Thursday, December 19, 2019

City gets pushback on police HQ in Opportunity Corridor

The Cleveland Police Department's current headquarters is at
1300 Ontario Street in downtown Cleveland, a 9-story-tall,
330,000-square-foot office building that has too much office
space and too little parking, storage and training areas for the
CPD's needs (Ideastream). CLICK IMAGES TO ENLARGE
Like a traffic cop directing traffic at a downtown intersection, two interest groups have reportedly given Mayor Frank Jackson's administration the stop hand and a whistle for going the wrong way with its proposed new Cleveland Police Department (CPD) headquarters (HQ).

According to a Jackson administration source, the rebuke reportedly came from two interest groups -- the local business community and from downtown law firms.

The local business community, whose primary mouthpiece is the Greater Cleveland Partnership, expressed its concerns about the administration's proposed site for a CPD HQ at East 75th Street and the under-construction Opportunity Corridor.

According to the source, the business community wanted to use the Opportunity Corridor to attract growing businesses from throughout Greater Cleveland. Or, better yet, it would attract new businesses from outside the region.

The Opportunity Corridor is a 3-mile-long, $350 million boulevard that will link Interstates 77 and 490 with University Circle by 2021. But it also is, in part, being used to clear and clean polluted, vacant industrial sites that have lain fallow for 40 years and began falling into decline 40 years before that.
The orange oval is the proposed site for the new CPD HQ
on East 75th Street with the alignment for the Opportunity
Corridor boulevard shown as a yellow line (Google).
The goal for the Opportunity Corridor is to attract employers to hundreds of acres of newly cleared land that are accessible to the city's under-employed residents. Also running through the Opportunity Corridor are high-frequency transit routes including all three of the region's rail transit lines plus several bus routes that would help provide that access.

"The Opportunity Corridor isn't for relocating up to 1,000 police department jobs from downtown," the source said.

Similarly, the source said downtown law firms have also expressed concerns about moving the CPD HQ out of downtown where the region's largest concentration of lawyers, support staff and their offices are located.

Lawyers typically accompany clients in meetings with police investigators, facing interrogations or appearing in line-ups at the current police headquarters on Ontario Street and St. Clair Avenue downtown. Lawyers, paralegals and legal assistants also frequently visit the police station to request and gather reports, records and other documents.

Many lawyers or their staffpersons can walk from their offices to the police station, or take one of the free trolleys that circulates around downtown. While parking is plentiful downtown, with 60 acres of parking lots and structures available, someone could walk halfway to the police station in the time it takes to get to their car and drive it out of a parking garage.
A vision for the Opportunity Corridor, as developed and
adopted by the Burten Bell Carr community development
corporation and City Planning Commission is to attract
growing employers from outside the region (BBC).
Relocating the CPD HQ increases travel time and costs for law firms and ultimately for their clients. And, with more time needed for travel means less time lawyers, paralegals and legal assistants can get work done.

Ward 15 City Councilman Matt Zone, chair of council's Safety Committee, did not respond to a personal message seeking comment prior to publication of this article.

City Councilman Kerry McCormack, whose Ward 3 includes downtown, Tremont and Ohio City, would not comment on the source's information. However, he doubted that a new CPD HQ would help jump-start development in the Opportunity Corridor, as the Jackson administration has claimed.

"I don't believe it will be an economic catalyst," he said. "It won't hurt the (Opportunity Corridor) area but I also don't want to promise people that it's going to be some economic development-, job-creating machine because, by itself, it won't be."

McCormack added that he didn't mind seeing the CPD HQ move out of the heart of the central business district. But he said that he would like to see it on the near-east side of downtown. McCormack said the Plain Dealer Plaza, 1801 Superior Ave., was an ideal location.
Properties shown in red are large-scale, underutilized parcels
that currently are owned by city, county or state government
agencies and may offer ideal sites for a CPD HQ (Google).
The city was near to acquiring that property for $19.5 million last year until the transaction was abruptly halted without any official reason given. Another $40 million in building renovation costs were anticipated for that site.

Two other buildings were considered for the CPD HQ -- 55 Public Square built in 1958 and the pre-1977 Central Police Station, 2001 Payne Ave. built in 1937. But the reuse of both structures with modern police station facilities did not meet city requirements. So the city pursued a newly built CPD HQ in excess of 200,000 square feet, not including training facilities, storage or parking.

City officials have said that they wanted to move quickly on the project. But the city's first request for proposals for the project was issued in early 2017 and officials still are mulling site options. Properties that already are publicly owned might be had at a far lower cost and without the delays of negotiation.

There are multiple underutilized and large properties owned by the city, county and state in and near downtown. Some of those properties, like the lakefront land north of First Energy Stadium, are already spoken for.

But the largest publicly owned, underutilized property in or near downtown is the former Norfolk Southern Corp. intermodal rail yard between the Inner Belt (I-90) highway and the Main Post Office. It is currently owned by the Ohio Department of Transportation (ODOT) and measures about 49 acres, according to county records.

ODOT District 12 Public Information Officer Brent Kovacs said earlier this year that the transportation department considers that site to be "excess property" and would like to sell the land. It acquired all 49 acres in 2011 for $29.8 million so that a small portion of it could be used for the construction of the Inner Belt's new Cuyahoga Viaduct bridges.

