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Noble Investment Group Buys Four Residence Inn by Marriott Hotels in Greater Cleveland

10 Mar 2014, 8:56 pm

By Adrian Maties, Associate Editor

Noble Investment Group last week announced the acquisition of four Residence Inn by Marriott hotels in the greater Cleveland metro area. The Atlanta-based company did not disclose how much it paid for the properties.

According to Noble’s website, the four properties include the 175-room Residence Inn Cleveland Downtown, the 174-room Residence Inn Cleveland Beachwood, the 118-room Residence Inn Cleveland Independence and the 96-room Residence Inn Cleveland Mentor. They all feature large suites with full kitchens and offer complimentary hot breakfast, Wi-Fi, grocery delivery service and other amenities. Noble also announced plans to upgrade and redesign the properties to enhance the guest experience. The Residence Inn by Marriott brand is a top choice for guests seeking affordable, upscale accommodations when traveling for an extended period.

“Given the robust demand growth in the Cleveland MSA, Noble believes there is significant opportunity to maximize asset performance with renovations targeted toward enhancing the guest experience. With a going-in cap rate of approximately 11.5 percent on trailing 12-month income, this portfolio represents an attractive combination of in-place yield, considerable income upside and a basis that is well below replacement cost,” said Noble principal Ben Brunt in a statement for the press.

Marcus & Millichap reports that the hospitality market in the Midwest, a region that encompasses Illinois, Indiana, Michigan, Ohio and Wisconsin, performed well in 2013 and that it is expected to continue on the same path in 2014. Business travel remains a primary driver of the hotel sector’s performance, and Cleveland has no shortage of businesses. The city has emerged as a global leader in healthcare, biomedical engineering and technology, home to many important companies. Also, Ohio’s Utica Shale is fast becoming an important driver of economic activity in the region. As households regain the wealth lost during the recession and as the job market becomes more stable, leisure demand will also improve, leading to increased performance.

Photo credit: Marriott.com


Victory Center Prepares to Receive Tenants in Health-Tech Corridor

3 Mar 2014, 10:14 pm

By Adrian Maties, Associate Editor

What was once a vacant building is about to be launched as a mixed-use complex. Garson Victory LLC,  a partnership led by real estate broker Scott Garson, redeveloped 7012 Euclid Ave. after purchasing it in late 2010 for $2.7 million. The result was Victory Center, a complex featuring offices, labs and research facilities and now ready to welcome tenants.

According to real estate website PropertyShark, the four-story building was constructed in 1917. It occupies 3.3 acres of land in the core of Cleveland’s Health-Tech Corridor and offers 165,965 square feet of space.

Garson Victory worked on the project with a local development team including Domokur Architects, on project and construction services; Partners Environmental Consulting; historic consultant Heritage Consulting; LEED consultant HLMS Sustainability Solutions; and NAI Daus. It also collaborated with the city of Cleveland and the state of Ohio.

The developers used tax credits to finance the renovation of the building’s core and shell. The  project received a $4.2 million Historic Tax Credit Award from the state of Ohio in December 2011. It will generate another projected $3.7 million in Federal Historic Tax Credits. Huntington National Bank will finance tenant improvements and other project-related costs.

The total cost of the project was $26.6 million. It delivered a LEED Silver-certified building, ready to house Cleveland’s growing incubator and accelerator growth-stage companies, biomed and tech businesses. Local stakeholders such as BioEnterprise Inc., Jumpstart Inc., Magnet Inc. and Global Cardiovascular Innovation Center are working to attract business tenants to Victory Center.

“The goal of this space is to give local companies room to grow,” Scott Garson, developer and investment partner, said in a statement for the press. “It’s a prime location for occupants to capitalize on Cleveland’s increased investment in tech and biomed businesses, where they can leverage a wealth of local resources and support.”

