Leader Building Still Seeking New Owner

By Adrian Maties, Associate Editor

The Leader Building, a Class B office building in downtown Cleveland, hit the auction block on Nov. 13. Despite fetching a high bid of nearly $7.7 million during an online auction, the property won’t be sold.

Constructed in 1913 on the former site of the Trinity Episcopal Church, the high-rise used to house the Cleveland Leader newspaper.  According to its Web site, the building’s quality and craftsmanship are unmatched in the city. The Carlyle Development Group paid $4 million for the building in late 2004. Building amenities include two full-service restaurants, a deli, a cigar and convenience store, a barber shop, a shoeshine stand, a coffee shop and dental offices.

Although the Cuyahoga County Fiscal Office says it is worth $2.7 million, it attracted a high bid of almost $7.7 million at the auction running from Nov. 13 to  15. And it was not enough, as the price did not meet the reserve, an unpublished threshold set by the owner.

The downtown Cleveland office market is gaining momentum as city officials offer businesses favorable tax incentives to relocate to the CBD. Companies are now vacating space in the suburbs and establishing a presence in the core. According to Marcus & Millichap, in the last 12 months transaction velocity accelerated by 30 percent as local buyers purchased Class B and C  assets  at attractive prices.

The 16-story Leader Building is situated at the intersection of East Sixth Street and Superior Avenue, in the heart of Cleveland’s CBD. It is close to both the new casino and the future convention center, in a location that makes it very desirable for both companies looking to move downtown or developers seeking to turn it into apartments. This might explain why the owner is in no hurry to sell.

Photo credts: www.theleaderbuilding.com/

Charts courtesy of Marcus&Millichap

Oswald Cos. Leases Three Floors in 1100 Superior Building

By Adrian Maties, Associate Editor

Oswald Cos., one of the nation’s largest independent, employee-owned insurance companies, has been looking for space all over Cleveland to accommodate its needs. The company has been located in downtown Cleveland since 1893 and seems to be focused on remaining in the city’s center.

In August 2013, Oswald Cos. will move about 200 employees and its headquarters to 1100 Superior Ave., a 21-story, 576,000-square-foot Class A office tower built in the early 1970s. Oswald struck a deal with American Landmark Properties Ltd., 1100 Superior’s owner, to lease the 13th, 14th and 15th floors for 12 years. The space was previously occupied by Cliffs Natural Resources.

Right now, Oswald’s offices are located at 1360 E. Ninth St., in the IMG Center, the company’s home for the past 21 years. The new space totals 71,000 square feet, a 48 percent increase over its current 48,000 square feet. Oswald will move 220 employees from its current headquarters and almost a dozen from its Beachwood office to the new location next to the revived Perk Park on E. 12th St.

The Oswald deal is one of the biggest at 1100 Superior. And it comes with naming rights: The building will be renamed the Oswald Centre. In addition, a new fitness center will be constructed, as well as a 4,000-square-foot, first-floor conference room.

According to Marcus & Millichap, the downtown Cleveland office market is gaining momentum. Multiple companies have vacated space in the suburbs and established a presence in the core. The overall vacancy is expected to drop to 20.7 percent this year. Asking rents will grow by 0.7 percent to $18.50 per square foot, while effective rents are expected to close 2012 at $14.69 per square foot, an increase of 0.8 percent.

Photo credits: American Landmark Properties

Charts courtesy of Marcus & Millichap.

Mercy Medical Center Plans Expansion; Ohio City to Receive 72 Market-Rate Apartments

By Adrian Maties, Associate Editor

Canton’s Mercy Medical Center plans to increase the size of its emergency department. According to the Akron Beacon Journal, the hospital is looking to finalize plans for the 14.5 million-square-foot renovation and construction project.

First, the plans have to be approved this month by the hospital’s board. If this happens, Mercy Medical can start construction in January. The project will increase the size of the ER from 33 beds to 48 beds, all in private rooms. It also includes renovating the hospital’s lobby, expanding the admitting area and installing a new outpatient laboratory. Finally, a Subway restaurant will replace a McDonald’s that recently closed on the campus.

Mercy Medical expects construction to take between 15 and 18 months. The project will be financed with the help of donations and through hospital operations.

In other news, Freshwater Cleveland announced that The Foran Group plans to turn a pair of historic buildings in Cleveland’s Ohio City neighborhood into 70 market-rate apartments. It will be the first big housing project to be developed in Ohio City since the Great Recession.

Rick Foran of The Foran Group has partnered with developer Christopher Smythe on the West 25th Street Lofts project, which has been in the works for several years. It was sidelined when the economy collapsed and financing dried up.

