Tuesday, March 5, 2019

Columbus Road TOD coming into focus for Duck Island

This rendering of the Atlanta BeltLine Eastside Trail is an
example of work done by part of the development team that
is recommended by the Greater Cleveland Regional Transit
Authority for its Columbus Road property along the Red Line
rapid transit and greenway. (Perkins & Will Global)
CLICK IMAGE TO ENLARGE
Today, the Greater Cleveland Regional Transit Authority (GCRTA) announced its staff recommendation for who should develop its Duck Island property along Columbus Road south of the Ohio City Red Line rail station. The GCRTA Board of Trustees still must decide whether to approve that recommendation. The proposed team and design may be intriguing to many.

The recommended developer is Carnegie Management and Development Corp. of Westlake. On their team is a well-known international architectural firm Perkins & Will Global which has undertaken many Transit-Oriented Development (TOD) master plans and TOD-thematic projects.

Although Carnegie has historically built suburban sprawl-type developments, it has recently taken a new approach in winning the City of Lakewood's bid to build the $100 million, new-urbanist, mixed-use One Lakewood Place redevelopment of the former Lakewood Hospital site. Combined with Perkins & Will's expertise, it builds hope that their involvement will result in a well-designed project that will generate ridership for the adjacent GCRTA Red Line rail station and boost the surrounding neighborhood.

The proposed development will not just be residential but include some mixed use, plus 2 acres of greenspace as well as a partial cap over the Red Line and planned greenway trail, said GCRTA Real Estate Manager James Rusnov. The cap is proposed to be located more than one hundred feet south of Abbey Road and include a building, a public plaza, and potentially a secondary access point to the Ohio City Red Line station platform which extends well south from Abbey.

"It will also improve connectivity with Harbor Bay's (Market Square) development," Rusnov said. "It's a nice way to blend the two projects. Our RFP (Request For Proposals) stipulates improved access to the (Red Line) station."

Public spaces will be a prominent feature in Carnegie's One
Lakewood Place project that will see construction starting
this year on the site of the the former Lakewood Hospital.
Carnegie's proposed development on GCRTA's land will
also feature public spaces, including over the Red Line
 tracks and greenway (Nelson-K&A).
Some neighbors expressed concern that the development would be nothing more than a row of high-priced luxury townhouses that would produce little if any ridership benefit to GCRTA or offer any retail/restaurant amenities, public spaces and enhanced pedestrian connectivity between Ohio City and the Duck Island neighborhood. One of those opposed is developer Sam McNulty who built the Duck Island 7 luxury townhomes across the street from the property GCRTA seeks to develop. He recently wrote an op-ed in Scene explaining his opposition.

Ironically, public records show that one of the Columbus Road development proposals rejected by GCRTA staff was by a team that included Gary Ogrocki, a principal at Dimit Architects. Ogrocki is also a partner of McNulty's in the Duck Island 7 development. Ogrocki did not respond to an e-mail seeking comment for this article.

The development of GCRTA's Columbus Road property will be a topic of discussion at the Duck Island Block club at 6:30 p.m. March 5 at Forest City Brewery, 2135 Columbus Rd.

The entire west side of Columbus Road visible here
was rezoned to multi-family housing by the city
according to the Duck Island Neighborhood Plan
which was shaped by public input. However, only
a portion of this GCRTA-owned land is proposed
to be developed, leaving the rest of the land, or
2 acres, for greenspace (Google/KJP).
Last October, Cleveland City Council rezoned multiple parcels of land in the fast-growing Duck Island neighborhood. The rezoning followed six years of neighborhood engagement and the creation of a local development masterplan based on public input.

The land along the west side of Columbus Road (including the land GCRTA seeks to develop) from Lorain to West 25th, was rezoned from semi-industry to "multi-family G-1" which allows a range of residential uses, from single-family homes to apartment buildings. Only a portion of that is proposed to be developed. The rest will remain greenspace measuring about 88,000 square feet or 2 acres.

The proposed inclusion of mixed-use in Carnegie's project will require a variance from the Board of Zoning Appeals -- as does Harbor Bay's development across the tracks. The maximum square footage of a building on a property zoned G-1 is three times the lot area and can be up to 35 feet in height based on the street frontage. The site of the lot area would be expanded by building over the Red Line.

In my November blog posting, Rusnov noted that the GCRTA-owned land to be developed is south of Abbey, measuring 85 feet by 700 feet. That brings it to near the Willey Avenue intersection. The land north and south of the GCRTA development site, including next to the station headhouse, would feature improved, accessible greenspace and offer pedestrian and bicycle paths to the the Red Line Greenway trail.

Given the zoning, height district and lot area, the height of the development's street frontage along Columbus Road could permit a four-story building. But the Red Line right of way below Columbus Road is 25-30 feet lower, offering the opportunity to erect buildings as tall as seven stories from the perspective of the rail line's ravine. Also, the lot area allows buildings to provide up to 178,500 square feet of space, equaling approximately 150 apartments, without a variance. That doesn't include a larger, undefined lot area over the tracks, however.

