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Hyatt Place Cleveland/Independence Sold to Lone Star Funds as Part of 38-Hotel Portfolio

29 Sep 2014, 4:02 am

By Adrian Maties, Associate Editor

The Hyatt Place Cleveland/Independence is changing hands. The Northeast Ohio property is one of 38 sites that Hyatt Hotels Corp. has agreed to sell to Texas-based Lone Star Funds for about $590 million.

Located seven miles south of downtown Cleveland, in the city of Independence, the hotel features 127 studio-style suites and 1,200 square feet of flexible meeting space. Amenities include a 24-hour fitness center, indoor pool, free Wi-Fi, complimentary parking and more.

The 38-property portfolio totals 4,950 rooms and includes another Ohio hotel, the Hyatt Place Cincinnati- Northeast, in Mason. Hyatt Hotels  said it will enter into franchise agreements with Lone Star Funds as part of the sale. This means that all the hotels will keep their current Hyatt Place and Hyatt House branding. The transaction is expected to be completed this November, subject to customary closing conditions and approvals.

Aimbridge Hospitality LLC will manage the hotels. Over the next 24 months, Lone Star Funds will invest an additional $50 million to renovate and upgrade its new hotels.

“Hyatt utilized its strong balance sheet and industry expertise to launch the Hyatt Place and Hyatt House brands. We are now leveraging that brand equity to recycle capital while maintaining a long-term brand presence in multiple markets,” Steve Haggerty, global head of capital strategy, franchising and select service for Hyatt, said in a statement for the press. “We believe the renovations planned for the portfolio will help maintain the brands’ reputation as the leading brands in their segments, and we look forward to deepening our relationship with Lone Star and Aimbridge.”

This is the second large hotel portfolio to sell this month. NorthStar Realty Finance Corp. also recently announced it will buy a 7,000-room portfolio of upscale extended-stay and select-service hotels from Inland American Real Estate Trust for $1.1 billion.

Photo credit: independence.place.hyatt.com

University Hospitals to Buy Highland Hills’ One Harvard Crossing for $12M, Relocate 600 Employees

21 Sep 2014, 5:11 am

By Adrian Maties, Associate Editor

University Hospitals is moving to a new location. The hospital system recently announced its plans to buy the One Harvard Crossing office building, in Highland Hills, and move 600 of its administrative employees to the East Side suburb.

UH said it will pay $12 million for the facility, located on the corner of Harvard and Northfield roads. The deal is expected to close on Sept. 30. According to The Cleveland Plain Dealer, UH plans to start renovations at One Harvard Crossing in October. It will start to move the first employees to the new location in January, and by March it expects to finish most of the relocations.

One Harvard Crossing is a 130,000-square-foot building located at 20800 Harvard Road. It was constructed in 1999 and sits on 31 acres of land. According to real estate website PropertyShark.com, the total market value of the property is set at $6.9 million. The almost vacant One Harvard Crossing last changed hands in 2013, as part of the Gotham King portfolio, which included nine office buildings that slipped into foreclosure in 2012. Lone Star Funds, a Texas-based investment group, took over the East Side properties.

The acquisition of One Harvard Crossing is part of UH’s consolidation plans, designed to accommodate its recent growth and bring under the same roof its teams of non-clinical employees (administrative, human resources, legal, etc.), currently located in other facilities throughout the Cleveland area. This is not the first time the healthcare provider bought a large building outside its campus in order to relocate staff. In 2006, it acquired the former OfficeMax headquarters in Shaker Heights. The facility is now called the UH Management Services Center. It currently houses several of the hospital system’s departments, including legal and human resources.

Photo credit: Google Maps

Investors Strike Two New Deals in Downtown Cleveland’s Hot Apartment Market

14 Sep 2014, 5:46 am

By Adrian Maties, Associate Editor

Downtown Cleveland – with its steady economic growth, low apartment vacancy and numerous retail and hotel developments – continues to prove very attractive to investors. Recently, two new companies made their presence known in the area, in attempts to take advantage of the 95 percent-occupied downtown apartment market.

According to The Cleveland Plain Dealer, the Millenia Cos. of Valley View acquired the office high-rise at 75 Public Square on Sept. 5. The company paid $4 million for the property. It now plans to turn the property into an apartment building with between 80 and 100 units, with one lower floor reserved for offices and street-level retail.

The 187-foot-tall 75 Public Square office building was completed in 1915. It was designed by the Cleveland architectural firm of Hubbell & Benes and once served as the headquarters for the Cleveland Electric Illuminating Co. The Plain Dealer reports that the property slipped into foreclosure in June, after its owner, a company named Northpoint Properties Inc., failed to make a balloon payment on a $4.5 million mortgage.

Millenia President Nico Bolzan told the Plain Dealer that the 15-story building was 60 percent occupied at the time of the sale, making it a perfect candidate for conversion to apartments. Construction will start once the developer manages to secure federal and state preservation tax credits and other subsidies. Until then, Millenia Cos. will operate the building as offices. The company plans to invest about $30 million in the project. Nico Bolzan said he hopes to finish it in time for the 2016 Republican National Convention.

