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Forest City Sells Flats Properties to Cleveland-Area Investor Group Eyeing Development

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CLEVELAND, Ohio – Jumping at the chance to own a large potential development site near the Cuyahoga River, local investors have purchased 7.7 acres and eight buildings in the Flats from Forest City Realty Trust, Inc.

Public records show that an investor group led by Joel Scheer paid $3.5 million Tuesday for a motley collection of industrial buildings and roughly 500 parking spaces along Stones Levee, West Third Street and Canal Road. The properties, south of Tower City, sit in the shadow of the Lorain-Carnegie (Hope Memorial) Bridge and near the end of the East Ninth Street Extension.

Publicly traded Forest City, based in Cleveland, acquired many of the parcels in the early 2000s to provide parking around the now-demolished Tower City Amphitheater. The decade-old outdoor concert venue closed in 2011, after Forest City sold the amphitheater site and surrounding land to an affiliate of Michigan businessman Dan Gilbert’s casino-gaming operation.

Scheer doesn’t have a specific development plan or timeline for building on the properties. But, he said, “it’s not in my nature to wait. I seem to be relatively impatient.”

If cleared, the site could accommodate 1,000 cars, based on a document circulated by Forest City. Scheer said parking is a “definite safety valve,” a fallback option that mitigates his risk. His intention isn’t to add more pavement to that part of the Flats, though.

He’s considering both new construction and restoration of the existing buildings, some of which are partially leased to storage tenants and other businesses.

“It just seems to scream for some activity, some development, whether it be housing, whether it be retail, any type of development,” Scheer said. “We’re going to investigate what makes sense for the city, the whole neighborhood. So I think it’s pretty exciting.”

The purchase was a sizable one for Scheer, who also owns the former Sammy’s building on the east bank of the Flats and an empty building at 2338 Canal Road. And the transaction is notable for downtown Cleveland because of the acreage involved.

But the sale was negligible for Forest City, a real estate investment trust that has its headquarters here but its attention turned to Boston, Dallas, Denver, Los Angeles, New York, San Francisco and Washington, D.C.

Over the past few years, Forest City has sold off most of its downtown Cleveland assets, including the bulk of the Tower City complex. The company still owns a significant chunk of land on Scranton Peninsula, on the west bank of the Flats, but is staying mum about development or sale prospects for that property.

Selling the east bank property was a logical move after Forest City’s other dispositions at and around Tower City, said Jeff Linton, a company spokesman.

“It was something that was acquired at a different time and in a different place for the company,” he said of the site. “It was in support of another asset – the amphitheater – and it made sense to go ahead and take the step of finding a buyer and getting rid of it.”

Plus, Linton added, “as we’ve always said, we’re not doing new development here. We’re focusing new development on other core markets.”

The properties Forest City sold are located at 401-601 Stones Levee; 1902-1950 W. 3rd St.; 1968, 1978 and 1986 W. 3rd St.; and 2484 Canal Road.

Rico Pietro, the real estate broker who represented Scheer, said proximity to the river, views looking north toward Tower City and the property’s proximity to Progressive Field and Quicken Loans Arena added to the appeal. He doesn’t view nearby industrial uses as barriers to eventual development, whatever that development might look like.

“We like this site. There’s enough revenue coming in the door to cover most of the expenses. Long-term, it could be office, housing, retail, industrial, mixed-use, or institutional,” said Pietro, a principal with Cushman & Wakefield/CRESCO Real Estate in Independence. “It’s in an emerging market with really nice infrastructure access and pretty substantial views. … We don’t know what it’s going to be, but I think it’s going to be something special.”

 

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