,000.

One of three sections of the now-closed Steve Barry Buick.
This was their new car showroom on the north side of Detroit
Avenue. Their service/repair center was on the south side of
Detroit on the west side of Orchard Grove Avenue and the
used car lot on the east side of Orchard Grove.

Steve Barry Buick -- The last new-car dealership along Detroit in Lakewood was Steve Barry Buick, 16000 Detroit Ave. Steve Barry Buick stopped selling cars more than a year ago but it continued to service and maintain cars until earlier this year. Office equipment and furniture continue to be sold off into May.

Although the property isn't listed for sale publicly, it is common knowledge in local real estate circles that Steve Barry Buick and the neighboring Bobby O's Place tavern is for sale. The asking price is rumored to be several times higher than the $940,300 the county has it appraised for tax purposes.

The dealership's property, owned by Fairlane Realty, includes four parcels totaling 0.76 acres and a small building dating from 1927 on the south side of Detroit for the used car lot. The 1.2-acre parcel and dealership sales/service building on the north side of Detroit dates from 1948. At nearly 2 acres, the combined property is comparable in size to the Educator's Music/former Spitzer site.

Lakewood Center North has towered over downtown since
1974. Until 2017, it was exclusively an office building. Now,
10 of its 15 floors are being renovated with 153 apartments.
At left is Cleveland Clinic's Family Health Center, seen
under construction in August 2017.

Lakewood Center North
-- But the single largest addition of housing units to Lakewood in many years didn't come from new construction. Instead, it came from a concept borrowed from nearby downtown Cleveland -- conversion of an aging office building into apartments. At 15 stories, Lakewood Center North, 14600 Detroit, was the tallest suburban office building in Greater Cleveland.

It lost its office building standing after the United Transportation Union's national headquarters went west to North Olmsted and New York Life insurance went east to downtown Cleveland. That left 10 floors of the office building vacant. An investor group, Lakewood Center North LLC led by Brad Kowit, acquired the building in 2013 for a mere $3.385 million from CW Capital Servicing Inc. of Bethesda, MD which bought the building seven years earlier for $14.45 million.

Ten floors in the middle of the building are being renovated with 153 apartments, offering one-bedroom and two-bedroom units. The top two floors of the building will remain as offices with the bottom three floors a mix of offices, retail and restaurants. Having apartments in downtown Lakewood, with its many restaurants and shops (including two full-service grocery stores, one of which is open 24 hours), is intended to attract more Millennials to Lakewood.

Preliminary site plan for Carnegie Management & Development's
proposed One Lakewood Place development on the site of the old

Lakewood Hospital -- The biggest development in downtown Lakewood is yet to come -- One Lakewood Place. It's due to a different kind of shift in the commercial market -- outer suburban job sprawl. Cleveland Clinic's Lakewood Hospital pulled up stakes and relocated 660 employees of its highly paid workforce from this inner-ring suburb to exurban Lorain County. While 200 Cleveland Clinic employees will remain at its new $34 million Family Health Center at Detroit and Belle avenues, the loss of so much income tax and so many workers has hurt downtown Lakewood shops and restaurants.

So the city has named Carnegie Management & Development Corp. of Westlake to redevelop the city-owned Lakewood Hospital site. At 5.7 acres, it is the largest site in Lakewood to be developed in nine decades.

Planned is a $75 million mixed-used project featuring an apartment tower with hundreds of units, 60 townhouses, 100,000 square feet of offices and 84,000 square feet of retail. The only question at this point is how tall will the main building be -- six stories of offices with 200 residential units in other buildings to the south? Or will it be 18 stories with 200 residential units atop the six-story office pedestal plus the other 200 residential units south? Carnegie is considering the latter because it is more cost effective, the Lakewood residential market is strong and downtown Lakewood shops and restaurants need the business to make them whole from the loss of so many hospital workers.

Trinity Lutheran Church and its two single-level retail buildings
just beyond were listed for sale but are no longer on the market.
Instead, the site is under contract with an unidentified developer
to re-use the vacant structures or demolish them for a new land
use plan.

Trinity Lutheran Church -- Another development that could soon move forward is the repurposing of one or more parcels owned by Trinity Lutheran Church, 16400 Detroit, between Hall and Westlake avenues. Three parcels are here. They total 0.729 acres and are valued at $680,400 for taxes. The church is on the westernmost parcel and two, single-level storefront-type buildings are on the two easternmost parcels. Those two were to be razed and developed with a Wendy's fast-food restaurant but there wasn't sufficient space for parking and a drive-through lane.