END

Monday, March 4, 2019

Cleveland's Tower City may soon become tech hub

Tower City Center's The Avenue in 2008. This was before the
Great Recession, the apparent disinterest by Forest City Enter-
prises in sustaining its Cleveland holdings and declared disin-
terest by Bedrock LLC in retaining the downtown mall as a
retail center had reduced its occupancy by nearly half. Now,
the former railroad station is facing its next useful existence.
(KJP) (CLICK IMAGES TO ENLARGE)
Tower City Center, formerly Cleveland's main railroad passenger station, could soon enter its third incarnation -- this time as a $150 million tech hub. Dubbed City Block, the hub would become an incubator for a variety of technology firms, ranging in size from Fortune 100 anchor companies to flash-in-the-pan start-ups.

City Block, although sought by the heavy-hitting, civic-minded BlockLand initiative to give blockchain technology a home base in the USA, will unite all sorts of technology start-ups in a collaborative setting. After investigating a dozen Cleveland sites, BlockLand's Place Committee has zeroed in on The Avenue at Tower City Center, according to several sources who asked not to be identified. The reason is that negotiations haven't yet concluded, so it's not yet a done deal.

** UPDATE: Blockland founder Bernie Moreno and Cuyahoga County Executive Armond Budish both confirmed on April 19 that Tower City would be the site for City Block but were unable to discuss details as yet. **

The Avenue is the mostly retail space at Tower City topped by skylights which were originally built as the railroad and rapid transit stations of Cleveland Union Terminal in 1930 and converted to their current uses in 1991 by Forest City Enterprises.

Tower City Center had bigger plans in the late-1980s, including
the Riverview Phase shown here, including several skyscrapers
that were never built. The Riverview land remains available for
future development (Forest City Enterprises). 
BlockLand reportedly favors The Avenue because it meets their search criteria. The Place Committee prefers an existing building, one that is located in downtown Cleveland, and offers about 300,000 square feet of collaborative space. The Tower City complex surrounding The Avenue has under one roof nearly 2 million square feet of existing office space, 300 housing units, two hotels, and five rail transit lines fanning outward including to the airport.

Underutilized, The Avenue itself offers 366,000 square feet of space for retailers, cafes, restaurants and even offices. About half of The Avenue is vacant and more tenants will leave soon to make way for renovations. Some retailers will stay.

One of The Avenue's largest tenants is the City of Cleveland's Office of Sustainability. It has its Sustainable Cleveland Center in a former J.Crew store on two levels above the food court and below the Ritz Carlton Hotel. It plans to move out by July at the urging of Mayor Frank Jackson's administration, a City Hall source said.

Funding would come mostly from investors and foundations. A new $50 million partnership was announced between NCT Ventures of Columbus and the Cleveland Foundation to help boost the city's technology scene. It is not clear how much of this funding could be used directly for developing City Block, however.
Redevelopment of Tower City Center could feature a new vision
for Prospect Avenue, which is actually built on a bridge over The
Avenue. That vision could result in a more pedestrian-friendly
setting with wider sidewalks and outdoor cafes (Bedrock LLC).
City Block will also feature a school called Genesis where students in kindergarten through college would learn blockchain. Although popular around the world, blockchain, which uses cryptography to connect and secure electronic records and transactions, has been slow to catch on in the U.S. There is no North American "home base" for this technology yet, so BlockLand supporters are trying to position Cleveland as its American home.

"We're hoping to bring companies here who want to access U.S. markets and need a U.S. headquarters," said BlockLand leader Bernie Moreno in Crain's Cleveland Business. "I'm seeing Cleveland as a spot for that."

In that same article, Moreno said he wants to bring to City Block one or more Fortune 100 regional offices, or a nascent blockchain-brand being developed by a Fortune 100 tech firm. Here are the Fortune 100 tech firms, with one or more of these being approached by Moreno:

4 Apple
8 Amazon
9 AT&T
16 Verizon
22 Alphabet (aka Google)
30 Microsoft
33 Comcast
34 IBM
35 Dell Technologies
46 Intel
51 United Technologies (recently was broken up & bought out)
58 HP
74 Charter Communications (aka Spectrum)
76 Facebook
82 Oracle
83 Tech Data
98 Time Warner

The Avenue was bought from Forest City by Bedrock LLC in 2016. Ever since then, Bedrock has had little or no interest in maintaining retail as the dominant use at the The Avenue. Going as far back as last August, Ken Till, vice president of development for the Detroit-based Bedrock's Cleveland properties, identified all of the components of City Block without anyone realizing he was letting the cat out of the bag.

"We're really looking at mixed-use development," Till said to WCPN's Aug. 9, 2018 The Downtower podcast. "That means office space, school space, maybe a tech incubator."

Given the timing of the Office of Sustainability's departure, the number of local, national and even international heavy hitters involved, as well as other recent rumors, it's possible that the City Block project could see construction as early as this summer -- if an agreement between BlockLand and Bedrock is reached soon.

END

Wednesday, February 20, 2019

Ohio City mixed-use project may feature downtown ad firm

It was only a matter of time before the 1.7-acre Hingetown site
of the Cleveland Vibrator Company was acquired for redevelop-
ment. It is surrounded by recent, in-progress and planned high-
value, multi-story developments (Google).
CLICK IMAGES TO ENLARGE
An exciting mixed-use development is in the works for the Hingetown section of Cleveland's Ohio City neighborhood, according to multiple sources. Although still in a preliminary stage, the development's concept at this point involves putting the offices for a fast-growing downtown company on the lower floors of a new building with apartments on the upper floors.

