Redevelopment of the Erieview Tower got a big financial boost today when the Cleveland-Cuyahoga County Port Authority authorized up to $55 million in bonds for the $78 million conversion of the 40-story office building to Marriott-branded luxury apartments (Google). CLICK IMAGES TO ENLARGE THEM.
Funds also OK’d for US Lower School in Shaker Hts
Today, the Cleveland-Cuyahoga County Port Authority’s board approved $144 million worth of financing toward development projects with a combined price tag totaling $206.1 million. The projects include one new-construction residential tower near Edgewater Park, one renovated and converted Downtown Cleveland office tower, and a major expansion and renovation of middle school facilities in Shaker Heights.
The renovated tower is a re-imagining of downtown’s 40-story Erieview Tower, 1301 E. 9th St., which was authorized to received up to $55 million in taxable lease revenue bonds for the $78.2 million project. The redevelopment will convert the 60-year-old office building into 227 Marriott-branded luxury apartments, with shared amenities and space on two additional floors.
Port authority officials said they expect construction to start by the end of 2024 and be completed in the third quarter of 2026, creating approximately 1,081 new jobs as part of the larger Erieview redevelopment.
Later phases could include a 210-room W-branded luxury hotel on eights floors, 12 floors of renovated office space, a 15,000-square-foot ballroom on the tower’s lower floors and redevelopment of the attached Galleria that fronts East 9th Street. The return of a restaurant on the 38th floor where the Top of The Town establishment was for many years also is planned.
The project is led by Erieview Developer LLC, owned by the Kassouf family with James Kassouf at the helm. His firm also won $23 million in historic tax credits to fund other parts of the development which totals more than $100 million. About 300,000 square feet of office space would remain in the 703,000-square-foot, 529-foot-tall skyscraper. More than a dozen floors in the tower are vacant.
In the adjoining 138,000-square-foot Galleria that was built in 1987, 40,000 square feet is occupied by the Parker Hannifin Downtown YMCA fitness facility with a lap pool, yoga and spinning studios plus a spa/wellness clinic. The remaining 98,000 square feet retail space suffers from high vacancies. Below it is a heated, 421-space parking garage.
The Shoreway tower apartments are due to rise atop a pedestal of parking overlooking the Shoreway boulevard and Edgewater Park on Cleveland’s west side. The building will offer 110 apartments and 4,000-square-foot of ground-floor retail space (EAO).
Up to $64 million in taxable lease revenue bonds were authorized for building the $85.5 million Shoreway Tower. This 13-story building overlooking the West Shoreway and Edgewater Park will feature 200,000 square feet of space for 110 apartments, 169 parking stalls and 4,000 square feet of retail space. A new design for the tower was approved by the city’s Landmarks Commission in March.
Located in the Battery Park section of Cleveland’s Detroit-Shoreway neighborhood, J-Roc Development will build a 143-foot-tall addition alongside the existing, four-story Shoreway Apartments, 1200 W. 76th St. Originally built in 1918 as the Globe Machine and Stamping Co., J Roc redeveloped the brick building in 2014 using historic tax credits.
Prior to renovation, the historic structure was a warehouse for arts and crafts retailer Pat Catan’s, owned by the Catanzarite family. Pat Catan’s was sold to The Michaels Companies for $150 million in 2016 by then-CEO Nick Catanzarite, principal of J-Roc and son of the retailer’s founder Pat Catanzarite.
“Projects like this do not happen without public-private collaboration,” Catanzarite said in a written statement. “We are excited to work with the port and city to help transform the lakefront living experience right here in Cleveland.”
The project also involves street improvements and upgrades to the existing Shoreway building. it will encompass an art gallery, fitness center, three additional apartments, and a remodeled roof deck. Despite tightened lending, J Roc remains busy as it wraps up construction on the Driftwood apartments in Tremont and, at the north end of that neighborhood, a potential project overlooking the Cuyahoga Valley.
While getting project financing has been challenging in the last year, even more difficult has been the pursuit of construction financing so work can actually get underway. Due to inflation and a lack of liquidity, big banks have limited their construction lending to warehouse, data centers and other commercial developments, according to real estate insiders.
In Shaker Heights, University School’s middle school renovation and expansion features a new 40,000-square-foot, three-story library and classroom addition, 24,000-square-foot renovation and landscape improvements for play and learning. The new design honors the style of the century-old Walker and Weeks-designed building, while meeting current education demands (Annum).
Only smaller banks have awarded construction loans to residential and mixed use projects in the last year or two, and then only to developments with price tags near $50 million or less. But with inflation easing, liquidity is increasing even though interest rates remain high. So the projects financed today have a better shot at getting built than they would have just a year ago.
The third development is markedly different from the other two. The port board authorized up to $25 million in tax-exempt educational facilities revenue bonds for the $42.4 million expansion and renovation of University School’s middle school facilities, 20701 Brantley Rd., in suburban Shaker Heights. The century-old Shaker campus is for grades K-8 while the Hunting Valley Campus is its high school.
“The Port financial assistance pipeline is robust at a time when traditional bank lending can be more difficult to obtain,” said Rhonda Winslow, vice president of development finance at the port authority. “This underscores the port’s important role in driving regional economic development by providing efficient access to capital markets.”
In other development news, the port board approved refunding bonds for the University Square Garage in University Heights and the county convention center hotel downtown. Refunding the bonds for the University Square garage, which is to be demolished, is a key piece of redeveloping the shopping center into mixed use, including selling the property to KL Holdings and constructing 200 market-rate apartments.
Downtown, the 32-story convention center hotel is owned by the port authority and leased to Cuyahoga County which in turn contracts with Hilton to operate it. The port serves as a middle man for the 30-year bond financing that was used to build the hotel that opened in 2016. Refunded bonds maintain a cash amount held aside by the original issuer of the debt to repay its principal.
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