The church sanctuary wasn't part of that discarded, conceptual plan. Trinity Lutheran is moving a half-mile west to Lakewood Congregational Church. An unidentified developer is under contract by Trinity Lutheran to find a new use for its old property.

Since 1980, the Phantasy Cleveland has helped launch many
fledgling music careers in rock, new wave and punk. But the
former movie theater complex is for sale and could soon be
redeveloped with residential or other uses (
Phantasy Cleveland -- Last on this list is the Phantasy Cleveland, 11794-11814 Detroit, a 55,000-square-foot live entertainment complex with three stages and three bars. Built in 1918 as the Homestead Theater, it continued to show movies until 1979. It was part of a theater district that also included the ornate, Spanish-style, 1927-built Loew's Granada Theatre at the southeast corner of Detroit and West 117th. It closed and was demolished in 1969 for a Shell gas station that succumbed in the 1980s to a Pizza Hut.

It's possible that the Phantasy, for sale for $1,050,000, could be redeveloped with apartments or remain as a theater. The theater complex itself is set on 0.52 acres of land. An adjoining 0.172-acre parcel is also owned by 11802 Detroit Ave. It is The Chamber Danceclub, formerly the Highland Studio, and appears to be part of the Phantasy sale listing.

Detroit Avenue, looking east from Beach/Winchester avenues
at the Rockport Square townhouse development. Compare this
view with the Fairchild Chevy scene near the top of this article.
More of Detroit Avenue, especially where the other two closed
car dealerships now sit, could soon look similar to this.

All of these developments will help Lakewood stop and reverse a decades-long loss of housing stock and, more importantly, loss of population. Cuyahoga County's loss of population and households is well-known. It started with the city of Cleveland in the 1960s and continues to this day, albeit more slowly as the city rebuilds its aging, obsolete housing stock. Despite Cleveland being incorporated 100 years before Lakewood had, the average age of Cleveland's housing stock is actually one year newer (1940 vs 1939) due mass demolitions and extensive new construction.

Lakewood has the third-most housing units in Cuyahoga County (30,569 units or 5 percent of the countywide total), trailing only Cleveland (213,983 or 35 percent) and Parma (36,682 or 6 percent). Lakewood lost 1,725 households between 1990-2010, ranking behind Cleveland, East Cleveland and Euclid in housing loss, according to a 2016 study by the Cuyahoga County Planning Commission. More recently, the growing conversion of many Lakewood rental duplexes into for-sale, single-family homes is raising the value of housing but reducing housing units and population.

Lakewood has 28,144 living units, 30.6 percent of which are apartments, 33.3 percent are one-family homes and 23.5 percent are two-family homes. The only cities that have more apartments are Bedford Heights, East Cleveland, Highland Hills, Mayfield Heights, North Randall, Warrensville Heights and Woodmere.

With Lakewood as a benchmark, only four cities have a smaller share of their housing stock as single-family homes -- East Cleveland, Highland Hills, Linndale and North Randall. And only four cities had a greater share of their housing stock as two-family living units -- Linndale, Newburgh Heights, Cleveland and East Cleveland.

Cuyahoga County cities with the largest share of new living units constructed between 2010-2013 were Cleveland with 681 units (valued at $103 million) or 27 percent of the Cuyahoga County total, and Strongsville at a distant second with 251 units (valued at $81 million) or 10 percent of the countywide total. Lakewood added only 20 living units valued at $6 million during that period.

That shows how much catching up Lakewood has had to do. The existing and potential Detroit Avenue corridor developments listed in this article (plus others in Birdtown, Clifton Pointe and scattered sites) are helping to add nearly 1,000 modern housing units to this stable, walkable community.


Tuesday, March 20, 2018

Cleveland, redefined

Out-of-state license plates are everywhere in Greater Cleveland these days, especially in hot neighborhoods of Cleveland as well as inner-ring suburbs like Lakewood and Cleveland Heights. These photos were captured outside an apartment building in Ohio City where the number of cars bearing out-of-state plates equaled those with Ohio plates. CLICK IMAGES TO ENLARGE (Tom Moran photo)

Perhaps you've noticed it on the license plates of cars in your neighborhood. Perhaps you've noticed it while shopping for a new house. Perhaps you've noticed it in the new faces at your child's school. Perhaps you've noticed it on local dating apps.

Something is happening in Greater Cleveland that we're not accustomed to. They're coming. Many are already here. Lots of them. Lots of what?