END

Friday, December 13, 2019

Sherwin-Williams HQ competition heats up, delays announcement

The Bedrock site (dark orange buildings) behind Tower City
is reportedly giving the Jacobs/Weston lots west of Public
 Square strong competition for Sherwin-Williams' new head-
quarters plus research and development facilities. That means
any announcement about the new facilities will have to wait
until 2020. This is an unofficial massing (Geowizical).
CLICK IMAGES TO ENLARGE
If you wanted a shiny new Sherwin-Williams (SHW) headquarters plus a research and development (HQ+R&D) facility in your Cleveland-area stocking by Christmas morning, you're probably going to be disappointed. But don't expect a lump of coal either.

According to two high-level sources, the competition for SHW's HQ+R&D facility is back to a two-horse race, with Bedrock Cleveland making a strong push to take back the lead from the Jacobs/Weston lots west of Public Square in downtown Cleveland.

The renewed competition means that there probably won't be a HQ+R&D decision by SHW before the end of the year.

One of the two sources said that SHW, although having purchase contracts in place for 6.82 acres of the 8-acre Jacobs/Weston lots since early spring, kept the lines of communication open with Bedrock.

"The conversations between Sherwin-Williams and Bedrock continue to take place," the source said. "They never stopped."

Keeping those lines of communication open has paid off for SHW, as Bedrock reportedly has sweetened its offer to SHW to locate its HQ+R&D facilities in the riverfront phase of its CityBlock development. That phase reportedly would include apartment buildings, a hotel and possibly additional office space.
Another unofficial massing of a SHW HQ+R&D complex
(dark orange) behind Tower City Center. The lighter orange
next to them is an official concept for the later phases of
Bedrock's CityBlock development (Geowizical).
The first phase of CityBlock is the already announced $110 million renovation of The Avenue Shops at Tower City into a business incubator. That project is due to get underway in 2020.

Bedrock has the resources to make this happen. Not only is Bedrock's Dan Gilbert a billionaire, but his Rock Ohio Ventures is $843 million richer after selling off and leasing back its Cleveland-area casinos in late October.

Details of Bedrock's offer to SHW are unknown. But a source says the site Bedrock and SHW are discussing is a 2.7-acre section of parking lot between Huron Road/Tower City Center and SHW's existing R&D facility -- the John G. Breen Technology Center, 601 Canal Rd. SHW also owns 9.2 acres along the Cuyahoga River.

SHW's new HQ+R&D would measure 1.8 million square feet. Parking facilities would be extra. The massive new complex would consolidate up to 6,000 jobs in downtown Cleveland where SHW currently has about 3,500 employees.

The other source said that, while the Jacobs/Weston lots might have had a 90/10 chance of landing SHW's HQ+R&D a month ago, that site's lead has probably shrunk to 60/40. The source said it wasn't due to any shortcomings found by SHW in its due-diligence work at the Jacobs/Weston lots. Rather, it was due to Bedrock's strong push, he said.

"The Jacobs and Weston lots aren't a done deal," he added.
Blocks outlined in red show the Jacobs Group- and Weston
Group-owned parking lots west of Public Square (Google).
Originally, Bedrock proposed to build a new headquarters tower and lease it to SHW. But a long-term lease would count as debt to SHW, which is still trying to shed the debt it used to acquire Valspar in 2017. SHW is making rapid progress in paying down that debt, but that progress would be slowed if it leased a $1 billion headquarters.

As noted before, SHW has purchase agreements with the Jacobs Group for its 1.17-acre lot on Public Square and with the Weston Group for its 5.65-acre "Superblock" bounded by Superior and St. Clair avenues, plus West 3rd and West 6th streets. It reportedly doesn't include any other land in the Warehouse District owned by Weston.

First American Title Insurance Co. is doing the title research on the Jacobs and Weston lots for SHW and its facilities consultant Welty Building Co. That became apparent when a source contacted NEOtrans Nov. 11 to say that SHW would file permits as part of its acquisition of the Jacobs/Weston lots.

Later that week, First American Title Insurance's subsidiary, Commercial Due Diligence Services of Norman, OK, filed 12 certificates of disclosure with the city for the Weston lots to gather information about those properties. However, the firm likely discovered that it didn't need to file the certificates for commercial property acquisitions in Cleveland. No certificates were filed for the Jacobs lot.
The red stars are placed on all of the parcels that were removed
in October from a three-year-old lease between Weston-owned
companies, so that residents of the Weston-owned Standard
Building apartments could park on those lots (Google).
The same firm was the title company associated with a mortgage that 4780 Hinckley Cleveland LLC, an affiliate of IRG Dayton I LLC, was released from on Dec. 10, Cuyahoga County records show. IRG owns a property at 4780 Hinckley Industrial Parkway leased by SHW since 2016 as an overflow office space.

First American found some anomalies with the Jacobs and Weston lots that had to be cleaned up, including the vacating of an unused alley, Broome Ct. N.W., from the county's plats maps. Cleveland City Council authorized the vacation by ordinance in 2017. The plat map was updated by the county on Dec. 2.

