One of the biggest pending deals in Downtown Cleveland is for the Ohio Savings Plaza which actually consists of two office towers. This 18-story building on East 9th Street, which is the larger of the two for-sale buildings, is proposed to be converted into residential (Google). CLICK IMAGES TO ENLARGE THEM.
Medical Mutual, Ohio Savings Plaza all-in-1 deals
Although the real estate listing for Ohio Savings Plaza, 1801 E. 9th St. and its associated Park Plaza, 1111 Chester Ave., show their transaction status as “under contract,” it’s been that way for many months. It will retain that status for at least two more months. What’s going on behind the scenes reveals the complexities and even creative new ways of pursuing big deals in this market at this time.
In the past, you bought a property or at least secured a purchase agreement to buy a property, then sought the financing to do whatever the buyer intended to do with it. Nowadays, some are pursuing all-in-one financing — arranging the purchase financing at the same time as the construction financing. It reduces fees and sometimes interest rates as property loans tend to come with higher interest rates than a construction loan.
So the Ohio Savings Plaza/Park Plaza deal, accounting for a total of 500,000 square feet of office space, isn’t the only property searching for a path to become something more mixed-use in the post-pandemic era of remote/hybrid work places. Just up East 9th is the vacated Medical Mutual headquarters which is the target of a $100 million redevelopment into apartments and a hotel.
What’s unique about that deal is also what is unique about what’s brewing at Ohio Savings Plaza. Both are currently owned by companies with long histories in Cleveland. Both owners may still be involved in those properties after the keys to their buildings are handed off to new end-users. And both are trying to simultaneously nail down financing for their title transfers and for their conversions to new uses, including public dollars.
According to sources familiar with the Rose Building, 2060 E. 9th, insurer Medical Mutual will reportedly be involved in its redevelopment called Project Scarlet. The Rose Building was the headquarters of Medical Mutual since the 1940s until it consolidated its shrinking office footprint in suburban Brooklyn.
Looking north along East 9th street, the Rose Building is at left. Formerly the headquarters for Medical Mutual, it is proposed to be converted into apartments and a boutique hotel as part of an innovative joint venture that may include Medical Mutual (CBRE).
Partners involved in the deal raised eyebrows in the real estate community last month when they announced the project prior to any title to the property transferring. Sources said Medical Mutual may be involved in a potential lease-back arrangement either for the building, the land or both.
A 99-year ground-lease at The Bell, another office building conversion project on East 9th, is how the lender Twain GL XX, LLC of Oak Brook, IL handled its property arrangement. The 1983-built, 492,864-square-foot former Ohio Bell headquarters is owned by a partnership called 45 Erieview, LLC.
Spark GHC and Cleveland Construction, both based in Greater Cleveland, are leading the joint-venture redevelopment of the 122-year-old, 400,000-square-foot Rose Building. The early inclusion of the general contractor is an indicator that an all-in-one financial deal is being pursued, the sources said. NEOtrans reached out to Spark GHC Executive Vice President Nathan Felker to confirm or clarify the sources’ information but has yet to hear back from him.
At Ohio Savings Plaza/Park Plaza, rumors have swirled about a partial conversion for more than a year. Things became more substantive in November 2023 when NEOtrans learned details about a potential buyer who put the property under a purchase agreement. The property includes an 18-story, 333,592-square-foot building facing East 9th and a nine-story, 166,760-square-foot, mini-me version of it facing Perk Plaza.
Ohio Savings Plaza/Park Plaza are both owned by Long Island-based New York Community Bancorp (NYCB). Sources familiar with the project said the buyer wants to consolidate the office users, including NYCB offices, into Park Plaza, keep the retail and other commercial tenants in the three-story pedestal of Ohio Savings Plaza, and convert the upper 15 floors of Ohio Savings Plaza into apartments.
Sale of the Ohio Savings Plaza also includes the nine-story Park Plaza office building which overlooks Perk Park along East 12th Street between Chester Avenue and Walnut Avenue. This building would likely remain as offices (Colliers).
NYCB wants to retain its longtime presence in Cleveland, sources said, and possibly reach a sale and leaseback arrangement as part of a joint venture redevelopment. An email seeking more information was sent by NEOtrans to NYCB’s general inquiry page was not responded to prior to publication of this article.
Sources continue to say that a Detroit area-based buyer — not Bedrock Real Estate or City Club Apartments — has the purchase agreement. The sources have declined to provide further details except that the buyer is a well-established real estate firm. The buyer’s broker is Johno Norian of NXT Commercial Real Estate Services and located in the Detroit suburb of Plymouth. He has not responded to e-mails from NEOtrans seeking more information.
NYCB’s brokers at Colliers also are not talking. They declined comment on this deal. But the sources who were willing to talk said the pending purchase, already publicly identified on real estate websites like Loopnet, is into a series of 60-day purchase agreement extensions. The next one ends around Labor Day but a specific date wasn’t known to the sources. Reportedly there is one more extension available to the prospective buyer after that.
The extensions are being exercised to achieve an all-in-one financing arrangement, they said. Reportedly the financing includes an important public financing component with the city and possibly the county or state that has yet to be realized. Such deals typically carry a community benefits agreement that involves local and minority hiring, set asides for affordable housing units, and the like.
If Ohio Savings Plaza is converted to residential, many of its units will offer great views like one looking northeast over Downtown Cleveland and Lake Erie (Colliers).
Earlier this week, a $47 million real estate deal in Cleveland’s Hough neighborhood came together thanks to significant public financing from the city. That project is for affordable housing, which is difficult to finance in Downtown Cleveland due to its far higher real estate prices and development costs.
Between the larger, 1969-built Ohio Savings Plaza and the smaller, 1972-built Park Plaza is the Huntington Garage, 999 Chester. The garage was recently renovated for $8 million by its owner, an affiliate of Palatine Capital Partners of New York City which bought it in 2015 for $16 million, property records show.
That garage is the subject of interest by prospective purchasers but at asking prices below what Palatine paid for it, sources said. So far Palatine isn’t interested in letting it go for those amounts. It isn’t known who the buyers are but reportedly the Ohio Savings Plaza mystery buyer has inquired.
There are also rumors that Millennia Companies was interested. A Millennia affiliate owns the vacant, 1.3-million-square-foot 925 Euclid and is trying to redevelop it as the Centennial for $500 million. A walkway tunnel below Chester connects the Huntington garage with 925 Euclid. Huntington Bank used to have offices in 925 Euclid.
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