Photo credits: www.victorycentercleveland.com

Beachwood’s Four Seasons Enters Final Stretch of Campus Expansion Project

25 Feb 2014, 2:25 pm

By Adrian Maties, Associate Editor

The Four Seasons is a luxury gated apartment community in Beachwood. It is owned by Cleveland’s Goldberg Cos., and is currently undergoing an expansion project that will provide several state-of-the-art amenities to current and future residents. The project is scheduled for completion this spring.

Located at 26900 George Zeiger Drive, the Four Seasons includes three distinct high- and mid-rise buildings, with one-, two- and three-bedroom residences and an array of first-class amenities. The expansion project will bring a fourth apartment building to the campus. It will stand five stories high and will include 143 customized one-, two- and three-bedroom apartments. The new building will be adjacent to Beachwood Place. Its apartments will feature oversize windows, nine- and 10-foot ceilings and private balconies, as well as granite countertops, stainless-steel appliances, luxury closets, spa-inspired baths and more.

The Four Seasons will also offer its residents an important number of community amenities, including a landscaped courtyard with water features and outdoor relaxation spaces, entertainment areas and even a new fitness studio. Another important amenity is the community’s location. It’s close to shops, restaurants and entertainment, as well as major thoroughfares. Legacy Village, the Cleveland Metroparks Acacia Reservation and  local galleries are all nearby, while downtown Cleveland is just a short ride away.

“Four Seasons apartments are known for unparalleled service and sophistication,” said Jordan Goldberg, of Goldberg Cos., the project developer, in a statement for the press. “Residents can expect detailed, carefully designed suites, showcasing our commitment to first-class service and experience.”

Photo credits: www.fourseasons4.com

Cleveland Metro Area Apartment Construction Achieves Five-Year High

18 Feb 2014, 5:00 am

By Adrian Maties, Associate Editor

In recent years, the soft job market and the uncertainty about the local economy have kept many people in the Cleveland area from buying new homes. Instead, they opted to rent. That’s why apartment vacancies in the metro area reached one of the lowest levels of the last decade in 2012.

Marcus & Millichap reports that apartment construction in the Cleveland area has now reached a five-year high, as many developers have sought to take advantage of the low vacancy levels. Last year, 550 units were completed, with builders expected to deliver 750 units this year. Apartment construction projects seem to be springing up like mushrooms after the rain.

According to The Plain Dealer, on Feb. 7, the Cleveland City Planning Commission approved rezoning for a roughly four-acre residential development at the edge of Tremont and Ohio City, as well as the conceptual plans for an apartment project in the city’s Detroit-Shoreway neighborhood. Together, these two projects will deliver 500 units close to the city’s downtown. But they will require additional public hearings and community meetings before construction can start.

Another project, in Cleveland’s Ohio City neighborhood, took an even larger step toward construction. Crain’s Cleveland reported that the U.S. Department of Housing and Urban Development notified the developers of the $20 million W. 25th Street Lofts on Feb. 7 that it had approved a $14 million loan for the project. Construction is expected to start in April, as soon as financing is secured.

Plans call for the redevelopment of the former Baehr Brewery at 1526 W. 25th St. into more than 60 apartments. The project offers an opportunity for dense development in a largely single-family neighborhood and will help meet the need for additional housing units in the area.

According to Marcus & Millichap, the weak job market and the rising inventory will lead to an increase in apartment vacancy this year to 5.8 percent. However, vacancy will remain moderate in comparison to the five-year period prior to the recession. Rents will also advance 1.3 percent to $808 per month in 2014. With many of these projects located close to employment districts, attracting tenants shouldn’t be a problem, as companies look to hire more people to fill positions.

Charts courtesy of Marcus & Millichap Real Estate Investment Services

W.P. Carey Buys, Leases Back Air Enterprises Warehouse Facility

11 Feb 2014, 11:22 am

By Adrian Maties, Associate Editor

A Northeast Ohio industrial property recently changed hands. The Air Enterprises Manufacturing/Warehouse Facility in Streetsboro, Ohio, has been acquired by W. P. Carey Inc., a publicly traded REIT, for $7 million.