Another item discovered recently, although it is not clear by whom, was that the Weston Group had a lease agreement with its various Warehouse District properties that needed to be addressed. The lease was from 2016 and allowed residential tenants of its newly renovated Standard Building to park on its properties in the Superblock and those north of St. Clair as well.

That lease was amended and recorded with Cuyahoga County on Oct. 23. The amendment reduced the number of guaranteed residential parking spaces for the Standard Building from 370 to 281. And it removed all 23 parcels in Weston's 5.65-acre Superblock from the lease.

Less than two weeks later, geotechnical survey crews descended on the Weston and Jacobs lots to take soil and groundwater samples from deep below the surface. And into December, sewer crews began working in the area although a source said that some of the work may involve the installation of fiber optic cable conduits.

END

Thursday, December 12, 2019

Downtown Cleveland hotel sells to NY-based REIT

Downtown Cleveland's Hilton Garden Inn and Gateway
Conference Center as seen from Interstate 90 (Google).
CLICK IMAGES TO ENLARGE THEM
Downtown Cleveland's Hilton Garden Inn, 1100 Carnegie Ave., sold on Dec. 9 to a New York City-based real estate investment trust that specializes in owning Marriott- and Hilton-branded hotels.

The 11-story, 240-room hotel, its adjoining Gateway Conference Center and the 2.85 acres on which the complex sets was sold for $28.16 million to MCR Cleveland LLC, according to Cuyahoga County records.

MCR Cleveland is an affiliate of MCR Hospitality Fund REIT LLC, headquartered on the 86th floor of One World Trade Center in New York City. It also has a secondary headquarters in Dallas.

The REIT, formed in 2006, owns about 90 hotels totaling 15,000 rooms with a combined value of $3 billion, according to MCR's Web site. Their hotel properties are in 30 states and 76 cities. This is MCR's first acquisition in the Greater Cleveland market but is its sixth hotel located in Ohio.

MCR owns the Homewood Suites by Hilton in Columbus/Ohio State University, Hilton Garden Inn in Dublin (Greater Columbus), Courtyard by Marriott in Lima, Homewood Suites by Hilton in Milford (Greater Cincinnati) and the Hampton Inn & Suites in Perrysburg (Greater Toledo).
The Gateway Conference Center, at right, was included in the
Dec. 9 sale of the downtown  Hilton Garden Inn (Google). 
The firm does not own any hotels in Greater Pittsburgh, Greater Buffalo or in the entire state of Michigan, its Web site shows. MCR touts that it is a recipient of the Marriott Partnership Circle Award, the highest honor Marriott presents to its owner and franchise partners, and the 2018 Hilton Legacy Award for Top Performer.

On the same day the hotel property purchase was recorded by Cuyahoga County, a $22,730,000 mortgage from Wells Fargo Bank to MCR also was recorded by the county along with a subordination agreement by MCR Cleveland Tenant LLC of Dallas for Wells Fargo Bank.

Based on recent transactions, the property has gained significantly in value in recent years. In 2012, the hotel's first owner, 1100 Carnegie, LP, sold it to JPMCC 2006-LDP7 Carnegie Avenue, LLC. for $12.43 million.

Then, it was sold again in 2015 to Hotel 1100 Carnegie, L.P. for $16,597,500, according to Cuyahoga County records. Hotel 1100 Carnegie sold the Hilton Garden Inn to MCR. This latest sale of $28.16 million represents a 133 percent increase in market value for the hotel in just seven years.
The proximity of Progressive Field, seen in the background,
is a major selling point for the Hilton Garden Inn (Google).
The 11-story Hilton Garden Inn was built in 2000 and measures 138,116 square feet. In addition to guestrooms, suites and accessible rooms, it has a fitness center, pool and whirlpool. Also on site is Harvey’s Bar and the Great American Grill restaurant which provides table and room services.

The neighboring 32,095-square-foot Gateway Conference Center was built in 1900 and renovated in 2001, county records show. Meeting space in the building measures 20,000 square feet not including audiovisual facilities, full-service catering and preparation rooms and other support areas.

Downtown Cleveland's Hilton Garden Inn is less than a block away from Interstate 90 and Progressive Field, home of the Cleveland Indians baseball team. It is one of four Hilton Garden Inn locations in the metro area, including Hopkins Airport, Mayfield Village and Twinsburg locations.

Sales of local Hilton Garden Inns show stability with the chain here. Other than downtown, the most recent sale was the Mayfield location which transferred in 2018 via a receivers deed for $2.3 million. The Twinsburg hotel last transferred in 2008 for $16.5 million while the Cleveland Airport site last transferred in 2000 when that hotel was built, county records show.

END

Wednesday, December 11, 2019

Transformational real estate development tax credit bill sees big changes

Substantial changes were made today to legislation that would
provide a source of capital financing to mega-developments in
Ohio's cities (State of Ohio). CLICK IMAGES TO ENLARGE
A proposed Transformational Mixed-Use Development (TMUD) tax credit pending before the state legislature was substantially amended today during a hearing of the Ohio House of Representatives' Workforce & Economic Development Committee.

