Cleveland, redefined

Out-of-state license plates are everywhere in Greater Cleveland these days, especially in hot neighborhoods of Cleveland as well as inner-ring suburbs like Lakewood and Cleveland Heights. These photos were captured outside an apartment building in Ohio City where the number of cars bearing out-of-state plates equaled those with Ohio plates. CLICK IMAGES TO ENLARGE (Tom Moran photo)

Perhaps you’ve noticed it on the license plates of cars in your neighborhood. Perhaps you’ve noticed it while shopping for a new house. Perhaps you’ve noticed it in the new faces at your child’s school. Perhaps you’ve noticed it on local dating apps.

Something is happening in Greater Cleveland that we’re not accustomed to. They’re coming. Many are already here. Lots of them. Lots of what?

People. Relocated, transplanted, moved.

If it is big enough to measure, we probably won’t get a better feel for this population shift until the next Census count in 2020. But numerous unscientific sources of information are revealing that a recognizable change is happening in Greater Cleveland.

First, the license plates. If you live in some of the hot neighborhoods of Cleveland — Downtown, Detroit-Shoreway, Little Italy, Ohio City, Tremont, University Circle — or in inner-ring suburbs like Lakewood or Cleveland Heights, you have new, out-of-state neighbors. Parked in these areas are lots of cars with license plates from eastern states, especially New York, Pennsylvania or Maryland. Or you’ll even see a few Illinois, Michigan, Georgia, California and Texas plates.

The out-of-state plates are more numerous in neighborhoods with plenty of apartments — a favorite among new arrivals who aren’t ready to buy in an unfamiliar city. At some larger apartment complexes or on streets with many smaller apartment buildings, up to half of the parked cars are from out of state.

Second, my younger friends have noticed on dating apps lots of Clevelanders looking for love or friendship, and starting out with “I’m new in town…” They couldn’t cite numbers but said there were enough of them to be noticeable and to cause my friends to wonder “What is going on?”

Third, for those already married with children, they’re probably noticing new faces at their child’s day care. For example, at Lakewood Child Care Center, they’re coming from New York, other eastern states as well as from Chicago, said Director Holle Brambrick.

“Our (facility) tours of potential new customers coming from out-of-state has definitely increased in the past year,” she said.

And then there’s the real estate. If you haven’t checked the prices lately of homes in the above-mentioned neighborhoods and inner-ring suburbs, you are in for a shock. Until the last year or two, a home shopper could easily find a nice house in Cleveland or Lakewood away from the lake for under $200,000. Not anymore.

Thousands of residences are under construction in Greater
Cleveland, with many rising near the region’s rail and bus
rapid transit stations to offer links to downtown, airport and
more. Here, Centric apartments rise next to the Little Italy
Red Line station that opened in in 2015.
(Ken Prendergast photo)

Consider the story of my Lakewood veterinarian and her husband (they didn’t want their names used). They live in a second-floor apartment in a ubiquitous Lakewood double. This one is located on Rosewood Avenue, near the intersection of Hilliard Road and Madison Avenue. The couple wanted to stay in their apartment, but the double was sold to a real estate developer for $170,000. The developer will do to this double what he has done to other Lakewood doubles — gut it and convert it into a single-family home for sale. They are asking and getting sales upwards of $300,000.

So my veterinarian friend and her husband looked to buy new homes anywhere north of Lorain Avenue, whether it is in Cleveland, Lakewood, Rocky River or Fairview Park. As a young couple, they wanted to be close to the city and their jobs. Finding an affordable home is proving to be difficult. They thought they found the perfect home in Kamms Corners near the Metroparks, but they were outbid by $5,000 by someone offering all cash.

Howard Hanna realtor Emmanuel “Mike” Skantzos, based out of the agency’s Rocky River office, says experiences like this are becoming more common. When a renovated historic house with quality finishes goes on the market, it may not last a week before a buyer snaps it up. And the asking price often doesn’t get negotiated downward; instead it gets bid upwards by competing buyers.

Furthermore, Skantzos estimates that about 20 to 25 percent of the work at Howard Hanna’s Rocky River office is handling relocations to the Cleveland area. While only about 5 percent of his business is relocations, there are realtors at his office who handle nothing but relocations and they are busy, he says.

Cars with New York license plates are parked in January next
to the 15-story Lakewood Center North building that was
recently converted to apartments. (Ken Prendergast photo)

The change in the market is being noticed in Downtown Cleveland too. There, Greg Deming, property manager at the new Worthington Yards apartments in the Warehouse District, said he’s surprised by the number of people relocating to Cleveland for new jobs this winter.

“Usually, December through February are slow,” Deming said in Crain’s Cleveland Business. “I’ve never seen it like this. We’ll be filled by springtime.”