The two buildings at the corner of West 25th and Church are the historic Baehr Brewing Company building, constructed in the 1870s, and the former Cuyahoga Metropolitan Housing Authority on Church. They will be transformed into an apartment complex with include first floor garage parking, an interior courtyard, and 9,000 square feet of commercial space.

The West 25th Street Lofts project calls for the incorporation of existing historic features into the apartments. The two-story Baehr Brewing Company building will be completely restored on the exterior to federal historic standards.

Rick Foran hopes the project will bring new life to the neighborhood. He also hopes to close on his financing early next year, start construction immediately after, and have renters moving in by May 2014.

Photo credits: www.facebook.com/cantonmercy

Hyland Gets Tax Breaks for Westlake Expansion; Diebold Suspends Plans for New HQ

By Adrian Maties, Associate Editor

Earlier this month, the city of Westlake’s planning commission approved Hyland Software Inc.’s plans to build an office across the street from its headquarters on Clemens Road.  Last week, the company won Ohio tax credits meant to encourage it to go ahead with the expansion project and add 387 jobs as well.

Hyland Software is one of the most important companies in Cleveland. It was established in 1991 by Packy Hyland Jr., and according to its Web site it currently has more than 1,200 employees. Hyland’s offices can be found in several locations throughout the United States, as well as in São Paulo, London and Tokyo.

The tech company acquired Nordson Corp.’s headquarters building and nearly 20 acres of the 25-acre campus on Clemens Road in 2008. It now plans to add a third three-story, 112,000-square-foot building just across the street from its headquarters. This new building should be large enough to house 700 employees. The tax credit is a rebate of 50 percent of Hyland Software’s state tax owed over the next five years. Hyland has to add 387 jobs and $13.5 million in payroll for the next eight years to keep the tax credits.

Companies like Hyland provide important help to the local economy. They add high-paying jobs and bring in outside money.

In other real estate-related news, Diebold Inc. has indefinitely suspended its plans to construct a new $100 million global headquarters building. The ATM maker is committed to remaining in its current location in Green, Ohio.

Plans called for the new headquarters to be built on 55 acres of land near the intersection of Massillon Road and Town Park Boulevard. Thomas Swidarski, Diebold’s president & CEO, said, ” Investing more than $100 million in a headquarters facility is not economically feasible, given the other priorities for the business at this time.” The company will focus on growing its business through investment and acquisitions and therefore needs ”adequate capital flexibility.”

Diebold will decline the various state and local financial incentives it was previously offered. These incentives, valued at more than $57 million, will now be available for other companies.

           Photo credits: www.facebook.com/HylandSoftware

Parmatown Mall Sold to Phillips Edison & Co.

By Adrian Maties, Associate Editor

Cincinnati-based  Phillips Edison & Co., a fully integrated retail real estate company, is the new owner of Parmatown Mall, one of the largest retail properties in Northeast Ohio. The terms of the deal that closed on Oct. 16 have not been revealed.

Parmatown is a 1.2 million-square-foot, mixed-use complex. It was built in 1955 and renovated and expanded in 1985, 2004 and 2005. The property occupies 83 acres and is located at the corner of Ridgewood Road and State Route 3 in Parma, Ohio, approximately eight miles from Downtown Cleveland. A court-appointed receiver has been managing the complex since July 2011, after the original owners defaulted on the mortgage.

The complex has three components:

• Parmatown Plaza
• Parmatown Strip Center
• Parmatown Medical Center

Parmatown Plaza is an enclosed, single-story, regional shopping mall anchored by JCPenney, Dick’s Sporting Goods and Walmart. A Marc’s Grocery Store anchors Parmatown Strip Center, a neighborhood retail center, while the Parmatown Medical Center is a four-story medical office building.

Roy Williams, vice president of Phillips Edison’s Strategic Investment Fund, said in a news release that “Phillips Edison has been in the business of redeveloping retail properties for over 20 years. Parmatown represents an ideal opportunity to apply our expertise and revitalize this historic property to its full potential. Now that the acquisition process has been concluded, we will focus our efforts on a comprehensive strategy that will rejuvenate this key component of Parma’s commercial center.” Parma Mayor Tim DeGeeter also believes that Phillips Edison’s acquisition of Parmatown Mall will lead to an improved quality of life for Parma residents.

Phillips Edison owns and manages 225 shopping centers in 25 states. Parmatown is the fourth purchase for Strategic Investment Fund II. The Cincinnati-based company established the fund in 2011 after its Strategic Investment Fund I was fully invested. In a separate transaction, the company purchased the mall’s empty Macy’s building, along with some small-shop space and parking areas owned by Macy’s. The store closed earlier this year.

Photo credits: www.parmatown.com.

Charts courtesy of Marcus&Millichap.