Six changes were accepted by the committee that further refined the proposed law, Substitute Senate Bill 39. Most of the changes would link the release of tax credit awards more closely to the amount of state and local taxes generated by the credit.

The amendments were submitted by the bill's original sponsor, State Sen. Kirk Schuring (R-29, Canton), said Josh Ferdelman, legislative aide to State Rep. Paul Zeltwanger, chair of Workforce & Economic Development Committee.

"We are not closed off to amendments by any means," Ferdelman said. "We (the committee) won’t meet next week, but we will take this up again in January."

The tax credit would refund to insurance companies up to 10 percent of their investment in TMUDs, as defined by the bill. Those include projects whose new or to-be-renovated connected buildings are at least 15 stories tall, measure at least 350,000 square feet and contain any combination of retail, office, residential, recreation, structured parking or similar uses.

"Substitute Senate Bill 39 is designed to provide a unique tax credit that will foster mega-development projects that will transform Ohio's downtowns with new and robust economic development," said Schuring in testimony to the committee in October.
Stark Enterprises, which is seeking to develop nuCLEus
in downtown Cleveland, initiated the original version and
consideration of the TMUD tax credit legislation (Stark).
New provisions in the TMUD bill would limit the director of the Ohio Development Services Agency (DSA), which would administer the tax credit, to approving only four TMUD tax credits per fiscal year. If fewer than four TMUD applications were made or approved, the unused credits would carry over to the next year.

If more than four applications are submitted, they would be ranked by their economic value and transformational impact. The proposed change would give consideration to the new state and local taxes generated from the project and its surrounding area.

A project that has the most significant transformational impact and has a pro forma (or forward-looking financial statement) that shows the most expeditious schedule for the new state and local taxes to exceed the amount of the tax credit, will be the one that is approved.

After the TMUD credit is approved by the DSA director, the project must go into construction no later than one year after its approval. If it does not, the approved tax credit will be rescinded, according to the amended bill.

The revised bill also won't release the 10 percent tax credit to recipients all at once. Instead, the first 5 percent credit will be issued upon the completion of construction. The remaining 5 percent will be issued as evidence is submitted showing the new state and local taxes that were caused by the project and its surrounding area, according to Schuring.

If the evidence shows that, after the construction of the project was completed, it already generated new state and local taxes that exceeded the amount of the 10 percent credit, then a certificate for the full 10 percent will be issued.

But if the new taxes do not exceed the amount of the tax credit immediately after the completion of the construction, then the remaining 5 percent will be issued incrementally on an annual basis as evidence is shown that the new state and local taxes generated from the project and its surrounding area exceeds the amount of the additional credit. The incremental increases in the credit will be for a period of up to 5 years.
Millennia Cos.'s proposed Centennial development in down-
town Cleveland could also be a beneficiary of the TMUD tax
credit bill. This is part of the massive former bank lobby in
the Centennial, or ex-Union Commerce Bank (Millennia).
Lastly, the accepted amendments would increase the existing historic renovation tax credit percentage from 25 to 35 percent for projects in rural areas. And the bill would enhance a variety of Chapter 119 rules stipulating how DSA will administer the TMUD program.

The TMUD legislation had seemingly been on a fast track toward passage this fall as numerous business and civic groups testified in support of the bill. They included the Ohio Municipal League, Ohio Mayors Alliance, Ohio Chamber of Commerce, City of Hamilton, Ohio Insurance Institute, NAIOP of Ohio (Commercial Real Estate Development Association) as well as The Millennia Companies and Stark Enterprises.

The only group to testify in opposition to the bill was Policy Matters Ohio, a left-leaning non-profit policy research institute with offices in Cleveland and Columbus.

Stark's law firm, Thompson Hine LLP, originally drafted the TMUD legislation nearly two years ago at the request of Stark. It did so after Stark had attempted other methods of loosening up public-sector capital funding for its mixed-use nuCLEus development project in downtown Cleveland.

Stark and other real estate developers note that major developments in Ohio's larger downtowns cost nearly as much to build as those in larger cities like New York and Chicago but command rents that are one-half to two-thirds less.
 
Until today, the committee hadn't held hearings on Sub. SB 39 since early November. Today's hearing on the TMUD legislation was the committee's fifth. The bill passed the Ohio Senate 32-1 on June 25. An older version of the bill passed the Ohio House last year 91-0 but the legislative session expired before the Senate could act on that version.

The current legislative session expires Dec. 31, 2020.

END

Tuesday, December 10, 2019

Son of Seeds & Sprouts - Part I

These news tidbits are too small for Seeds & Sprouts but are nonetheless important. They include the last two weeks of items that appeared in public records such as building permits, planning commission filings, real estate listings and similar but brief references showing definitive movement in Cleveland-area real estate. They are listed by Cleveland neighborhood (per city-defined planning jurisdiction) and suburbs. Sometimes there's just too much going on to report it any other way! Thanks to Tykaps/UrbanOhio for providing insights on these tidbits.