Anyone driving around the hot real estate areas noted earlier will see apartments, townhouses and new businesses popping up like daisies. And that’s just what they can see. What they can’t see are real estate developments moving more quickly from the drawing board, through financing and city approvals processes to the cusp of construction. The reason is because rents are rising to levels where fewer subsidies are needed due to the as-yet insatiable demand.

Most parcels of land along and north of Detroit Avenue in Cleveland in Ohio City and Gordon Square have a new real estate development on them or a real estate developer inquiring about them. Just about every under-utilized piece of land in Tremont has been or is being developed. Housing prices in Duck Island are bound to eclipse downtown’s as large swaths of vacant land are giving way to large swaths of swanky new townhomes, some priced above $1 million.

Three apartment towers of 20-34 stories are under construction along Euclid Avenue between downtown and University Circle, with several more planned in the Flats and several more planned in University Circle. And if you wanted to get a house in Little Italy or Uptown for under $200,000, you’ve missed the train. Townhouses in the $300,000 to $800,000 range don’t stay on the market for long, and hundreds of apartments rising near rail and bus stations in the area are leasing out before the paint dries on them.

So what’s driving this change?

One economic shift is the amazing growth of “eds and meds” jobs, officially known in the U.S. Bureau of Labor Statistics data sets as the Education & Health Services sector. In the past decade, this sector has added more than 20,000 jobs in the Cleveland market. Year-over-year growth rates of 4 percent or greater in the past three years are comparable to the growth rates of the tech sectors in Austin, TX and Silicon Valley.

Roughly the same vantage points in University Circle, which has become
Cleveland’s boomtown. The scene at left is from 1978 and the view at right
is from 2016. With upwards of 60,000 jobs, this area is now Ohio’s fourth-
largest employment center, behind only the downtowns in Cleveland,
Columbus and Cincinnati. (Scott Muscatello graphic)

And it’s not just growth at the Cleveland Clinic or University Hospitals pushing these numbers. Nor is it limited to their biotech spinoffs, although they’re a significant driver. Regional employment has finally returned to where it was before the Great Recession but still 80,000 off from where it was in 2001.

One of the most exciting business announcements in a long time is the new biotech partnership between the Cleveland Clinic, JumpStart, and Plug and Play, one of the world’s leading startup accelerators. Silicon Valley’s Plug and Play Tech Center has moved into the Global Center of Health Innovation, now more than 80 percent full. One of the biggest fool’s errands of economic development is to try to convince employers to relocate their jobs to your city. Most economic growth is homegrown. Instead, bring the money to Cleveland and the people will follow. Plug and Play will do that.

So financiers are noticing Cleveland. Consider San Francisco’s 10,500-employee Bank of the West which is adding commercial banking hubs in only two metro areas this year — Atlanta and Cleveland. NexTier Bank, a roughly $1.2 billion-asset bank based in Kittanning, PA, is opening a new commercial loan production office in Cleveland. It’s NexTier’s first foray into Ohio where it will help finance multi-family residential developments in downtown Cleveland.

Another San Francisco firm has chosen Cleveland and Atlanta as its two expansion markets this year. Divvy Homes, a new, tech-based real estate firm, provides creative financing so renters can buy their homes.

Real estate giant Marcus & Millichap’s Institutional Property Advisors created a new operation to assist the development of multi-family residential buildings in the Midwest. It didn’t locate its IPA Midwest-Multifamily headquarters in Chicago or any of the other major cities in the Midwest. Instead, it chose Cleveland.

More financial institutions opening up commercial loan operations in Cleveland include SunTrust Bank, Sandusky’s Civista Bank, and Citizens Bank, one of the largest banks in Northeast Ohio, which acquired Cleveland M&A firm Western Reserve Partners to expand its presence in commercial lending. All of this will help homegrown employers grow.

Everything listed thus far has occurred just in the past year.

From Hingetown (foreground) to Downtown and beyond,
business and public investment in Cleveland is accelerating,
attracting new jobs and residents (Aerial Agents photo).

Also in the past year, many companies have chosen to follow the money here. Some are moving their back-office operations from eastern states, including more expensive locales like the New York City metro area. Most of these don’t individually involve large numbers of jobs. But there are many of them which makes the shift all the more organic and sustainable.

“People don’t realize Cleveland has a lot of money in it — who would’ve thought so, right?” said DynamicVentures LLC CEO Brandon Short in Crain’s. Short recently returned to Cleveland from Manhattan.

“But as more and more dust gets kicked up, you’re seeing more eyes turned toward Cleveland,” Short added. “I think that’s part of why you’re seeing the deal flow out here.”