Developers Start Work on Luxury Aloft Hotel in Beachwood

By Adrian Maties, Associate Editor

BGL Real Estate Advisors, a subsidiary of Brown Gibbons Lang & Co., and Cleveland real estate developer Scott Berkowitz broke ground on Monday, Oct. 15, on a luxury aloft hotel at the Chagrin Highlands corporate center in Beachwood. It will be the second aloft hotel in the Cleveland area. In May 2013, an aloft hotel is expected to open in Cleveland’s downtown.

Mayor Merle Gorden, together with other members of the community, joined Berkowitz at the groundbreaking ceremony. The new Aloft hotel is a ”vision of W Brand Hotels,” he said. Starwood Hotels and Resorts Worldwide Inc. calls the upscale, hip, urban-inspired select-service hotels its “style at a steal” brand.

The new hotel is being developed on a nearly four-acre site near Eaton Corp.’s new headquarters and University Hospitals’ Ahuja Medical Center. According to land records, the developers paid $1.6 million for the property. The hotel will include 135 rooms and stand four stories high when it opens, anticipated in the third quarter of 2013.

US Bank financed the project. Pride One Construction is the general contractor, with Mann Architects as the project’s architect. Jeff Wild, partner at Benesch, Friedlander, Coplan & Aronoff, served as legal counsel, while Nico Bolzan, director, and Jeffrey Steck, vice president, led the BGL Real Estate Advisors transaction team. St. Louis-based Midas Hospitality was selected by the developers to manage the hotel.

Berkowitz first looked to BGL Real Estate Advisors to secure both the debt and equity for the project. But the company found the project so interesting, it formed a partnership with Berkowitz and now they are working together as co-developers. “After hearing about the project and then seeing the location, we knew it was a special business opportunity,” Michael Gibbons, senior managing director & principal at Brown Gibbons Lang & Co., said in a release.

Photo credit: www.facebook.com/alofthotels.

U.S. Green Building Council Awards LEED Certification to Four Cleveland Clinic Facilities

By Adrian Maties, Associate Editor

The Cleveland Clinic announced last week that four of its facilities have earned LEED certification from the U.S. Green Building Council. This brings its total to 10 LEED buildings, with two more on the way.

The 136,000-square-foot Pathology and Laboratory Medicine Institute building opened in January. A three-story, glass-clad building, it houses one of the largest-volume hospital laboratories in the country. It achieved LEED-NCv2.2 Gold Certification for maximized natural light, energy-efficient LED lighting, a green roof and improved water run-off, as well as incorporating various other sustainable strategies.

The Twinsburg Family Health and Surgery Center earned LEED-NCv2.2 Gold Certification as well, because of its environmentally friendly features, use of regionally sourced materials with recycled content, superior indoor air quality and preservation of surrounding wetlands. The building opened in July 2011. At 190,000 square feet, it is the Cleveland Clinic’s first family health center with a 24-hour emergency department and helipad.

Avon’s Richard E. Jacobs Health Center opened in December 2011. The 190,000-square-foot center achieved LEED-NCv2.2 Silver certification last month because of its water efficiency, indoor air quality, minimization of site disturbance, purchase of regionally manufactured materials and recycled content, as well as an overall energy cost reduction of nearly 15 percent.

The 50,000-square-foot Stephanie Tubbs Jones Health Center opened in October 2011. It earned LEED-NCv2.2 Silver certification for its water efficiency, advanced controls and sophisticated energy modeling to ensure that the building’s energy use is minimized and optimized, with environmentally friendly materials and resources, indoor environmental quality and innovation in design. The building was designed to support the local community and ecosystem.

Developed by the U.S. Green Building Council, Leadership in Energy and Environmental Design (LEED) is a certification program that provides third-party verification of green buildings. To earn LEED certification, a project must satisfy all LEED prerequisites and earn a minimum 40 points on a 110-point LEED rating system scale. The Cleveland Clinic is a member of the U.S. Green Building Council and Practice Greenhealth and is a U.S. EPA ENERGY STAR Partner. Since 2008, it has been awarded over 75 Practice Greenhealth Awards.

Photo credits: www.balfourresourcegroup.com/

Noble Investment Group Buys Embassy Suites Cleveland-Beachwood

By Adrian Maties, Associate Editor

Atlanta-based Noble Investment Group, a leading private lodging and hospitality organization, has purchased the Embassy Suites Cleveland/Beachwood hotel in Beachwood. It is the investor group’s sixth acquisition this year.

The Embassy Suites Cleveland-Beachwood is located at 3775 Park East Drive. It offers 216 rooms in an excellent location, close to first-class retail and dining offerings, as well as corporate headquarters for companies such as Diversified Realty Corp., Aleris and TOA Technologies. It is also near the new state-of-the-art University Hospitals Ahuja Medical Center and Case Western Reserve University.