BUCKEYE-SHAKER SQUARE


Rehab of 2804 South Moreland is due to begin soon (Google).
2804 South Moreland Blvd. -- Building permits were filed for the rehabilitation of this three-story, 24-unit, 14,130-square-foot apartment building built in 1930. The county rates this property in very poor condition. It was bought Dec. 21, 2018 by Rakefet Landes of Beachwood although he transferred it on May 28, 2019 to 2804 Moreland LLC that lists to his home address. The property is on the southwest corner of South Moreland and Drexmore Road, next to the Shaker Square business district.


Mixed-use is planned at 12607 Larchmere Blvd. (Google).
12607 Larchmere Blvd -- A 15,500-square-foot structure is proposed to rise on a 0.356-acre lot, according to newly filed building permits. Proposed is residential over a ground-floor commercial space. The street is zoned with a pedestrian retail overlay that requires structures to be built within 5 feet of the sidewalk; heights are limited to 60 feet. The land and its two-story wood warehouse were bought in 2011 by David Davita of Mayfield Village but transferred to his firm 12607 Larchmere LLC on July 15, 2019.


An 88-unit apartment building is planned at Larchmere Blvd.
and East 121 Street on the site of a charter school (Google).
12201 Larchmere Blvd. -- First Interstate Properties proposes building a four-story, 88-unit apartment building on the 1.27-acre site of the Life Skills NE Ohio charter school. The school would be demolished to make way for the apartments, located on the northeast corner of East 121st Street and Larchmere. A Dollar Store was proposed for the property in 2018 but met with neighborhood opposition

+ + + + + + + + + + + +

CENTRAL
First phases of Sankofa Village are behind the foreground site
of the newer, later phases approved for construction (Google).
2701-2755 Community College Ave. -- The next phases of the Cuyahoga Metropolitan Housing Authority's Cedar Transformation Plan (Sankofa Villageare moving forward following the filing of building permits for more than 100 housing units that will be mostly, if not all single-family townhomes. Phases one and two recently were completed with 60 apartment units and 50 townhomes. A total of 377 residential units are envisioned for the 17-acre block, replacing 70-year-old, inadequate public housing. Pennrose is the developer.


+ + + + + + + + + + + +

CLARK-METRO


The approximate site of a residential development being consi-
dered by the Spang Bakery's developers (Cuyahoga County).
3100 Barber Ave. -- Ben Beckman, an investor behind the conversion of the J. Spang Bakery, 2707 Barber, to market-rate apartments is filing certificates of disclosure with the city to purchase vacant land north of Barber and east of West 32nd Place. Additional nearby properties are in the land bank and are being used as a community garden. The actual size of the development site is unknown. Pursuing new construction in the same area may be a sign that the Spang Bakery apartments are filling up well.


+ + + + + + + + + + + +

DETROIT SHOREWAY


A recently planned apartment building in Battery Park (LDA). 
1275 West 73rd St. -- New construction building permits were filed by Columbus-based Avenue Partners for two new apartment buildings on the east side of West 73rd. Avenue Partners is buying the land from Marous Brothers that began the massive Battery Park development. One building will measure 55,000 square feet and the other 36,000 square feet adding a total of about 250 units and underground parking. A clubhouse and pool will be at the north side of the site. For size comparison, the Battery Park Lofts built in 2018 at 1250 West 75th St. measure 105,000 square feet. Separately, the city of Cleveland will extend Battery Park Boulevard east of West 73rd to West 70th, through the former property of Elite Medical Transportation/Mobile Martin EMS property.


Proposed Gordon Green party center on Detroit Avenue (Dimit).
5400 Detroit Ave. -- Building permits were issued to a local group of investors led by John E. Lawrence and incorporated as JEL LAW Properties, LLC to renovate Saigon Plaza as a party center called Gordon Green. The 0.88-acre parcel was bought on May 7, 2019. That was where the east-side's Hawken School planned to build an early-childhood center until it merged with West Park's Birchwood School. An adjacent parcel along Tillman Avenue was sold July 22, 2019 by JEL LAW Properties to Tillman Partners LLC for $447,000.


Herman Ave. Townhomes to start building (Cuyahoga County).
5209-5217 Herman Ave. -- Stout Properties. LLC received building permits to construct an eight-unit townhouse development called Herman Avenue Townhomes. The project involves demolishing three existing, vacant homes. Also four parcels were recently replatted as nine lots, including a common lot to serve as a driveway and buffer, much like other townhouse developments in the neighborhood. MG2 is the project architect.

+ + + + + + + + + + + +

FAIRFAX


Berusch is pursuing a development on this site at the northeast
corner of Euclid Avenue and East 71st Street (Google).
7107 Euclid Ave. -- Euclid 71 LLC, an affiliate of Berusch Development Partners, has acquired nine parcels along the east side of East 71st Street north to Chester Avenue for an unidentified development, presumed to be residential. A brick building owned by Russel J. Papalardo for his A-1 Liquidators at 7107 Euclid is the only structure remaining on these parcels that were acquired in Sept. 24, 2019. This is next to Vazza Real Estate Group's One Midtown townhouses.