Air Enterprises will continue to occupy the 178,180-square-foot property, which it has leased for a period of 15 years. The Akron-based company started moving into the new facility last fall as part of its expansion plans. The Record-Courier reported that Air Enterprises will create more than 250 new jobs at the Streetsboro facility, located at 1777 Miller Parkway, less than 25 miles from Cleveland’s central business district, in the next five years.

The property was constructed in 1993, on 23 acres of land. It offers office and warehouse space, as well as more than 250 parking spaces. It was previously occupied by Commercial Turf Products. According to PropertyShark.com, Commercial Turf Products acquired the facility in 1997 for $4.9 million.

W. P. Carey acquired the facility on behalf of CPA®:18 – Global, one of its managed non-traded REIT affiliates. It announced the acquisition together with that of a 1.6 million-square-foot Chicago distribution facility leased to a Solo Cup affiliate. For the second property,  W. P. Carey paid approximately $85 million.

“The two transactions closed on behalf of CPA®:18 – Global demonstrate how W. P. Carey can tailor transactions that enable private companies and institutional real estate investors to sell assets on a timely basis consistent with their specific investment strategies and liquidity requirements. Sourcing, structuring and executing on a variety of single-tenant property types in diverse industries and locations supports our established investment strategy of generating stable, long-term cash flow for investors,” said Gino Sabatini, W. P. Carey managing director & co-head of global investments, in a statement for the press.

CBRE recently reported that Northeast Ohio’s industrial market continued to improve in 2013, with availability decreasing to 7.16 percent at the end of the year. Sale and leasing activity in the region increased, hitting a high of 2.8 million square feet in the third quarter of 2013, levels not seen since pre-recession. And CBRE expects sale prices to continue to bounce back to pre-recession levels this year, as well.

Photo credits: Google Maps.

Buffalo Lodging Associates to Manage Hilton Garden Inn Akron

4 Feb 2014, 6:39 am

By Adrian Maties, Associate Editor

The Hilton Garden Inn Akron is scheduled to open this fall. The hotel is currently under development on three acres of land, on the former Goodyear world headquarters campus, at the corner of East Market Street and Kelly Avenue. It will be the first hotel constructed in Akron since 1980 and it will be managed by Buffalo Lodging Associates LLC.

The hotel is being developed by Pittsburgh-based Summit Development and Industrial Realty Group LLC (IRG), a national real estate development and investment firm. Work on the project started last year. At a cost of $18 million, it will deliver a 139-room hotel with a full restaurant and bar, an indoor swimming pool, a fitness center, meeting rooms offering about 3,000 square feet of flexible space and more.

The Hilton Garden Inn Akron is considered the second phase of the larger East End mixed-use project, also developed by IRG and Summit. The project calls for the renovation of the former Goodyear Tire & Rubber Co. corporate headquarters and Goodyear Hall across the street. The two developers will transform the 1.7 million square feet of space into a mix of offices, retail and residences. Located right in the heart of this massive development, the Hilton Garden Inn Akron is expected to become an important amenity for the downtown Akron business district.

“We are very pleased to have been selected by IRG and Summit and look forward to delivering an outstanding lodging experience to the Goodyear Tire & Rubber Co. and the greater Akron community,” said Cole Fach, vice president of development for Buffalo Lodging Associates, in a statement for the press.

Based in Canton, Mass., Buffalo Lodging Associates offers a wide range of development and management services for new and existing hotel owners. Its portfolio includes 42 hotels throughout New York, Ohio, Missouri, Massachusetts, Connecticut, Rhode Island, Florida, New Jersey and Ontario, Canada.

Photo credits:  www.eastendakron.com

Two More Hotels Planned for Cleveland Area

28 Jan 2014, 5:14 am

By Adrian Maties, Associate Editor

2013 was a good year for hotel construction in the Greater Cleveland area, as developers started work on a number of projects expected to deliver hundreds of new rooms to the region in the near future. And it seems that this hotel construction boom will continue  into 2014. Work will soon start on two more projects in the metro area, one in downtown Cleveland, the other in Avon.