The hotel was offered for sale in July on the Auction.com Web site with a starting bid of $2.5 million. Although Noble did not disclose the purchase price, Cuyahoga County land records show that NF II Beachwood L.L.C., an affiliate of the Noble Investment Group, paid $8.2 million for the property in a deal that closed Friday, Sept. 28. Cuyahoga County valued the hotel at $16.8 million.

Noble plans to invest $8.6 million to improve the property and significantly upgrade and enhance its amenity offerings and guest experiences. “We are pleased to make this investment, our 17th over the past 16 months, in a market with a strong mix of new and existing stable demand generators,” said Rodney Williams, Noble’s chief investment officer and a managing principal, in a news release. “Noble was able to acquire this asset at a substantial discount to replacement and will invest nearly $40,000 per suite to maximize the asset’s position within this vibrant marketplace.”

Marcus & Millichap reports that many hotels in northeast Ohio are seeing increased bookings as crews working the Utica shale formation require housing during the work week. Hotel occupancy in the midwestern United States continues to recover from the low level of the recession three years ago. Occupancy in Ohio rose to 56.5 percent, partly reflecting the influence of oil and gas exploration on the northeast portion of the state. Marcus & Millichap also reports that sales of nationally branded select-service, limited-service and economy hotels spiked more than 60 percent over the past year, with most of the sales occurring in Illinois, Ohio and Wisconsin.

Charts courtesy of Marcus&Millichap.

Photo credits: www.hotels.com

Summa Health System Pays $6.1M for Former Roadway Express HQ

By Adrian Maties, Associate Editor

Summa Health System, Summit County’s largest employer, recently purchased the former Roadway Express Inc. corporate headquarters building just off Route 8 in north Akron. It will use the vacant office building as a new administrative center. Over time, Summa plans to relocate as many as 800 workers there and open up space for patients at its Akron City Hospital campus.

The 273,000-square-foot office building is located at 1077 Gorge Blvd. and sits on 14.7 acres of land. It also includes a cafeteria and an 84-seat auditorium. Roadway Express built it in 1962 and spent $14 million to expand it by 180,000 square feet in 1986. It was Roadway’s home for a very long time.

YRC Worldwide Inc. was the seller. It acquired Roadway in 2003. Early this year, YRC announced plans to sell the facility and cut as many as 100 jobs there as part of a cost-cutting campaign. The building has been vacant since employees left at the end of March. Now, Summa will bring new life to the property.

YRC hired Akron’s Pickard Commercial Group to market the property. They partnered with CBRE Group Inc. to broker the deal. According to Summit County property records, the office building has an appraised value of about $8.8 million. Summa paid nearly $6.1 million for it, including office furniture.

Summa will start relocating employees to the the building on Gorge Boulevard in the coming months, most of them from its Akron City Hospital campus. Executives including the health system’s president and CEO will remain on the hospital campus for now.

With this acquisition, Summa will be able to keep its back offices in the city and bring together administrative departments that have been housed in crowded offices or spread out among numerous buildings. The health system  has approximately 11,000 employees and serves more than one million patients a year.

Photo credits: CBRE

Apartments Coming to Cleveland

By Adrian Maties, Associate Editor

The time is ripe for apartment construction, and developers are heeding the call.

With most private sectors adding jobs in the Cleveland area, payrolls are expected to grow this year at the fastest pace in more than a decade. In the coming months, improvements in the local economy will support the creation of new renter households. And apartment vacancy will fall to the lowest levels in 15 years and push rents to grow even more.

In Cleveland’s East Side suburbs, record-high demand for apartments is driving a small building boom. According to the Cleveland Plain Dealer, the Zaremba Group is one of the developers striving to supply this need. The Lakewood developer plans to bring 336 apartments to Mayfield Heights.

The apartments will be constructed on the former Locust Grove golf course. The 14-acre property is located at the northeast corner of Cedar and Lander roads and has lain dormant for a long time. Zaremba has a contract to buy the former golf course and will build two five-story apartment buildings linked by a clubhouse complex on the northern part of the property, leaving almost one third of the site untouched.  Plans call for one-, two- and three-bedroom units, ranging in size from 700 to 1,400 square feet and featuring indoor and outdoor parking, a pool and a courtyard with fire pits.

Demand for apartments is also high in downtown Cleveland. Just recently, the K&D Group closed on the acquisition of the Hanna Building Annex after nine months of negotiations. In coming weeks, the Willoughby-based apartment developer, owner and manager will start work on a project that will turn the 120,000-square-foot building in PlayhouseSquare into 102 apartments. Rents will range from  $800 to $1,500 a month. The first apartments are expected to open in March and the entire project to be finished by next August.

