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Starwood Buys Two Northeast Ohio Malls as Part of $1.6B Deal

26 Nov 2013, 2:37 pm

By Adrian Maties, Associate Editor

Investment firm Starwood Capital Group last week completed the acquisition of seven dominant regional malls in four states, on the West Coast and in the Midwest. The deal was announced in September. Two Northeast Ohio shopping centers are also included in the portfolio.

The two Northeast Ohio malls are the Great Northern in North Olmsted and Belden Village in Canton. The Great Northern Mall is the largest of the two. It is a single-level enclosed shopping mall with about 1.2 million square feet of retail space, and is anchored by Macy’s, Dillard’s, Sears, J.C. Penney and Dick’s Sporting Goods. The mall was constructed by the Biskind Development Co. and opened in 1965. Great Northern is currently undergoing an expansion project that will bring  a new movie theater, restaurants, reconfigured retail space and a new main entrance. The project is expected to be completed by the end of the year.

Belden Village offers 826,140 square feet of space. It was constructed by The Richard E. Jacobs Group and opened in 1970. Belden Village is anchored by Dillard’s, Macy’s and Sears.

Starwood now owns three shopping centers in Northeast Ohio. The company acquired Strongville’s SouthPark Mall last year.

The portfolio contains 7.9 million square feet of retail space. It includes another Ohio mall, Franklin Park, in Toledo, with nearly 1.3 million square feet of retail space. The other malls in the portfolio are the Capital in Olympia, Wash., the Southlake in Merrillville, Ind., and the Parkway in El Cajon and Plaza West Covina in West Covina, Calif. All of the malls are anchored by major national retailers, with an average occupancy of almost 96 percent. Starwood acquired the portfolio from the Sydney, Australia-based Westfield Group for $1.6 billion. Westfield will retain a 10 percent common equity interest in the properties. Read more about this story here.

Marcus & Millichap reports that retail property operations throughout the Cleveland metro area have been strengthened by growing apartment development activity. According to a report for the third quarter of 2013, transaction velocity in multi-tenant properties has almost doubled in the past four quarters, with the median price for multi-tenant properties reaching $38 per square foot. The Akron, Stark County and Northeast submarkets generated 40 percent of all sales in the past 12 months. Activity in Akron and Stark County more than doubled during this time.

Photo credits: Google Maps.
Charts courtesy of Marcus & Millichap.

Pinecrest Development in Orange One Step Closer to Construction Start

18 Nov 2013, 10:14 pm

By Adrian Maties, Associate Editor

A small village in Northeast Ohio is about to have a huge impact on the entire area. On Nov. 5, residents of the village of Orange voted to approve plans to rezone a residential neighborhood and pave the way for a 76-acre mixed-use project that will bring new, upscale shopping to the region. According to unofficial results from the Cuyahoga County Board of Elections, 709 people voted for Issue 51, while 532 were against it.

The project is called Pinecrest and it’s the creation of Northeast Ohio real estate developer David Lewanski and Lewanski Development L.L.C. At a cost of $150 million, it will be Orange Village’s first-ever town center.

Pinecrest will be located near the Harvard Road and I-271 interchange. On the project’s website, the developers say they reached agreements with all the required homeowners and that they will receive above-market value for their homes. They also pledged not to bring any big-box, discount retailers to the development.

Pinecrest is designed to be a pedestrian-friendly destination, with a Western lodge-style architecture. The developers say they will use natural materials such as stone, wood and brick in its construction, as well as green building techniques. Plans show Pinecrest will feature about 400,000 square feet of retail and restaurant space; a 650-seat theater; 18,500 square feet of office space; 220 flats, villas and townhomes; parking; and green spaces. All the homes will be for-sale only, with prices starting at around $300,000.

The development is also expected to provide a significant boost to the local economy. According to its website, Pinecrest is expected to bring $1.5 million in new annual revenue for Orange Village and $2.9 million in new annual revenue for Orange Schools. It will also create more than 1,000 construction jobs and over 2,100 permanent jobs upon its completion.

The project will be developed in phases. Phase II also includes the construction of an upscale, 75-room hotel. Work will start next year, with Phase I expected to open in 2016. All phases are scheduled for completion by 2018. The Cleveland Plain Dealer reported last week that David Lewanski signed Fairmount Properties on as a joint-venture partner for the development. 

Photo credits: http://pinecrestyes.com/

Cleveland Named Most Affordable Housing Market in United States

12 Nov 2013, 7:02 am

By Adrian Maties, Associate Editor

Looking to buy a house in Cleveland? You’re in luck! The Northeast Ohio city is the most affordable housing market in the nation, according to an annual report by Coldwell Banker Real Estate.

In its 2013 Home Listing Report, Coldwell Banker analyzed the average listing price for a four-bedroom, two-bathroom property between January 2013 and June 2013 for 52,257 listings in 1,997 markets. Markets without at least 10 four-bedroom, two-bathroom listings were excluded from the ranking. The report identified Cleveland as the least expensive market. On average, a four-bedroom, two-bathroom home here lists for $63,729.