Two sources say the site is 2828 Clinton Ave., the current location of one of the region's most well-known and oft-photographed businesses -- the 94-year-old Cleveland Vibrator Company which will relocate from the site. The downtown company seeking to move to the site is The Adcom Group, a full-service marketing and communications firm, according to two other sources.

However, Adcom CEO Joe Kubic would not confirm specifics at this time.

"I personally, along with some other partners, are in the process of buying some commercial property in Ohio City," he wrote in an e-mail. "We haven’t yet finalized our plans for it though. It is certainly a possibility that Adcom may relocate there at some point, but we are happy in our current location as of now."

Adcom is headquartered at 1370 W. 6th St. in downtown Cleveland's Warehouse District, above Starbucks Coffee.

The Adcom Group's Warehouse District HQ
is becoming constrained by the company's
rapid growth. The communications and
marketing firms anticipates further growth
and needs more office space (Google).
Two sources also say that The Snavely Group of Chagrin Falls will likely be the developer for the proposed mixed-use project. However, President Pete Snavely Sr., Vice-President of Marketing Polly Snavely and Vice-President of Development Pete Snavely Jr. have yet to respond to a Feb. 19th e-mail seeking comment for this article.

This would be Snavely's second Hingetown development. Last year, at the corner of Detroit Avenue and West 25th Street, it completed construction of The Quarter -- 194 apartments above 30,000 square feet of ground-floor commercial space. The commercial space is fully leased and the residential units are 93 percent leased, according to The Quarter's Web site. The $60 million development also involves the renovation of the historic Forest City Bank Building on the other side of Detroit with ground-floor commercial uses and 38 affordable apartments above.

One of the most well-known signs on the West Side is this one
at the corner of West 29th Street and Clinton Avenue in Ohio
City's Hingetown section. The manufacturer of industrial equip-
ment to resolve material flow challenges is already looking for
a new home in the area (Google).
Through 2828 Clinton Inc., Cleveland Vibrator owns 14 parcels totaling 1.715 acres, according to Cuyahoga County property records. The site is bounded by West 28th and West 29th streets, as well as Church and Clinton avenues. The proposed development reportedly does not include the Ohio City Firehouse, 1455 W. 29th, which was converted into offices and the Rising Star Coffee Roasters cafe. There is also no information to indicate whether the development site includes a residential property and the Banana Blossom Thai Cuisine at West 28th and Clinton.

Sources do not have information yet as to how tall the proposed mixed-use building might be or when demolition and construction might begin. Contrary to Kubic's statement, other persons close to the project say time is of the essence. Adcom reportedly expects to double in size in the coming years and needs more space soon.

Adcom was founded in 1990 and today has more than 110 employees although Kubic wouldn't clarify how many. The employment data comes from news coverage last year about 100-employee Adcom's purchase of fellow ad firm Arras Keathley that had 10 employees.

The Cleveland Vibrator site is reportedly under a sale contract but has yet to close. Terms of the deal were unavailable. In total, the land and buildings on the 14 parcels are appraised by the county at a combined value of $510,000 for tax purposes. Cleveland Vibrator has already begun a search for its new location and hopes to find a new home nearby soon, a source said.

Its current site is surrounded by new developments, in addition to Snavely's Quarter. Northward, across Church Avenue, Hemingway Development is building its $60 million, mixed-use Church & State project, featuring an 11-story building and a 6-story building. In the opposite direction, across Clinton Avenue, Casto will soon begin constructing its $22 million, 119-unit Dexter Place apartments. To the east, across West 28th, the $24 million West 25th Street Lofts were renovated a few years ago with 83 apartments over 9,600-square-feet of commercial space.

END

Friday, February 15, 2019

Gordon Park area -- Cleveland's next housing boom site?

About 150 homes and 8,000 feet of commercial space are
proposed by Knez Homes at East 55th and the Shoreway,
near where Bo Knez grew up. But the site's access to the
lake, downtown Cleveland and University Circle were
bigger factors in him wanting to build here (RSA)
CLICK IMAGES TO ENLARGE
Recent real estate projects show the strength of the housing market in Cleveland, especially in certain neighborhoods accessible to downtown and the lake. New projects are taking at a stab at an undeveloped area for housing -- East 55th Street and the Shoreway, just west of Gordon Park.

When motorists enter Cleveland on Interstate 90, they get an up-close view of Lake Erie to their right that is spectacular at sunset. But to their left is an underwhelming collection of low-level, single-use commercial structures and vacant lots.

This "gateway" to downtown offers an immediate message -- Cleveland hasn't figured out how to capitalize on its lakefront. The highway itself is testament to that. When it was built, it sliced Gordon Park in two to skirt the coal-fired Cleveland Electric Illuminating Co. (now First Energy) Lake Shore Power Station, demolished in 2017. With the power plant gone, developer interest in the Gordon Park area has perked up. That includes rerouting the highway to restore the park and improve access to the lake.

Entering downtown from the east along the lakefront is under-
whelming. The lack of major developments conveys a message
that Cleveland hasn't capitalized on its lakefront (Google)
The latest developer to show interest in the area is Bo Knez, president and CEO of B.R. Knez Construction, Inc., DBA Knez Homes. Knez, who was born in Slovenia and raised in the East 55th-St. Clair Avenue neighborhood, said he has wanted to developed here for some time.

