Ernst & Young is leaving the trophy-class building that bears its name at Flats East Bank along the Cuyahoga River in downtown Cleveland. Its offices will move across downtown to another building with a water view — North Point Tower (LoopNet). CLICK IMAGES TO ENLARGE THEM
Office move shakes up downtown market
UPDATED FEB. 15, 2022
Although rumored for weeks, the announcement that EY (formerly Ernst & Young) is moving its offices out of one of only two trophy-class buildings in downtown Cleveland still came as a surprise to some longtime real estate executives. The 23-story office tower at 950 Main Ave. at Flats East Bank that bears Ernst & Young’s name has been one of downtown’s most expensive and successfully leased since it opened in 2013.
In a letter to employees today, EY informed its staff that the company is moving its Cleveland offices later this year to North Point Tower, 1001 Lakeside Ave. The business consulting, assurance, tax and transaction service company that was partially founded in Cleveland 120 years ago moved its international headquarters to New York City in 1989 but retained a significant presence in Cleveland. In addition to more than 100 offices worldwide, its four national offices are located in New York City, Washington DC, Dallas and Cleveland. Today, the company announced it would split up its offices into separate auditing and consultancy units, but the e-mail sent to employees regarding the office move made no mention of the split as a motivation for the move.
“Get excited — we’re moving to a new office this year!” the e-mail to EY employees began. “We signed the lease this week to make it official. With our lease at The Flats ending in November 2023, we’ve decided to move just a couple blocks away to North Point Tower II. Moving to this new location will allow us to embrace a full EY@Work workplace transformation, creating a more flexible and collaborative environment that best supports how we work.”
A decade ago, EY moved 1,200 Cleveland employees from a 226,000-square-foot space in the former Huntington Building, 925 Euclid Ave., that has long been the target of redevelopment efforts. The company relocated to roughly 150,000-square-feet in the new tower at Flats East Bank. But the company continued to shrink. It appears the company now will need less than 70,000 square feet of office space in its new home, based on an analysis of space availability at EY’s current and future homes in Cleveland.
The North Point office complex, 1001 Lakeside Ave., is comprised of two structures built at different times. In 1985, the five-story structure was built. Four years later, the 20-story North Point II was added (JLL).
It isn’t yet known how much space EY will take in the North Point Tower. Pina Ciccone, EY’s operations/location manager based in Pittsburgh forwarded NEOtrans e-mail to EY staff responsible for external communications for a reply. Maria Iampietro, EY’s director of US-Central Region communications based in Atlanta, confirmed the move in an e-mail to NEOtrans using the same text that was sent to EY employees.
Jones Lang LaSalle’s Web site for the North Point II’s leasing shows that up to 160,813 square feet is available at that tower. Commercial Cafe shows that roughly 140,000 square feet of office space is available in North Point II. It also says that 62,712 square feet of contiguous space is available on floors 17-19 with the rest scattered throughout the building. JLL’s Senior Vice President Tom Fox who handles leasing at North Point did not respond to an e-mail from NEOtrans seeking more information.
But EY’s e-mail to employees strongly suggests that the company has gained naming rights to its new home at North Point Tower.
“The new office location will keep us close to clients and our brand will remain visible in the market, quite literally, with two EY signs on top of the building,” according to the email to EY employees. “Between the EY Nottingham-Spirk Innovation Hub and our new office space downtown, we remain deeply committed to having a strong presence in Northeast Ohio.”
EY Nottingham-Spirk Innovation Hub is located in the former First Church of Christ Scientist, 2200 Overlook Rd., at the Cleveland-Cleveland Heights line. EY is seeking approvals from the city of Cleveland to expand into and occupy for two years a temporary office in a modular structure on site. During that time, it will seek construction of a permanent building to accommodate its expansion of the innovation hub, according to a building permit application submitted to the city in October 2022 for the temporary building. That application is still being processed.
Ernst & Young Tower, 950 Main Ave., as seen from the West Shoreway high-level bridge over the Cuyahoga Valley (Google).
EY’s e-mail to Cleveland workers gave a word-picture of what its employees should expect to see from their new downtown workplace.
“When you choose to come into the office, our new space will offer you a variety of workspaces and collaborative technology to enable you to work effectively, individually and as teams,” the e-mail read. “We’ll have access to great amenities – including a private terrace overlooking the lake and football stadium, on-site auditorium and a free fitness center. Our move is not just a change to our space itself, but also a change in how we work to support a more flexible, on-demand and ‘fit for purpose’ way of working. Keep an eye out for more information on the new behaviors and protocols we will adopt in our new office.”
One year ago, EY gave back 26,000 square feet at 950 Main to its landlord, the Wolstein Group, whose CEO Scott Wolstein passed away last year. His family’s company leased that returned space to Dollar Bank so it could move its offices from the Galleria at Erieview, said Steve Ross, vice president at CBRE Cleveland which handles leasing at the Ernst & Young Tower.
“Should EY vacate, this would create a very unique opportunity for a company to not only move to the best office tower in Cleveland, but also have potential naming and building signage rights,” Ross said. “CBRE is proactively marketing their floors in case they decide to relocate.”
He described Ernst & Young Tower as the premier office building in Cleveland, touting its “modern, high-quality office space, top-tier amenities, and prime location along the waterfront.” Ross said those attributes have attracted the region’s most prominent companies and talent and added that the building’s “forward-looking design and infrastructure will continue to make it a sought-after location for companies as they reimagine their office footprint in a post-pandemic environment.”
EY’s Nottingham-Spirk Innovation Hub on Overlook Road at the Cleveland-Cleveland Heights is the subject of expansion plans (Cleveland Restoration Society).
CBRE’s updated listing for the 480,000-square-foot Ernst & Young tower shows that 106,607 square feet or 22.2 percent of the building is available for lease. But CBRE’s Senior Corporate Communications Specialist Justin Luera said the building is currently 93 percent full — or it least it will be until EY departs later this year. Questions about EY’s real estate plans for the North Point Tower were referred by Luera to EY staff.
Terry Coyne, vice chairman of real estate brokerage Newmark’s Cleveland office, anticipated that the space EY will open up in the Ernst & Young tower could be filled soon by another tenant seeking a flight to quality, as others have done downtown. But, if that tenant relocates from a lower-class building downtown, it would create a vacancy that may be more difficult to fill.
“I believe that since 2009, downtown Cleveland’s apartment market was a bubble but that asset bubble saved us,” Coyne said, noting that residential conversions have filled unwanted office buildings. “We’re going from 15 million square feet of office space down to eight million in downtown Cleveland, which is the same as (downtown) Cincinnati. The winners (among office space users) will have amenities while the losers will have nothing. In between, we’ll have a bloodbath.”
However, he expressed surprise at EY’s move for several reasons. Their home of the last decade was one of only two in downtown Cleveland in the highest asset class of office buildings — trophy class. Key Tower is the other. The office building has top-rated amenities, efficient floor layouts and high-end technology. It was built by the Wolstein Group and Fairmount Properties. Until Sherwin-Williams began building its new headquarters in late-2021, the Ernst & Young building was the last office tower constructed in downtown Cleveland.
The 20-story, 591,938-square-foot North Point Tower, built in 1989 by the Ferchill Group, is a Class A office building — the next level down from trophy class — and is 24 years older than Ernst & Young tower. It was the second phase of the North Point complex, constructed on the site of the old Cleveland Press newspaper offices and printing plant. The first phase was a five-story office building completed in 1985.