“Cleveland’s friendly, hometown feel draws people of all ages, and in recent years the community has been revitalized, with more young professionals entering the market,” said Ed Dolinsky, president of Coldwell Banker Hunter Realty, in a statement for the press. “Energized by a growing tech hub that effectively supports nearby renowned hospitals and research institutions, this Midwest city continues to reinvent itself through its diversified business sectors and strong sense of neighborhood communities.”

The second-most-affordable housing market in the U.S. is also located in the Cleveland Metropolitan Area. It’s Garfield Heights, where the average listing price for a four-bedroom, two-bathroom home is $66,075. A total of 66 Ohio cities were included in the study. Ten of them were among the top 100 most affordable markets. Ohio ranked as the 14th most affordable state in the nation.

According to Coldwell Banker’s 2013 Home Listing Report, Malibu, Calif., is the most expensive market in the U.S. Madison Hildebrand, an agent with Coldwell Banker Residential Brokerage in Malibu, said the affluent beach community is transforming “from a seasonal destination to a year-round locale.” The average listing price for a  four-bedroom, two-bathroom home in Malibu is $2.2 million.

Key Highlights from the 2013 Coldwell Banker U.S. Home Listing Report:

  • The average listing price of a four-bedroom, two-bathroom home in the survey was $301,414.
  • California holds 13 of the top 25 spots for the most expensive markets in the U.S.
  • All top five of the most expensive markets are in the Golden State, with the two most expensive markets in the country located minutes from Los Angeles—Malibu (No. 1) and Newport Beach (No. 2).
  • In contrast, 60 percent (15) of the 25 most affordable markets are in the Midwest.
  • New York is the only state that had markets ranked on both the most expensive and most affordable lists.

You can view a list of the most expensive and most affordable markets in each state on the Home Listing Report website.

Source: Coldwell Banker Real Estate

Smartland Buys Lee-Yorkshire Apartments in Cleveland Heights

5 Nov 2013, 6:20 am

By Adrian Maties, Associate Editor

Smartland, Cleveland’s largest real estate investment firm and one of Ohio’s top property management companies, has purchased the Lee-Yorkshire Apartments. The price of the transaction was not disclosed.

The Lee-Yorkshire Apartments complex is located at 2027 Lee Road, in Cleveland Heights, one of Cleveland’s most desirable suburbs in terms of public transportation, safety, education, amenities and resident services, according to Smartland. It is close to some important Cleveland landmarks, such as the Cedar Lee movie theater, the Lopez restaurant, Cleveland Clinic, Cleveland State University, Case Western Reserve University and University Hospitals.

The complex offers 304 spacious one-bedroom and two-bedroom units, featuring hardwood floors; ceiling fans; walk-in closets; kitchens with built-in cabinets, refrigerators and stoves; full baths; and more. Building amenities also include covered parking and a laundry facility.

“Lee-Yorkshire Apartments offers the perfect mix of affordable rent and well-managed housing that Cleveland-based tenants—and Ohioans in general—appreciate and have come to expect from Smartland,” Vadim Kleyner, its CEO, said in a statement for the press. He added that his company believes in and wants to contribute to Northeast Ohio’s economic rebirth and that the purchase is part of Smartland’s years-long commitment to bringing high-quality, affordable housing to the area. “Over the last several years, we have restored hundreds of houses in the Cleveland area and have successfully helped reduce vacancy rates throughout Cleveland. We will continue to identify, restore and purchase properties that meet our investment and quality standards,” Kleyner also said.

One-bedroom apartments in the complex rent for $650 per month, while two-bedroom units rent for $725 per month. According to a Marcus & Millichap Greater Cleveland apartment market report for the third quarter of 2013, average effective rents rose to an all-time high of $792 per month. With apartment vacancy in the area at historically low levels, the average effective rent is likely to rise to $804 per month by the end of the year.

Photo credits: Cleveland Property Management
Charts courtesy of Marcus & Millichap Real Estate Investment Services.

Developers Break Ground on New Cambria Suites Hotel in Avon

28 Oct 2013, 3:46 am

By Adrian Maties, Associate Editor

Another hotel is under construction in the Cleveland area. Choice Hotels International Inc., Ceres Enterprises LLC and Consolidated Construction Co. started work on Oct. 21 on a new Cambria Suites hotel at 35600 Detroit Road in Avon. The cost of the project was not announced.

The 113-suite hotel is scheduled for completion in early fall 2014. According to a news release, it “will be designed for guests who want to take their lifestyle with them when they travel.” The 113 suites will be larger than the traditional hotel rooms, and will offer separate work and living areas. Each room will feature two flat-screen LCD TVs, a CD/DVD player and MP3 jacks.

The property will also offer free Wi-Fi and the usual Cambria Suites amenities. Guests will be able to dine at the Reflect restaurant or grab a coffee at the hotel’s barista bar. A Refresh state-of-the-art fitness center will also be included, as well as a 24-7 Refill convenience store.