On Feb. 15, he presented conceptual plans to the Design Review Committee of the Cleveland Planning Commission to get its feedback before proceeding with more detailed designs for a mixed-use development. The site is at 5700 South Marginal Rd. with two parcels of city-owned land totaling 3.9 acres. In urban development, that is a large canvas.

On it, Knez says he plans 50-60 townhomes, 90-100 apartments and 8,000 square feet of ground-floor commercial space on the Shoreway side for retail, restaurants or offices. Townhouses would be above the commercial spaces, he said in a phone interview on Feb. 13 but asked for this article to not be published until after his plans were presented to the planning commission.

Views from the Shoreway (I-90) of Knez's proposed East
55th development. The tallest building is a 90- to 100-unit
apartment building, with the shorter structures being 50-60
townhouses. Those nearest to the highway would have
retail/restaurants/offices on the ground floor (RSA).

The site is the former Howard Johnson's 12-story hotel built in 1965 but demolished in 2009. Knez likes this location not just because he grew up nearby, but because it has easy access to downtown Cleveland and University Circle -- the first- and fourth-largest employment concentrations in Ohio. And, of course, the lake is a short walk away.

Planning Commission staff threw some of that cold lake water on Knez's plans, based on their written comments.

"The planned density feels somewhat relentless. Consider reducing the number of units, and create more communal spaces which encourage interaction and a sense of 'dwelling' for the residence," said one unidentified staff person.

"Consideration needs to be given to how this site connects to the surrounding neighborhood and environment to maximize the potential of the 'amenities' that surround this locations," said another commission staffer.

The eastern approach to downtown is a stark landscape, devoid
of any significant structures since the 2017 demolition of the
Lake Shore Power Plant that stood at the left. With it gone,
there's more interest in developing this area including relo-
cating the highway and adding more greenspace (Google).
The last comment is interesting because there is no nearby neighborhood to connect with nor any adjacent amenities. Knez's development, by adding about 150 living units and perhaps 300 residents, will hopefully jumpstart a lakefront neighborhood that can connect with his project.

Interestingly, Knez's presentation listing in the planning commission's agenda also showed his project included a city-owned site on the north side of the Shoreway, at 5500 North Marginal Road. But Knez said that was not correct.

"My interest is only on the south side of the Shoreway," he said. "That site (former Howard Johnson's) has been vacant for a long time."

While Knez may not be interested in the north side of the Shoreway, others are. In fact, that's where development of housing in this area began.

The Shoreline apartments, developed as Quay 55 in 2002, as
 seen from Gordon Park. A dozen more developments of this
scale, including multiple high-rises along this stretch of lake-
front, would offer the kind of neighborhood Knez is trying to
jumpstart with his proposed development (Marous).
It started in 2002 when the Nicholson Terminal building, once a new car warehouse, was converted to the 138-unit Quay 55 apartments by Rocky River-based Coffin Development Co. But Coffin defaulted on a $20 million U.S. Department of Housing and Urban Development-guaranteed loan.

Quay 55 went through several owners until 2017 when Landmark Lakeshore LLC bought Quay 55, renamed it The Shoreline, and got approval to add 29 apartments to the property by converting indoor parking spaces. Occupancy of the building has continued to be high. Only five apartments are currently available in the building, according to The Shoreline's Web site.

Unfortunately, a 4-acre lakefront parcel east of The Shoreline and west of 5500 North Marginal remains undeveloped. This flat, wide open, grassy parcel is owned by Coffin Development Co. -- the same firm that redeveloped the Nicholson Terminal. While it would be a terrific development site, the property remains untouched. There are no public filings to indicate any development activity here.

END

Thursday, February 14, 2019

Downtown-lakefront land bridge has momentum, funding

Lake Erie Plaza was a wide pedestrian bridge lined with statues
and vendor spaces over the lakefront railroad tracks. But it was
built for the Great Lakes Exposition of 1936-37 and dismantled
soon thereafter. A land bridge of similar design or even wider
may be sought by city officials and others to link the downtown
malls and North Coast Harbor including its museums, new
development and a long-planned transportation center (PD file).
CLICK IMAGES TO ENLARGE
If the city has its way, a $65 million land bridge linking Downtown Cleveland's malls to the lakefront could soon be the centerpiece of a multi-faceted plan to enhance the area around North Coast Harbor. Developments surrounding the proposed land bridge include expansion of the Rock & Roll Hall of Fame, Great Lakes Science Center, Cumberland Real Estate Development's next phases as well as a multi-modal transportation center.

The City of Cleveland has $25 million in city, county and state funds left over from an earlier plan to link downtown and the lakefront with a flamboyant, curving, skinny and ribbon-like pedestrian bridge designed by "starchitect" Miguel Rosales. The bridge's cost had ballooned to $33 million. Instead, the Cleveland Economic Development Department is pursuing a land bridge envisioned more like the statue-festooned and storefront-lined promenade that linked downtown to the Great Lakes Exhibition of 1936-37. In fact, the land bridge could be even wider -- as wide as the malls themselves. City officials seem confident they can get it built by 2022.

