Friday, September 28, 2018

Cleveland: Nearly 40 towers planned


Among all phases of the Circle Square (was University Circle
City Centre/UC3), the One/Two University Circle and Park
Lane Condos developments, 13 buildings of 10+ stories were
built/are planned in the area of Euclid/Chester and East 105th/
Stokes, recreating a second downtown that existed here prior
to the 1970s (Midwest)(CLICK IMAGES TO ENLARGE).

A remarkable building boom is under way in Greater Cleveland. Because of a strong economic recovery that's been picking up momentum here over the past five years, there are more large building projects in the metro area now than at any time in perhaps the past 50 years.

By my count, there are approximately 39 buildings of 10 stories or taller that were completed since last year, are under construction, are about to begin construction or are planned. Of course, not all are going to get built because some are "plans" put out there for a real estate developer to generate publicity and/or test the market to see what can be economically justified.

Unlike the last boom, which featured many 10+ story apartment buildings in the suburbs of Lakewood, Euclid, Parma, Mayfield Heights, and elsewhere, nearly all of the structures in this current boom are in the city of Cleveland. And, unlike the last construction boom, there are also now many residential conversions of obsolete office buildings, many of which are 10+ stories tall. They are not included in this count.

This article ranks new construction projects based on their likelihood of a groundbreaking within the next five years. Their likelihood is based primarily on the project's current development status. Some developments are multi-structure projects; one or two buildings from each of those larger plans might see a groundbreaking by 2023.

Completed projects are, of course, listed first. Those with most or all of their financing in place and a nearer-term ground-breaking date are ranked as next-most likely. Other factors are the locations where these buildings are built and who the developers are. Some developers have a knack for quickly delivering projects. Others don't.

One thing that is not taken into account is the future of the national and global economy. If the economy tanks, most of these developments will probably get put on the shelf or killed outright. But no one knows when the economy will ebb again so that variable is omitted.

But we do know the Cleveland economy is humming right now, hence the justification for this building boom.

Cleveland was the fastest growing big-city economy in Ohio in 2017 and that pace is continuing well into 2018 so far. Not only was it the fastest growing economy in Ohio so far this year, but Cleveland was one of the fastest growing in the entire Midwest in June. Global real estate giant CBRE ranked Cleveland 8th out of the 50 fastest growing tech economies in the U.S. and Canada in the past two years. Lastly, San Jose, CA and Cleveland tied as the metro areas achieving the fastest wage growth in the second quarter of 2018, according to PayScale.com. There's a reason why there's optimism in Cleveland's air.

So here's the building projects starting with those completed in the past year:

The Edge on Euclid (CRG) (CLICK PHOTOS TO ENLARGE)
The Edge on Euclid (one tower of 10+ stories), 1750 Euclid Ave. --
Opened: Fall 2017
Height: 11 stories
Square footage: 262,000
Residential units: 240 apartments
Investment: $60 million
Developer(s): St. Louis-based CRG and San Diego-based Koman Group
Description: provides downtown off-campus housing and amenities for Cleveland State University students and affordable urban apartments for young professionals. Built on the site of the former Jewish Federation of Cleveland offices.

One University Circle (Joshua Jones)
One University Circle (one tower), 10730 Euclid Ave. --
Opened: Summer 2018
Height: 20 stories, 234 feet
Square footage: 533,000
Residential units: 276 apartments
Investment: $116 million
Developer(s): Cleveland area-based Petros Homes, First Interstate Properties Ltd.
Description: University Circle luxury residential tower built on mostly vacant lot.

The Beacon (UrbanOhio)
The Beacon (one tower), 515 Euclid Ave. --
Opening: Spring 2019
Height: 28 stories, 355 feet
Square footage: 440,000
Residential units: 187 apartments
Investment: $94 million
Developer(s): Cleveland-based investor Reuven Dessler and Stark Enterprises
Description: downtown 19-story luxury residential tower atop 9-story parking garage built in 2005.

The Lumen (PHS)
The Lumen (one tower), 1650 Euclid Ave. --
Opening: Summer 2020
Height: 34 stories, 396 feet
Square footage: 602,000
Residential units: 318 apartments
Investment: $135 million
Developer(s): Playhouse Square Foundation and Houston-based Hines Interests Ltd.
Description: downtown luxury residential tower under construction on former surface parking lot.

