August 10, 2017
CLEVELAND, August 10, 2017 – Cushman & Wakefield | CRESCO Real Estate is pleased to announce the representation of Mold Masters in their sublease located in Eastlake, Ohio. Principal, Joseph Barna, SIOR and Senior Vice President, Eliot Kijewski, SIOR represented Mold Masters in conjunction with Liberty Development Company.
Mold Masters signed a 13 year sublease agreement for 77,767 SF at 34000 Vokes Drive in Eastlake, just 18 miles from downtown Cleveland. The industrial space was built in 1981 and renovated in 1988. It is currently owned by Broadstone Net Lease Inc., a Rochester, NY based REIT who purchased the building in 2012.
Mold Masters designs and builds tools and wax patterns for civilian and military aircraft engines as well as turbine engines used in the oil and gas industry and hydroelectric power plants. Mold Masters currently has two facilities in the Cleveland area, their corporate headquarters and tooling division in one facility and their pattern division in a separate facility. They will now be able to consolidate both facilities when they move into the facility on August 1st, 2017.
May 18, 2017
CLEVELAND, May 18, 2017 – Orangetheory® Fitness, the energizing and fast growing fitness franchise announced that a new studio will be coming to Cleveland, located at 740 Prospect Avenue. With eight studios now open in the Northeast Ohio market and several in development, the brand will continue to target the Ohio area for expansion.
Stephanie and Kurt Altenburger, owners of the newest Orangetheory Fitness location will be celebrating its grand opening with a VIP party this fall. The new studio will feature new design and construction details for Northeast Ohio.
“We are thrilled to bring Orangetheory Fitness to our Downtown Cleveland community.” states Stephanie, “We knew in 2015 when we first introduced Northeast Ohio to Orangetheory in Rocky River, that it would change people’s lives across our “land”. With over eight locations open across NEO, this Downtown location will be our ninth open studio and we couldn’t be more excited to be located in the heart of our big city.”
Cleveland joins the ranks of major cities such as Chicago and New York to host Orangetheory Fitness. Classes are offered all day long, so the flexibility is not lost on those who need to get a workout in but also balance working downtown and enjoying the nightlife that Cleveland has to offer.
Isaac Gold, Director of Real Estate at Silken | Gold represented Orangetheory Fitness. “My team has truly enjoyed the opportunity to represent Orangetheory Fitness and their efforts growing their company footprint in the Northeast Ohio Market.”
Rico Pietro, Managing Partner of Cushman & Wakefield | CRESCO Real Estate represented the landlord. “Ownership is incredibly honored to announce our lease with Orangetheory Fitness at the Pointe at Gateway. Having a national best in class circuit fitness company only adds to the growing experience of downtown residents and daily workers. Where do you sign me up?”
For more information on the Downtown Cleveland Orangetheory Fitness and membership packages visit www.orangetheoryfitness.com.
May 5, 2017
Downtown Cleveland’s commercial real estate market has come alive in the last five years with renovation and new construction projects taking place across the city, says Joseph V. Barna, SIOR, Principal at Cushman & Wakefield/CRESCO Real Estate.
“The economy has turned,” Barna says. “The buzz of what’s going on in Northeast Ohio, specifically in Cleveland, has caught the attention of real estate investors from all over the country. People want to be here.”
Commercial real estate value is up across the board, both on the sales and leasing side, and in both the office and industrial sectors. In addition, land values have begun to rise as investors as well as users are more willing to put shovels in the ground and begin new rather than take on a property that has significant flaws. As the vacancy rate for the industrial market has dropped from more than 10 percent in 2008 and 2009 to 4.6 percent today, many of the more desirable buildings have come off the market.
“What you have are older multi-story structures and buildings that have been expanded several times and lack open contiguous space,” Barna says. “They simply are not functional.”
Smart Business spoke with Barna about the best strategy to follow in a growing real estate market.
What are some important tips for entering the real estate market?