+ + + + + + + + + + + +

HOUGH


This abandoned, 160-apartment building has a buyer (Loopnet).
9410 Hough Ave. -- The spillover effect from the growth of University Circle and Cleveland Clinic is putting derelict properties to new uses. Case in point is that an unknown buyer on Dec. 6 reached a sale contract for the vacant 160-unit Kingsbury Apartments (aka Coventry Courts) with seller CLE Venture Fund LP. The 10-story building, built in 1973, had an asking price of $2.3 million. It is next to the new Axis At Ansel apartments, a 163-unit apartment building.

+ + + + + + + + + + + +

KINSMAN


The new East 79th Red Line rapid transit station (GCRTA).
2625 East 79th St. -- Building permits were filed for the $8 million renovation of the Greater Cleveland Regional Transit Authority's East 79th Red Line rapid transit station, replacing the 1955-built facility that isn't ADA compliant. The rebuilt station will serve the Opportunity Corridor area including the site of the new Cleveland Police Department headquarters and it's nearly 1,000 employees.

+ + + + + + + + + + + +

OHIO CITY


Market Square's first phase is this V-shaped apartment building
along Lorain Avenue. West 25th Street is at right (Harbor Bay).
2021 West 25th Street -- Building permits were issued for phase one of site development for the Market Square project by Harbor Bay Real Estate Advisors, LLC. This will allow the city to start utilities work here on Feb. 1, 2020 and for the developer to start demolition of the Market Plaza shopping center and site excavation work by March 1. Phase one includes a seven-story, 253-unit apartment building over ground-floor retail at the corner of West 25th and Lorain Ave. Remaining retailers at the plaza are on month-to-month leases.


+ + + + + + + + + + + +

SLAVIC VILLAGE


NRP Group's Slavic Village Gateway development (NRP).
5163 Broadway Ave. -- Building permits were filed for the construction of the Slavic Village Gateway development, to be built by NRP Group of Cleveland. To built on 5.25 acres of land, the development's first phase will have 78 apartments and 10 townhomes along with 21,000-square-foot of ground-floor commercial spaces. One of the tenants is the University Settlement. Slavic Village Gateway will rise on the site of St. Michael/St. Alexis Hospital which closed in 2003 after 119 years of service.


+ + + + + + + + + + + +

TREMONT


A 3.4-acre parcel in Duck Island is for sale (Cuyahoga County).
2000 Lorain Ave. -- Andrew Brickman's Brickhaus Partners is no longer pursuing an ambitious development that many consider is in Ohio City. One West Twenty actually is in the Duck Island enclave. Instead, Brickhaus has listed for sale the larger of two plots of land it assembled in recent years. It is asking $7.25 million for the 3.4 acres of land but will retain 1.32 acres of land between West 19th and 20th streets, north of Lorain Ave.


Developments on three of the four corners at Scranton-Willey-
Kenilworth will change this scene in the coming years (Google).
2329 West 16th Pl. -- As 3004 St. Clair, LLC, real estate investor David Ferrante acquired a brick warehouse and 0.42 acres of land at the northeast corner of Scranton Road and Kenilworth Avenue on Sept. 9, 2019 for $1 million. His intentions for the site became clear when he began a Design-Review case for an eight-unit townhouse development called Due North Townhomes. This intersection is attracting developments, starting with Gustave Development's 11 Scranton. Another Gustave development is proposed at the northwest corner of Scranton and Willey Avenue. And Sustainable Community Associates is planning roughly 83 residences on the southwest corner of Scranton and Willey.


+ + + + + + + + + + + +

UNIVERSITY-LITTLE ITALY

Blue Sky Brews replaces Rising Star Coffee Roasters (Google).
2187 Murray Hill Road -- A coffee and beer spot called Blue Sky Brews is coming to the southeast corner of Edgehill Road recently vacated by Rising Star Coffee Roasters. The location is on the ground floor of a three-story apartment building, close to Case Western Reserve University and University Hospitals. This Rising Star store moved to 1975 Lee Road in Cleveland Heights.


END

Friday, December 6, 2019

Sherwin-Williams already spending big to put HQ at Public Square

November was a busy month for Sherwin-Williams (SHW)
and its many contractors and sub-contractors working on and
near the parking lots west of Public Square. SHW is spending
big money on this work, providing growing evidence that
this is where the Fortune 500 will put its new headquarters
plus research and development facilities (Pete Marek).
For more than a month now, real estate professionals have been watching the activity on the Jacobs Group/Weston Group-owned parking lots, located on the west side of Public Square. When asked what they think of it, their general response is "there's definitely something going on there."

Why?

Because of the amount of money being spent -- perhaps up to $10 million so far.

And when a company shells out that much money to measure, poke, drill, extract, review, document, analyze, repair, model, simulate and design stuff in around those windswept parking lots, that company is showing that it is pretty serious about that site.

That's especially true when said company isn't doing work like that at any other site in Greater Cleveland or anywhere else, according to multiple sources. Well, apparently Atlanta -- OK, just kidding!

Of course, that company is Sherwin-Williams (SHW) which has been working toward finding a site for its new 1.8-million-square-foot headquarters plus research and development (HQ+R&D) facilities.
The Jacobs and Weston lots, measuring 7.93 acres in total,
are ground zero for SHW's due-diligence activities for its
1.8-million-square-foot HQ+R&D facilities (Google).
How do I know it's SHW? Because three sources who have been directly involved at the highest levels of SHW's HQ+R&D efforts disclosed that SHW has favored the Jacobs/Weston lots for a long time.

