At North Coast Harbor, Harbor Verandas in the foreground and Nuevo Modern Mexican & Tequila Bar in the background are no longer on the market. Owner Cumberland Development wants to retain them due to their profitability and reassess after the real estate market improves, including when the fate of nearby Burke Lakefront Airport is decided (KJP). CLICK IMAGES TO ENLARGE THEM
Fate of Burke Lakefront Airport could affect site
Two very visible buildings at downtown Cleveland’s North Coast Harbor that were listed for sale over the past year were just taken off the market this week by owner Cumberland Development LLC. There are several reasons why the Harbor Verandas mixed-use building and the Nuevo Modern Mexican & Tequila Bar are being retained. But one of them is because of the fate of the nearby Burke Lakefront Airport could cause the value of the site to rise in the future.
Even so, Cumberland was asking a respectful $19 million for the pair of small buildings, if purchased together. The Harbor Verandas, built in 2018, measures about 51,000 square feet and the Nuevo restaurant, built in 2016, totals 8,630 square feet. They could be acquired separately for $14 million for the mixed-use building and $5 million for the restaurant, according to an online brochure from real estate brokerage Newmark. The latter building also includes a 16,000-square-foot piece of land for future development, now used as the Cleveland Pier Volleyball Courts. But developing that site probably isn’t an option, at least for now.
In fact, Cumberland CEO Richard Pace said the Federal Aviation Administration has become more mindful of lakefront development. For example, he said the FAA has expressed concerns about the site for The Lone Sailor monument, proposed to be relocated to the northeast corner of the lawn at Voinovich Park at North Coast Harbor. That elevated site, next to the volleyball courts, apparently was considered by the FAA to be too high for the approach to Burke’s main runway.
“When we were putting in the volleyball courts, the FAA asked how high would the ball go in the air,” Pace said. “That said, we want to have the volleyball courts. We have no plans to develop them (with buildings).”
Site of the two buildings and volleyball courts that Richard Pace has taken off the for-sale market. However, he continues to lease commercial spaces in the Harbor Verandas building with his most recent deal for a new media studio for MacRumors (Newmark).
Cumberland, based in Cleveland, got a grant from the Ohio Department of Natural Resources in the mid-2010s to build the sand volleyball courts and install two public restrooms that are attached to the north side of Nuevo on East 9th Street Pier. The courts and restrooms are maintained by the Downtown Cleveland Alliance as well as Hermes Sport & Social. Cumberland developed Nuevo and Harbor Verandas in a since-concluded development partnership with Trammell Crow Co. of Dallas.
But Cumberland doesn’t own the land on which the two buildings or the volleyball courts set. Instead, Cumberland has a 50-year land lease and a 47-year extension option with the city to occupy those sites. The lease would transfer with any sale of those two buildings. The land cannot be purchased without a public vote because it is reclaimed from Lake Erie. The state of Ohio says it owns the bottom of the lake bed below fill dirt that was added by the city over the past century. The city owns the fill dirt and pays the state a nominal lease rate.
That’s why the city can’t sell the land. In fact, Cumberland can’t even sell the 16 apartments in Harbor Verandas as condominiums because of the city’s lease of submerged land, Pace said. Even so, he said he was happy to hold onto the buildings, even though most developers like to sell their newly constructed buildings once they’ve leased out and therefore become stabilized properties.
“I put these on the market last year but took them off,” he said. “I’m pretty happy with them. Both are profitable buildings and are worth hanging on to.”
Nuevo Modern Mexican & Tequila Bar is a two-story restaurant and event space near the end of East 9th Street Pier at North Coast Harbor. Pace was offering it and the volleyball courts in the background for sale. The courts could become a development site someday, but probably not as long as Burke Lakefront Airport continues to host aircraft (Newmark).
Harbor Verandas’ apartments are fully leased as are most of its five ground-floor commercial spaces that total 6,934 square feet. One of them, called Suite D that looks west across the harbor toward First Energy Stadium and measures 1,805 square feet is being built out for a new tenant, a private media studio for MacRumors which is an online consumer technology news outfit based in the suburbs of Richmond, VA. Dan Barbera, content creator for MacRumors and host of the MacRumors Show Podcast, says the studio is due to open in mid-January but cautions that the studio isn’t open to the public.
“The office is more so a media studio that’s going to be used to produce all of our shows,” Barbera said. “Our podcast will be taking place from there as well as any and all media found on our YouTube channel, Web site and social media. I am primarily a one-man operation as most other employees that do help me out are remote. Though expansion in the future, more local employees are on the table with this new space downtown.”
As has been written about here at NEOtrans and elsewhere, now is a tough time to be selling and financing real estate following the rise in interest rates. Pace said he is undeterred and continues to look for good deals and other opportunities. Another of those was to be on downtown’s lakefront. Cumberland had a lease with the city to develop 18 acres of land north of First Energy Stadium and was on track to start construction in 2020.
That was until then-Mayor Frank Jackson gave the development rights to the Haslam family, owner of the Cleveland Browns. The Haslams also have sought to develop land in Columbus next to Lower.com Field, home of the Major League Soccer Columbus Crew owned by the Haslam family. However, despite the city’s approval of ambitious plans for Astor Park, no construction has taken place.
An apartment at the Harbor Verandas on East 9th Street Pier at North Coast Harbor. Each of the 16 residential units has 10-foot-high ceilings, a fireplace in every living room and access to 29 indoor parking spaces (Newmark).
In Cleveland, after lakefront warehouses north of the Browns’ stadium were razed in the winter of 2021 to make way for events related to the National Football League Draft, the Greater Cleveland Sports Commission paved the land for 2,000 waterfront parking spaces. The commission called the parking lot “temporary” but the move was criticized by Ward 3 Councilman Kerry McCormack and lakefront advocate Dick Clough, executive board chair of the Green Ribbon Coalition. Both called for the creation of a public park instead.
Last month, Pace allowed his 10-year lease to lapse as manager and master lessee at the Fifth Street Arcade in downtown where Cumberland’s corporate offices were located. He said he could have renewed it for another 10 years but didn’t have the appetite for that kind of work into his 70s. Cumberland’s office was moved to the Baker Electric Building, 7100 Euclid Ave., in Cleveland’s Midtown neighborhood. In 2006, Cumberland renovated and later acquired the Baker Electric Building, a former electric car manufacturing plant converted into offices and lab spaces. But Pace said he isn’t ready to retire yet from making real estate deals.
“I’m a deal junkie,” he said.
He recently partnered with Brian Smith, Cleveland Clinic’s former director of strategic project development in CedarTech LLC to acquire and renovate the Clinic’s six-story DD Building, 10900 Carnegie Ave. to provide offices for technology firms. CedarTech purchased the 49,205-square-foot, 66-year-old building and 1.37 acres of land in July for $1.36 million.
On that same day, county records shows, CedarTech also acquired from the Clinic for $162,045 two vacant, tiny parcels totaling 0.248 acres at 10728 Carnegie. Those are surrounded by other undeveloped parcels totaling 0.84-acres and owned by the nonprofit community development corporation University Circle Inc., located at the intersection of Carnegie Avenue and Stokes Boulevard. But Pace said he has no immediate plans for that site.