“We look forward to bringing the distinctive Cambria Suites experience to travelers visiting Avon, Ohio,” Michael Murphy, senior vice president of Cambria Suites, said in a statement for the press. David Crisafi, president of Ceres Enterprises, added that Cambria Suites was ”an obvious choice” for his company, as it looked to expand its hotel portfolio. “The brand offers a unique value proposition in the upscale category, with amenities that allow travelers to be at their best.  My father, Frank Crisafi, and I have lived here and done business here for most of our lives and have owned and operated hotels in the Cleveland area for over 20 years.  The market growth and potential in Avon is extremely positive, and we look forward to bringing the Cambria brand to the area,” he said. Frank and David Crisafi, owners of Ceres Enterprises, already operate a very successful Cambria Suites in Noblesville, Ind.

In recent months, developers have started work on several hotel projects in the Greater Cleveland area, such as the 110- to 125-room Marriott-branded hotel Emerald Hospitality plans to build in Avon. That property is also expected to open in fall 2014.

In downtown Cleveland, the GEIS Cos. and Sandvick Architects plan to invest $250 million into transforming the former AmeriTrust Tower and historic Cleveland Trust Rotunda into ”The 9,” a high-end complex featuring a luxury hotel, apartments and much more. Value Place also announced this summer that it will develop six more hotels in the Cleveland metro area, while a $40 million project will deliver the first new hotel in downtown Akron in 40 years.

Photo credits: Cambria Suites

Inland Real Estate Buys University Heights Shopping Center

22 Oct 2013, 3:49 am

By Adrian Maties, Associate Editor

Inland Real Estate Corp. has acquired a Cleveland-area shopping center in a joint venture with Dutch pension fund advisor PGGM. The purchase price was $24.9 million, excluding closing costs and adjustments. The joint venture also assumed an $18.4 million property-level loan with a two-year term, which it expects to pay off or refinance upon maturity.

Called Cedar Center South, the shopping center is located in the Cleveland suburb of University Heights, about eight miles east of downtown Cleveland. According to a press release by Inland Real Estate, the 139,000-square-foot property is currently 83 percent leased.

A 45,300-square-foot Whole Foods grocery store anchors Cedar Center South, together with a 12,100-square-foot CVS/pharmacy. Both stores have signed long-term leases, which, according to Inland, provide a stable, high-credit-quality income stream. The Whole Foods grocery store is one of only two such stores in the eastern Cleveland metro area. The center’s tenant roster also includes other national and local retailers.

Inland used proceeds from recent sales of non-core assets to pay for the shopping center. The real estate investment trust has an ownership interest in four other retail centers in the Greater Cleveland area. Together, the properties total more than 592,000 square feet of leasable space.

“We are executing on our strategy to enhance the long-term growth potential of our portfolio through the acquisition of retail assets with creditworthy tenancy, strong demographics and excellent market position,” said Scott Carr, chief investment officer for Inland, in a statement for the press. “The acquisition of Cedar Center South advances our goal of increasing the geographic and tenant diversity of our portfolio, and presents the opportunity to add value through asset improvement initiatives. Further, by acquiring the center through our PGGM joint venture, we are utilizing our capital efficiently and achieving an attractive return on investment.”

Marcus & Millichap reports that transaction velocity in multi-tenant properties in the Cleveland area has nearly doubled over the past four quarters as local investors became much more active in the market. Limited development is also expected to push down the vacancy rate to 10.7 percent, with rents expected to finish the year at $11.71 per square foot.

Photo credits: Inland Real Estate Corp.
Charts courtesy of Marcus & Millichap Real Estate Investment Services

$250M Project to Deliver Marriott Autograph Collection Hotel, 205 Apartments to Downtown Cleveland

14 Oct 2013, 12:38 am

By Adrian Maties, Associate Editor

The GEIS Cos. and Sandvick Architects, both based in Cleveland, have teamed to bring new life to the intersection of East Ninth Street and Prospect Avenue, a long-overlooked area of the city’s downtown. Dubbed “The 9,” the $250 million development calls for the renovation and transformation of the former AmeriTrust Tower and historic Cleveland Trust Rotunda into a high-end complex featuring a luxury hotel, apartments and much more. The project will create 1,000 construction jobs.

The GEIS Cos. acquired the 29-story AmeriTrust Tower earlier this year from Cuyahoga County. When the project is finished, expected in late 2014, the skyscraper will house the 156-room Metropolitan at The 9 hotel, which will be affiliated with Marriott International’s Autograph Collection. The hotel will also include The Adega restaurant, with its Mediterranean cuisine and featuring downtown’s largest outdoor dining area; 12,000 feet of meeting and event space; a Heinen’s grocery store; an art gallery; and The Alex Theater. Amenities include an indoor dog park, a spa and fitness club, and the Azure Sky, downtown’s largest rooftop bar and sun deck.

The tower will also be home to 105 spacious luxury apartments, located on the upper floors. Their residents will have access to the hotel’s guest services. In addition, to answer the high demand for apartments in Cleveland’s downtown, 1010 Euclid Ave. will be turned into 100 market-rate apartments, which will be available to employees of The 9 at a subsidized rate.