Circle Square (SO-IL+Kurtz)
Circle Square (three to eight towers), Euclid/East 105th/Chester/Stokes --
Groundbreaking: First phase Summer 2018
Height: First new building is proposed to be as tall as 10 stories, with later buildings in the 5-20 stories range
Residential units:700 units (all phases)
Retail/office/community space: 150,000 square feet (all phases)
Investment: $300 million (all phases)
Developer(s): Cleveland-based Midwest Development Partners and Orlean Co.
Description: More than $16 million in renovations to the 13-story Fenway Manor began in the summer of 2018. New construction, featuring up to a 10-story apartment building above a new MLK Branch Library, is scheduled to begin in 2019. In total, this is a four-block development that will demolish the old MLK Branch Library, the vacated Third District Police station, eliminate higher-speed turning lanes from Chester-east to Stearns-south, replaced by at least three new buildings of up to 10 or more stories and four more buildings that could be nearly 10 stories tall or more, depending on demand and financing. A dozen for-sale townhouses are planned on the site of a former roller rink/used car lot, now park land along Stearns Road.

Church & State (Hemingway)
Church & State (one tower), 2850 Detroit Ave. --
Groundbreaking: Fall 2018
Height: 11 stories (second building of six stories)
Residential units: 161 apartments
Investment: $57 million
Developer(s): Cleveland-based Hemingway Development
Description: Two buildings with apartments over ground-floor retail, adjacent to new public space, to be built on a vacant lot. This project is so imminent that it will likely be in the "proposed"category for only one more week after this blog is published.

Kenect Cleveland (Wolstein/Akara)
Kenect Cleveland (one tower), Main at West 11th --
Groundbreaking: Winter 2019
Height: 12 stories
Residential units: 309 apartments
Investment: $150 million
Developer(s): Cleveland-based Scott Wolstein and Chicago-based Akara Partners
Description: Luxury apartment building with ground-floor retail, adjoining movie theater and riverside restaurants. This is the third phase of the Flats East Bank development and will be built primarily on a surface parking lot. It is an imminent project with a developer Akara that has a knack for delivering projects.

Top Of The Hill (Eppstein Uhen)
Top Of The Hill (one tower), Cedar at Euclid Heights --
Groundbreaking: Summer 2019
Height: new plans now show one building up to 10 stories tall
Residential units: up to 285 apartments and 20 townhomes
Office space: unknown
Hotel space: unknown boutique hotel
Retail space: up to 14,000 square feet
Investment: up to $80 million
Developer(s): Indianapolis-based Flaherty & Collins
Description: This Cleveland Heights development is only one of two projects in this article outside of the City of Cleveland. It is a multiple-structure, phased development proposed on vacant land and surface parking lots at the top of Cedar Hill, above University Circle.

One Lakewood Place (RDL)
One Lakewood Place (one tower), 14519 Detroit --
Groundbreaking: Fall 2019
Height: one of the many structures could be up to 10 stories
Residential units: 200 apartments, 60 townhomes
Office space: 100,000 square feet
Retail space: 84,000 square feet
Investment: up to $100 million
Developer(s): Cleveland area-based Carnegie Management and Development Corp.
Description: This mixed-use development is only one of two projects in this article outside of the City of Cleveland. It will be constructed on the site of the now-closed Lakewood Hospital. Pre-demolition hazardous material abatement has begun on the former hospital after some of its medical facilities were moved next door to the new Lakewood Family Health Center.

Market Square (HPA)
Market Square (two towers), West 25th at Lorain --
Groundbreaking: Fall 2019
Height: 12-story office building, 10-story residential building
Residential units: 260 apartments
Office space: 137,000 square feet
Retail space: 36,000 square feet
Investment: approximately $130 million
Developer(s): Chicago area-based Harbor Bay Real Estate Advisors
Description: Transit-oriented mixed-use development including indoor and outdoor public spaces built on the site of an existing strip shopping center, next the RTA's Ohio City Red Line rail station. Harbor Bay has a proven record of developing projects in many Midwest cities.

nuCLEus (Stark)
nuCLEus (two towers), Prospect/East 4th/Huron --
Groundbreaking: Unknown
Height: prior plan was for a 54-story main tower
Residential units: up to 500 units, mostly apartments
Office space: 200,000+ square feet
Retail space: 150,000 square feet
Investment: up to $540 million
Developer(s): Cleveland-based Stark Enterprises
Description: Transformational mixed-use development on one of downtown's largest parking craters. Due to difficulties in securing gap financing, Stark may scale down the project including eliminating the hotel bridge building between Plot A and Plot B and significantly reducing the height of the residential tower. However, the office tower may actually increase in size and be the first phase of this project due to tightening of the Class A downtown Cleveland office market.


