An important local real estate developer has emerged to lead a proposed apartment and hotel tower on the Flats’ West Bank, giving the project further legitimacy. That backer is the man who brought the Flats’ East Bank back from the ruins of being Cleveland’s Party Central in the late-20th century to become a bright, attractive mixed-use development.
Scott Wolstein, CEO of the Wolstein Group, has reportedly stepped forward to help develop a proposed 20-story tower above two historic buildings at 1250 Riverbed St., according to a high-level real estate source. That’s a significant turn of events considering the last 20-30 years of Flats development.
Historically, Wolstein developed the Flats’ East Bank and Jeffrey Jacobs the West Bank. But Jacobs Entertainment Inc. is focused on its gaming interests these days. Jacobs’ Nautica Entertainment LLC is selling off its properties on the West Bank, starting with 5.6 acres of riverfront property. An unknown, potential buyer has emerged for the riverfront parcels, three sources said.
Wolstein was contacted by e-mail, asking if he was involved with developing 1250 Riverbed and if there was a target date for starting construction on a long-proposed 12-story building on Flats East Bank, featuring 320 apartments built over ground-floor commercial uses including possibly a cinema.
“I really have no update at this time,” Wolstein replied.
|Flats East Bank Phase 3B is a 12-story apartment building over
ground-floor commercial and retail spaces, including a cinema
and costing about $100 million to build (Perkins+Will).
The question about the status of Flats East Bank is connected. After all, Wolstein would not get involved with the West Bank of the Flats unless further progress on the East Bank was either dead or was fully financed, merely awaiting a go-ahead from the city and/or a general contractor.
According to another source, the Flats’ East Bank Phase 3B or 3.2, as the 12-story building at Main Avenue and West 11th Street is sometimes called, has completed its capital stack thanks to gap financing from Cleveland-based GBX Group LLC. The Wolstein Group has partnered with Chicago-based Akara Partners, LLC to build its brand-name apartment offering here, called Kenect Cleveland.
Although Wolstein would not provide a target start for construction, an updated Dodge Reports listing says the project has a “Construction start targeted within 2020 — definitive schedules to be determined.” Schematic designs have yet to be considered by the city’s Planning Commission for the $100 million project, to be built on a 2.45-acre parking lot owned by the Cleveland-Cuyahoga County Port Authority.
Flats East Bank is a $500 million development featuring a mix of uses including a trophy-class office tower, luxury apartments, three-star hotel and riverside restaurants. The first phase of construction on Flats East Bank began in 2010, starting with the 18-story Ernst & Young office tower and an eight-story Aloft Hotel. Phase 3A, or 3.1,? is under construction now, consisting of two riverfront buildings hosting four different restaurants.
Unfortunately, the financial health of at least one part of Flats East Bank may be in serious trouble, according to Fitch Ratings. It recently issued a notice called Fitch’s Loans of Concern?(FLOC), downgrading five of Cantor Commercial Real Estate (CFCRE) commercial mortgage trust series 2017-C8 pass-through certificates.
The largest of the certificates it downgraded was for the 150-key Aloft Cleveland Downtown, having an original loan amount of $27 million. Aside from the hotel, ground-floor retail and a surface parking lot north of the hotel, no other Flats East Bank properties are part of the collateral. Fitch said the hotel’s revenue has declined over the past three years to a level where it is no longer able to cover the debt service.
Also, the property’s largest retail tenant, 17,000-square-foot EB Fitness Club, closed at the end of 2017 but was replaced in late-2019 by Browns Fit, a team-themed fitness center that temporarily closed during the pandemic. The FLOC didn’t acknowledge the new tenant in its report.
The hotel is owned by Flats East 1111 Hotel LLC which, in turn, was owned by Fairmount Properties until the second quarter of 2018 when Fairmount sold its share in Flats East Bank to Wolstein. Fairmount and Wolstein were partners in Flats East Bank’s development until Fairmount went off on its own to develop the $230 million Pinecrest lifestyle center in Orange Village.
But that setback apparently hasn’t stopped Wolstein from looking across the river to 1250 Riverbed St.. That property is comprised of a four-story, 103-year-old building and an attached six-story, 108-year-old building. Together, the two buildings total 50,000 square feet. They were converted from commercial uses to 28 residential units in the 1980s and renamed the Left Bank Apartments.
Up to 16 stories are proposed to be added above these timber-framed, brick buildings to accommodate 85 apartments and a 200-key Dream Hotel, according to marketing materials from Washington DC-based Coloma River Capital.
|Proposed plan for adding 16 stories above two historic
apartments buildings at 1250 Riverbed (DLR Group).
That firm has a purchase agreement to acquire the property from 1250 Riverbed Street LLC, an affiliate of an ownership group led by Eliahu Adahan. A source said that there are still significant gaps remaining in the capital stack for the proposed 20-story tower.
Design/engineering firm DLR Group proposed a unique approach to suspend the 16-story addition over the historic buildings. Two thick concrete, vertical cores would rise up through the interiors of the two buildings from which a grid of rigidly-jointed frames called Vierendeel trusses would support each floor.
|Map of the Flats’ West Bank showing the locations of various
proposed developments under consideration (KJP/Google).
The Left Bank Apartments are on the river side of the 142-year-old Superior Viaduct which was closed to through traffic in 1920. On the other side of the viaduct from 1250 Riverbed is a vacant acre of Jacobs’-owned land on which a 700+ space parking garage with a green roof is proposed.
Estimated to cost about $25 million, the garage would provide parking for the proposed tower as well as for the Nautica Powerhouse and the Jacobs Pavilion at Nautica. Those attractions would lose about 670 parking spaces (370 of them permanently) when Nautica’s 5.6 acres are sold and redeveloped with their own buildings and parking decks.
|Conceptual idea for adding a train station to the Greater
Cleveland Regional Transit Authority’s Cuyahoga Viaduct.
The station would be on the Airport-Downtown-University
Circle-Windermere Red Line rapid transit (Google/KJP).
“Spending millions of dollars on parking doesn’t make sense here, better transit does,” said Christopher Stocking of Clevelanders for Public Transit. “At the same time, GCRTA’s budget is limited. We have to get creative and take advantage of the transit assets we already have.”