It’s important to understand that you make money in real estate when you buy, not when you sell. Make an informed decision and don’t overpay. If you’re buying an older piece of real estate, understand the structure of the building and the mechanical components. How long will it be before the property becomes obsolete? What limitations does the space have that could hamper your growth plans as well as exit strategy? If you’re not experienced in real estate, these are things you may not think to consider. It’s critical to have a knowledgeable team that can walk you through the steps. Have a good real estate consultant, financial adviser, attorney, environmental specialist and a contractor all of whom understand commercial real estate. Surround yourself with a team of consultants that can lead you to a smart decision. So many people who have found success in business think they can easily transition into real estate. You need to look beyond the sales price, however, and think about total operating expenses. Additionally, if your plan is to have tenants, consider the cost of adapting the space to a tenant’s unique requirements.
How important is planning when entering a new market?
The planning process is critical both from the developer and user side. When you come into a market, you need to understand the trends and the characteristics of that specific location. There are certain sectors of Greater Cleveland and Northeast Ohio that are much more desirable for redevelopment or new development. When it comes to speculative construction, you need to be in the right place. Development firms utilize “feet on the ground” local experts to ensure their decisions are based on real-time market knowledge and guidance.
If you’re a user, there are limited choices in the market and your planning needs to be ahead of the curve. Assemble that team and make sure you are truly exposed to all the alternatives. On the leasing side, lease terms are longer today. People know that inventory is tight and they want to lock up functional space long-term, especially if it includes expansion and contraction rights.
Conversely, if you own a building, it may be a good time to sell because values are higher than they have ever been, demand is high and the supply is low. It’s also a good time to liquidate because there are a lot of buyers with cash looking to come into this market. The more qualified buyers you have interested in acquiring your property, the greater the likelihood of bidding up the price.
How do you deal with economic uncertainty?
The world of real estate, like most things, is always in a state of constant change. Change also brings opportunity and you just need to stay ahead of the trends and understand where is the opportunity. Technology has provided potential investors and users with so many sources of information, it can be overwhelming. Don’t make a rash decision. Rather, be willing to take a step back and think before you act.
May 5, 2017
EUCLID, Ohio - Another dead Northeast Ohio mall could be bulldozed for an industrial project, under plans being floated by an Atlanta-area developer that has constructed sprawling distribution centers for Amazon.com and other retail behemoths.
On Tuesday, Euclid's Planning and Zoning Commission will consider a request to rezone a 66-acre site, spanning Euclid Square Mall and a few adjacent parcels, from retail to industrial use. Documents filed with the city identify Seefried Industrial Properties, Inc., of Georgia as the potential buyer of the properties.
And those documents show that Seefried wants to construct a massive building - 650,000 to 1 million square feet - where the vacant mall now stands.
Documents submitted to the city of Euclid show that a massive industrial building could replace the shuttered Euclid Square Mall just off Interstate 90 at Babbitt Road and East 260th Street.City of Euclid
Dave Riefe, the company's senior vice president for the Midwest region, declined to comment Wednesday. Seefried's chief development officer, Jim Condon, didn't respond to an email. And a receptionist at the company's headquarters said nobody was available to talk.
The rezoning proposal doesn't identify an occupant for the building, a project labeled with the code name "Project Bark."
Seefried, a privately held business, has developed hulking Amazon.com distribution centers in Nashville and Richmond, Virginia, along with buildings for Home Depot, PepsiCo and PPG Industries, according to the real estate company's website.
The Euclid Square Mall property would be a logical landing pad for a distributor seeking easy access to highways, rail lines, utilities and rooftops. Before Jacobs, Visconsi & Jacobs Co. built the mall, which opened in 1977, the property was an industrial site, occupied for more than 40 years by a brass and copper-product manufacturing facility.
Bounded by Babbitt Road and East 260th Street, the property - a rare development site of that size for Cuyahoga County - sits just south of Interstate 90, not far from Interstate 271. The city's building department ordered the closure of the mall last fall due to safety concerns. At that point, the onetime shopping destination was home to a ragtag bunch of churches and businesses.
Bob Garber, a real estate broker representing the property, confirmed that there's a possible buyer. Citing confidentiality agreements, he wouldn't say more.
"There's an active deal pursuing the property. That's as far as we can go," said Garber, a principal with Cushman & Wakefield/Cresco Real Estate, which co-listed the mall and an empty Toys "R" Us store at an asking price of $5.75 million with Greg Guyuron of Anchor Cleveland.
There are five ownership groups involved on the sale side of the deal, according to the rezoning proposal. A representative for the largest owner, Beverly Terrace, Ltd., didn't respond to a request for comment.