Flats South Innovation District (Dimit)
Flats South Innovation District (two towers), West 3rd at Stones Levee --
Groundbreaking: Unknown
Height: 12 stories each tower
Residential units: 240 apartments, 45 townhomes
Office/retail space: 81,300 square feet
Investment: approximately $100 million among all three phases
Developer(s): Cleveland area-based Joel R. Scheer Real Estate and Welty Building Co.
Description: Two identical 12-story apartment buildings are proposed, along with a wide variety of mixed uses. Demolitions of 1900-1960 W. 3rd were approved by the city in September to prepare for construction for the first phase of the Flats South development, which is proposed for a riverside industrial area that's long been underutilized.

Phase II site--One University Circle (Dimit)
Two University Circle (one tower), Euclid at Stokes --
Groundbreaking: Unknown
Height: Potentially 20+ stories
Residential units: Approximately 200 units
Investment: $100+ million
Developer(s): Cleveland area-based Petros Homes, First Interstate Properties Ltd.
Description: University Circle luxury residential tower built on a surface parking lot. Developers were pleasantly surprised at the very robust leasing of their first phase but tenants are reportedly disappointed that there is no lease-to-buy option. So condominiums may be available in a second phase.

Park Lane Condominiums (Finch)
Park Lane Condominiums (one tower), 10570 Park Lane -- 
Groundbreaking: Unknown
Height: 11 stories
Residential units: 18 condominiums
Investment: $20 million
Developer(s): Boca Raton, FL-based Finch Group
Description: This development is a follow-up to Finch's Park Lane Villa and would provide for-sale units on top of a parking garage entrance, between the villa and the 11-story Judson Manor, just north of the massive Circle Square development that's getting under way.

One West Twenty (Vocon)
One West Twenty/Duck Island (two towers), 2000 Lorain --
Groundbreaking: Unknown
Height: At least one building and possibly two may be 10+ stories
Residential units: was 500 apartments but may be more
Investment: was $100 million but may be more
Developer(s): NA
Description: The project and its properties were sold by an Andrew Brickman-led company to a nationally prominent real estate developer which seeks to increase the scale of the project. Existing zoning allows for structures of up to 13 stories. The site was mostly cleared by Brickman except for a small, remaining structure, the offices of Hauck Painting.

2210 Superior Viaduct (City Architecture)
2210 Superior Viaduct/Flats West Bank (one tower), 2210 Superior Viaduct --
Groundbreaking: Unknown
Height: 11-20 stories
Residential units: 64 apartments
Investment: unknown
Developer(s): Cleveland area-based Downtown Ventures LLC
Description: The developer, led by Daryl Kertesz, has a contract to buy the property but hasn't yet sought to demolish the small industrial building on the site. The developer would like to build a 20-story tower but is proposing only 11 stories at this time.

Nautica Waterfront District (GDP Group)
Nautica Waterfront District (seven towers), Main and Center --
Groundbreaking: Unknown
Height: 10-27 stories
Residential units: 664 apartments
Hotel space: unknown 150-room hotel brand
Office space: 187,000 square feet in 15-story building
Retail space: unavailable
Investment: $405 million
Developer(s): Cleveland area-based Jacobs Investments, Inc.
Description: Jacobs purchased 22 acres of mostly parking lots as well as several nearby buildings on the West Bank of the Flats for a massive, mixed-used development including seven buildings of at least 10 stories, starting with a 15-story office building and 12-story hotel, followed by two 27-story residential buildings connected mid-tower, three 10- to 12-story apartment buildings plus structured parking, public plazas and private marinas

Weston Superblock (Gensler)
Weston Superblock (four towers), Superior/St. Clair/West 3rd/West 6th --
Groundbreaking: Unknown
Height: 24-37 stories
Residential units: 1,500 apartments
Hotel space: unknown brand 250-room hotel
Office space: 1 million square feet primarily in a 37-story building
Retail space: 123,200 square feet
Investment: up to $1 billion
Developer(s): Cleveland area-based Weston and Citymark Capital
Description: 3 million square feet of development was proposed on mostly Weston-owned parking lots to which Weston has purchased more pieces of land to completely own the entire Superblock except for the Stark HQ. However there has been no news about this project in a year and it isn't even mentioned on Weston's website.

