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Beachwood Developer Plans 200,000-SF Distribution Center in Solon

25 Jan 2015, 12:04 am

By Adrian Maties, Associate Editor

ORG Holdings L.L.C. intends to build a 200,000-square-foot warehouse on an 11-acre site located at 6801 Cochran Road in Solon, according to Crain’s Cleveland

Edward Schwartz, an ORG principal, told Crain’s Cleveland that, together with his business partner, Jonathan Berns, he plans to acquire the site and start construction as soon as the project receives all the necessary approvals. St. Gobain Crystals, part of the French-based St. Gobain of North America building materials firm, is the current owner of the site, which is listed for sale with Newmark Grubb Knight Frank. The asking price is $995,000.

Although he did not reveal the cost of the project, Schwartz did say he expects to open the new facility by the end of the year. It will have a ceiling clear height of 32 or 36 feet and will be LEED certified.

CBRE Group Inc. reports that the Cleveland-area industrial market saw 264,721 square feet of positive absorption in the last quarter of 2014, bringing the year’s total to 2.2 million square feet. As a result, vacancy dropped slightly to 6 percent for the first time since 2007, while availability fell more significantly to 6.8 percent.

It was the first time since the first quarter of 2009 that availability dropped to less than 7 percent. This has inspired some developers to start work on speculative projects, like ORG.

Charts courtesy of CBRE.

Cleveland Browns Continue with Phase II of Renovations at FirstEnergy Stadium

19 Jan 2015, 4:52 am

By Adrian Maties, Associate Editor

”The stadium is nothing without our fans.” – Alec Scheiner, President of the Cleveland Browns.

Last Wednesday, the Cleveland Browns released more details about the second phase of the FirstEnergy Stadium Modernization Project. It is the final phase of a $125 million makeover, expected to improve the fan experience and also help the team win as many games as possible.

Jimmy Haslam, owner of the Browns, announced the project in the fall of 2013. Phase one was finished last year. It added massive video boards, LED and ribbon boards, a new audio system, sponsor decks and escalators, which helped eliminate congestion. And it also helped improve the team’s home field advantage: The Browns finished 2014 with a 4-4 record at home, their second best since 1999.

Work on the second phase of renovations started after the 2014 season. It will bring upgraded lighting and signage in the concourses; high-definition graphics of current players, Browns legends  and the Dawg Pound; revitalized premium areas; new celebrity chef stands; and even a field-level hospitality location opposite the team’s locker room. The Browns expect to finish everything in time for the 2015 campaign. Turner Construction is the general contractor, with Gensler as architect.

Phase two is expected to cost about $50 million. The entire project is funded with the help of a $62 million loan from the NFL, money from the city of Cleveland and a bank loan to cover the remainder. The city owns the stadium. It will provide $2 million in funding each year for the next 15 years. The $30 million represents a present-day value of $22 million.

Photo credit: The Cleveland Browns

Macy’s to Close Richmond Heights Store

12 Jan 2015, 5:00 am

By Adrian Maties, Associate Editor

Macy’s has announced it will close its store in Richmond Town Center in Richmond Heights. The decision is one in a series of initiatives intended to help the company evolve and keep up with the changing face of retail.

The Richmond Heights Macy’s opened in 1998. It has 165,000 square feet of space and employs 105 people. It numbers among 14 locations Macy’s plans to close this year, together accounting for approximately $130 million in annual sales. The list also includes two other Ohio stores, in Columbus (115 employees) and Springfield (79 employees).

Macy’s said in a news release that final clearance sales are scheduled to begin on Jan. 12 and will run between eight and 12 weeks. Employees affected by store closings will be offered severance benefits or positions in nearby stores where possible.

After the closings, Macy’s Inc. will operate about 830 stores in 45 states, the District of Columbia, Puerto Rico and Guam. The company expects these changes to generate savings of approximately $140 million per year. It will reinvest them into technology and growth initiatives.