To do so, the city is seeking another $40 million from a variety of public and private sources. The land bridge, also dubbed "Mall D," would replace the now-closed pedestrian bridge that has connected Mall C (above the Huntington Convention Center, north of Lakeside Avenue) with First Energy Stadium and Cleveland Municipal Stadium before it.

Because of this connection, the Cleveland Browns are reportedly contributing funding to the land bridge and possibly to a partnership with Cumberland's lakefront development plans. The amount or conditions aren't yet known and the Browns aren't revealing anything yet. So far, Cumberland has built on the lakefront the two-story Nuevo Modern Mexican & Tequila Bar restaurant and the three-story, 16-unit Harbor Verandas apartment building at the foot of East 9th Street.

Cumberland Development's Harbor Verandas apartments over
retail are the latest phase of lakefront investments to turn North
Coast Harbor into more of a year-round setting (KJP).
Next phases for Cumberland and its partner Trammel Crow apparently include redeveloping two former Port of Cleveland warehouses into shops and restaurants. Full build-out shows 1,000 apartments, 80,000+ square feet of offices and 50,000 square feet of retail space. It also reportedly involves partnering with the Rock & Roll Hall of Fame and the Great Lakes Science Center on proposed museum expansions that would, among other things, connect their buildings with an enclosed, climate-controlled walkway.

Additionally, the latest of many iterations of a Lakefront Multi-Modal Transportation Center is part of the land bridge plan, sources said. The transportation center would unite Greyhound buses, Amtrak trains, Greater Cleveland Regional Transit Authority (GCRTA) buses and trains and possibly other regional transit agency buses.

Looking east toward East 9th Street from near the Amtrak train
station, and possibly from below where a new land bridge/Mall D
could be built, the Greyhound bus station portion of the planned
Lakefront Multi-Modal Transportation Center is seen. The Shore-
way is to the left and the rail tracks are to the right (CPC).
The 700,000+ combined annual passenger boardings (includes an anticipated 20 percent boost thanks to more convenient transfers between trains and buses) at this hub in downtown Cleveland would, for context, exceed the 619,000 enplanements at Akron-Canton Regional Airport in 2017. It would also exceed the attendance of 526,000 people at Cleveland Browns home games last year. With that kind of 24-hour, 365-days foot traffic, it could certainly attract a cafe, newsstand and possibly a convenience store that would also be supported by existing and planned lakefront tourism, housing and maybe a hotel.

The most recent plan has a refurbished Amtrak station and new Greyhound station built along and south of the Shoreway. The Greyhound station was assumed to be built in such a manner so that it could support a small building built above it, such as for a hotel, offices or residential. The transportation center at full build-out is estimated to cost less than $70 million. The Northeast Ohio Areawide Coordinating Agency, which oversees federal transportation spending in Greater Cleveland, has included the Lakefront Multi-Modal Transportation Center in its current funding priorities.

The city's most recent plan for a Lakefront Multi-Modal
Transportation Center with a possible location for the newly
proposed land-bridge/Mall D concept added (CPC/KJP).
In 1998, one of the most exciting variations of the lakefront multimodal transportation center was proposed (See the 1998 plan's Executive Summary here). Called the North Coast Transportation Center, it featured an enclosed station over the Norfolk Southern/Amtrak and GCRTA tracks plus a roadway for buses with a green roof that was nearly as wide as Mall C to the south. It could even feature meeting spaces to expand the convention center. In other words, it would provide indoor and outdoor pedestrian linkages between the central business district and North Coast Harbor.

Other transportation linkages are possible with this site. For example, the public transit advocacy group All Aboard Ohio has proposed a waterside terminal in Cleveland (possibly in the harbor) where high-speed catamarans could take passengers to Port Stanley or Shrewsbury to board Ontario's planned high-speed trains and be in downtown Toronto in less than four hours.

The 1998 plan for the North Coast Transportation Center that
would also feature a green roof and thus serve as Mall D over
the tracks and end at a boulevard that would have replaced
the Shoreway highway. A new lakefront hotel and parking
garage was also envisioned in this amazing plan (GCRTA).
Realizing the 1998 transportation center plan would cost about $200 million in today's dollars. But the $25 million already in hand could be used to fund the design/engineering and environment approvals. Then the city would be in a position to apply for and secure a no-match federal Railroad Rehabilitation & Improvement Financing loan (for which there is still $29 billion in direct loan authority remaining) to pay the entire cost of a transportation center. A $200 million loan would cost the city about $10 million per year. By the way, the $10 million per year to service debt that built First Energy Stadium in 1999 ends in 2028.

"Seems like a no-brainer" to debt-finance the land bridge incorporated with a transportation center, said one planner involved with the city's lakefront projects who spoke off the record. "But everyone is waiting around for a grant. We need to just do it and pay it back over time."

END

Sunday, February 10, 2019

Ten million square feet of downtown Cleveland construction

More than 4 million square feet of
development projects were recently
completed, are underway or about to
begin along Euclid Avenue in down-
town Cleveland. But that may be just
the appetizer for what's next. (KJP)
CLICK IMAGES TO ENLARGE

What if I told you that Downtown Cleveland could soon have more than six million square feet of buildings under construction at the same time? What if I told you downtown already has four million square feet of construction underway or about to begin? Yes, 10 million square feet total.