Settlers Point Tower (Dimit)
Settlers Point Tower (one tower), 1400 West 10th --
Groundbreaking: Unknown
Height: 19 stories
Residential units: up to 30 apartments or condominiums
Investment: up to $40 million
Developer(s): Cleveland area-based Joel R. Scheer Real Estate and Welty Building Co.
Description: Residential tower is proposed by the owner and developer of the adjacent and historic Settlers Point Building. It would be built between that building and the neighboring Riverbend Condominiums on a parking lot owned by Scheer. There has been no publicity or announcement about this building; just a casual reference to it on a map on Scheer's website as well as a "Happy July 4th" rendering that didn't mention the proposed building's name that was shared on the website of Scheer's architect, Dimit.

Two additional projects could someday appear on this ranking. One is a possible mixed-use redevelopment of the Lutheran Hospital's parking lot bounded by West 25th, Franklin, West 28th and Aust. Cuyahoga County property records show that an affiliate of commercial real estate developer Weston Inc. purchased property at 1550 W. 25th. This is a partnership with the Kertesz family to develop this site.

However, in recent years, community development officials have discussed developing the 5-acre Lutheran Hospital parking lot with one or more multiple-story buildings and consolidating the hospital parking into a new garage farther south. This development is being motivated further by the progress in establishing Irishtown Bend Park across West 25th that will provide an attractive view of downtown from the redeveloped hospital parking lot.

The other possible tower is a new, consolidated headquarters for the Sherwin Williams Co. The coatings company's offices and research facilities are spread among four buildings in Cleveland, including their historic headquarters in the Landmark Office Towers, 101 Prospect, plus their expanded offices in the Skylight Office Tower across West 2nd Street, 4780 Hinckley Industrial Parkway and the Breen Technology Center, 601 Canal.

Sherwin Williams was considering a new consolidated headquarters before 2016 when it began efforts to acquire Valspar Paint, then-headquartered in Minneapolis. Sherwin Williams has recently wrapped up all legal work from that acquisition, settled its reorganizing of employees, and begun adding new employees again. Once the company also pays down its debt to a satisfactory level, it may reconsider building a new headquarters.

That's my ranking of the likelihood of potential 10+ story building projects around Greater Cleveland.

END

Tuesday, September 4, 2018

Smaller nuCLEus may come from a Dream

A new Dream Hotel in Nashville involves lots
of new construction, except for an historic six-
story building at the right. Everything else is
new, including several facades designed to look
historic (CLICK TO ENLARGE, ESa graphic).
Two rumors about new real estate developments may not be unrelated as they first appeared. In fact, they may be directly connected.

The first rumor is that Stark Enterprises' nuCLEus development may be going forward after all, albeit scaled back. The second rumor is that a boutique hotel is coming to the Warehouse District.

Reportedly, a Dream Hotel is in the early stages of working with a developer to locate on St. Clair Avenue. Details are scarce about the location for this international chain of boutique hotels, other than "St. Clair in the Warehouse District." But hotels often follow themes in how they build and operate and we can learn about future plans by looking at projects they've already done and how they might evolve.

Based on Dream Hotel's themes in its existing or under construction sites, they like to repurpose older buildings. Their locations in New York, Miami and Hollywood are all repurposed historic structures. They are large boutique hotels, ranging in size from 169 to 314 rooms. Typically, boutique hotels are smaller, about 10-100 rooms.

With their Nashville location, due to open Feb. 1, 2019, they repurposed a six-story, historic commercial building. But they also built a new, 10-story structure alongside it, albeit with historic-looking facades on 4th Avenue North, a main thoroughfare. Their planned Dallas location will be a brand-new, 13-story building on historic Mockingbird Lane in the Uptown area. It was originally going to be a 128-room hotel but was increased to 264 rooms.

On St. Clair in Cleveland's Warehouse District, underutilized or vacant buildings are scarce. A possible location for Dream Hotel's Cleveland location could be on a parking lot, site of the long-planned Superblock development by Weston Inc. It might also involve repurposing the for-sale, 2002-built Reliance Building, 959 West St. Clair, next to the Flats. Those would reflect Dream's growing interest in newer structures. But Dream's philosophy is more about historic buildings and historic districts.

