Investors pump up height of planned Cleveland skyscraper

With an address of 725 W. St. Clair Ave., this 11-parcel, 2.3-acre
parking lot in downtown Cleveland’s Warehouse District, owned
by Stark Enterprises, is the site for a residential tower proposed
by Realife Real Estate Group that may be taller than Playhouse
Square’s 34-story The Lumen skyscraper?(Google).
CLICK IMAGES TO ENLARGE THEM

Upon opening Realife Real Estate Group’s Web site, a video begins to roll. The video is from a drone coming in low from the west, soaring above downtown Cleveland’s Warehouse District. And it is not a coincidence that the first parking crater it passes over is the multi-parcel lot on the southeast corner of St. Clair Avenue and West 9th Street.

That’s where Israeli real estate principal Yaron Kandelker and other investors from his home country hope to build downtown Cleveland’s next residential skyscraper, according to sources. Proposed is a $100 million project that is desired to be taller than The Lumen, now under construction in Playhouse Square.

Kandelker’s investor group reportedly has significant resources and has invested in other projects in Israel and Moscow, Russia, but is looking for bargains in largely untapped, inexpensive markets like Jacksonville, FL and Cleveland. Opportunity Zone-enabled financing has become an important factor in Cleveland’s attractiveness.

Ad.
The Lumen apartment tower rises in downtown
Cleveland’s Playhouse Square. Despite its large
physical presence in the skyline, it will make a
small dent in downtown’s housing market that
could accommodate another dozen Lumen
towers-worth of housing stock according
to a 2018 market study (Twitter).

Realife could have lots of competition for new downtown residential high-rises here as Stark Enterprises, City Club Apartments, Geis Companies and the Frangos Group all want to get in on the action. But it appears that Stark Enterprises may be less of a competitor and more of a partner to Realife.

The property at St. Clair and West 9th is owned by West 9th Street Parking, LLC, an affiliate of Stark Enterprises. Stark in 2014 acquired Los Angeles-based L&R Group’s Cleveland portfolio for $26 million. That portfolio includes properties that sources say Stark intends to begin clearing in August for nuCLEus, a $354 million, two-24-story-tower development in the Gateway District.

But the portfolio also included a 2.33-acre, 11-parcel property at 725 W. St. Clair Ave., at the southeast corner of West 9th. To reduce costs of development, Stark may retain ownership of this property and enter into a joint venture with Realife. Kandelker didn’t return an e-mail seeking comment.

However, Stark Enterprises‘ Chief Operating Officer Ezra Stark did respond and said that he could not comment on any joint venture discussions with Realife. He did say that Stark Enterprises was not selling the land to Realife and has had no conversations in that regard.

If Stark does partner with Realife in its future efforts, it wouldn’t be the first time Stark helped the firm expand its real estate foothold here.

Just last December, Stark sold its five-story headquarters building at St. Clair and West 3rd Street to Kandelker for $2.65 million, below Stark’s asking price of $2.9 million. Stark also provided to Kandelker the financing for the purchase and filed the paperwork to create Kandelker’s company, 1350 W6 LLC, which acquired Stark’s old HQ. And Stark hurriedly moved out to a temporary headquarters at 629 Euclid Ave. while nuCLEus (Stark’s new HQ) is being built.

Ad.
Realife is focusing its downtown investment efforts on two of
its largest parking craters, both in the Warehouse District. Its
proposed skyscraper would be built on the westernmost crater
owned by Stark Enterprises while it purchased Stark’s former
headquarters located next to the largest crater, dubbed the
Superblock which is owned by Weston Inc. (Google).

Realife hasn’t officially pursued a development plan for Stark’s old HQ at 1350 W. 3rd St. However, the property is listed on Realife’s Web site as a potential multi-family project. Sources say a four-story-tall billboard on the west side of the building generates significant revenues, so there is no hurry to find new uses or tenants for the building.

Realife’s proposed high-rise residential project down the street comes as nearly all of downtown’s obsolete office towers have been converted to residential. More new-construction residential towers are planned to rise following the completion of The Beacon 29-story tower and The Lumen 34-story tower.

As mentioned earlier, Realife seeks to build a tower taller than The Lumen, and likely higher than any of the other proposed residential high-rises, according to source familiar with the project. However, the square footage, amenities and excavation would have to be less than The Lumen’s in order to meet Realife’s reported $100 million budget for its tower.

The Lumen is a $135 million, 602,000-square-foot residential tower with 318 apartments in Playhouse Square on Euclid Avenue at East 17th Street. Preliminary cost of building the tower is $224 per square foot.

The Lumen’s high cost per square foot was due, in part, to the removal of 30,000 cubic yards of dirt for a roughly 30-foot-deep, 1-acre wide “bathtub” that includes underground parking and services for the building. It also dug 175-foot-deep supportive caissons to bedrock.

Parcel map for the property 725 W. St. Clair Ave. being
marketed for sale by Stark Enterprises and shows some
adjoining parcels that are not involved in Realife’s
nascent skyscraper plans (Cresco).

A source familiar with both The Lumen and Realife’s proposed tower said Realife is also reducing the cost per square foot of its tower by shrinking its floorplates, not just reducing the amount of excavation and amenities. That would allow Realife to build taller than The Lumen while constructing fewer square feet of structure.

In addition to a roughly 100,000-square-foot garage and a fifth-floor amenity deck, The Lumen has floor plates of about 12,000 square feet in the tower. Those features are also instructive to estimating what Realife may have in mind for its skyscraper.

The comparison to The Lumen and Realife’s $100 million budget suggests that Realife’s tower could be about 40 stories tall, measure 500,000 square feet including 90,000 square feet of parking, have floorplates of less than 10,000 square feet, and have construction costs of $200 per square foot.

Considering that only 2 percent of downtown Cleveland employees live downtown, there is still a large, untapped market for downtown housing. A 2018 Housing Demand Analysis for downtown Cleveland showed that there is a market for building another 3,800 housing units beyond the 3,000 units already under construction or in planning. To meet that demand would require building the equivalent of another dozen Lumen-sized skyscrapers downtown.

Realife Real Estate Group’s Yaron Kandelker (LinkedIn).

Since 2015, Realife affiliates dramatically increased their presence in Greater Cleveland. They acquired more than 55 mostly single-family residential properties in Cleveland and inner-ring suburbs for nearly $4 million, county records show.

Realife has also added multi-family properties to its portfolio, including in Fairview Park, Lakewood and Cleveland, the latter having Luchita’s West 117th Street flagship restaurant on the ground floor. But neighbors of some of Realife’s properties have complained about the lack of maintenance on them.

END

2 thoughts on “Investors pump up height of planned Cleveland skyscraper”

  1. Very interesting, seems like every year 1 or 2 new apartment towers are being planned for downtown. On the other hand, will corporations soon begin building offices in downtown as well? Moving here is much cheaper for them than in major corporate cities Chicago.

Comments are closed.