“The 9 will be like no other hotel or residence in the city – or the country, for that matter,” said Greg Geis, the company’s CEO, in a statement for the press. “From the old bank vaults that we are turning into private dining areas and the magnificent Tiffany glass dome of the rotunda building to the bellmen and intuitive technology that will recognize and anticipate our visitors’ needs, The 9 will be a marquee destination that rivals anything in the country – but also celebrates what’s great about Cleveland and its rich history.” The hotel, residences and restaurants are all scheduled to open simultaneously in the fall of 2014.

Photo credits: The GEIS Cos.

Jacobs Real Estate Services Sells Acreage in Avon for New Marriott Hotel

8 Oct 2013, 8:27 pm

By Adrian Maties, Associate Editor

A new hotel will open in Avon next year. Westlake-based Jacobs Real Estate Services, an independent affiliate of The Richard E. Jacobs Group, announced on Oct. 1 that it has agreed to sell a 4.27-acre site on Just Imagine Drive to Emerald Hospitality Associates Inc. and Nimbus Investment Fund. The price of the transaction was not disclosed.

Emerald Hospitality, a hotel operator and developer also based in Westlake, plans to build a 110- to 125-room, Marriott-branded hotel on the site. It will sit adjacent to the Cleveland Clinic Richard E. Jacobs Health Center and will include a 5,000-square-foot conference center. A groundbreaking date has not yet been announced, but the hotel is expected to open in fall 2014.

The new hotel is just the first step of a larger, 132-acre, master-planned development known as Avon Place. It will include a mix of offices, hotels, restaurants, medical facilities and other related developments. Jacobs Real Estate Services said it will announce two more signed land sale agreements for Avon Place in the coming weeks.

“We are excited to be bringing a Marriott-branded hotel to complement the highly successful Cleveland Clinic facility,” James Eppele, executive vice president at Jacobs Real Estate Services, said in a statement for the press. “Emerald Hospitality’s expertise in developing and managing first-class select-service hotels is a perfect fit with the type of development we intend to bring to Avon Place.”

Marcus & Millichap Real Estate Investment Services reports that the hotel industry is on an upward trajectory that shows no signs of imminent weakening in the Midwest region, a region consisting of Illinois, Indiana, Michigan, Ohio and Wisconsin. And as the economy gains momentum in the area, the hotel sector is expected to further prosper. Ohio’s new casinos and the oil and gas activity in the Utica Shale region are providing new demand generators.

Charts courtesy of Marcus & Millichap Real Estate Investment Services.

Troubled Cleveland Shopping Center Going to Internet Auction

30 Sep 2013, 4:06 am

By Adrian Maties, Associate Editor

The Horseshoe Cleveland Casino, the Cleveland Convention Center and other important projects are expected to boost tourism and attract more people to the city, all to the benefit of local retailers. Marcus & Millichap reported that sales of retail assets will grow through the remainder of the year, as an increasing number of out-of-state investors are looking to acquire properties in the metro area, especially in University Heights, Beachwood, Shaker Heights and Rocky River.

In the face of this, Retail Properties of America (formerly Inland Western Retail Real Estate Trust) is trying to unload a five-story shopping center in University Heights. The Chicago-based REIT, one of the largest owners and operators of shopping centers in the United States,  listed the property for sale on Auction.com. It acquired the retail center in 2005 for $55 million.

University Square was constructed in 2003. It is a 287,000-square-foot shopping center located on 15.43 acres of land at Cedar Road and Warrensville Center Road, about 10 miles from downtown Cleveland. The retail center is shadow anchored by Target and Macy’s and is served by a five-story, 2,300-space, city-owned parking garage.

According to Auction.com, the property is only about 26.5 percent occupied. Bidding will start on Oct. 8 and will end on Oct. 10. There is no starting bid, but the minimum bid deposit amount is $50,000. The attached Target and Macy’s stores are not included in the sale, as they are owned by the retailers themselves. University Square will be sold to the highest bidder regardless of price. Ryan Fisher and Chris Prosser of Colliers International are marketing the property.

Photo credits: Google Maps.
Charts courtesy of Marcus & Millichap.



Westfield Sells Two NE Ohio Malls to Starwood Capital Group

23 Sep 2013, 4:06 am

By Adrian Maties, Associate Editor

Two shopping malls in Northeast Ohio will have a new owner by the end of the year. The two properties are part of a portfolio the Sydney-based Westfield Group agreed to sell to an affiliate of Starwood Capital Group, the private investment firm headquartered in Greenwich, Conn.

The Great Northern mall in North Olmsted and Belden Village in Canton are part of a portfolio that also includes Toledo’s Franklin Park; two California shopping centers, the Parkway and West Corvina, in El Cajon and West Corvina, respectively; the Southlake in Merrillville, Ind.; and the Capital in Olympia, Wash.

Great Northern has 1.2 million square feet of selling space. It is undergoing an expansion project that will bring  a new movie theater, restaurants, reconfigured retail space and a new main entrance. The project is expected to be completed by the end of the year.