First, the second question. Here's a quick summary of current projects to add residential space only along Euclid Avenue and only between Public Square and Playhouse Square. In some cases, where the building is being completely rehabbed, I'm including the total square footage of the building which may include some ground-floor retail space or some co-working spaces. I'm not including all of the space in the Halle's and Terminal Tower buildings for example, because roughly half of each will not be touched by renovations and therefore is not subject to the construction investment.

May Company........800,000
Centennial/925....1,360,000
Euclid Grand..........308,000
Athlon/CAC............225,000
Beacon...................300,000
Lumen....................602,000
Halle Building.........200,000
Terminal Tower.......340,000

TOTAL.................4,060,000 square feet

There has been some publicity recently about how many construction cranes dot the skylines of America's largest cities. Cleveland counts only one tower crane currently up -- for The Lumen 34-story apartment tower at Playhouse Square. It went up shortly before the tower crane for The Beacon 28-story apartment tower came down last fall. Another will go up soon for the Church & State development now underway on Detroit Avenue at West 29th Street. This doesn't include the many shorter cranes positioned around the Quicken Loans Arena expansion.

Downtown Cleveland's many underutilized, obsolete commercial buildings can be renovated and repurposed for less cost than building new towers that would require construction cranes. All those old buildings have been or are filling up with residents to satisfy the still-insatiable demand for housing in our urban core.

Among 37 downtown Cleveland residential buildings 100 feet or taller, 21 of those became or are becoming residential since 2010, 27 of 37 since 2000, and 31 of 37 since 1995. Downtown has seven 20+ story residential developments completed or underway since 2006 with two more in advanced stages of planning. That's nine total. Only three 20+ story residential buildings were developed in downtown Cleveland before 2006 -- all from 1967-73. How many of 20+ story downtown residential developments since 2006 involved a construction crane? Two.

Downtown Cleveland, as seen from Voinovich Park at North
Coast Harbor in summer 2018 (KJP).
More are coming, however. The unmet demand for housing amounts to 6,800 residential units by 2030, which would equal another 21 Lumen-sized apartment towers to meet that demand. Cleveland's suddenly robust job growth and near-exhaustion of the supply of obsolete commercial buildings is timely. It coincides with new financial tools like the Opportunity Zone tax breaks or the fact that real estate investment trusts are willing to take lower, longer-term returns. These changes bode well for meeting the residential demand with new construction as the supply of obsolete, convertible commercial buildings runs dry.

So when someone says it's a bummer that Cleveland doesn't have more construction cranes dotting our skyline, we probably would have them if we didn't already have so much obsolete, lower-cost commercial space available for conversion to meet the demand for residential.

Now, the first question. What might the six million square feet of new construction involve? Right now, we're looking at a much more feasible, scaled-down but still massive nuCLEus development, potentially measuring 2 million square feet of offices, residential, retail and parking.

A preliminary massing for Stark Enterprises' scaled-down
nuCLEus development between Prospect and Huron at
East 4th Street. Plans are still being finalized (Stark).
In the last two years, Stark Enterprises tried to initiate two innovative financing schemes to provide additional public funding to his original, $500+ million plan for nuCLEus. Those schemes suggest that Stark had a $50 million to $100 million gap in his capital stack for nuCLEus. In other words, Stark Enterprises was able to amass upwards of $400 million of capital for the project. At current construction prices, the revised design for nuCLEus could cost as little as $350 million. If so, it's possible that Stark may have enough capital to move forward with this new, smaller plan.

What's next? It's possible that another 4 million square feet of downtown development could be in the cards and, at their rates of apparent progress, they could both see construction at roughly the same time.

In talking to city officials and consultants hired by Sherwin Williams, the Fortune 500 company was ready to move forward in 2016 with a new 900,000-square-foot headquarters tower on the Jacobs Group-owned parking lot on Public Square. The global coatings company was quickly outgrowing its 86-year-old headquarters in the Landmark Building on lower Prospect Avenue.

Then, Sherwin Williams saw an opportunity to build its market share and revenue by acquiring rival coatings firm Valspar for $11.3 billion. All planning for the new HQ was put on hold. The Valspar acquisition was approved by various governments around the world in 2017, and all of the legal work and internal reorganization was wrapped up by mid-2018.

To accommodate the year-over-year growth of 615 new jobs
in Greater Cleveland, Sherwin Williams added a fourth office
building to its local inventory, on Hinckley Industrial Parkway
in Cleveland. This came two years after the coatings giant
shelved plans for building a new consolidated headquarters
tower on Public Square in downtown Cleveland (LoopNet).
But Sherwin Williams is now carrying more than four times the average debt that the rest of the coatings industry was carrying. At current trendlines, it could take the coatings giant until the end of 2022 before its debt-to-equity reaches levels more typical of its competitors.

But with 615 additional employees now spread across four office locations in Greater Cleveland in 2018 compared to a year earlier, Sherwin Williams has more of a need for a consolidated headquarters tower than ever before. And it needs to be an even larger headquarters than the one it planned in 2014-16. It is likely to be 1 million square feet or even larger so it can accommodate future growth of the company.