People. Relocated, transplanted, moved.

If it is big enough to measure, we probably won't get a better feel for this population shift until the next Census count in 2020. But numerous unscientific sources of information are revealing that a recognizable change is happening in Greater Cleveland.

First, the license plates. If you live in some of the hot neighborhoods of Cleveland -- Downtown, Detroit-Shoreway, Little Italy, Ohio City, Tremont, University Circle -- or in inner-ring suburbs like Lakewood or Cleveland Heights, you have new, out-of-state neighbors. Parked in these areas are lots of cars with license plates from eastern states, especially New York, Pennsylvania or Maryland. Or you'll even see a few Illinois, Michigan, Georgia, California and Texas plates.

The out-of-state plates are more numerous in neighborhoods with plenty of apartments -- a favorite among new arrivals who aren't ready to buy in an unfamiliar city. At some larger apartment complexes or on streets with many smaller apartment buildings, up to half of the parked cars are from out of state.

Second, my younger friends have noticed on dating apps lots of Clevelanders looking for love or friendship, and starting out with "I'm new in town..." They couldn't cite numbers but said there were enough of them to be noticeable and to cause my friends to wonder "What is going on?"

Third, for those already married with children, they're probably noticing new faces at their child's day care. For example, at Lakewood Child Care Center, they're coming from New York, other eastern states as well as from Chicago, said Director Holle Brambrick.

"Our (facility) tours of potential new customers coming from out-of-state has definitely increased in the past year," she said.

And then there's the real estate. If you haven't checked the prices lately of homes in the above-mentioned neighborhoods and inner-ring suburbs, you are in for a shock. Until the last year or two, a home shopper could easily find a nice house in Cleveland or Lakewood away from the lake for under $200,000. Not anymore.

Thousands of residences are under construction in Greater
Cleveland, with many rising near the region's rail and bus
rapid transit stations to offer links to downtown, airport and
 more. Here, Centric apartments rise next to the  Little Italy
Red Line station that opened in in 2015.
 (Ken Prendergast photo)
Consider the story of my Lakewood veterinarian and her husband (they didn't want their names used). They live in a second-floor apartment in a ubiquitous Lakewood double. This one is located on Rosewood Avenue, near the intersection of Hilliard Road and Madison Avenue. The couple wanted to stay in their apartment, but the double was sold to a real estate developer for $170,000. The developer will do to this double what he has done to other Lakewood doubles -- gut it and convert it into a single-family home for sale. They are asking and getting sales upwards of $300,000.

So my veterinarian friend and her husband looked to buy new homes anywhere north of Lorain Avenue, whether it is in Cleveland, Lakewood, Rocky River or Fairview Park. As a young couple, they wanted to be close to the city and their jobs. Finding an affordable home is proving to be difficult. They thought they found the perfect home in Kamms Corners near the Metroparks, but they were outbid by $5,000 by someone offering all cash.

Howard Hanna realtor Emmanuel "Mike" Skantzos, based out of the agency's Rocky River office, says experiences like this are becoming more common. When a renovated historic house with quality finishes goes on the market, it may not last a week before a buyer snaps it up. And the asking price often doesn't get negotiated downward; instead it gets bid upwards by competing buyers.

Furthermore, Skantzos estimates that about 20 to 25 percent of the work at Howard Hanna's Rocky River office is handling relocations to the Cleveland area. While only about 5 percent of his business is relocations, there are realtors at his office who handle nothing but relocations and they are busy, he says.

Cars with New York license plates are parked in January next
to the 15-story Lakewood Center North  building that was
recently converted to apartments. (Ken Prendergast photo)

The change in the market is being noticed in Downtown Cleveland too. There, Greg Deming, property manager at the new Worthington Yards apartments in the Warehouse District, said he's surprised by the number of people relocating to Cleveland for new jobs this winter.

"Usually, December through February are slow," Deming said in Crain's Cleveland Business. "I've never seen it like this. We'll be filled by springtime."

Anyone driving around the hot real estate areas noted earlier will see apartments, townhouses and new businesses popping up like daisies. And that's just what they can see. What they can't see are real estate developments moving more quickly from the drawing board, through financing and city approvals processes to the cusp of construction. The reason is because rents are rising to levels where fewer subsidies are needed due to the as-yet insatiable demand.

