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Cleveland City Council Approves $700M Lakefront Development

5 Jun 2014, 1:27 pm

By Adrian Maties, Associate Editor

Cleveland’s lakefront is getting a makeover. The city recently approved plans to develop more than 20 acres of lakefront property close to the central business district. The project is expected to cost $700 million.

Cumberland Development is working on the development together with Trammell Crow Co. Bellwether Enterprise Real Estate Capital LLC will provide loan origination and financing strategy beyond traditional debt and equity mortgage banking.

Plans call for the construction of more than 2.2 million square feet, including more than 1,000 apartments, 800 parking spaces, 80,000 square feet of office space, 60,000 square feet of retail space, a boutique branded hotel and a charter school serving downtown Cleveland residents.

The project will be developed in three phases. Phase I will include mixed-use development, while Phases II and III call for the construction of residential housing. Each phase will use different sources of capital.

The partners on the project have worked together since the request for proposal phase and will continue to collaborate through its completion. “This project is 25 years in the making and will be transformative for Cleveland. We’re honored to be involved,” Ned Huffman, Bellwether Enterprise president, said in a statement for the press.

Richard Pace, CEO of Cumberland Development, will serve as the principal on the development, managing the project and assuming responsibility for its design, construction and management. “It’s right in the heart of some of Cleveland’s major attractions, and there is no other property like it in the Midwest that has yet to be developed,” he added.

Gilbane Inc. and Coleman Spohn Corp. are the construction managers. The team also includes HKS Architects, URS Corp., SWA Group and Mobius Grey LLC.

Photo credit: Bellwether Enterprise

Joint Venture Buys Large Cleveland Industrial Portfolio

31 May 2014, 4:12 am

By Adrian Maties, Associate Editor

A joint venture acquired a large industrial portfolio in the Cleveland area. Alex. Brown Realty Inc., a real estate investment firm headquartered in Baltimore, teamed up with Biynah Industrial Partners LLC, a Minneapolis-based real estate private equity firm, to buy the Great Lakes Industrial Portfolio. The seller was a joint venture between Virginia’s Harbor Group International and local investors.

The Great Lakes Industrial Portfolio includes nine Class A buildings with 766,477 square feet of space. The properties are located in Cleveland’s South, Southeast and Southwest submarkets. According to CBRE Group Inc., these three submarkets had a good first quarter of the year, registering a decrease in vacancy. The South submarket saw the largest drop in vacancy of the three, falling from 6.2 to 5.6 percent. Meanwhile, the Southeast and Southwest markets showed vacancy rates of 7.3 and 7.2 percent, respectively.

Cleveland’s overall vacancy decreased to 6.2 percent in the first quarter of 2014 and remains significantly lower than the U.S. average. Meanwhile, the average asking lease rates remained steady at $4.51 per square foot.

“We like the fundamentals of this deal—quality assets, submarket diversification, and a strong and stable tenant base,” Jeff Josephs, Biynah’s co-founder & managing principal, said in a statement for the press. He added that the existing leases have at least five years of remaining term and that more than 80 percent of the existing tenants have made significant capital improvements to their space.

The Great Lakes Industrial Portfolio represents the eighth transaction between Alex. Brown Realty and Biynah. According to The Plain Dealer, the price of the transaction was $43 million. The joint venture said it acquired the portfolio at a substantial discount to replacement cost. “Given our low basis and the in-place income, our investment should yield strong cash-on-cash returns from day one,” commented Tom Burton, Alex. Brown Realty’s chief investment officer. He also said that the financing arranged by ARES Real Estate gives the joint venture the flexibility to sell off individual buildings. “That flexibility will undoubtedly enhance our exit strategy.”

Photo credit: Alex. Brown Realty
Charts courtesy of CBRE

Cleveland’s Victory Center Wins 2014 Preservation Achievement Award

27 May 2014, 3:49 pm

 By Adrian Maties, Associate Editor

The new Victory Center redevelopment received recognition on May 1 at the 2014 Celebration of Preservation. The $26.6 million redevelopment of the almost 100-year-old, four-story building at 7012 Euclid Ave. was honored with the Preservation Achievement Award for a Commercial Building by the Cleveland Restoration Society and the Cleveland Chapter of the American Institute of Architects. The new mixed-use complex is located in the core of Cleveland’s Health-Tech Corridor, and is now ready to house the city’s growing incubator and accelerator growth-stage companies.

Garson Victory LLC,  a partnership led by real estate broker Scott Garson, was behind the project. The redevelopment team also includes Domokur Architects, Partners Environmental Consulting, Heritage Consulting, HLMS Sustainability Solutions and NAI Daus.

According to real estate website PropertyShark, the building was constructed in 1917 by the Craig Curtis Co. Griebel and Ebeling architects designed the building in the Neo-­Classical Revival style.