Sherwin Williams isn't going to take on new debt from constructing or long-term leasing a new headquarters, possibly costing $1 billion, until it pays down the Valspar debt. But it might revisit planning for a new headquarters before the Valspar debt is paid down to a reasonable level. At its current rate of paying down long-term debt, and considering that the design and construction of a skyscraper takes three to four years, we might start hearing more substantial rumblings from Sherwin Williams about a new headquarters in about a year.

The existing Justice Center, including the courts tower (center-
left) and jail (part of which is visible in the foreground) is a
massive complex at 2.3 million square feet. Its replacement
will likely be even larger, perhaps up to 3 million square
feet and built at separate locations (Google).
That project could also coincide with what may be the largest single real estate construction project since the Cleveland Union Terminal complex and associated rail rights of ways were built in the late 1920s and early 1930s. All signs are pointing to the county building a new Justice Center consolidated courts tower and a regional jail complex rather than rebuilding its existing center.

The reason is that the existing facility, despite measuring 2.3 million square feet, is too small for Cuyahoga County's vision. Its goal is to regionalize all municipal courts and jails, thereby eliminating duplicative functions and saving taxpayers money. It's quite possible that a consolidated courts tower and regional jail complex would add up to 3 million square feet, including parking.

That doesn't mean that both facilities would be under one roof as they are now or even across the street from each other. The county hired Project Management Consultants to present alternatives, ranging from reconstructing the existing Justice Center courts tower and/or jail facilities to building new in adjacent sites or separated by miles. The consultant began their work in early 2018 and must wrap it up by Jan. 31, 2020. Their to-do list includes developing build/rebuild specifications for a possible request for proposals from developers.

If the county does favor new construction for both the courts tower and jail complex, the cost could be more than $1 billion. According to a 2014 report by Cleveland-based Osborn Engineering Co., maintaining the 26-story court tower, central atrium, the two 11-story jails, the city's seven-story police headquarters (now leased for county probation offices) and 432,500 square feet of underground parking over the next 10 years would cost nearly $179 million.

Leasing a new courts tower and jail, as the county does with its administration building, could cost upwards of $75 million per year. And, as with its administration building, the county could buy a new courts tower and jail for $1 at the conclusion of the lease.

One option proposed about a decade ago was the construction
of a new courts tower and jail tower built over a parking deck
and transit center along Superior Avenue, between West 3rd
and West 6th streets in the Warehouse District (GCRTA).
County officials have prioritized keeping a consolidated courts tower downtown because of its central location, accessibility by public transportation and car, the presence of many restaurants for workers, visitors and juries, and the proximity of offices for attorneys/public defenders, bail bondsmen, social services and other support services.

A location that might make sense for a 30-story consolidated municipal and county courts tower is on the Weston-owned parking lots on Superior Avenue at West 3rd Street, one block west of Public Square. It is also right next to the Public Square lot where Sherwin Williams planned to build its headquarters tower and might revisit that site again.

Where might the new regional jail be put? Anywhere in or near downtown is a logical guess. But if a new regional jail isn't built next to a new courts tower, look for a jail facility for unsentenced inmates to be included inside the courts tower so that the accused and their attorneys can have proximate access to each other. The consolidated jail would offer 200 more beds than the existing jail. It will be a massive complex, measuring more than 1 million square feet.

In 2026, just seven short years from now, the Justice Center will be 50 years old. By that time, it may already be vacated. And as part of a request for proposals, the winning developer may get the keys to that complex, perhaps at a vastly reduced price, to do with it what they will. Given its age by then, the building would qualify for historic tax credits to reduce its cost of redevelopment. And given the building's rapidly decaying condition, its redevelopment will have to be extensive.

END

Friday, January 25, 2019

Old Westinghouse plant may soon be in developer's hands

The former Westinghouse plant near Edgewater Park is
sought by a real estate developer that specializes in
renovating and converting historic factories into
residential properties (CLICK TO ENLARGE)
One of the most visible historic factories in Cleveland may soon be in the hands of a developer that has a proven track record of restoring such buildings.

The former Westinghouse Electric and Manufacturing Co. at 1200 W. 58th St. near Gordon Square in the Detroit-Shoreway neighborhood is best known for its eight-story structure towering over the Westinghouse Curve of the West Shoreway (aka State Route 2) near Edgewater Park. Or, perhaps you recall the Black Widow interrogation scene from the 2012 Avengers movie that was filmed here.

On Jan. 22, a Certificate of Disclosure was filed with the city regarding Sustainable Community Associates' purchase of the 3.62-acre property from Paramount-Breakwater Properties LLC, according to the city's Division of Records. Certificates of Disclosure must be processed by the city prior to a property transfer taking effect. The certificate was processed Jan. 25.

Motorists on the West Shoreway (State Route 2) know the old
Westinghouse plant well. It towers over the highway and the
Norfolk Southern Railroad tracks just west of Whiskey Island.
Considering the sale hasn't taken effect, Josh Rosen, one of three partners in Sustainable Community Associates with Naomi Sabel and Ben Ezinga, couldn't comment on his company's interest in the property.

"I am not at liberty at this juncture to discuss this or our involvement with this," Rosen said. "As soon as I am able to, I would be delighted to reach out and discuss any and all of this."

