As owner Optima Management Group describes their property, 55 Public Square is a “Class B office building in a Class A location.”
That location is about to get even valuable with a planned $73.6 million remodeling of the former headquarters of The Cleveland Electric Illuminating Co., now a part of First Energy. When the 24-story office building opened in 1958, it was Cleveland’s first glass curtain wall skyscraper.
The building’s value will certainly increase further with Sherwin-Williams (SHW) reportedly selecting neighboring properties for its massive new headquarters plus research and development (HQ+R&D) facilities.
At least two other neighboring buildings in downtown’s Warehouse District are under contract with prospective buyers who intend to renovate them and capitalize on the proximity of SHW’s HQ+R&D project. However, their buyers said they weren’t yet ready to publicly reveal their acquisitions or intentions.
To help finance 55 Public Square’s remodeling, Optima applied to the Ohio Development Services Agency (ODSA) for a maximum $5 million tax credit from the Ohio Historic Preservation Tax Credit Program, according to a source who wasn’t permitted to speak publicly about the renovation project or the tax credit application for it.
|The Brilliant Electric Sign Co., then of Hough
Avenue in Cleveland, places holiday decora-
tions on the new Cleveland Electric Illumina-
ting Co. headquarters in 1959 (Press).
The Fall 2019 tax credit application period, also called Round 23, began in August. Applications are being reviewed by ODSA until Dec. 1. Approved applications are scheduled to be announced on or before Dec. 31, the OSDA web site shows. Buildings that are 50 years old or older qualify for historic tax credits.
According to documents submitted to OSDA by Optima, the $73.6 million renovation includes replacing the office tower’s exterior surfaces, called the envelope, comprised of glass and steel panels as well as metal framing.
The project also involves remodeling the basement, upper two mechanical floors 23, 24 and tenant improvements on floors 1-6 and 18. That represents 40 percent or 195,474 square feet of the 480,000-square-foot building.
The restaurant wing at the corner of West 3rd Street and Frankfort Avenue, as well as the six-level parking deck on the corner of West 3rd and St. Clair Avenue are not part of the renovation, the application documents show. John Q’s Steakhouse, originally owned by the Stouffer’s chain, operated in the restaurant wing from 1959 to 2013.
It’s apparent that Optima Management Group is moving forward with the renovation project regardless of OSDA’s decision. Through an affiliate, Optima 55 Public Square LLC, the owner is soliciting for bids from construction firms to carry out the remodeling work, the source said.
|This postcard was printed shortly after
55 Public Square, then called the Illu-
minating Building, opened in 1958 for
the utility (Cleveland Memory Project).
Although 55 Public Square started a post-war building boom of Modernist towers in downtown Cleveland, that boom was delayed. The electric utility’s new home was built 13 years after the end of World War II and three decades after downtown’s previous skyscraper was completed — the Terminal Tower.
Built in the International Style according to the principles of Ludwig Mies van der Rohe, 55 Public Square was designed by Carson Lundin & Shaw Architects. It is 300 feet tall and has 20,000-square-foot floorplates.
According to commercial real estate brokerage Jones Lang LaSalle (JLL), 55 Public Square is 57 percent vacant. That’s the fourth-highest vacancy rate among downtown Cleveland office buildings, trailing only the Ellipse (45 Erieview), Superior Building (815 Superior) and the Western Reserve Building (1468 W. 9th). The average vacancy rate for Class B buildings downtown is 33 percent.
The tired-looking tower’s high vacancy has persisted in spite of an asking price of only $17 per square foot, or $1.26 below the average Class B asking price downtown. Class B office space, which is a lower-quality product than Class A or Trophy class (but higher than Class C), represents slightly more than half of downtown’s 15 million square feet of office inventory, JLL says.
Two years ago, the City of Cleveland seriously considered leasing a significant portion of 55 Public Square for its new Cleveland Police Department headquarters. However, substantial facility and security changes were needed and the city began looking elsewhere.
Last year, local real estate developer K&D began the process to buy the aging office tower from Optima and convert its lower half to apartments. But K&D withdrew after taking a harder look at the cost of renovations versus projected revenues.
Optima Management Group, run by Chaim Schochet, acquired 55 Public Square in 2008 for $34 million during a recessionary buying spree in which his firm snapped up a half-dozen Cleveland towers. Optima since has sold all but two of those towers, 55 Public Square and One Cleveland Center, 1375 E. 9th St.