Cuyahoga County records turn up more than $450,000 in delinquent property taxes tied to the mall and one other parcel. The mall has been eligible for property-tax foreclosure for years, but court records indicate that the county never initiated a foreclosure case.
The other parcels include a former bank and a shuttered grocery store.
"What's exciting here is a possibility for a full redevelopment of that site," said Jonathan Holody, Euclid's planning and development director.
He wouldn't talk about the potential user for the building or the number of jobs that might be associated with such a large project. "There's nothing I can share on that," he said.
But the city, which is updating its master plan, supports the rezoning and the concept of replacing obsolete retail buildings with modern industrial space. If the planning commission OKs the rezoning language next week, the proposal will be introduced to Euclid City Council on May 15 and would be eligible for a vote in mid-June.
"There has been good activity in our industrial corridor," Holody said. "We see this as a way to return the site to productive use and attract new jobs to the city."
On the other side of East 260th, Ray Fogg Corporate Properties recently wrapped up construction on the second building at Bluestone Business Park.
Property records show that Amazon, which is hush-hush about its real estate deals, has signed a five-year lease on part of that 127,000-square-foot building. Online listing records show that there's still a 47,000-square-foot space available for lease.
Ray Fogg, Jr., chief executive officer at Fogg, didn't return a phone call about the lease and the potential impact on Bluestone from the proposed industrial rezoning next door.
Amazon didn't respond to an emailed request for comment about its growing presence in the region and its possible interest in the Euclid Square Mall property.
"The market's tight," Terry Coyne, vice chairman of the Newmark Grubb Knight Frank brokerage in Cleveland, said of demand for industrial real estate. "Vacancy rates are at lows we've never seen before, both in the whole market and in modern distribution space. So it's not surprising that [Euclid] would try to turn a dead mall into a productive industrial site."
May 5, 2017
Selecting where to start or move a business to is a crucial decision. The correct space and location are key factors in how well the business will do. Choosing a location with an active market for whatever the business delivers is important for sustainability, according to local experts.
Northeast Ohio is full of hot spots for commercial real estate, according to David Leb, associate at Newmark Grubb Knight Frank in Cleveland, and Bob Garber, managing principal at Cushman & Wakefield CRESCO Real Estate in Cleveland.
Businesses looking to move or establish themselves have many areas to choose from. But how do these areas become the hot spots – and why?
Garber said the space depends on the needs of the business. The areas that business owners should look at varies whether they are looking for industrial or office space.
“In terms of both markets, certainly the industrial side, there is very low vacancy,” Garber said. “(Those low vacancies) are driving people into places that we never thought would be as hot as they are now.
“For example, Glenwillow and Solon are up and coming. The Route 8 corridor was a sleeper for many years, but has gotten pretty active in terms of stuff going on. Then, if you’re moving west, you’re still seeing things happen in Middleburg Heights and Strongsville.”
In terms of the office space perspective, Garber said Chagrin Highlands in Beachwood, Highland Hills, Orange and Warrensville Heights, is booming in terms of both multitenant and office buildings.
“I think that if you are thinking of the activeness on the office side,” Garber said. “Those pockets give a good understanding of things that are starting to pop up.”
According to Leb, downtown Cleveland is one of the larger real estate hot spots because of the perks of a live/play/work environment.
“For companies located in the suburbs, they have to give serious thought to how they are going to attract new talent,” Leb said. “Being located downtown gives them a cool factor that suburban properties struggle to achieve.”
Both Garber and Leb said many factors go into creating hot spots in development and real estate, such as land that is ready to develop, accessibility and amenities. Sometimes, though, all it takes is for one person to believe an area has potential, they said.
“In the case of Midtown (in Cleveland), Geis Cos. and Cumberland Development were two developers who made significant investments in the Midtown area, because they had the vision to imagine it as Cleveland’s next burgeoning business district,” Leb said. “Twenty years ago, companies weren’t considering Midtown as a safe and viable option, but now is experiencing tremendous growth.
“That’s something that sports and commercial real estate have in common – the power of momentum.”
Garber said sometimes popularity just comes from something as simple as a population shift. As more and more people move to different locations, a business moves with them.
