Downtown construction boom looms

Lumen apartment skyscraper towers over downtown Cleveland and provides sign of success.

The last tower crane over downtown Cleveland was for the 34-story Lumen apartments. It came down in February 2020, a month before the pandemic hit in full force. The next tower crane arrives in August for Sherwin-Williams’ new headquarters. Perhaps a half-dozen more are likely to arrive in the next year downtown with more cranes in other parts of Cleveland (KJP). CLICK IMAGES TO ENLARGE THEM.

Are you ready for some construction cranes, Cleveland? No, I’m not talking about the tower cranes that will rise next month above Sherwin-Williams’ new HQ west of Public Square or the crane soon to arrive over the City Club Apartments on Euclid Avenue. Those may be just the tip of the iceberg for downtown. And for this article we’re not even getting into the cranes above University Circle now and in the future. Or the future cranes above Ohio City. Or MidTown. Or near Edgewater Park. Or even near Gordon Park someday.

I’m talking about new downtown apartment buildings, hotels, office towers and, yes, even new condo buildings. Some of these are going to be announced one at a time. Others, like Bedrock’s riverfront development, are going to have multiple buildings announced simultaneously because of the public spaces and public infrastructure that will link them. And we’re likely to see some of these submitted for the second round of Transformational Mixed Use Development (TMUD) tax credits, the application deadline for which is this Friday.

Downtown Cleveland has been a busy place for construction workers, just not from new construction. In the previous decade, downtown added 13 high-rise residential buildings ranging from 10 to 34 stories tall — nearly all by converting obsolete commercial buildings. Only two were from new construction — The Beacon and The Lumen. Another two were new commercial towers — Flats East Bank’s Ernst & Young office tower and the Hilton Cleveland Downtown. There are another seven buildings under renovation or about to begin, including three more starting this summer. They will join 55 Public Square, Renaissance Cleveland Hotel, Fidelity Hotel that are under renovation. A partial renovation of Erieview Tower also is planned.

Cleveland’s market demand

Had there not been so many old, obsolete commercial buildings available, most of them offices, this demand for new housing by young professionals and empty nesters could have been met by new construction. That doesn’t guarantee it would have been though. Downtown has been an evolving housing market. That market has continued to grow despite the rising cost of construction materials and labor. Since last year, some construction contractors refused to settle on a price for work more than six months in advance, a matter complicated by supply chain issues that delayed delivery of materials sometimes by months.

Condominiums are being planned for downtown Cleveland for the first time in years.

Several mid-rise condominium developments are in the works downtown like this one that was proposed in The Avenue District along East 12th Street but was later scaled back and built as apartments due to the pandemic. But developers are getting a taste for building condos again and finding ways around lenders’ requirements for having 50 percent of the units pre-sold before construction funds are lent (LDA).

Thankfully, construction costs seem to have leveled off and some materials prices have dipped although labor remains tight. Rising interest rates have reduced buying power so housing prices have dropped a little bit. But there are no signs yet of a housing bubble. Demand continues to remain high, with up to one-third of all renter inquiries in the first quarter of 2022 coming from outside of Greater Cleveland according to Same is true for buyers.

“For over a year I’ve polled agent partners and received a consistent answer to this question,” said Gusty Molnar, partner at Social Mortgage LLC based in Ohio City. “What percent of your home sales go to ‘out of towners,’ meaning 100-plus miles away, moving their primary residence to Cleveland? It’s a consistent 30 percent or more from the top players I chat with.”

The demand remains strong. Employment growth in Greater Cleveland so far this year has ranged from 2.1 to 3.6 percent, according to the federal Bureau of Labor Statistics. The positive trend could be seen starting last year as global employment listing site showed that Greater Cleveland ranked higher than some Sun Belt powerhouses in the number of available jobs. Cleveland and other former Rust Belt cities have diversified their economies and are beginning to generate real economic opportunity while remaining affordable and livable.

There are now more occupied housing units in the city of Cleveland today than there were in 2010, even as Cleveland’s population fell 6 percent and Cuyahoga County’s dipped 1.2 percent. The reason is that as low-income families moved out, childless single professionals and couples moved in. Cuyahoga County’s 18-and-older population — aka the adult working population — grew 2 percent from 2010-2020, according to the Census. Similar numbers existed for Cleveland.