Located just off Interstate 77, Belden Village is the second-smallest property in the portfolio, with 826,000 square feet of retail space. Starwood Capital already owns a shopping center in Northeast Ohio, Strongsville’s SouthPark, a property that the investment firm acquired last year.

The Westfield Group will sell the 7.9 million-square-foot portfolio for $1.6 billion, $120 million less than the book value of the assets as of Dec. 31, 2012. The deal is expected to close in the fourth quarter of 2013.

“Today’s announcement continues the implementation of our strategic plan, which positions WDC to generate greater shareholder value,” Peter Lowy, co-CEO of the Westfield Group, said in a statement for the press.  “We are focused on redeploying our capital into superior retail destinations in major cities through divesting of non-core assets and introducing joint venture partners into our high-quality portfolio of assets,” he added.


Charts courtesy of Marcus & Millichap.

$110M Project Could Bring 400 Apartments to Cleveland’s May Co. Building

10 Sep 2013, 3:43 am

 By Adrian Maties, Associate Editor

Downtown Cleveland is a magnet for multimillion-dollar developments. The newest project on the list–which includes the Cleveland Convention Center and Global Center for Health Innovation, the renovation of Public Square, the Flats East Bank and the Horseshoe Casino Cleveland–could transform the massive May Co. building on Public Square into apartments.

The building was designed by the world-famous Chicago architect Daniel Burnham and constructed at the start of the last century as a six-story structure. An expansion in 1931 added two more stories, making it the largest department store in the state. The building was added to the National Register of Historic Places in 1974 and is now eligible for federal tax credits for historic preservation.

The department store was unable to compete with the newer shopping malls, so it closed in the 1990s, becoming a huge blight on Public Square. Morgan Reed, the current owner, acquired the building in 2007 through an affiliate, Euclid of Cleveland LLC, paying $11 million for it. According to the Cuyahoga County Fiscal Offices, the May Co. building is now worth $13.6 million. CBRE Group Inc. is marketing the property for the owner. Largely unoccupied, it houses only the Cuyahoga Community College’s Hospitality Management Center and a restaurant called Pura Vida.

According to The Plain Dealer, a local group of investors plans to buy the old department store. The group includes Robert Rains and John Carney, managing partners of Cleveland’s Landmark RE Management LLC , as well as David Goldberg, a longtime civic leader and real estate investor. Their $110 million project calls for the transformation of the 930,000-square-foot property into a residential tower with about 400 one- or two-bedroom apartments and 600 parking spaces. The apartments would rent for $1.35 per square foot.

There’s still a long way to go before the deal is done and the project can start, but it could be a success. Downtown Cleveland apartment occupancy is high, as is the demand for apartments in the area.

Charts courtesy of Marcus&Millichap

CNL Healthcare Properties Buys Elyria Medical Building for $20M

3 Sep 2013, 4:27 am

By Adrian Maties, Associate Editor

The Cleveland Clinic Elyria Family Health and Surgery Center has a new owner. Orland-based CNL Healthcare Properties Inc. has acquired the property as part of a six-building portfolio for which it paid a total of $59.5 million.

The 40,000-square-foot, outpatient-oriented medical facility was constructed in 2008. It is located at 303 Chestnut Commons Drive in Elyria and is fully leased by The Cleveland Clinic, which will remain a tenant in the building.

According to the website of the Lorain County Auditor’s Office, the property was acquired for $20.2 million in a deal that closed on Aug. 22. The seller was MMIC Chestnut Commons LLC. The market value was set at $12.1 million, while the market value of the land was set at $1.8 million.

Totaling 181,890 square feet, CNL Healthcare’s newly acquired portfolio also features properties in the Phoenix, Kansas City, Kan., and San Diego metropolitan areas. The other five buildings are the John C. Lincoln Medical Plaza I and II and the North Mountain Medical Plaza in Phoenix; the Doctors Specialty Hospital Medical Office Building in Leawood, Kan.;  and the Escondido Medical Arts Center in Escondido, Calif.

“We believe this acquisition will both expand and diversify our medical office and specialty healthcare portfolio with the addition of high-quality facilities in thriving metropolitan markets,” Kevin Maddron, senior managing director for healthcare and senior housing properties for CNL Financial Group, said in a statement for the press.

The Cleveland Clinic Elyria Family Health and Surgery Center will be managed by the healthcare division of Holladay Properties, which will also manage and lease the properties in Kansas and Phoenix. Lincoln Harris CSG, an affiliate of Lincoln Property Co., will manage the center.

This is CNL Healthcare’s fourth medical office- and healthcare-related facility portfolio acquisition this year. The company said it has invested $149.7 million in 12 medical facilities across the country.

Photo credits: Google Maps

Value Place Plans to Develop Six Extended-Stay Hotels in Cleveland Area

26 Aug 2013, 4:56 am

By Adrian Maties, Associate Editor

Value Place, the largest economy extended-stay lodging brand in the nation, continues its rapid expansion across the United States and has now set its sights on Cleveland’s metro area. The Wichita, Kan.-based extended-stay hotel brand already has three corporate properties in Mentor, Akron-Green and Avon, and plans to develop six more in the area over the next two years.