Most parcels of land along and north of Detroit Avenue in Cleveland in Ohio City and Gordon Square have a new real estate development on them or a real estate developer inquiring about them. Just about every under-utilized piece of land in Tremont has been or is being developed. Housing prices in Duck Island are bound to eclipse downtown's as large swaths of vacant land are giving way to large swaths of swanky new townhomes, some priced above $1 million.

Three apartment towers of 20-34 stories are under construction along Euclid Avenue between downtown and University Circle, with several more planned in the Flats and several more planned in University Circle. And if you wanted to get a house in Little Italy or Uptown for under $200,000, you've missed the train. Townhouses in the $300,000 to $800,000 range don't stay on the market for long, and hundreds of apartments rising near rail and bus stations in the area are leasing out before the paint dries on them.

So what's driving this change?

One economic shift is the amazing growth of "eds and meds" jobs, officially known in the U.S. Bureau of Labor Statistics data sets as the Education & Health Services sector. In the past decade, this sector has added more than 20,000 jobs in the Cleveland market. Year-over-year growth rates of 4 percent or greater in the past three years are comparable to the growth rates of the tech sectors in Austin, TX and Silicon Valley.

Roughly the same vantage points in University Circle, which has become
Cleveland's boomtown. The scene at left is from 1978 and the view at right
is from 2016. With upwards of 60,000 jobs, this area is now Ohio's fourth-
largest employment center, behind only the downtowns in Cleveland,
Columbus and Cincinnati. (Scott Muscatello graphic)

And it's not just growth at the Cleveland Clinic or University Hospitals pushing these numbers. Nor is it limited to their biotech spinoffs, although they're a significant driver. Regional employment has finally returned to where it was before the Great Recession but still 80,000 off from where it was in 2001.

One of the most exciting business announcements in a long time is the new biotech partnership between the Cleveland Clinic, JumpStart, and Plug and Play, one of the world's leading startup accelerators. Silicon Valley's Plug and Play Tech Center has moved into the Global Center of Health Innovation, now more than 80 percent full. One of the biggest fool's errands of economic development is to try to convince employers to relocate their jobs to your city. Most economic growth is homegrown. Instead, bring the money to Cleveland and the people will follow. Plug and Play will do that.

So financiers are noticing Cleveland. Consider San Francisco's 10,500-employee Bank of the West which is adding commercial banking hubs in only two metro areas this year -- Atlanta and Cleveland. NexTier Bank, a roughly $1.2 billion-asset bank based in Kittanning, PA, is opening a new commercial loan production office in Cleveland. It's NexTier's first foray into Ohio where it will help finance multi-family residential developments in downtown Cleveland.

Another San Francisco firm has chosen Cleveland and Atlanta as its two expansion markets this year. Divvy Homes, a new, tech-based real estate firm, provides creative financing so renters can buy their homes.

Real estate giant Marcus & Millichap's Institutional Property Advisors created a new operation to assist the development of multi-family residential buildings in the Midwest. It didn't locate its IPA Midwest-Multifamily headquarters in Chicago or any of the other major cities in the Midwest. Instead, it chose Cleveland.

More financial institutions opening up commercial loan operations in Cleveland include SunTrust Bank, Sandusky's Civista Bank, and Citizens Bank, one of the largest banks in Northeast Ohio, which acquired Cleveland M&A firm Western Reserve Partners to expand its presence in commercial lending. All of this will help homegrown employers grow.

Everything listed thus far has occurred just in the past year.

From Hingetown (foreground) to Downtown and beyond,
business and public investment in Cleveland is accelerating,
attracting new jobs and residents (Aerial Agents photo).
Also in the past year, many companies have chosen to follow the money here. Some are moving their back-office operations from eastern states, including more expensive locales like the New York City metro area. Most of these don't individually involve large numbers of jobs. But there are many of them which makes the shift all the more organic and sustainable.

"People don't realize Cleveland has a lot of money in it -- who would've thought so, right?" said DynamicVentures LLC CEO Brandon Short in Crain's. Short recently returned to Cleveland from Manhattan.

"But as more and more dust gets kicked up, you're seeing more eyes turned toward Cleveland," Short added. "I think that's part of why you're seeing the deal flow out here."

His story was similar to those of many other capital investors who have either returned, relocated to or expanded in Cleveland in the past year or so. Those stories were outlined in a comprehensive article in Crain's Cleveland Business. Investors said they were drawn, in part, by the city's new image, unleashed upon the nation and the world after the Cleveland Cavaliers won the championship and the Republican National Convention was held here, both in 2016.