A major riverfront development is planned by Bedrock in Cleveland below Tower City Center.

The first phase of Bedrock’s riverfront development may offer a 20-plus-story office building for Quicken Loans and other tenants, as outlined in red here. And it may include other buildings as well, such as those to the left plus significant public realm and other infrastructure improvements to connect Public Square with the banks of the Cuyahoga River (Bedrock).

What projects are planned?

Unfortunately, Greater Cleveland isn’t building enough new housing to keep up with demand. And that demand, at least for apartments, has been strongest in Cleveland’s urban core. In 2021, one-third of all apartment demand in Greater Cleveland was downtown and nearby. That has translated into rising rents. In the mid-2010s, it was rare to see a downtown building with rents of $2 or more per square foot. Today, we’re starting to see some rents push above $3 per square foot and the market is absorbing them.

Look at how fast the top-of-the-market Lumen leased out. The new 34-story apartment tower at Playhouse Square reached 90 percent occupancy quickly despite the pandemic and nationwide riots in 2020 with half of its residents coming from outside Greater Cleveland. The glassy skyscraper filled up at rents ranging from $2 to $3.50 per square foot. Now stabilized, The Lumen is for sale by the Playhouse Square Foundation. Once sold, look for the foundation to build an encore, possibly at the southeast corner of East 13th Street and Chester Avenue.

Nearby, at the southeast corner of East 13th Street and St. Clair Avenue, a 1-acre parking lot owned by Weston Group has been a property of interest for the Warrensville Heights-based developer and several potential partners. A mid-rise apartment or condominium building is proposed to be built here, across the street from downtown’s last new condo building — The Avenue. This 10-story, 96-unit building was the victim of bad timing. It opened in 2008 as the nation’s financial crisis froze nearly all housing transactions.

An attempt to revive the downtown condo market was begun in late 2019 as construction started on Geis Companies’ 12th+AVE condominiums. But Geis had to do a mid-construction pivot as the pandemic hit in March 2020, forcing it to redesign and market the project as 35 apartments. Geis expressed concern that potential buyers wouldn’t have the money for a down payment. Another case of bad timing stunted the delivery of new condos to downtown.

Downtown Cleveland has skyscrapers that were never built like most major cities.

Convention Plaza hotel and offices was a 40-story tower proposed 30 years ago on the southeast corner of St. Clair Avenue and East 6th Street. Every city has its share of projects that don’t happen because most ideas for new buildings never get built yet few become public. Few Clevelanders likely never heard of this project (Fleischman).

The Avenue District is the only place where for-sale housing is being added downtown. Knez Homes is building the second phase of The Avenue townhomes along Superior Avenue east of East 12th. President and CEO Bo Knez said he would like to add more for-sale housing downtown but said he isn’t ready to make any announcements yet on where, what or when. He said the “why” isn’t a question. “Housing demand downtown certainly remains strong,” Knez said.

He’s not going to be alone for long, however. MRN Ltd. is converting two floors of offices at its 1896-built, 17-story New England Building, 629 Euclid Ave., into 22 condominiums. Originally, MRN planned to convert both floors into apartments but wanted to test the downtown condo market. And MRN may not be alone for long either. There are at least three other condo projects in the works downtown with each involving new mid- to high-rise buildings. And yes, all of them are proposed take out a dreary surface parking lot. Unfortunately, their locations cannot be shared yet as the developers have not submitted any documents for the public record and have requested their projects be kept confidential until then.

As noted earlier, Bedrock’s riverfront has been the subject of much activity that points to something big here — a new office building, a new high-rise residential building and a new hotel. All of those may be announced in Bedrock’s first phase. Bedrock Real Estate, the real estate arm of Dan Gilbert’s Rock Ventures, has been busy. In December it converted the ownership of about 20 acres of land between Huron Road and the riverfront from Rock Ohio Caesar’s Cleveland LLC to Huron Holdings LLC, according to a deed transfer filed with the county.

Also, Bedrock reportedly has a purchase agreement with Sherwin-Williams to acquire its 9-acre Breen Technology Center, 601 Canal Rd., that the coatings firm will vacate in 2024. Real estate sources said Bedrock is working with general contractors about rebuilding its parking decks under Tower City which itself is getting a major renovation. Indeed, the entire area around Tower City will be the subject of public realm improvements designed by Columbus-based MKSK Studios who was hired by Bedrock, sources said.