Founded by renowned hotelier Jack DeBoer in 2002, Value Place is known for its policy: Customers pay for an entire week even if they stay just one night. Rates at the Avon, Green and Mentor hotels are between  $199 and $260 per week.

Value Place is working with Cleveland-based brokers Greg Slyman and Jason Jarchow of Kelly & Visconsi Associates LLC to explore possible sites in the area. It expects to start construction on the first property in January 2014. The four-story building will be located at Emerald Corporate Park and will feature 124 rooms. According to Crain’s Cleveland, the construction of the first property will cost more than$6 million. Value Place will hire local construction companies for the six projects.

“Value Place’s operating model enables us to grow in any economic environment,” David Redfern, president of Value Place Development, said in a statement for the press. “Further expansion in the Cleveland market has the potential for consistently higher-than-average occupancy, as we offer a previously underserved demographic of guests with Value Place’s clean, safe, simple and affordable accommodations.”

Value Place currently has 184 locations open in 32 states. Over the next three years, the company plans to buy land and build corporate-owned hotels in other areas, including Atlanta, Boston, Denver and southeast Florida.

Photo credits: Value Place

Downtown Cleveland Attracts Leasing but Loses Skylight Financial Group

19 Aug 2013, 4:14 pm

By Adrian Maties, Associate Editor

The Cleveland office market had a strong start to 2013, and it continued to see activity throughout the first half of the year. According to CBRE Group Inc., the office market finished the second quarter with 124,568 square feet of positive absorption. The overall vacancy rate, while still high, decreased to 20.2 percent.

The Central Business District had 67,069 square feet of positive absorption, higher than the suburban market, with the vacancy rate decreasing to 19.7 percent from 20.3 percent in the previous quarter. A series of lease renewals and expansions suggested that tenants are striving to lock up space.

In spite of this trend, though, there are still some companies looking to leave downtown Cleveland.

According to The Plain Dealer, Skylight Financial Group will move roughly 100 workers from the Skylight Office Tower at Tower City in downtown Cleveland to the United Bank Building at West 25th and Lorain Avenue in Ohio City. The company has signed a 10-year lease for nearly 18,000 square feet on the top floor of the building. Skylight will also occupy a penthouse that building owner MRN Ltd. will construct for it.

This is an unusual move for a financial-planning firm, as Cleveland’s Ohio City neighborhood is better known for its breweries (it has the largest concentration of breweries in the city). However, Skylight executives told The Plain Dealer they see this move as an opportunity to contribute to the revitalization of the neighborhood and also recruit more young professionals. They selected Ohio City because they believe the company will have a greater impact in this area than in Cleveland’s downtown.

The move is just what Ari Maron of MRN Ltd. has been waiting for. It provides the United Bank Building with the right anchor and also brings its occupancy up to 95 percent.

Skylight Financial Group isn’t the only company to leave downtown Cleveland. Eaton Corp. left its former offices at 1111 Superior Ave. downtown in February. It moved 700 employees to Eaton Center, a 580,000-square-foot building in Beachwood.

Photo credits: Skylight Financial Group

Forest City Sells Cleveland’s Higbee Building to Horseshoe Casino Owners

6 Aug 2013, 4:28 am

By Adrian Maties, Associate Editor

Forest City Enterprises Inc. last week finalized the sale of the 14-story Higbee Building, one of Cleveland’s most renowned historic places. Rock Ohio Caesars L.L.C. is the property’s new owner. It opened the Horseshoe Casino Cleveland there last year.

Moody’s Investors Service disclosed Rock Ohio Caesars’ plans to buy the 815,000-square-foot office building in March in a report grading the joint venture’s bid for $535 million in loans. The sale price was approximately $79 million, and it generated approximately $39 million in net cash proceeds for Forest City.

“We continue to execute on our strategy of focusing on our primary core markets – New York, Washington, D.C., Boston, Denver, Dallas, Los Angeles and San Francisco,” said David LaRue, Forest City president & CEO, in a statement for the press.  “We will use liquidity from dispositions such as this to continue to reduce debt and improve our balance sheet, invest in our mature portfolio and activate entitled development opportunities in core markets.”

Now that the acquisition is concluded, Rock Ohio Caesars is expected to start construction this month on a 170-foot, glass-enclosed, pedestrian bridge that will link the second floor of the casino to a nearby parking garage also owned by the joint venture. It will span the intersection of Ontario Street and Prospect Avenue. In the report, Moody’s Investors Service said the walkway is expected to facilitate more convenient access to the casino and help boost both visitation and length of stay.

Constructed in 1931, the Higbee Building is part of the Tower City Center, a large mixed-use facility composed of a number of interconnected office buildings and included on the National Register of Historic Places. It underwent a renovation project a few years ago.  In order to start construction on the skywalk, Rock Ohio Caesars had to buy the property and make sure that investors in historic preservation tax credits on the building were repaid.