Marcus & Millichap reports that metrowide apartment vacancy will retreat to 3.9 percent this year. Asking rents will to climb to $750 per month, while effective rents will reach $722 per month. As investors rush to build new apartment buildings and convert other vacant buildings into residencies, hundreds of apartments could be added to the Cleveland area in the next few years.

Charts courtesy of Marcus&Millichap.

New KSU Hotel & Conference Center Project to Create Jobs, Economic Growth

By Adrian Maties, Associate Editor

A new, $15.6 million Kent State University project will bring a hotel and conference center to downtown Kent and create hundreds of jobs, and spur regional tourism growth and economic development. The Kent State University Foundation, The Pizzuti Cos. of Columbus, the city of Kent, the Development Fund of the Western Reserve (DFWR), which is controlled by the Development Finance Authority of Summit County, and the Finance Fund are partners in the Kent State University Hotel & Conference Center project.

The new hotel will have 95 rooms. It is part of a larger $100 million redevelopment project that will bring retail, offices and residences to downtown Kent. With a total student enrollment of more than 41,000, KSU is now the second-largest public university in Ohio, attracting thousands of campus visitors each year. Joel Pizzuti, president of The Pizzuti Cos., expects the new hotel to have a significant impact on the local economy. The developers also expect Kent- and Akron-area employers to hold conferences and other special events in the new 5,400-square-foot, 300-seat ballroom/conference center.

The project is being financed with the help of a unique public/private partnership that includes $9 million from the Finance Fund ($8 million in federal and $1 million in state New Markets Tax Credits), and $6.5 million from the DFWR. It will necessitate 430 construction jobs during construction and 42 permanent jobs when the project is finished. All of this in a community with a 29 percent poverty rate. The hotel is expected to open in spring 2013.

“This project hits all of our hot buttons,” said Finance Fund CEO James Klein. “It drives jobs and economic development, as well as spillover benefits, as it provides education for students building skills for future employment.”

Image courtesy of KSU.

Avon Gets New Cleveland Clinic ER

By Adrian Maties, Associate Editor

The Cleveland Clinic opened a new 24-hour adult and pediatric emergency department on Sept. 5 at its Richard E. Jacobs Health Center in Akron. On Aug. 29, the center held a mock training exercise featuring simulated patients and medical scenarios and tasks.

The $93 million Richard E. Jacobs Health Center opened last December. It is a 190,000-square-foot facility, located at 33100 Cleveland Clinic Blvd. The center offers its patients almost 30 services. It features advanced specialty and primary care, with four operating rooms, four procedure rooms and an outpatient surgery center, an infusion suite for chemotherapy and a full-scale imaging center, as well as on-site retail optometry and a pharmacy.

The emergency department is its newest addition. It totals 15,000 square feet and features 12 beds, full adult and pediatric emergency services and a 24-hour on-site helipad for critically ill patients who need to be transported to another location.

With the opening of the emergency department, 70 board-certified emergency care physicians and nurses were added to the staff, bringing the total number of physicians, nurses and support staff employed at the center to approximately 350.

The  emergency department was originally scheduled to open later this year, together with the new Interstate 90 interchange. John Costin, MD, chairman of the Cleveland Clinic’s Lorain Institute, stated, however, that the clinic felt it was better to open the emergency department sooner rather than later. When finished, the new I-90 on-ramp will allow for faster and easier access.

“With a longstanding presence in Lorain and western Cuyahoga counties, the opening of the all-inclusive emergency department is continued proof of Cleveland Clinic’s commitment to providing accessible, comprehensive medical care to this area,”  doctor John Costin said in a release. He added that “the center will serve as a resource for the community and will work closely with community fire and emergency medical service departments to deliver residents the best emergency care possible.”

Image courtesy of Cleveland Clinic.

Hilton Garden Inn Sells for $12.4M at Auction; K. Hovnanian Buys Meadow Lakes

By Adrian Maties, Associate Editor

The Hilton Garden Inn Cleveland Downtown will soon have a new owner. JPMCC 2006-LDP7 Carnegie Avenue L.L.C., a representative for the current mortgage holder, submitted the winning bid at a sheriff’s auction on the morning of Aug. 27, The Cleveland Plain Dealer reported.

Standing 11 stories tall, the hotel opened in 2001 and together with the adjacent conference center cost $25 million to build. The hotel is located at 1100 Carnegie Ave. and includes amenities such as WiFi, 32-inch flat-screen TVs, a business center, 13 meeting rooms, parking, a fitness center and an indoor swimming pool.