“It’s all about location, location, location,” he said. “When you run out of land in a city, it’s logical to move to the next one over and so on.”
As for the front-runner of the commercial real estate business, Leb and Garber had differing opinions. For Garber, it’s more general and depends on what the client is looking for.
“If you’re a bulk distribution warehouse user, you’re looking for a more centralized area,” Garber said. “If you’re an office, you want to be around a more realized orientated area. It really depends on (a client’s) goals and business. I think they all have their own merits. Each city has it’s own positives that are drawing people for many different reasons.”
But for Leb, the Ohio City/Detroit Shoreway area is an obvious front-runner in terms of commercial real estate and a potential for booming business in the future. The only problem is that it lacks in office space.
“All of the ingredients are there for a strong office market but supply is lagging demand,” he said. “I would expect more speculative office construction and renovation of buildings in those neighborhoods over the next few years.”
March 15, 2017
Pinecrest, the $230 million mixed-use development under construction in Orange Village, has landed its first office tenants.
Fairmount Properties, developer of the project on Harvard Road at I-271, announced that Alliance Prime Associates, along with Continental Heritage Insurance Co. and Tower 7 Partnership LLC, will move their offices to Pinecrest when the development opens in spring 2018.
The companies are leasing a collective 15,000 square feet in the fourth floor in one of the two office buildings that are part of the project, according to a news release issued by Fairmount. Terms of the lease were not disclosed.
Insurance executive Joseph E. LoConti is the president of Alliance Prime and the founder of the LoConti family office, comprising Tower 7, which finances startup, private equity and real estate transactions, and Continental Heritage, an insurance carrier specializing in surety and emerging property and casualty markets.
The firms will move to Pinecrest from their current home in Mayfield Heights.
In a statement, LoConti said, "A significant driver in our relocation decision was to locate within an environment that will provide our colleagues and clients with great options for dining and entertaining, as well as a hotel for visiting business associates, all within walking distance of our offices."
Fairmount partner Adam Fishman called the lease with the LoConti companies "a great start" for the office portion of the Pinecrest development.
The Offices at Pinecrest consists of two adjoining 75,000-square-foot buildings on the northeast portion of the project site. Both buildings have three floors of office space above retail and restaurants. They front on Pinecrest's central green space/events venue and are connected to a multilevel parking garage.
In addition to the office space, Pinecrest upon completion will feature more than 400,000 square feet of retail and dining space, a 145-room AC Hotel by Marriott, and 87 apartments.
Pinecrest is being developed by a partnership led by Fairmount and the DiGeronimo Cos.
February 6, 2017
Rico Pietro, Principal with Cushman & Wakefield | CRESCO Real Estate acted as the lead transaction advisor for the disposition of a strategic downtown property on the bank of the Cuyahoga River. The $3,000,000 sale includes eight (8) assets totaling an estimated 144,000/SF across 7.7 acres on December 21st, 2016.
The property is located just west of the Gateway professional sports complexes and predominately north of the Lorain/Carnegie Bridge with incredible views of the Cleveland skyline.
The Seller of the property is Forest City Realty Trust and the purchase entity is Flats South Cleveland LLC headed by Mr. Joel Scheer.
“The property has no immediate plans for redevelopment but its location, recent upgrades for access and infrastructure and breathtaking views of Cleveland’s bridges and skyline offer a considerable amount of flexibility for reuse as housing, manufacturing, office, retail or mixed use. Its potential really takes your breath away.” stated Rico Pietro.
February 6, 2017
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."
February 6, 2017
When constructions hit peak pace in the real estate cycle, it's as interesting and varied as watching an afternoon of horse races — and with almost as many jockeys.
The 20-story One University Circle apartment building began rising in June on its way to becoming the tallest apartment building to go up in the city in more than 40 years. In many ways, the project typifies the go-go apartment drive nationally and in the region driven by low interest rates. Moreover, lots of other deals are remaking the region's physical environment this year, or new owners promise to shake things up.
Here are our picks for the top real estate stories of the year.
10. Football helmet maker kicks production to new arena
Riddell agreed to occupy a massive build-to-suit factory and distribution center costing $27 million, taking the well-known football helmet maker and its growing souvenir helmet enterprise from its original home in Elyria when the new place is finished.