Photo credits: Forest City Enterprises, Inc.


Work Starts on John Marshall High, One of Three New Schools Planned for Cleveland

29 Jul 2013, 2:13 pm

By Adrian Maties, Associate Editor

July 18 marked the official start of construction of the new John Marshall High School at 3952 W. 140th St. Mayor Frank Jackson, Cleveland Metropolitan School District CEO Eric Gordon, JMHS Alumni President Ken Tischler and Cleveland City Council President Martin Sweeney were among those present at the groundbreaking ceremony.

ICON L.L.C. is developing the project for the school district. The new John Marshall High School will be a $41.7 million investment of public money and will replace the original facility, which was built in 1932 on Cleveland’s near west side.

A city ordinance limits construction between the hours of 7 a.m. and 7 p.m. However, work is scheduled to be conducted between the hours of 7 a.m. and 3:30 p.m. The new John Marshall High School will be a 207,182-square-foot facility and will have the capacity to hold 1,260 students. TDA Architecture is the project’s architect.

Work will soon start on two other Cleveland high schools, as well: the Max S. Hayes Vocational High School and the Cleveland School of the Arts. Both will be built by Higley Bowen Construction Partners. The three projects combined total $120 million.

The district is constructing them with money from Issue 14, a renovation and construction bond issue voters passed in 2001. Although the district has renovated other high schools with money from the $335 million construction fund, it had constructed only one high school, John Adams High School, in 2006.

Officials hope construction will be finished by 2015 and expect to have the three new high schools ready for the 2015-16 school year. Students have been moved to other buildings until the new ones are done.

Rendering courtesy of ICON L.L.C.

$40M Project to Deliver First New Hotel in Downtown Akron in 40 Years

22 Jul 2013, 2:32 pm

By Adrian Maties, Associate Editor

Downtown Akron is getting ready for a new hotel. Mayor Don Plusquellic, Greystone Partners L.L.C. and Amerimar Realty Co. on July 16 announced plans for the project, which will incorporate the historic Greystone Hall at Mill and High streets and will be the first new hotel construction in the city’s downtown in 40 years.

The city has signed a memorandum of understanding with Greystone Partners, a group of five Greater Akron-area businesspeople that plans to buy Greystone Hall, a former Masonic Temple built in 1917. They will also purchase the adjacent High Street Christian Church and demolish it.

The project is expected to cost $40 million. A 160-room hotel will be constructed on the church site. It will include a 125-seat restaurant and bar, a state-of-the-art fitness center and indoor swimming pool, three ballrooms and multiple smaller meeting rooms, as well as a destination venue for weddings and other social events. The historic Greystone Hall will be fully renovated and will be connected to the hotel through a glass atrium.  It will house a restaurant and spaces for meetings and events, while continuing to be a venue for live theater productions. The new hotel will be LEED certified.

Greystone is working with Philadelphia-based Amerimar Realty Co. on the project. Braun and Steidl is the project’s architect, with Welty Building Co. as construction manager. An affiliate of Amerimar Realty will operate the hotel as an independent facility. The Development Finance Authority of Summit County will be participating in financing the project.

Mayor Plusquellic said in a news release that he considers Greystone Partners and Amerimar Realty “the right people” to build the quality hotel downtown Akron deserves. “This hotel will work closely with the John S. Knight Convention Center and preserves the historic Greystone facility. It will help to bring many more guests, conventions and groups to visit and convene in our great city. This is exactly what we hoped for in a hotel plan – a great facility close to the convention center, more jobs for our citizens and a substantial investment in our downtown,” he added.

Photo credit: http://greystonehall.org

Agree Realty Corp. Buys Cleveland-Area Sam’s Club for $21.4M

16 Jul 2013, 3:43 am

By Adrian Maties, Associate Editor

Agree Realty Corp., a Farmington Hills, Mich.-based real estate investment trust involved in the development and acquisition of single-tenant net lease retail properties, recently purchased a triple-net-leased Sam’s Club located in Brooklyn, Ohio. Marcus & Millichap Real Estate Investment Services arranged the all-cash sale.

The 147,771-square-foot freestanding building is located at 10250 Brookpark Road, at the intersection of Tiedeman and Brookpark roads. It was constructed in 1987, on 9.9 acres of land. Over the last decade, it has been periodically remodeled.

Agree Realty acquired the retail building from Betco Properties L.L.C., an affiliate of Cleveland-based Stark Enterprises. It paid $21.4 million, or 145 per square foot, for the property. A Sam’s Club Fuel Center outparcel was included in the sale. Marcus & Millichap’s Scott Wiles, Craig Fuller and Erin Patton represented the seller. Sam’s Club has 5.5 years remaining on its lease and a percentage rent clause tied to the store’s gross sales, providing a potential source of additional income.

Scott Wiles, a vice president of investments in Marcus & Millichap’s Cleveland office, said the property received a lot of attention from investors. Erin Patton, a vice president of investments in the firm’s Columbus office, added that the property is located just next door to a newly expanded and remodeled Walmart Supercenter, at a heavily trafficked intersection that sees daily traffic counts of 53,730 cars.

