At the end of this past winter, the Treo apartments on West 25th Street in Tremont was still a half-year away from completing construction. Despite work still progressing, the property went on the market to maximize the terms of its financing (V1drone). CLICK IMAGES TO ENLARGE THEM
Near-West Side properties expected to draw much interest
Two near-West Side Cleveland multi-family properties hit the market this week but for two very different reasons. In the Lincoln Park section of Tremont, the still-under construction Treo was offered for sale today. Tomorrow, it will be The Edison’s turn to test the waters. The Edison at Gordon Square was built five years ago near Edgewater Park in the Detroit-Shoreway neighborhood.
Both properties are exclusively listed by BWE Investment Sales, an affiliate of Cleveland-based Bellwether Enterprise. BWE Investment Sales focuses on commercial real estate properties across the country, including market-rate and affordable multi-family housing.
“They’re two very different buys,” said Brandon Kosek, BWE Investment Sales’ vice president, referring to the two listings. “Treo has to close before occupancy to maximize the benefits of its Opportunity Zone financing. The Edison is going on the market because it’s fully stabilized.”
Treo is a 171-unit, luxury mixed-use apartment development with a 2,235-square-foot ground-floor retail/restaurant space located at 2461 W. 25th St. Developing it is Chicago-based Mavrek Development along with Cleveland-based general contractor Krueger Group and financier Schiff Capital Group Ltd. of Columbus.
The five-story Treo apartments and ground-floor retail space are seen here in this rendering, viewed from across West 25th Street at a new intersection with an extension of Moltke Court (NORR).
Kosek said Treo will provide prospective buyers a rare opportunity to receive tax benefits of an Opportunity Zone investment through acquisition of the property prior to the issuance of a certificate of occupancy by the city. The certificate is anticipated at the end this year.
Treo’s luxury apartments have modern, upscale finishes with on-site amenities such as a rooftop terrace with unobstructed views of the Cleveland skyline, in-house fitness center, private landscaped courtyard, co-working lounge, and a bike storage room. A promotional video for the property is posted on YouTube.
Treo has a 15-year, 100-percent tax abatement and 30-year tax increment financing (TIF) was awarded to the project. Ohio’s tax credit program for Opportunity Zone investors provides a credit up to 10 percent of the required equity, estimated at potentially $2 million in tax credits. The West Cleveland Submarket boasts strong historical occupancy rates with rental growth projected to average 4.5 percent to 5.5 percent through 2023.
An auto repair and scrapyard business on West 25th and several houses on West 20th Street were razed in 2020 for the new 211,516-square-foot project. Although the building appears isolated, that’s not going to last. Construction is due to start this year on the West 20th Apartments next door. To the north, The Pearl is proposed to rise. More projects are planned in the area.
With Lake Erie visible at the left and downtown Cleveland to the right, The Edison at Gordon Square’s proximity to attractions helped it lease out in less than a year. Now the property is for sale and its developer NRP Group may be looking for new development opportunities (Dimit).
Cleveland Development Advisors says construction costs for Treo were approximately $38 million but NEOtrans understands that when soft-costs of development are included, such as property acquisition, legal fees and demolitions, cost of Treo was actually about $45 million. Kosek said no sale price is being listed publicly for Treo or for The Edison.
“They are being offered for whatever the market will bear,” he said.
The Edison at Gordon Square, 6060 Father Caruso Dr., was completed in 2017. The 306-unit, market-rate apartment complex on former industrial land near Lake Erie reached 90 percent occupancy less than one year later. Typically a property is considered stabilized when it reaches such occupancy although other site, legal or financial factors can come into play.
Cleveland-based NRP Group, one of the nation’s largest multi-family developers, delivered The Edison for $55.5 million, according to Cleveland Development Advisors. Because the property leased out so quickly, NRP Group began pursuing the development of a 323-apartment phase two across the street from The Edison on roughly four acres at Breakwater Avenue and West 58th Street.
The Edison at Gordon Square’s multiple buildings fill the center portion of this view looking west toward Edgewater Park and the setting sun on Lake Erie (Aerial Agents).
But NRP officials reportedly had a change of heart and privately expressed concern the firm’s second property would end up competing with the first. So they looked farther away for a development site and eventually landed on Scranton Peninsula, along the Cuyahoga River just south of downtown’s Public Square.
Their first effort to develop the riverside acreage was stalled by the pandemic. But earlier this year NRP Group won city approvals to develop The Peninsula with 316 residences. Construction permit applications have been filed by the development team to start site work.
Often, a developer will sell a stabilized property so it can use the proceeds to help capitalize their next project or projects. While it is possible the sale of The Edison could benefit The Peninsula, that project is likely already fully financed given its progress. It is not yet known what project NRP Group could pursue next locally, but it could be in another city given the developer’s national reach.
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