Sherwin-Williams HQ competition heats up, delays announcement

The Bedrock site (dark orange buildings) behind Tower City
is?reportedly giving the Jacobs/Weston lots west of Public
Square strong competition for Sherwin-Williams’ new head-
quarters plus research and development facilities. That means
any announcement about the new facilities will have to wait
until 2020. This is an unofficial massing (Geowizical).
CLICK IMAGES TO ENLARGE

If you wanted a shiny new Sherwin-Williams (SHW) headquarters plus a research and development (HQ+R&D) facility in your Cleveland-area stocking by Christmas morning, you’re probably going to be disappointed. But don’t expect a lump of coal either.

According to two high-level sources, the competition for SHW’s HQ+R&D facility is back to a two-horse race, with Bedrock Cleveland making a strong push to take back the lead from the Jacobs/Weston lots west of Public Square in downtown Cleveland.

The renewed competition means that there probably won’t be a HQ+R&D decision by SHW before the end of the year.

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One of the two sources said that SHW, although having purchase contracts in place for 6.82 acres of the 8-acre Jacobs/Weston lots since early spring, kept the lines of communication open with Bedrock.

“The conversations between Sherwin-Williams and Bedrock continue to take place,” the source said. “They never stopped.”

Keeping those lines of communication open has paid off for SHW, as Bedrock reportedly has sweetened its offer to SHW to locate its HQ+R&D facilities in the riverfront phase of its CityBlock development. That phase reportedly would include apartment buildings, a hotel and possibly additional office space.

Another unofficial massing of a SHW HQ+R&D complex
(dark orange) behind Tower City Center. The lighter orange
next to them is an official concept for the later phases of
Bedrock’s CityBlock development (Geowizical).

The first phase of CityBlock is the already announced $110 million renovation of The Avenue Shops at Tower City into a business incubator. That project is due to get underway in 2020.

Bedrock has the resources to make this happen. Not only is Bedrock’s Dan Gilbert a billionaire, but his Rock Ohio Ventures?is $843 million richer after selling off and leasing back its Cleveland-area casinos in late October.

Details of Bedrock’s offer to SHW are unknown. But a source says the site Bedrock and SHW are discussing is a 2.7-acre section of parking lot between Huron Road/Tower City Center and SHW’s existing R&D facility — the John G. Breen Technology Center, 601 Canal Rd. SHW also owns 9.2 acres along the Cuyahoga River.

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SHW’s new HQ+R&D would measure 1.8 million square feet. Parking facilities would be extra. The massive new complex would consolidate up to 6,000 jobs in downtown Cleveland where SHW currently has about 3,500 employees.

The other source said that, while the Jacobs/Weston lots might have had a 90/10 chance of landing SHW’s HQ+R&D a month ago, that site’s lead has probably shrunk to 60/40. The source said it wasn’t due to any shortcomings found by SHW in its due-diligence work at the Jacobs/Weston lots. Rather, it was due to Bedrock’s strong push, he said.

“The Jacobs and Weston lots aren’t a done deal,” he added.

Blocks outlined in red show the Jacobs Group- and Weston
Group-owned?parking lots west of Public Square (Google).

Originally, Bedrock proposed to build a new headquarters tower and lease it to SHW. But a long-term lease would count as debt to SHW, which is still trying to shed the debt it used to acquire Valspar in 2017. SHW is making rapid progress in paying down that debt, but that progress would be slowed if it leased a $1 billion headquarters.

As noted before, SHW has purchase agreements with the Jacobs Group for its 1.17-acre lot on Public Square and with the Weston Group for its 5.65-acre “Superblock” bounded by Superior and St. Clair avenues, plus West 3rd and West 6th streets. It reportedly doesn’t include any other land in the Warehouse District owned by Weston.

First American Title Insurance Co. is doing the title research on the Jacobs and Weston lots for SHW and its facilities consultant Welty Building Co. That became apparent when a source contacted NEOtrans Nov. 11 to say that SHW would file permits as part of its acquisition of the Jacobs/Weston lots.

Later that week, First American Title Insurance’s subsidiary, Commercial Due Diligence Services of Norman, OK, filed 12 certificates of disclosure with the city for the Weston lots to gather information about those properties. However, the firm likely discovered that it didn’t need to file the certificates for commercial property acquisitions in Cleveland. No certificates were filed for the Jacobs lot.

The red stars are placed on all of the parcels that were removed
in October from a three-year-old lease between Weston-owned
companies, so that residents of the Weston-owned Standard
Building apartments could park on those lots (Google).

The same firm was the title company associated with a mortgage that 4780 Hinckley Cleveland LLC, an affiliate of IRG Dayton I LLC, was released from on Dec. 10, Cuyahoga County records show. IRG owns a property at 4780 Hinckley Industrial Parkway leased by SHW since 2016 as an overflow office space.

First American found some anomalies with the Jacobs and Weston lots that had to be cleaned up, including the vacating of an unused alley, Broome Ct. N.W., from the county’s plats maps. Cleveland City Council authorized the vacation by ordinance in 2017. The plat map was updated by the county on Dec. 2.

Another item discovered recently, although it is not clear by whom, was that the Weston Group had a lease agreement with its various Warehouse District properties that needed to be addressed. The lease was from 2016 and allowed residential tenants of its newly renovated Standard Building to park on its properties in the Superblock and those north of St. Clair as well.

That lease was amended and recorded with Cuyahoga County on Oct. 23. The amendment reduced the number of guaranteed residential parking spaces for the Standard Building from 370 to 281. And it removed all 23 parcels in Weston’s 5.65-acre Superblock from the lease.

Less than two weeks later, geotechnical survey crews descended on the Weston and Jacobs lots to take soil and groundwater samples from deep below the surface. And into December, sewer crews began working in the area although a source said that some of the work may involve the installation of fiber optic cable conduits.

END