Agree Realty also acquired a 7,840-square-foot AutoZone store on South Kedzie Road in Chicago. “We are extremely pleased to announce these two high-quality additions to our portfolio. With the acquisition of this Sam’s Club, Walmart has now become the fourth-largest tenant in our portfolio by rental revenue,” said Joey Agree, president & CEO. ”Our acquisition team continues to source value-add, accretive opportunities leased to industry-leading tenants.”

Agree Realty currently owns and operates a portfolio of 120 properties in 32 states, with about 3.5 million square feet of gross leasable space.

Photo credits: Agree Realty Corp.
Charts courtesy of Marcus&Millichap Real Estate Investment Services


Work Resumes on Schofield Building Conversion; Eight Northeast Ohio Projects Receive Historic Preservation Tax Credits

9 Jul 2013, 8:26 pm

 By Adrian Maties, Associate Editor

After a three-year break, work is restarting on the conversion of the 14-story Schofield Building in downtown Cleveland. The $50 million project will deliver a 122-room hotel, 55 luxury apartments, a ground-floor restaurant and retail space at East Ninth Street and Euclid Avenue by late 2014.

Work started in 2009 but was stopped a year later due to the difficult economy. The Victorian-style brick and terracotta structure did qualify for federal and state tax credits aimed at preservation, but the sorry state of construction lending still proved to be a problem. Although the conversion of the Schofield Building is now moving forward, the developer, CRM Cos., did not release any information about project financing.

The concept of a hotel topped by apartments is new to downtown Cleveland. Apartment tenants will have access to room service, valet parking, a concierge and other amenities. CRM is working on the project together with Kimpton Hotels & Restaurants and the Cleveland Construction Corp. of Mentor. Kimpton will operate and manage the hotel.

Work resumed on the Schofield Building conversion just as the Ohio Development Services Agency announced it awarded $17.9 million worth of state tax credits to eight Northeast Ohio redevelopment projects. In total, the Ohio Development Services Agency awarded $33.9 million worth of credits to 22 projects across the state.

The Northeast Ohio projects included:

  • Fairmont Creamery Ice Cream Building in Cleveland;
  • Starr Gennett Building in Cleveland;
  • St. Luke’s Hospital Final Phase in Cleveland;
  • 1220 Huron Road in Cleveland;
  • The Adams Bag Company Paper Mill in Chagrin Falls;
  • Akron Savings and Loan a.k.a. the Landmark Building in Akron;
  • Goodyear Hall in Akron;
  • Phoenix Block in Ravenna.

The eight projects have a total construction cost of almost $110 million. They will create more than 1,000 construction and permanent jobs and will deliver more than 300 apartments as well as restaurants, office and retail space. For more information about the projects, click here.

Photo credits: Cleveland Construction Corp.


Hackman Capital JV Acquires 16 Cleveland-Area Buildings as Part of 28-Asset Ohio Industrial Portfolio

1 Jul 2013, 4:14 am

By Adrian Maties, Associate Editor

A joint venture led by private, Los Angeles-based investor Hackman Capital Partners L.L.C. purchased 28 industrial buildings and two land parcels located in the state of Ohio.  The transaction, which included 2.6 million square feet, closed on June 14. Hackman Capital Partners did not disclose the purchase price.

Sixteen of the 28 properties are located in Cleveland. They total 1.6 million square feet and make up 61 percent of the portfolio. According to the Cleveland Plain Dealer, the properties include six buildings on Darice Parkway and Mohawk Drive in Strongsville, seven buildings in Solon, two buildings on Enterprise Parkway in Twinsburg and one building on Avion Park Drive in Highland Heights. CBRE Group Inc. reported that the overall availability rate for industrial properties in the Cleveland area decreased in the first quarter of 2013 from 7.8 to 7.6 percent, with overall vacancy rates dropping from 7 to 6.9 percent. Average asking rates have also increased, to $4.56 per square foot.

The remaining buildings include seven in Cincinnati totaling 394,072 square feet and five in Columbus totaling 611,578 square feet. Hackman Capital also acquired two land parcels in Columbus that total 23.5 acres.

The multi-tenant buildings comprise 108 tenant spaces ranging from 2,400 to 219,600 square feet. As of the closing date, the portfolio was 73 percent occupied. The Los Angeles-based company owns more than 20.6 million square feet of real estate across the United States, including 5.6 million square feet in Ohio.

Michael Hackman, the company’s founder & CEO, and other company executives were born and raised in Columbus. Hackman said the company will manage the properties from its regional office in Columbus, adding that “we’re thrilled with the acquisition and excited to be expanding our footprint in Ohio.”

Hackman Capital has hired Colliers International to manage the portfolio. It will be leased by an internal team, along with agents from Jones Lang LaSalle Inc., CBRE, Newmark Grubb Knight Frank, RG Boll and Colliers International. Deutsche Bank provided first mortgage financing, while New York-based Square Mile Capital Management L.L.C. supplied an additional $25 million of capital.

Charts courtesy of CBRE.

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