Jacobs Real Estate Services recently announced it will develop a Residence Inn by Marriott hotel at its Avon Place development in Avon. It will be located on Just Imagine Drive, adjacent to the Cleveland Clinic Richard E. Jacobs Health Center.

The new hotel will be constructed on a 4.27-acre site that Jacobs Real Estate Services has agreed to sell to Emerald Hospitality Associates Inc. and its independent affiliate, Nimbus Investment Fund. It will stand five stories tall and offer 116 rooms, with all the amenities of the Residence Inn hotels. An attached 10,000-square-foot conference center will also be constructed. The hotel is expected to open in spring 2015.

“We are excited that Marriott and Emerald Hospitality have chosen Avon Place. Residence Inn will be a perfect complement to the expanding Cleveland Clinic, restaurants and offices planned for this development,” said Jim Eppele, JRES executive vice president, in a statement for the press.

Crain’s Cleveland also recently reported that workers have installed black chain link fences around the former Cleveland Metropolitan School District administration building at 1380 E. Sixth St. in downtown Cleveland. The property will be transformed into the Drury Plaza Hotel.

However, developers don’t expect any real construction to start until summer, as there are still many hurdles the project needs to pass, such as securing city approvals for Drury’s plans or obtaining Ohio Historic Preservation Tax Credits. Construction crews are currently working on site cleanup and asbestos abatement.

The makeover is expected to cost more than $35 million. It will deliver a 180-room hotel. The project is expected to be completed by late 2015.

Photo credits: Google Maps            

Westin Cleveland Downtown to Open in May

21 Jan 2014, 3:57 am

By Adrian Maties, Associate Editor

The Westin Cleveland Downtown hotel will open in May in Cleveland’s downtown financial district, following a $64 million renovation. It will have a new look and a new general manager. Recently, the ownership hired Mark Anderson to lead the hotel in operations and guest services.

Optima Ventures partnered with Sage Hospitality to buy and renovate downtown Cleveland’s second-largest hotel. They paid $9 million for the property, purchasing it from the defunct financial-services giant Lehman Brothers Holdings Inc. The renovation project started in December 2012, with Willoughby, Ohio-based Marous Brothers Construction as the general contractor. It is designed by McCarten, an award-winning New York design firm.

When finished, the project will deliver a 484-room, contemporary, art-driven hotel, within steps of some of downtown Cleveland’s most important attractions: the Cleveland Convention Center and Global Center for Health Innovation, Browns Stadium and the Rock & Roll Hall of Fame. The new hotel will feature 20,000 square feet of flexible event space that can be divided into 20 separate rooms, including a 9,000-square-foot Grand Ballroom connected to the floor above by a glass staircase. Other amenities include a state-of-the-art fitness center, a business center, a Starbucks, as well as a new restaurant, the Urban Farmer-Cleveland’s Steakhouse. Once finished, the property is expected to achieve LEED certification.

Anderson has experience with the Westin brand as well as Sheraton and Hilton. He previously managed such hotels as the 1,053-room Boston Park Plaza Hotel and Towers, the Hilton Stamford, the Sheraton Boston and the Westin Providence Hotel. He joined the Westin Cleveland Downtown on Dec. 11, 2013.

“Sage is thrilled to have Mark lead us into the exciting Cleveland market,” Vincent Piro, divisional vice president of operations, premier & lifestyle for Sage Hospitality, said in a statement for the press. “This hotel will bring modern luxury, local flavor and authentic service to the Cleveland market. We look forward to its opening.”

Photo credits: www.westincleveland.com/


BakerHostetler to Move to Cleveland’s Key Tower in 2016

13 Jan 2014, 3:42 pm

By Adrian Maties, Associate Editor

Prime office spaces continue to be in high demand in Downtown Cleveland. BakerHostetler is just the most recent name added to the growing list of companies looking to do or to continue doing business in the CBD. Ranked 65th on the AmLaw 100 (American Lawyer, 2013, by gross revenue), the global law firm recently signed a 15-year lease for space in Downtown Cleveland’s iconic Key Tower. Currently, it is located in PNC Center, at East Ninth Street and Euclid Avenue.