His story was similar to those of many other capital investors who have either returned, relocated to or expanded in Cleveland in the past year or so. Those stories were outlined in a comprehensive article in Crain’s Cleveland Business. Investors said they were drawn, in part, by the city’s new image, unleashed upon the nation and the world after the Cleveland Cavaliers won the championship and the Republican National Convention was held here, both in 2016.

One of the largest corporate relocations was actually due to an acquisition. KeyBank acquired First Niagara Bank for $4.1 billion in 2016, quietly making it the nation’s 13th largest bank. It has been adding jobs and moving positions from its former Buffalo headquarters to Cleveland — to both its downtown and Brooklyn locations.

Fund That Flip, a New York City real estate services company, has moved its back-office and sales operations to downtown Cleveland. The company which provides financing to “flip” or redevelop historic homes, is still small as it was founded in 2014. But the company is growing quickly.

“Cleveland offers a broad base of high-quality talent in a much more cost-efficient environment than New York City,” said CEO Matt Rodak in Crain’s Cleveland Business.

Old and new mix at University Circle, a setting offering
the extent of amenities found in bigger East Coast cities
but without the big prices. It’s a big reason why some
are relocating to Cleveland. (UrbanOhio photo)

South Burlington, VT-based regional airline carrier CommutAir announced it is moving its headquarters to the Cleveland suburb of North Olmsted where it already has some sales and back offices. CommutAir, which recently entered into new agreements with United Airlines, expects to triple its operations here by 2020.

Health care technology company CoverMyMeds is bringing hundreds of new jobs to Cleveland after it was acquired last year for $1.1 billion by San Francisco-based McKesson Corp. The firm’s software allows physicians issuing prescriptions to quickly check with insurance companies to learn if a patient’s medication is covered.

When aggregates company Fairmount Santrol, based in Chardon, merged with Unimin of New Canaan, CT (located in the New York metro area), the board of directors decided to relocate the headquarters of the newly combined company in the Cleveland suburb of Independence. Lower costs and high-quality regional amenities were cited as the reason.

Yet another corporate combination between a New York City-based company and a Cleveland company is benefiting Cleveland. ABM Industries Inc, an international provider of building maintenance and operational services, acquired Cleveland-based GCA Services Group for $1.25 billion. GCA, with 37,000 employees, is a relatively small version of ABM. While ABM’s headquarters will remain in the Big Apple, many back-office functions and workers are being relocated to Cleveland to save money.

There are several thousand new jobs coming to Greater Cleveland this year and next with the opening of Amazon’s two Fulfillment Centers — massive distribution hubs for Northeast Ohio’s 4 million people. The Fulfillment Centers are taking the places of failed shopping malls in North Randall and Euclid.

Huge Amazon Fulfillment Centers are under construction in
Greater Cleveland. This one, on the site of the former Randall
Park Mall, is farther along. The other is being built where
Euclid Square Mall stood. (Aerial Agents photo)

But there are plenty of homegrown expansions, not the least of which are the 1,300 new jobs that Mayfield Village-based Progressive Insurance plans to fill in Northeast Ohio this year.

The last year saw the acquisition of Valspar Corp. of Minneapolis by Sherwin-Williams Co., founded in Cleveland 152 years ago. While the corporation reorganization and the reassignment of employees is continuing, Sherwin-Williams is expanding its headquarters in Cleveland with hundreds more employees spread among several buildings downtown and at a satellite building on Hinckley Industrial Parkway on the south side. A new headquarters tower downtown to consolidate the offices has been rumored but apparently is not in the company’s immediate plans, however.

Tech-startup BoxCast, which delivers high-definition streaming services, outgrew its offices at Burke Lakefront Airport and is moving to Ohio City. There, its new headquarters will add 71 new jobs.

Another is the growth of information technology firm MCPc Inc. It has outgrown its headquarters space on Superior Avenue downtown and is moving to Midtown’s Link59 development on Euclid Avenue near East 55th Street. Perhaps just as exciting, it bought the Greater Cleveland Regional Transit Authority’s 117,000-square-foot bus garage in Cleveland’s Old Brooklyn neighborhood. MCPc will redevelop it into an electronics recycling hub, adding 150 jobs.

There are many more success stories like these happening throughout Greater Cleveland or are about to. Many of them are following the money by either directly relocating jobs to Cleveland or are causing people to relocate to the metro area in search of affordable opportunities. Cleveland has the infrastructure and amenities of cities with far larger populations and costs of living.

The reason is because Cleveland had a far larger population not long ago. Yet even after it shrank, Cleveland maintained and improved its world-class museums, orchestra, sports, theater district, libraries, Federal Reserve Bank, city/metro/state/national parks, ethnic cultural offerings, restaurant scene and more. Those things are helping the city reshape its industrial past into a new, more diverse future. Based on the out-of-state license plates and other indicators, people elsewhere are noticing.


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