The closing of the Richmond Heights Macy’s is a blow to Richmond Town Center, which is losing one of its anchor tenants. However, in its latest retail market report, Marcus & Millichap said that development in downtown Cleveland and the numerous new jobs that are being created are bringing new retailers to the region. Grocers, fast food and discount retailers are moving into vacant space around the metro. The strong tenant demand has lowered metrowide vacancy, which reached 9.2 percent at the end of the first half of 2014 and continues to decrease.

Photo credit: Google Maps

Cleveland’s Charter One Bank Building Changes Owners

22 Dec 2014, 6:28 am

By Adrian Maties, Associate Editor

Another Cleveland office building changed hands this month. The Charter One Bank Building in downtown Cleveland was sold to two out-of-state investors for an undisclosed price.

Canadian-based SNR Group teamed up with Sassoon Equities Inc. to buy the property in a deal that closed on Dec. 8. Citizens Financial Group was the seller. The bank will continue to operate in the building, but as a tenant, not a landlord. It has leased 40 percent of the property; the remaining 60 percent is vacant.

The Charter One Bank Building, located at 1215 Superior Ave., stands five stories and features 164,000 square feet of space. According to PropertyShark, the building was constructed in 1986 and has a current market value of about $12 million.

The Plain Dealer reports that the new owners plan to renovate the newly acquired building. The project includes exterior improvements, a revamped lobby and remodeled office floors. CBRE Group Inc. has been hired to manage the building and find new tenants.

In its third-quarter market report, Marcus & Millichap said that development in downtown Cleveland and a resurgence of office construction in suburban submarkets are propelling the local office market forward this year. Investor interest in the Cleveland metro is strong, but sales activity over the past year has been limited due to the low number of  quality assets available for sale.

The real estate investment services firm also said that office sales during the year were concentrated in the Downtown and East Cleveland submarkets, as well as Summit County. Another recent downtown sale was that of the Halle Building, which K&D Management LLC purchased from Forest City Enterprises Inc. for $20 million.

With office completions down in 2014 compared to the previous two years, Marcus & Millichap expects the market to attract more and more investors as the existing buildings fill up and are listed for sale.

Photo credit: Google Maps

Forest City Sells Cleveland’s Halle Building for $20M

15 Dec 2014, 4:32 am

By Adrian Maties, Associate Editor

The Halle Building

One of Cleveland’s oldest landmark buildings has changed hands. Forest City Enterprises Inc. announced it completed the sale of the Halle Building at the start of December. The property was acquired by affiliates of K&D Management LLC for $20 million.

The Halle Building is located at 1228 Euclid Ave. in downtown Cleveland. The property was constructed in 1910 and was originally the home of the Halle Brothers upscale department store. It was reconfigured and now features 392,000 square feet of office space and a total of 409,000 square feet of space. It is listed on the National Register of Historic Places.

Forest City purchased the former department store in 1986. In a news release, the company said the sale generated net proceeds of approximately $8.3 million. It also added that the new owners plan to convert it into rental apartments, with retail, office and restaurant space on the first two floors. Forest City did not disclose any other details about K&D’s planned project.

On the same day it announced the sale of the Halle Building, Forest City also said it sold a 322-unit independent senior apartment community in Lauderhill, Fla. Pacifica Lauderhill LLC purchased the property, Forest Trace, in a sale that generated net cash proceeds of $18.5 million to Forest City. The buyer also assumed the existing mortgage on the community.

“These sales, which include our last assisted-living apartment community, reflect continued execution of our strategy to narrow the focus of our operating portfolio, monetize non-core assets and use proceeds to further reduce leverage and selectively reinvest in opportunities in core markets,” David LaRue, Forest City’s president & CEO, said in a statement for the press.

Since 2012, Forest City has sold 48 primarily non-core assets, generating cash proceeds of approximately $945.4 million. Over that same period, the Cleveland-based company has reduced total debt by approximately $1.9 billion and annual fixed charges by nearly $300 million.

Photo credit: Forest City Enterprises Inc.

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