9. Greeting cards firm changes its mailing address
American Greetings Corp. opeed its Creative Studios and world headquarters in the fall in last large phase of the Crocker Park mixed-use center in Westlake. The move shifts 1,700 jobs to the western suburb from Brooklyn.
8. Old building gains new tire headquarters
Growing Dealer Tire agreed to lease the Victory Building in MidTown and remain in the city. The transaction keeps a major employer with 450 jobs in Cleveland and shifts the just-renovated Victory Building, 7012 Euclid Ave., from a multitenant building to a single-tenant property.
7. Amazon, and chock-full industrial buildings, make the scene
With a speed that, in construction terms, rivals one of its deliveries, online retailer Amazon agreed to lease a proposed 248,000 square-foot building at Cornerstone Business Park in May. The $13 million building, the fourth on the site of the former Chrysler stamping plant, was open in time for the holiday shopping season. It employs more than 500 part-timers at the fulfillment center.
6. Malls twist in retail tsunami, Parmatown finds fresh start
Older enclosed mall properties went through the ringer, roiled by their age, changing demographics and retailing's online evolution. Richmond Town Square in Richmond Heights and Chapel Hill Mall in Akron sold at deep discounts. The city of Akron bought Rolling Acres Mall to control its destiny. On the bright side, Shoppes at Parma opened on the site of former Parmatown mall.
5. Inns run into market — downtown and everywhere
Hotel development boomed with the opening of the 600-room Hilton Downtown Cleveland at Huntington Convention Center and two other hotels opening in downtown Cleveland, the Drury Plaza Hotel and Schofield Kimpton. Meantime, doors opened at the first crop of new suburban hotels from Avon to Lyndhurst in almost a decade.
4. DDR did what?
Without explanation or severance, DDR Corp. canned David Oakes as its CEO. The Beachwood-based public shopping center company had a replacement ready as its board put one if its members, Tom August, a veteran REIT executive, into the job.
3. Downtown lakefront development begins
Much-longed-for lakefront commercial development in downtown Cleveland started becoming a reality. A joint venture of Cumberland Development Group of Cleveland and Trammell Crow Co. opened its first building at North Coast Harbor and began pursuing plans for a second, a small apartment building.
2. Forest City sells Terminal Tower and The Avenue
Forest City Enterprises Inc., the Cleveland-based real estate developer with national operations, shook things up with big impacts on the local real estate market. The company became a real estate investment trust, also changed its high-profile name to Forest City Realty Trust Inc.
After prodding led by major investor Scopia Capital Management, the founding families of the company agreed to submit a proposal to shareholders a plan to collapse into common shares the Class B shares they use to tightly control the company. Efforts to clean up its balance sheet and hike its stock price included shedding properties outside 10 major markets, a list that does not include its hometown. That effort led to sales of the iconic Terminal Tower and the Avenue retail center downtown. Once the owner of the largest downtown office portfolio, Forest City ended the year with just one, the Post Office Plaza building, 1300 W. 3rd St.
1. Got a site? Put up an apartment building!
Apartment frenzy soars, with new apartments opening such as Ovation at Crocker Park in Westlake and Copper Creek in Brimfield. Moreover, three multimillion-dollar apartment complexes are rising on Cleveland's West Side. A $117 million apartment tower is going up in University Circle. Called One University Circle by developers Mitchell Schneider and Sam Petros, the 280-suite luxury building epitomizes activity in a segment that's usually tepid in Northeast Ohio. The Marcus & Millichap investment realty brokerage estimates 690 suites will be finished by the close of 2016, down from 1,500 in 2015, but the number will rise dramatically in 2017 and 2018.
February 6, 2017
A New York investor quietly purchased a half-empty downtown Cleveland office building this week, but the firm's redevelopment plan hinges on jobs - not another residential conversion.
Somera Road, Inc., acquired 45 Erieview Plaza on Monday, in a transaction that didn't generate any public filings. The seller was an affiliate of Chicago-based Highlands REIT, Inc., which did not respond to requests for comment. The structure of the sale - Somera took over a limited liability company that owns the building - means the price is likely to remain a mystery.
Ian Ross, founder and principal at Somera, confirmed that the sale took place but would not disclose what his private investment firm paid for the 16-story building and its nearby garage.