The 240-room hotel near Progressive Field was purchased for $12.4 million, almost twice its appraised value of about $6.6 million. The minimum bid for the asset was set at $4.4 million. The property went into foreclosure in January 2011, after the ownership group led by Harvey Scach defaulted on a $17.8 million loan scheduled to mature in 2016. It is yet unknown what the lender plans to do with the hotel and conference center.

In other real estate-related news, K. Hovnanian Homes announced on Aug. 22 that it has purchased the remaining unsold lots and acreage at Meadows Lake. The acquisition makes K. Hovnanian the largest publicly traded national homebuilder in North Ridgeville.

Meadow Lakes is the largest and fastest-selling new home community in North Ridgeville, Ohio. With the acquisition, the Red Bank, N.J.-based national builder now owns more than 700 home sites; 67 of them are immediately available.

Tom Oster, division president of the Ohio Division of K. Hovnanian Homes, said, “Meadow Lakes has consistently been a top‐selling community in Northeast Ohio. We are pleased that we will be able to generate new jobs, improve city tax revenues and aid in the positive development of North Ridgeville. In addition, our presence in Meadow Lakes will afford home buyers the experience, strength and proven track record that come from a family homebuilder.”

Image courtesy of http://hiltongardeninn3.hilton.com.

Akron Children’s Announces $200M Tower Expansion

By Adrian Maties, Associate Editor

Akron Children’s Hospital has announced its plans to build a $200 million expansion of its campus in downtown Akron. The project is called ”Building on the Promise” and will help the hospital keep up with the increase in patients and services.

This is Akron Children’s first major project in 22 years. The centerpiece of the plan is a new critical care tower at the intersection of Locust and Exchange streets. It will feature a new neonatal intensive care unit with individual rooms for each of the hospital’s patients and their parents, a new emergency department with enough room to meet current and future patient volumes, outpatient surgical suites and a dedicated space for several of the hospital’s pediatric subspecialty programs.

“Our patient volumes have increased significantly, and we are seeing patients from (greater) distances. Our main campus will always be the place for trauma cases and children needing the most critical care,” said Bill Considine, president & CEO of the hospital.

The new tower will be built using a process known as “Integrated Lean Project Delivery.” It is expected to improve productivity, eliminate waste, enhance the overall patient experience as well as reduce the project’s overall cost.

Akron Children’s Hospital also plans to expand the Ronald McDonald House of Akron and build a six-level, 1,200-space parking deck and a child-focused patient and visitor welcome center.

A combination of public financing, the use of its internal reserves and philanthropy will help pay for the project. Akron Children’s will launch a capital campaign to raise $50 million for the critical care tower and $10 million for the Ronald McDonald House expansion. Construction will begin in the spring of 2013. The project is expected to be completed in 2015.

A number of companies are helping with project management, including the Boldt Co. of Appleton, Wis.; KLMK Group of Richmond, Va.; HKS Inc. of Dallas; and the Welty Building Co. and Hasenstab Architects Inc., both of Akron.

Image courtesy of Akron Children’s Hospital.

Cleveland’s Old Saint Luke’s Hospital Becomes Apartment Complex

By Adrian Maties, Associate Editor

Cleveland’s Saint Luke’s Hospital closed in 1999 and sat empty in the heart of the Buckeye-Shaker neighborhood until last year. But after private developer Pennrose Properties and other organizations got together and restored the hospital, it became Saint Luke’s Manor, a huge apartment complex that houses independent-living senior citizens.

Saint Luke’s Hospital was constructed in 1927. Located at 11311 Shaker Blvd., it used to be a trauma center and a place where babies were born. In 2005, it was added to the National Register of Historic Places. After it closed, the U-shaped brick building became an eyesore that plagued the neighborhood for more than a decade.

Pennrose Properties and its partners brought new life to the 1920s-vintage hospital. The first phase of the $53 million renovation project is now complete, and the central wing of the complex, which houses  72 apartments for the elderly, is open and occupied.

The developers sought out federal stimulus money and tax credits for affordable housing and historic preservation for the first phase. They hope to finish the two other phases by 2013. The second phase will include 65 apartments in the western wing, while the third phase includes an auditorium restoration and the construction of offices in the eastern wing.

Saint Luke’s Manor offers its tenants one- and two-bedroom apartments with oversize windows, fully equipped kitchens, walk-in closets, ceramic-tiled baths, resident-controlled heating and cooling, carpeted living areas and open floor plans with high ceilings. Community amenities include a billiard room, media room, library, resident lounges,  fitness center and much more. Pets are allowed, and the location near Shaker Square offers easy access to downtown Cleveland. Rents range from $400 to $900 per month.

Saint Luke’s Manor is just what the Buckeye-Shaker neighborhood needed. This project, along with others, will help bring new life to a neighborhood that suffered much in past years.