Because the transaction has yet to be recorded by the county, the sale amount isn't known either. The Westinghouse plant was listed for sale as an industrial property at $6 million. However, its land and structures were appraised for taxes in 2018 by the county at $1.18 million, up from $981,100 the year before.

One of 59 residences (plus 12,000 square feet of office
space) at the newly renovated Wagner Awning
Building in Tremont (SCA).
Sustainable Community Associates has built new and renovated old structures for housing in Oberlin and Cleveland. Until recently, their Cleveland projects have been all been renovations of vacant light-industrial structures, including the Mueller Lofts in Asiatown (80,000 square feet) plus the Fairmount Creamery (100,000 square feet) and Wagner Awning in Tremont (88,000 square feet).

The latter will soon be complemented by a $20 million, new-construction project by Sustainable Community Associates on the other side of Scranton Avenue. The Tappan will feature 95 residential units and a corner bakery. Rosen says his firm is putting a lot of effort into attracting a retailer, the bakery, to this new-construction neighborhood development.

In 2015 (above), redevelopment north of Gordon Square had
yet to spread east toward the foreground in this view. Now,
everything visible here has been targeted or redeveloped by
real estate investors. The extent of redevelopment was already
visible in this March 2018 view (below) by Aerial Agents.

Redevelopment of the vacant Westinghouse property will be, by far, Sustainable Community Associates' largest project to date. In total, the site contains 303,000 square feet of buildings, the oldest of which dates to 1882. The most notable is the eight-story, 122-foot-tall, 112,000-square-foot tower built in 1915. Until recently, it featured multi-story, lighted Christmas decorations, visible to motorists on the West Shoreway.

Presumably, the tower would be converted to residential because of its amazing views of Lake Erie, Edgewater Park, Wendy Park, Downtown Cleveland and the rapidly developing north end of the Detroit-Shoreway neighborhood. Hundreds of new apartments and townhomes have been built, are under construction or are planned nearby.

In fact 10.5 acres of the former Westinghouse property was sold five years ago to Cleveland-based NRP Group, one of the nation's largest apartment developers. On that land, NRP Group built The Edison at Gordon Square, a 306-unit apartment complex. NRP plans to build phase two, a 323-unit complex on the south side of Breakwater Avenue and west of West 58th.

The 1915-built, 122-foot-high Westinghouse tower,
as seen from the West Shoreway (LoopNet).
The Westinghouse plant's tower could easily accommodate more than 100 residential units, depending on how the first floor is redeveloped. Its floor plates measure 14,000 square feet and the walls are 2 feet thick in some places. Skylights and/or walk-out sun decks could be offered thanks to a saw-toothed portion of the roof. A two-story penthouse could be added in a cupola-like structure on the rooftop.

How Sustainable Community Associates intends to develop the remaining 200,000 square feet of the Westinghouse complex will be interesting to see, too. If historic tax credits are used to fund the property's redevelopment, there will be restrictions on how much of the site's original architecture can be altered.

Interior of the Westinghouse tower (LoopNet).
It is possible that some of it could become parking for tenants. But perhaps some could be used for offices, restaurants or even retail like a convenience store, considering how many people already live in the neighborhood and how many more housing units are planned. Perhaps there could be a community space such as an active sports center and/or indoor farmers market.

The shorter buildings in the Westinghouse plant actually pre-date Westinghouse's ownership of it. The factory at the foot of West 58th (previously called Waverly Avenue) dates to 1882 when John Walker founded Walker Manufacturing Co. to produce power-transmitting machinery for street railways. His company substantially rebuilt and expanded the plant in 1891, three years before Westinghouse sued Walker Manufacturing for patent-infringement.

Westinghouse plant circa 1920s (LoopNet).
Walker lost the case. Court-ordered constraints on the firm's activities led to its sale to Westinghouse for about $1 million in 1898. Westinghouse manufactured aluminum and brass castings at Walker's plant but transitioned in the 1930s to become the headquarters of the Westinghouse Lighting Division. It produced lights for use in industry, at airports and along highways, including the 1939-built West Shoreway. More than 500 people were employed at this plant. It closed in 1979 and the Lighting Division was relocated to 5901 Breakwater Ave. from 1980-82, according to the Encyclopedia of Cleveland History.

Westinghouse plant circa 1970 (CLICK TO ENLARGE)(WikiMedia).
In 1986, the plant was sold to the Kole family of Westlake, county records show. Peter Kole was president & CEO of Paramount Stamping, Welding & Wireforming Co. He was born in Pogradec, Albania in 1937 and came to America with his mother the following year. In 1978, Kole purchased a manufacturing company, Farco, located in Elyria and in 1981 moved the company to the Westinghouse plant where he started another company, Paramount, that manufactured steel automobile seat frames. He employed 300 people. Kole also was Honorary Consul Consulate of the Republic of Albania in Cleveland, according to a biography by his alma mater Idaho State University.

Kole sold off pieces of the 14-acre factory property to developers, with the remaining portion of the plant transferred in 2016 to a company Kole created -- Paramount-Breakwater Properties LLC. That company was renamed on Jan. 7, 2019 as Paramount-Breakwater LLC, according to Ohio Secretary of State records. Presumably, the LLC, not the property, could be sold in an Entity Sale to reduce the transaction fees and property taxes on Sustainable Community Associates.

END