Morgan Management is the second investor. But unlike the Millenia Cos., it purchased an already converted building. According to Crain’s Cleveland, the Rochester, N.Y.-based firm acquired the National Terminal Warehouse Apartments for $15.5 million from Irving, Texas-based Kimberly-Clark Co. on Sept. 8.

Once an old warehouse building, National Terminal was converted into 250 apartments in 1996. It was the single largest conversion of its time, opening the door for other such projects in the area. Crain’s Cleveland reports that unlike other multi-family properties in the area, the National Terminal is only 83 percent occupied, with rents of 75 cents per square foot, compared to $2 per square foot in other buildings. Given that it paid less than the $16 million market value of the property, Millenia Cos. might make additional investments to renovate National Terminal and achieve better rents.

Marcus & Millichap reports that apartment vacancy in the Cleveland metro area will climb by 0.7 percent this year, to 6.2 percent, as new apartments come online. In spite of this, average rents will continue to increase and will reach $805 per month this year.

Charts courtesy of Marcus & Millichap.

American Greetings Breaks Ground on New World HQ in Westlake

8 Sep 2014, 4:09 am

By Adrian Maties, Associate Editor

American Greetings broke ground on Aug. 26 on its new headquarters building at the Crocker Park development in the Cleveland suburb of Westlake. Expected to cost between $150 million and $200 million, the project is scheduled to be completed in two years.

The greeting cards company first announced its intention to build a new  headquarters building in Crocker Park in May 2011. A year later, it unveiled the first plans for the facility. Work was scheduled to start by 2012, but the project encountered some problems along the way and was delayed.

American Greetings finalized the transaction to relocate its world headquarters this March. On July 1, it announced the sale of its 1.6 million-square-foot facility in Brooklyn to Industrial Realty Group, one of the largest commercial and industrial property owners in Ohio. Under the terms of the deal, American Greetings will continue to lease space in its current location until the completion of its new world headquarters.

The American Greetings Creative Studios, as the new headquarters is called, will meet all of the company’s needs in spite of the fact that it will be smaller than the Brooklyn facility. Designed by RTKL, it will contain 600,000 square feet of office space and 60,000 square feet of retail on the first floor. A glass-enclosed skyway will connect the building to a five-story parking structure.

The project is good news for the city of Westlake, the Cleveland area and even the state, as it prevents an important company from leaving Ohio. American Greetings will bring more than 1,500 employees to the new location, becoming Westlake’s largest employer and providing a major economic boost to the entire area.

The greeting cards company has hired Washington, D.C.-based MGAC — a project cost, risk and owner’s representation firm — to manage all aspects of the project. The company will provide cost and risk management services, furniture, audio-visual and security systems procurement, and move management services. American Greetings plans to move to the new location in the summer of 2016.

Photo credit: RTKL

Cleveland Indians to Renovate Progressive Field

18 Aug 2014, 3:53 am

By Adrian Maties, Associate Editor

The Cleveland Indians announced on Aug. 7 that Progressive Field is getting a makeover. Called “The Progressive Field Evolution,” the multimillion-dollar renovation project will start in the off season. Most of it is expected to be complete by Opening Day 2015, with the remainder to be finished early in the season.

Progressive Field opened in April 1994. At that time it was called Jacobs Field. The baseball park set a major league record by selling out all of its 43,000 seats for 455 straight games between June 12, 1995, and April 4, 2001. However, in recent years the Indians have registered a drop in attendance. The Tribe said on its website that it is drawing an average of 18,659 fans per game this season.

The renovation project is meant to bring fans back. For the past four years, the Indians have researched other sporting facilities and have listened to what their own fans have had to say. The result is a 100 percent privately funded project that will enhance the fan experience at no cost to the taxpayer. Delaware North Cos., the Tribe’s food and beverage partner, will also help pay for the renovation.

Plans call for a reduction in capacity for the 43,000-seat facility. The new Progressive Field will have between 37,000 and 38,000 seats, and will put more focus on group gathering spaces. It will feature a revamped Gate C entrance at E. Ninth Street, new bullpens among the seats, a beyond the right-center-field wall, a new group seating area, a two-story bar for adults, and an expanded Kids Clubhouse with a climbing wall, batting cage and pitching machine.

“We cannot only think about ‘on the field,’ ” Tribe president Mark Shapiro said in a statement for the press. “We also have to obsess about being innovative in every single aspect of fan experience in our business. The reality is, as sports entertainment has evolved, media and technology have impacted not only the way our fans view our game and our sport but the way they consume it and experience it in the ballpark.”

In spite of the seating reduction, the Indians will not change their ticket price structure. They’re also working on other modification plans, to be announced in the next two or three years.

“We want the experience to be more compelling,” Shapiro said. “We want people to come to the ballpark.”

Photo credit: The Cleveland Indians

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