Standing 57 stories, or 947 feet tall, Key Tower is the largest building in Cleveland, the largest in the state of Ohio, the 20th largest in the United States and the 107th largest in the world. The skyscraper was completed in 1991 and opened in January 1992. It was designed by the famous architect César Pelli. The building offers 1.3 million square feet of space and is the headquarters of KeyCorp, the holding company for KeyBank. KeyCorp signed a 15-year lease extension for 37 percent of the Class A office tower in 2013.

Columbia Property Trust, one of the nation’s largest office REITs, has owned Key Tower since December 2005.  Starting in January 2016, BakerHostetler will occupy five floors of the 57-story building, about 115,615 square feet of space. Columbia Property Trust was represented by its vice presidents of asset management, Jerry Banks and Darik Afshani, and by Douglas Miller, Cindy Greiner and John Klayman of Jacobs Real Estate Services, an affiliate of The Richard E. Jacobs Group. Sherry Cushman of Cushman & Wakefield Inc. and Doug Leary of CBRE Group Inc. represented BakerHostetler.

“We are pleased to welcome BakerHostetler as a tenant at Key Tower,” Jerry Banks said in a statement for the press. “This deal supports our strategy to build value for our investors by enhancing the tenancy of Key Tower with yet another long-term, highly creditworthy tenant.”

Over the past two years, tens of businesses have moved to the CBD, bringing over 5,000 new jobs with them. CBRE expects this trend to continue for the next few quarters and the demand for prime office space to remain strong. The overall vacancy rate decreased in the third quarter of 2013 from 20.2 percent to 20.1 percent, while office rental rates increased by $0.86, ending the third quarter at $17.87 per square foot. In the CBD, rents increased from $19.10 per square foot to $19.29 per square foot.

Photo credits: Columbia Property Trust
Charts courtesy of CBRE.

Marcus & Millichap Arranges Sale of North Olmsted Towne Center for $17.8M

7 Jan 2014, 4:51 am

By Adrian Maties, Associate Editor

Large retail properties in the Greater Cleveland area saw a lot of action in the final quarter of 2013. Devonshire REIT Inc. paid $8 million for the Great Lakes Plaza in Mentor, while Starwood Capital Group acquired two shopping centers in North Olmsted and Canton as part of a $1.6 billion, seven-property portfolio.

More recently, the North Olmsted Towne Center changed hands. Carnegie Management and Development Corp. sold the shopping center for $17.8 million, or $186 per square foot, to an out-of-state private investor. According to Marcus & Millichap Real Estate Investment Services’ Cleveland-area retail report for the third quarter, the lack of quality assets, particularly in the shopping center segment, kept the median price per square foot for multi-tenant properties 10 percent lower, at $38 per square foot, compared to the level at midyear.

The Towne Center is located in the center of North Olmsted’s commercial district, at 25100 Brookpark Road, about 17 miles southwest of Cleveland. It offers 95,446 square feet of retail space, with tenants such as David’s Bridal, The Tile Shop, Jimmy John’s, La-Z-Boy, Men’s Wearhouse, Moe’s Southwest Grill, Party City and Pearle Vision. The property is also shadow anchored by a Target and a Walmart Supercenter.

Marcus & Millichap arranged the sale. Scott Wiles and Craig Fuller, of its Cleveland office, and Erin Patton, of its Columbus office, represented the seller. Together with Dustin Javitch of the Cleveland office, they also advised the buyer.

“Multi-tenant property transaction velocity in the Cleveland metropolitan area has nearly doubled over the past four quarters as local investors became much more active in the market,” Wiles said in a statement for the press. “Well-located, high-quality centers such as the North Olmsted Towne Center attract attention from local investors and out-of-area buyers from throughout the investor spectrum.”

Photo credits: Carnegie Management and Development Corp.
Charts courtesy of Marcus & Millichap Real Estate Investment Services

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