Image courtesy of Pennrose Properties.

Charts courtesy of Marcus & Millichap.

Hemingway Development to Expand MidTown Tech Park

By Adrian Maties, Associate Editor

Hemingway Development, a division of Streetsboro-based Geis Cos., plans to invest $8.9 million to purchase and renovate a vacant four-story building at 6555 Carnegie Ave. in MidTown Tech Park, in the Health-Tech Corridor.

MidTown Tech Park is right in the heart of the Health-Tech Corridor, the area between East 55th and East 105 streets and bounded by Cedar and Chester avenues. It is a prime location for biomedical, healthcare and technology companies wanting to take advantage of the close proximity to four world-class healthcare institutions, seven business incubators, three academic centers and more than 119 high-tech companies engaged in the business of innovation. The emerging MidTown Tech urban business park is in a former industrial neighborhood and is growing. The deal is set to close in late September.

Hemingway Development opened the Tech Park in 2011. It now consists of two buildings, the 128,000-square-foot 6700 Euclid and the the 50,000-square-foot 7000 Euclid. 6555 Carnegie, a former heating stove factory, would be its third building and would expand the complex to 242,000 square feet.

The $20 million 6700 Euclid, a rare example of speculative construction in the city, is 90 percent leased, while 7000 Euclid is 72 percent leased. 6555 Carnegie will offer startups and other new businesses loft-style space at a lower cost than what is available in the other two buildings; according to the Cleveland Plain Dealer, it’s likely that Hemingway already has a tenant lined up to lease space.

All tenants of MidTown Tech Park will have access to parking and all the amenities installed inside the 6700 Euclid building: a conference center, outdoor wireless, a fitness center and more. The complex also offers 24-hour security.

The renovation project is expected to create 90 jobs and will receive financial support from the city of Cleveland in the form of $4.5 million in loans and tax increment financing that will be used to support Hemingway’s application for New Markets Tax Credits. The financing must be approved by the Cleveland City Council. According to Crain’s Cleveland, the city of Cleveland and the state of Ohio see MidTown Tech Park as an anchor for the Health-Tech Corridor. They have offered financial support to all phases of the project.

Image courtesy of Google Maps.

Rendering courtesy of Marcus&Millichap.

SIGNET Development Breaks Ground on $130M NEOMED Expansion Project

By Adrian Maties, Associate Editor

SIGNET Development, a full-service real estate development and construction management firm co-headquartered in Akron, Ohio, and Jacksonville, Fla., broke ground on July 24 on a new  residential housing village in Rootstown for the Northeast Ohio Medical University (NEOMED). This is the first part of NEOMED’s three-phase master expansion plan. which includes more than $130 million in construction on the Rootstown campus. The project is expected to bring hundreds of construction jobs to the area.

NEOMED’s first on-campus residential housing project, it calls for the construction of three buildings standing four stories high on the northwest corner of the campus. The new luxury residential housing village will be spread over 270,000 square feet. It will include private parking spaces, paved walkways for easy access to existing campus facilities, group study areas on each floor, a large recreation area and a game room in the main building. The three buildings are designed to minimize sound transfer between units, ensuring the privacy of each resident.

There will be a total of 185 one- and two-bedroom units to house approximately 340 students. Each unit will include living room furniture and will be equipped with kitchen appliances, washer and dryer. In addition, each resident will have a private study area, bathroom and walk-in closet.

John Wray, vice president of administration and finance at NEOMED, sees SIGNET as the ideal partner to help the university with its expansion plans. “We’re excited to see construction begin,” he said.

SIGNET is one of the country’s premier developers of both public and private real estate projects. The company will provide NEOMED with turnkey development and finance services for the expansion project and will oversee all design, building, finance and management services. When finished, the expansion project will more than double NEOMED’s current 450,000-square-foot campus.

Anthony Manna, chairman of SIGNET Development, stated that his company is ”proud to partner with NEOMED to create a project that invests in our community and our future medical leaders by enhancing the living, learning and overall campus experience of a great medical university.” Developers expect to deliver the units by fall 2013. They will be available for lease to students and others affiliated with the university.

Rendering courtesy of TC Architects.

Cuyahoga County Eyes 250,000-SF Headquarters Space

By Adrian Maties, Associate Editor

In a planned series of moves that promise to make a collective splash in the Cleveland real estate market, the Cuyahoga County government is in the hunt  for 225,000 square feet for a new headquarters and another 200,000 square feet for record storage. In addition, the county also plans to put 13 properties on the auction block.

The county will post three request for proposals on its procurement website, on Monday, July 23, asking for proposals to lease or build two buildings as well as bids from property owners and developers.