Tower City Center is part of Bedrock's vision for linking Public Square with the Cuyahoga River.

Bedrock Real Estate released this image this week of a proposed indoor garden in Tower City’s Skylight Concourse. It is part of a plan to use socially engaging public spaces to create a sense of connectivity between Public Square and a proposed development along the Cuyahoga River below Tower City (Bedrock).

Those improvements, to be implemented in phases, will beautify the connection north to Public Square and east to Bedrock’s The May Apartments as well as its garage buildings with a large investment in greenery. The first phase is the proposed creation of a year-round garden in the Skylight Concourse at Tower City’s The Avenue shopping center. The souroces said the goal is to use socially engaging public spaces to make the area more pedestrian friendly and create a flow from Public Square through to the new riverfront development.

MKSK’s hiring was overlooked when Bedrock announced in April it had retained world-renowned architect Sir David Adjaye to help it craft its riverfront development vision. Last spring, a Cleveland city department head told NEOtrans that the city is already reviewing plans for riverfront buildings and public spaces, describing them as something that will “completely transform the riverfront” and be “bigger than anyone is currently imagining.” The official said the riverfront project will offer “lots of pedestrian access and public spaces to access the waterfront.”

This is one of several large masterplans in the works for downtown. The others include ballpark villages in the Gateway District near Rocket Mortgage Fieldhouse and Progressive Field, extending from Bedrock’s riverfront, through the former nuCLEus site, and extending over into parking lots and other underutilized properties east of East 9th Street. And, of course, let’s not forget a ballpark village near FirstEnergy Stadium, assuming the Cleveland Browns continue to play on the lakefront after 2028.

Another masterplan is for Cleveland State University for which work has stalled when the state-funded institution clashed with then-President Harlan Sands. With him gone, look for new progress on this effort, including demolition of the Wolstein Center arena, construction of more student housing plus expanded medical education and research programs. The latter could be done in partnership with yet another campus masterplan, this one for St. Vincent Charity Medical Center which seeks to have better pedestrian and transit links with downtown. That may depend on whether the Ohio Department of Transportation gets to raze the county’s vacant juvenile court building or if Philadelphia-based Amerimar Realty gets it to redevelop it with student housing, as sources say.

A major development is planned for Flats East Bank in downtown Cleveland but is overdue for an announcement.

Kenect Cleveland is a planned $85 million mixed-use development at Main Avenue and West 11th Street on the Flats East Bank that was apparently set back by the death of the project’s minority partner Scott Wolstein. But the project’s principal Akara Partners pledges to move ahead with the residential-retail-coworking development (Akara).

And as we know, the fate of a construction plan can depend on the fate of people. One of downtown’s biggest developments is phase 3B of the Flats East Bank development. Called Kenect Cleveland, this $84 million project would build 229 apartments and 15,000 square feet of ground-floor mixed use. It is led by Akara Partners of Chicago but had Scott Wolstein as a minority partner. He left this Earth at age 69 in May, a victim of stage 4 mucosal melanoma. Shortly after Wolstein’s November 2021 diagnosis, Akara CEO Rajen Shastri told NEOtrans that, despite the awful news, “Yes we are full steam ahead.” He had hoped to start construction by this past winter, yet clearly the project has suffered a setback.

NEOtrans is the place to watch for downtown development announcements in the coming days, weeks and months. Indeed it may be only days. Last fall, on Nov. 3, NEOtrans reported on the applicant projects for the first round of TMUD tax credits that were submitted by the state’s Oct. 29, 2021 deadline. It is likely we’ll hear next week about the applicant projects submitted by Friday for this year’s round of TMUD credits. The TMUD award winners will be announced by the Ohio Department of Development in late-summer, early-fall. There will be downtown Cleveland projects submitted — probably Bedrock’s riverfront development, a condo tower and a surprise project in there as well.

Oh, and keep an eye out for some juicy retail projects for downtown like a City Target, an urban format TJ Maxx and a national brand grocery store. Each would be about 30,000 square feet, give or take a few thousand square feet and help attract even more residential plus smaller retail tag-alongs to downtown Cleveland. They will add to downtown’s construction boom and help create more street life on the ground floors of new buildings in the central business district. You heard it here first.


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