Stark Enterprises' headquarters building, at 1350 W. St. at St.
Clair in the Warehouse District, was once an ornate, but soot-
covered commercial building. The view at left is from 1964
with its modernized version seen in 2017 (CPL, Google)
To me, that points to the for-sale headquarters of Stark Enterprises, 1350 W. 3rd St., on the southwest corner of St. Clair. While this building looks relatively new, it was actually built in 1900. It was modernized in the late 1960s with a contemporary skin. Underneath is ornate masonry, much like the Schofield Building at Euclid Avenue and East 9th that had its modern skin removed and its elaborate Victorian facade beneath meticulously restored.

At 18,290 square feet, Stark's HQ is slightly larger than the Reliance Building. If converted into a boutique hotel, it could reasonably accommodate about 40-50 hotel rooms. If more rooms are desired, a historic-looking building could be built on the Weston-owned parking lots surrounding it. There is no room by the Reliance Building for expansion. Stark's asking price for its five-story headquarters is $2.9 million.

If Dream Hotel is dreaming about Stark's HQ as its Cleveland location, then it might help explain the rumor about Stark's nuCLEus development. If and when Stark builds nuCLEus, founder Robert Stark said he would relocate the company's HQ offices to it. NuCLEus was originally planned as a 48- to 54-story, mixed-use complex with approximately 125,000 square feet of retail and restaurants, 200,000 square feet of office space, a 120-room hotel, 406 apartments, 36 condominiums and parking garage with 2,100 spaces.

The basic site plan for nuCLEus will likely remain unchanged
except for the deletion of the hotel. The office tower (Plot B)
will likely be taller and the main parking deck (Plot A) along
with residential tower above it will likely be shorter (Stark).
Relocating 15,000 to 20,000 square feet of office space for a real estate development's sponsoring company to said development may provide more motivation to fill some gaps in the project's capital stack. But it doesn't fill it. Not even close. Even if Stark got its sale asking price of $2.9 million for 1350 W. 3rd, or will retain ownership and has a nice lease deal in the works with Dream, neither is enough to move the fiscal needle on nuCLEus -- a massive development with a $542 million price tag.

But the new rumor is that nuCLEus will be smaller than originally planned and be built in phases. The office component, now proposed to be slightly larger, is needed more urgently. Not only is Cleveland's Class A office market getting tight, but if Dream Hotel wants the old Stark HQ, then Stark needs a new HQ to relocate to sooner rather than later. Stark originally proposed a 13-story (minus a public parking pedestal) "Plot B" for nuCLEus, with floor plates of about 35,000 square feet. This building would not only contain nuCLEus' office component, but dedicated parking for the offices, building mechanicals and ground-floor retail/restaurants. It is unlikely Stark would increase the height of this building above 20-25 stories or it would require digging costly caissons to bedrock.

While the amount of reduction in the residential component is unknown, one might look to Playhouse Square for an answer. There, the 34-story Lumen apartment tower is under construction because the project's sponsor, the nonprofit Playhouse Square Foundation, is not interested in a profitable return on its investment. Its return will instead come in the form of a more vibrant district, including busier restaurants, stores and theaters.

Stark may be after the same thing. The residential component could be viewed as a loss leader (or, more likely, a break-even leader) for the rest of the development which is heavy on retail and restaurants. Stark's 28-story The Beacon tower located one block away has topped out the height of its steel skeleton construction and, when completed and filled next year, will also offer a supply of several hundred residents with purchasing power. The Beacon was built on an already existing parking pedestal and so might the residential building for nuCLEus, depending on Stark's new phasing plan.

Removing the 150-room hotel from the development plan, including its costly bridge between two towers at the 18th-story level, would drop the project's overall cost by tens of millions of dollars. And removing the hotel from nuCLEus makes sense if Stark is the one involved with Dream Hotel in the Warehouse District.

Furthermore, if the residential tower is reduced to roughly the size of the Lumen tower, nuCLEus' cost would drop by another $60 million or so. With 150 hotel rooms and nearly as many residential units removed from the plan, that means less structured parking too. Scratch another $20 million or so from the parking cost.

By the time the "value engineering" is done, nuCLEus could be a $350 million to $400 million project, including for-sale townhouses lining Prospect Avenue and five or more floors of condominiums at the top of the residential tower.

The proposed Warehouse District hotel and a first-phase office tower at nuCLEus will help continue the momentum of downtown Cleveland.

END

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.

END

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.

END

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.

END

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.

END