Garson Victory acquired the property in late 2010 for $2.7 million. The restoration project called for the repair and replacement of the terra cotta cornice, the replacement of almost 90 window lintels, repairs to the brick façade and the replacement of 337 windows to exactly match the original window system of the property. The main lobby off Euclid Avenue was also restored. It includes the original terrazzo floor and marble wainscoting, which now sparkle under the upgraded contemporary lighting. The renovation was financed with the help of historic tax credits.

Victory Center opened its doors to tenants earlier this year. The 170,000-square-foot facility is LEED Silver certified and offers both lab and office space.

Photo courtesy of NAI Daus.


Trulia Study Ranks Ohio Cities High for Affordable Housing

18 May 2014, 4:46 am

By Adrian Maties, Associate Editor

Are you a middle-class American looking to buy a home? Head to the Midwestern United States — and make sure you stay away from California. That was a recommendation of real estate research firm Trulia’s list of the least and most expensive U.S. housing markets for today’s middle class.

According to Trulia, affordability has worsened in the past year. Home prices have climbed faster than incomes and mortgage rates have risen. As the nation recovers from the last housing crash, homes are still relatively affordable. And even though prices continue to rise, they are still below pre-recession levels. But homeownership is out of the reach of the middle class in many markets, especially along the coasts.

If you really want to buy a home, you should definitely start your search in Ohio. Last year, Coldwell Banker named Cleveland the most affordable city in the United States. Second on that list was Garfield Heights, a city in the Cleveland metro area. Now, Trulia reports that five of the top 10 most affordable housing markets for the middle class are located in the Buckeye State.

Akron tops the list, with 86 percent of the homes in the area affordable for the middle class. It shares the podium with two other Ohio cities, Toledo (with 84 percent) and Dayton (with 83 percent). The top 10 also includes Columbus, in sixth place, and Cleveland, in eighth place. In both areas, 81 percent of the homes are affordable for the middle class. The remaining markets in the top 10 are Gary, Ind.; Columbia, S.C.; Detroit; Little Rock, Ark.; and Rochester, N.Y.

The Cincinnati area came close to making the top 10. It occupied 13th place, out of 100, with 80 percent of the homes affordable to the middle class.

But if Ohio is the hero, then the villain is definitely California. Seven of the 10 least affordable markets are located in the Golden State. San Francisco occupies first place with only 14 percent of its homes affordable for the middle class. It is followed by Los Angeles (23 percent) and Orange County (24 percent). San Diego, Ventura County, San Jose and Oakland are the other California markets on the list. That list also includes two East Coast markets, New York and Fairfield County, Conn., as well as Honolulu.

According to Trulia, middle-class affordability will continue to worsen in the nation’s most expensive markets.  It’s not expected to improve in the long term without any new construction.

Chart: Trulia

Developers Plan to Break Ground This Fall of Phase I of Intesa

10 May 2014, 4:04 am

By Adrian Maties, Associate Editor

In March 2012, University Circle Inc., a nonprofit corporation established in 1957, announced it had hired the Coral Co. of Cleveland and Panzica Construction Co. of Mayfield Village to develop the mixed-use Intesa, one of the largest such projects to be constructed in Cleveland’s University Circle neighborhood. Groundbreaking was scheduled for early 2013, but the project was delayed and many people started to wonder if it would ever happen. But its time has come.

The Cleveland Plain Dealer recently reported that after spending the past year renegotiating its deal with University Circle Inc. and redesigning the buildings, the development team plans to start work this autumn on the first phase of the project.

The Intesa will be developed on Lot 45, a surface parking lot with 200 spaces at the edge of University Circle and Little Italy, a crucial piece of real estate in University Circle. Originally, the project called for the construction of buildings ranging from eight to 12 stories, more than 100,000 square feet of offices, 96 apartments, retail, a 700-car garage and even student housing.

The reconfigured project features all the same elements, but the buildings have changed location on the site. The apartments will sit at Mayfield and Circle, the offices will move to the east and the parking garage to the north to make it more accessible from Euclid Avenue.

This fall, Coral and Panzica plan to start construction on almost 200 apartments as well as the 700-space parking garage. There will be a single residential tower, with three types of apartments: traditional apartments, micro-suites and 13 two-story, townhouse-style penthouses. Units will range in size from less than 300 square feet to 1,900 square feet, with rents going from $600 to $3,000 per month. The apartments and the parking garage are expected to open in the spring or summer of 2016. The 11-story office building will be constructed in the second phase of the project, once it has tenants lined up.

The award-winning Bialosky + Partners Architects designed the Intesa. The entire project is expected to cost between $100 million and $110 million.

Photo credit: Bialosky + Partners Architects.

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