Then, on Nov. 11, another source contacted me to say that SHW would be filing city permits later in the week for buying properties west of Public Square. Sure enough, at the end of that week, a title company named First American Commercial Due Diligence Services filed 12 certificates of disclosure regarding the purchase of the Weston lots.

Those certificates are sometimes filed by prospective commercial property buyers. On the other hand, for residential purchases, certificates of disclosure must be filed to get violation/condemnation and legal use information from the city.

According to a real estate expert who helps companies conduct their due-diligence of desired development sites, SHW has likely spent anywhere from $5 million to $10 million on the Jacobs/Weston site so far.

Granted, some of that amount -- especially for legal fees and architect's fees -- was not for site-specific work. That amount was likely in the $2 million to $5 million range, he estimated.
Geotechical survey crews first showed up on the Weston lots
on Nov. 2, poking dozens of holes into the sea of parking lots
that extend for several blocks west of Public Square (KJP).
The legal fees are probably the largest component at this point. SHW's legal counsel during the HQ+R&D project is Korman Jackson & Krantz (KJK), located at One Cleveland Center in downtown Cleveland. KJK is a prestigious, well-respected firm.

And they've been on this job since at least fall 2018. That's when NEOtrans first became aware that SHW and KJK were working through a variety of documents, ultimately including requests for proposals, task orders, property agreements, filings and other legal instruments relating to the HQ+R&D project.

That's a lot of billable hours by a firm that doesn't come cheap.

Assisting SHW through the HQ+R&D process is Welty Building Co. Its President and CEO Don Taylor is reportedly close friends with SHW CEO John Morikis. Welty has had a bad run of late, running into some financial difficulties, two sources say. Some healthy fees paid by SHW are probably helping out Welty.

After the issuance of a request for qualifications and an evaluation process, SHW and Welty hired Gilbane Building Co. in early October as the HQ+R&D construction management firm. It also pared the list of prospective HQ+R&D sites. But SHW is reportedly still listening to offers until it closes on the Jacobs/Weston lots.

Then we have the broker's fees. CBRE, the nation's largest real estate brokerage, is doing more than just circulating draft purchase agreements. It reached out to a half-dozen or so property owners downtown to solicit proposals for a combined HQ+R&D facility and to the DiGeronimo family regarding its Valor Acres site in Brecksville for the R&D center only, sources said.
During Thanksgiving week, DRS Enterprises fed hundreds of
feet of tubing into West 3rd Street, down Frankfort Avenue,
then over to West 2nd Street. A week later, they dug into
West 3rd, just south of this location, nearer to Superior
Avenue apparently to make a spot repair to the city's
sanitary sewer collector. The question is, who initi-
ated the work and why? (Pete Marek)
And CBRE reportedly did that even as it, on behalf of SHW, reached a purchase agreement with the Jacobs and Weston groups last March or April. The Jacobs/Weston lots have been SHW's favored site all along. That's no surprise considering that in 2014-15, when Morikis was SHW's chief operating officer, it hired civil engineering giant AECOM to plan for a new HQ on the Jacobs lot.

Even though SHW favored the Jacobs/Weston lots, it wanted to generate alternatives to see if anything else was worth considering locally while giving lip service to sites outside of Greater Cleveland. The goal was to give its board of directors some meaningful data for sticking with the Jacobs/Weston lots.

Those are valuable parking lots. They likely carry a price tag of up to $6 million per acre, based on recent property transactions. The Jacobs/Weston lots are just shy of 8 acres. Based on that math, the Jacobs/Weston lots are likely worth $40 million to $50 million.

"Sherwin-Williams would have had to put up earnest money for the land," the due diligence expert said. "Earnest money is usually anywhere from 3-5 percent of the agreed upon purchase price. And that usually doesn't come back to the purchasing prospect if the transfer doesn't go through. So SHW could be out $1.2 million to $2.5 million if they don't buy the Jacobs and Weston lots."

Then there's the architect's fees.

"The architect fees are a fortune, probably in excess of $1 million at this point," the due-diligence expert said.
DRS Enterprises cut into Superior Avenue at West 6th Street
above a lateral sewer line that continued under the sidewalk.
Meanwhile, DRS crews were feeding hundreds of feet of
plastic tubing into the sewers at West 9th Street (KJP).

In the early stages, SHW's architect Vocon Partners LLC was working on alternative concepts, ranging from interior finishes to potential site options. Now, they've moved on to programming, spatial patterns, configurations and massings -- aspects that are becoming more site-specific with time.

That's for an HQ+R&D to accommodate up to 6,000 workers, including 2,500 jobs that would be new to downtown Cleveland.

Vocon is a very capable firm. But when the conceptual designs are being developed and advance into schematic designs, it is possible that a "starchitect" could be brought in.

For example, when Welty, Vocon and Gilbane last joined forces on building a Northeast Ohio headquarters facility -- for the Goodyear Tire and Rubber Co. in Akron -- they ended up bringing in San Francisco-based Gensler to put on the finishing touches. It's possible they already have or are considering it -- after all, why would people from Gensler's Chicago office start following me on Twitter?