One of the largest corporate relocations was actually due to an acquisition. KeyBank acquired First Niagara Bank for $4.1 billion in 2016, quietly making it the nation's 13th largest bank. It has been adding jobs and moving positions from its former Buffalo headquarters to Cleveland -- to both its downtown and Brooklyn locations.

Fund That Flip, a New York City real estate services company, has moved its back-office and sales operations to downtown Cleveland. The company which provides financing to "flip" or redevelop historic homes, is still small as it was founded in 2014. But the company is growing quickly.

"Cleveland offers a broad base of high-quality talent in a much more cost-efficient environment than New York City," said CEO Matt Rodak in Crain's Cleveland Business.

Old and new mix at University Circle, a setting offering
the extent of amenities found in bigger East Coast cities
but without the big prices. It's a big reason why some
are relocating to Cleveland. (UrbanOhio photo)
South Burlington, VT-based regional airline carrier CommutAir announced it is moving its headquarters to the Cleveland suburb of North Olmsted where it already has some sales and back offices. CommutAir, which recently entered into new agreements with United Airlines, expects to triple its operations here by 2020.

Health care technology company CoverMyMeds is bringing hundreds of new jobs to Cleveland after it was acquired last year for $1.1 billion by San Francisco-based McKesson Corp. The firm's software allows physicians issuing prescriptions to quickly check with insurance companies to learn if a patient's medication is covered.

When aggregates company Fairmount Santrol, based in Chardon, merged with Unimin of New Canaan, CT (located in the New York metro area), the board of directors decided to relocate the headquarters of the newly combined company in the Cleveland suburb of Independence. Lower costs and high-quality regional amenities were cited as the reason.

Yet another corporate combination between a New York City-based company and a Cleveland company is benefiting Cleveland. ABM Industries Inc, an international provider of building maintenance and operational services, acquired Cleveland-based GCA Services Group for $1.25 billion. GCA, with 37,000 employees, is a relatively small version of ABM. While ABM's headquarters will remain in the Big Apple, many back-office functions and workers are being relocated to Cleveland to save money.

There are several thousand new jobs coming to Greater Cleveland this year and next with the opening of Amazon's two Fulfillment Centers -- massive distribution hubs for Northeast Ohio's 4 million people. The Fulfillment Centers are taking the places of failed shopping malls in North Randall and Euclid.

Huge Amazon Fulfillment Centers are under construction in
Greater Cleveland. This one, on the site of the former Randall
Park Mall, is farther along. The other is being built where
Euclid Square Mall stood. (Aerial Agents photo)
But there are plenty of homegrown expansions, not the least of which are the 1,300 new jobs that Mayfield Village-based Progressive Insurance plans to fill in Northeast Ohio this year.

The last year saw the acquisition of Valspar Corp. of Minneapolis by Sherwin-Williams Co., founded in Cleveland 152 years ago. While the corporation reorganization and the reassignment of employees is continuing, Sherwin-Williams is expanding its headquarters in Cleveland with hundreds more employees spread among several buildings downtown and at a satellite building on Hinckley Industrial Parkway on the south side. A new headquarters tower downtown to consolidate the offices has been rumored but apparently is not in the company's immediate plans, however.

Tech-startup BoxCast, which delivers high-definition streaming services, outgrew its offices at Burke Lakefront Airport and is moving to Ohio City. There, its new headquarters will add 71 new jobs.

Another is the growth of information technology firm MCPc Inc. It has outgrown its headquarters space on Superior Avenue downtown and is moving to Midtown's Link59 development on Euclid Avenue near East 55th Street. Perhaps just as exciting, it bought the Greater Cleveland Regional Transit Authority's 117,000-square-foot bus garage in Cleveland's Old Brooklyn neighborhood. MCPc will redevelop it into an electronics recycling hub, adding 150 jobs.

There are many more success stories like these happening throughout Greater Cleveland or are about to. Many of them are following the money by either directly relocating jobs to Cleveland or are causing people to relocate to the metro area in search of affordable opportunities. Cleveland has the infrastructure and amenities of cities with far larger populations and costs of living.

The reason is because Cleveland had a far larger population not long ago. Yet even after it shrank, Cleveland maintained and improved its world-class museums, orchestra, sports, theater district, libraries, Federal Reserve Bank, city/metro/state/national parks, ethnic cultural offerings, restaurant scene and more. Those things are helping the city reshape its industrial past into a new, more diverse future. Based on the out-of-state license plates and other indicators, people elsewhere are noticing.