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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

Global Healthcare REIT to Expand in Ohio with Nursing Home Acquisition

9 Aug 2014, 4:41 am

By Adrian Maties, Associate Editor

At the end of July, Utah-based Global Healthcare REIT Inc. announced plans to expand into Ohio. The company has entered into an agreement to purchase the Meadowview Nursing Home, located in Seville, Ohio. It will be the fifth such property in Global Healtchare REIT’s portfolio.

The Meadowview Nursing Home is located on five acres of land in Medina County, about 25 miles west of Akron and 40 miles south of Cleveland. In a news release, Global Healthcare REIT said the area has an attractive population growth in the 65 to 74 year age bracket. The facility offers 27,500 square feet of space and is licensed for 100 skilled nursing beds.

Global Healthcare REIT will pay $3 million for the Meadowview Nursing Home. The deal will close after the satisfactory completion of a 45-day inspection period and other conditions customary in transactions of this nature. The REIT said it will secure financing to cover a portion of the price. The Utah-based company also said it has several financing opportunities but at the moment has made no firm commitments. The transaction is scheduled to close on Sept. 30. Global Healthcare REIT will not operate the facility; it will lease it to an unaffiliated third-party operator.

“The forecasted financial metrics on this facility are extremely favorable once we have implemented our planned changes and upgrades. We continue to evaluate properties opportunistically and hope to complete several additional acquisitions currently in the pipeline,” Christopher Brogdon, president of Global Healthcare REIT, said in a statement for the press.

InterContinental Hotels Group Opens Cleveland’s First Hotel Indigo

2 Aug 2014, 2:50 am

By Adrian Maties, Associate Editor

The city of Cleveland is welcoming a new hotel brand. InterContinental Hotels Group has opened the first Hotel Indigo in the area. Located in Beachwood, the new hotel is designed to reflect the history and culture of the surrounding neighborhood. It also celebrates the Cleveland Metroparks system, a beautiful and diverse network of green spaces dedicated to conservation, education and recreation and referred to by the locals as the “Emerald Necklace.”

The new Hotel Indigo Cleveland-Beachwood stands four stories tall and offers 100 rooms with hard-surface flooring, plush bedding and other features. It is located off interstates 271 and 480, close to many shopping and dining options. Hotel amenities include an outdoor courtyard, Wi-Fi, a 24-hour fitness center and 7,500 square feet of meeting space.

CBHV LLC is the hotel’s owner, with Atlantic Hospitality as the manager. Prior to its conversion to the Hotel Indigo brand, the ownership invested $8 million to renovate the property. The project uncovered an original brick wall, which was carefully restored and now serves as a unique design feature in the lobby.

Murals of the local green spaces that make up the “Emerald Necklace” and nature-inspired design accents featuring wood, grass and pebbles show the hotel’s connection to the surrounding Beachwood neighborhood, while the meeting rooms are named the Hunter Room and Jumper Room in tribute to the Hunter Jumper Classic competition, one of Northern Ohio’s annual summer traditions, held at the Cleveland Metroparks Polo Field.

“We love our neighborhood and look forward to introducing guests to some of our favorite places,” Cynthia Eckrich, general manager of the hotel, said in a statement for the press. “Whether it’s taking in a sky-high view from a hot air balloon during The Blossom Time Festival or keeping your feet on the ground on a local nature trail, we can connect our guests to the neighborhood like no one else.”

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