Finding a new county headquarters is the number one priority. Cuyahoga County is open to buying or leasing space in the central business district to house 700-plus county workers. The availability of parking and access to public transportation are both musts. For a prospective lease, the county wants a 20-year deal with options to renew. The county is targeting the first quarter of 2014 for move-in.

Also on the agenda is identifying  200,000 square feet of storage space within five miles of downtown Cleveland to hold county archives and other records. Cuyahoga County’s archives are housed in a 130-year-old Victorian mansion on Cleveland’s West Side.

Last but not least, the county will put 13 properties up for sale, including land, vacant and occupied office buildings, a former neighborhood center and maintenance facilities. The properties total 1.6 million square feet and include:

• The Ameritrust Complex – At 831,000 square feet, the largest of the properties;
• The Administration Building;
• Courthouse Square;
• The Hamilton Garage;
• The Marion Building;
• The Superior Auto Title building;
• The Whitlatch Building;
• The former Juvenile Court Complex;
• The County Archives;
• The Brentwood property;
• The Fitch Road Yard;
• A former neighborhood center in the Glenville neighborhood;
• A former MetroHealth facility at 2500 East 79th St. in Cleveland.

CBRE Group Inc. is representing the county. A bidder’s conference is planned for August 7, and the county also plans to hold open houses at all the properties. Submissions are due September 14 with deals expected to close by the end of the year.

Charts courtesy of Marcus & Millichap.

Cleveland to Get New Police Station

By Adrian Maties, Associate Editor

The city of Cleveland is working together with MidTown Cleveland Inc. on a $17.5 million development project that will bring the first new police station to the city in 34 years. The project will help make the neighborhood safer, will catalyze development–and will free two important properties in Midtown and University Circle for potential future redevelopment.

The new facility will be located in the heart of Cleveland’s booming  Health-Tech Corridor, at 4501 Chester Ave., near East 45th Street. It will be built on the site of the former Ward Bakery at Chester and East 45th Street and will help consolidate the existing Third District station, at East 107th Street and Chester Avenue, and the administrative offices located at Payne Avenue and East 21st Street.

According to MidTown Cleveland Inc.’s Web site, the new Third District police station will be three stories high, with approximately 60,000 square feet of space, on nearly four acres. When finished, it will house as many as 330 uniformed officers and civilian employees. Dispatchers will be located on the third floor, police administration will occupy the second floor and the first floor will feature  a police memorial as well as a large community room that can be rented for special events.

The Cleveland City Council has approved the plans for the new police station. The city is providing money for the construction, while MidTown Cleveland is the developer. The nonprofit neighborhood group will own the building and lease it to the city, but in time the city will take ownership. MidTown will access grant funding such as New Markets Tax Credits, something the city cannot do.

The project is designed to achieve LEED certification. MidTown plans to start construction in the fourth quarter of 2012.

Image courtesy of http://clevelandpolice.wordpress.com.

Cleveland Skyscraper Avoids Foreclosure

By Adrian Maties, Associate Editor

Great news for the Tower at Erieview, one of downtown Cleveland’s best-known buildings. A foreclosure case against the office-retail complex at 1301 E. Ninth St. has been dropped, thanks to the efforts of Werner Minshall, the owner of the property. He managed to find a lender willing to buy out the note and also invest and help upgrade the property.

The Tower at Erieview opened in 1964. It was designed by the renowned architectural firm of Harrison & Abramovitz and was the centerpiece of an urban development program known as the Erieview Project. Amenities include an underground parking garage, a new state-of-the-art conference center, full-service banking and ATM services, and 24-hour security.

The 40-story skyscraper is located in the heart of the Central Business District, providing its tenants with excellent panoramic views of Cleveland. The Tower at Erieview is also connected to The Galleria at Erieview, a two-story shopping center that opened in 1987. The Galleria provides retail and commercial business services, as well as fine dining and a full food court. Minshall-Stewart Properties acquired Erieview Tower and the Galleria in 2002.

RAIT Financial Trust of Philadelphia, which already held a second mortgage on the tower, acquired the $42 million first mortgage at a significant discount. According to court records, C-III Asset Management of Irving, Texas, a special servicer tasked with handling bad loans, filed a motion to dismiss the foreclosure lawsuit on Monday, June 25. C-III Asset Management filed to foreclose on the property last March.

RAIT Financial also provided $17 million for renovations. Minshall will now have the funds to redo the tower’s lobby, replace elevators and reopen the ceiling to its original 1960s height. He also plans to seek U.S. Green Building Council certification for the complex.

Although Cleveland’s downtown office market is improving slowly, it remains to be seen whether Minshall and RAIT Financial can find tenants for the almost half-vacant skyscraper in an area with a 20 percent office vacancy rate.

Image courtesy of http://www.toweraterieview.com.