The property last changed hands in early 2007 for nearly $52 million, public records show. The Cuyahoga County Fiscal Office now values the complex at just shy of $40 million, though. And the office building is half-empty. Longtime tenant AT&T is the sole occupant.
"We really like investing in urban markets," said Ross, who plans to fix up the building and aggressively pitch space there to companies trying to court employees in their 20s and 30s.
"The millennial generation is what a lot of large American corporations are focused on, managing the attrition of that very fickle employment base," Ross said, explaining his view of the market. "The suburban office concept, which you see a lot of in the Midwest and you see a lot of in Cleveland, specifically ... that's going by the wayside. That's not going to be the pull or the attraction for that highly sought-after employee."
Built in the early 1980s for Ohio Bell, 45 Erieview has been a bit of a sleeper building for more than 30 years, despite its prominent location at East Ninth Street and Lakeside Avenue. In 2007, Ohio Bell successor AT&T sold the property to Inland American Real Estate Trust, Inc. and signed a 12.5-year lease with several extension options, according to public records.
Since then, AT&T has pared its presence in the building, leaving the lower eight floors vacant and parts of the upper floors largely under-used.
Inland, based in Chicago, has changed its name and narrowed its focus. In April, the company - now called InvenTrust Properties Corp. and concentrating on retail - spun off its office buildings, including 45 Erieview; industrial properties; and other real estate into Highlands.
Regulatory filings indicate that 45 Erieview wasn't necessarily a lucrative investment for Highlands to hang onto. An accelerated payoff schedule on the building's mortgage required the company to put any income from the building, after operating expenses, toward paying off debt, according to a recent quarterly financial report. During the first nine months of this year, that meant Highlands didn't get to pocket $800,000 from 45 Erieview.
A landlord in that position doesn't have much incentive to make big investments.
"I think Ian and Somera Road probably bring a different approach to the property," said Rico Pietro of Cushman & Wakefield/Cresco Real Estate, the local brokerage firm handling leasing at the complex. "I think they're committed to making necessary upgrades to improve the marketability of the property."
Pietro and Jim Krivanek will stay on as Somera's leasing team.
Neither Pietro nor Ross would identify tenants they're chasing for a large, contiguous block of space - up to 250,000 square feet now, perhaps more if AT&T decides to downsize more - in a relatively modern downtown building.
Over the past few years, 45 Erieview has lost contests for large public leases, such as Cuyahoga County's headquarters deal, and routinely has been mentioned as a prospect for private-sector tenants on the hunt for new space. The sale to Somera comes as big employers including Medical Mutual of Ohio, a few blocks south on East Ninth Street, are considering a move.
"Our focus right now is being the best landlord we can be for AT&T," Ross said. "They're a dream tenant. ... We want to continue making them happy."
To liven up the property, Somera could overhaul the lobby, add a fitness center, create collaborative work areas, explore retail opportunities along East Ninth and add outdoor space. The complex already includes 400 dedicated parking spaces, between the building's basement and the garage at Lakeside and East 12th Street. Ross is working on renovation plans with Vocon, an architecture firm with offices in Cleveland and New York.
He wouldn't put a timeline on the improvements, saying that Somera has been putting together a team of seasoned local partners and is taking a slow approach.
One change he's not considering, though, is turning office space into apartments.
"That's not really our forte," said Ross, who familiarized himself with Cleveland while working for Triangle Capital Group, a privately held real estate fund that has invested here. "There's a fair amount of planned conversions in the market. That's not what we think of this building and its highest and best use."
Other residential makeovers have trimmed the supply of empty office space downtown. Meanwhile, a few developers are talking about constructing new office buildings, if tenants and lenders sign on. Ross is trying to position 45 Erieview somewhere in between - as long-term office space that's a lower-cost, lower-risk alternative to new construction.
And though most office leasing here involves existing Northeast Ohio tenants hopping around, he's not ruling out the prospect of attracting new players.
"I think a lot of national companies, in Los Angeles, New York, D.C., Chicago, are saying the cost of living in those cities has gotten astronomical. ... Attrition problems continue to be an issue," he said. "Companies are looking toward the Midwest. I do think there will be growth in the Greater Cleveland area in terms of new tenancy."
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