By the way "hello" -- hope you're enjoying the blog!

And now we come to the visible work that's been underway for the past month using geotechnical core drilling rigs, groundwater well drilling rigs, vacuum excavators and even some possibly related sewer work.
The sewer work by DRS came a week after
the same firm drilled into the Jacobs lot and
capped several groundwater testing wells
from which samples were immediately
retrieved and tested by Strategic Enviro-
nmental Services Inc. (KJP).
In the first two weeks of November, the geotechnical drilling rigs and vacuum excavators belonging to Enviroprobe Integrated Solutions Inc. and Environmental Works Inc. descended upon the Weston lots.

Into the third week of November, groundwater testing/removal wells were dug into the Jacobs lot by sub-surface construction firm DRS Enterprises with water samples removed and tested by Strategic Environmental Services, Inc. which conducts environmental remediation and waste disposal.

It's possible that the groundwater tests found sanitary sewer flow infiltration. And it's also possible that SHW paid for the follow-on sewer repairs, perhaps to be reimbursed by the city.

Why? Because the very next week and continuing into December, the same well-drilling contractor DRS Enterprises was busily making sewer repairs in the city's street rights of way, including pipe re-lining and excavations to make spot repairs on West 3rd Street and westward along Superior Avenue. They even worked the day before and the day after Thanksgiving when many people are on vacation.

I wrote a Nov. 30 article where I doubted that SHW had initiated the sewer work. Now I'm thinking they did. I wasn't aware on Nov. 30 that DRS had also done the Jacobs lot well-drilling a week earlier.

It wasn't for a lack of asking. The sewer workers themselves dismissed any questions. The Northeast Ohio Regional Sewer District said it wasn't the one making the repairs and besides, these were sanitary sewer collectors which are the responsibility of the city.
In 2017, Cleveland City Council voted to vacate an unused
alley called Broome Court, N.W. It did so at the request of
Weston Group which had planned but later abandoned a
major development on its land. The alley is circled in red
above. The ordinance brief is below (City of Cleveland).

I've reached out to several city officials, including asking them to speak off the record, to better understand what is happening here with these repairs. But none of them, not even the usually chatty ones, were talking.

It's highly unlikely that the city could authorize a private contractor to make repairs so quickly except in emergencies. It probably wasn't the city and it probably wasn't an emergency. The reason is because it all started with DRS drilling groundwater test wells from a private property (Jacobs lot) which, if the city led this effort, it would have required getting the law department involved to secure access.

The city wouldn't have bothered with that time-consuming process in an emergency. The city would have drilled into an adjacent public right of way, especially a lightly used one like Frankfort or even the northwest quadrant or roadway of Public Square.

And why would the city drill in the first place? Sanitary sewer leaks weren't stinking up Public Square or spilling out onto the street. The drilling started because SHW wanted to check subsurface conditions below the Jacobs lot for which it has a purchase agreement.

If it was SHW that paid for the sewer repairs, as I now suspect, then they are dead serious about locating on this site. You don't spend that kind of money and effort to address a possible infiltration from the aging sanitary sewers nearby if you're still debating this site. And considering how fast they got a crew out there and even worked the Friday after Thanksgiving, it appears SHW is in a big hurry to get this done.

The sewer repairs were obviously not cheap, regardless of who paid for them.

By the way, speaking of lightly used public rights of way, another example of SHW's HQ+R&D due-diligence work was revealed publicly on Nov. 21.
On Dec. 2, the alley Broome Court N.W. was removed from
Cuyahoga County's plat map, shown above, and absorbed by
the neighboring parcels, owned by Weston. The authorizing
document for changing the plat map was filed Nov. 21 and
is shown below (both images: Cuyahoga County).
On that date, title work by First American Commercial Due Diligence Services -- the same company filing the certificates of disclosure for SHW -- discovered a vacated street right of way that was supposed to have been removed from Cuyahoga County's plat maps two years ago.

Cleveland City Council voted in 2017, at the request of Weston which was then pursuing a since-abandoned development, to vacate an alley called Broome Court N.W. The county never removed the alley from the plat maps by distributing the right of way among adjacent parcels. The vacation plat of Broome Court was filed with the county recorder's office Nov. 21 and the plat map was redrawn Dec. 2.

This is an example of the title work that's necessary in order to discover and fix anomalies for the 46 parcels in the Jacobs/Weston lots. That work may eventually involve a possible further redrawing of plat maps to consolidate parcels following their acquisition by SHW. All of this title work is another significant expense for the global coatings giant, the due-diligence expert noted.

Finally, he added that the normal time for such due diligence work involving a large project is about six months plus multiple two- to three-month extensions as needed following the execution of purchase agreements. So it's not surprising that the due diligence for a project of this scale could take six months to a year, he said.

SHW's purchase agreements reportedly were executed in March or April. This project is bigger than any that the expert has ever experienced. It's understandable that the due-diligence work is not yet done nearly eight months later.

But that work may be coming down the home stretch to the finish line, concluding with a public announcement by SHW about an estimated $1 billion HQ+R&D campus and up to 6,000 retained and new jobs for downtown Cleveland.

END