Construction work is due to start immediately on converting aging offices in the 61-year-old Erieview Tower to luxury apartments. Following that will be renovations to convert offices to hotel rooms. Twelve floors of offices will be modernized and a rooftop restaurant and bar will be restored (Google). CLICK IMAGES TO ENLARGE THEM.
Tower to gain apartments, hotel, rooftop restaurant
Closing of financing for the $218 million redevelopment of the 38-story Erieview Tower and Galleria redevelopment in Downtown Cleveland was announced today by two advisors to the project. The momentous occasion signals an immediate start for residential construction, although some of the remaining office tenants in the building told NEOtrans that site-prep work is already underway.
Brown Gibbons Lang & Company (BGL) Real Estate Advisors team and law firm Kohrman Jackson & Krantz (KJK), both of Cleveland, announced the closing of large and complex financing for the major redevelopment project.
Redevelopment of the 1964-built Erieview Tower and its associated, 1987-built Galleria will be carried out by Erieview Developer, led by CEO James Kassouf, and project manager TurnDev, of Beachwood. Erieview Tower and Galleria are listed on the National Register of Historic Places.
“The BGL team has demonstrated their expertise and creativity in structuring the financing for this phase of the Erieview Tower and Galleria redevelopment project,” Kassouf said in a written statement.
“The Erieview Tower redevelopment project is an important step for Cleveland, and we’re proud to have been involved,” said Jon Pinney, managing partner at KJK and founding partner of TurnDev and TurnCap. “We look forward to the next phase and to continuing to support efforts that drive our city forward.”
The Bell at left has already been converted from offices to apartments. Now it’s taller neighborhood at East 9th Street and St. Clair Avenue will join the Downtown Cleveland office-conversion craze (Google).
The project will feature 227 W-branded by Marriott luxury apartments, a 210-room W-branded luxury hotel, a 38th-floor fine-dining restaurant and bar, a 15,000-square-foot ballroom, spa, fitness center, lobby lounge, renovated office spaces across 12 floors, and the connected retail Galleria, plus indoor parking.
Tenants of the W-branded by Marriott apartments will have access to hotel-like services including concierge, housekeeping, doorman, bellman and butler services, in addition to all hospitality and experiential amenities. The hospitality component will bring the first W Hotel in the state of Ohio.
Furthermore, the dual-branded W Residences plus W Hotels project is a unique and limited concept that Marriott offers worldwide. And there are, so far, only eight other locations in the United States offering this Marriott apartments-hotel combination in one building.
Construction will be phased by component, with residential construction commencing immediately, hotel construction beginning later in 2025, and the project expected to be completed in late 2026. The developers will begin interviewing for a marketing firm to promote both office and retail spaces.
Financial partners in the project included Huntington National Bank, Midland States Bank, PPG, Cleveland-Cuyahoga County Port Authority, Peachtree PACE, and the Ohio Brownfield Remediation Program each of provided development capital. BGL’s Real Estate Advisors team served as the exclusive financial advisor to the developer on the project.
The seldom-seen backside of Erieview Tower reveals a growing neighborhood of low- to mid-rise apartment buildings and townhomes (Google).
“As early as 1908, when my grandfather rented a news and fruit stand at the corner of East 9th Street and St. Clair Avenue, 117 years later, my family is redeveloping the entire block,” he added. “We have been committed to Cleveland, and we’re proud to see that commitment continue with the revitalization of this important historic district.”
The Kassouf family purchased Erieview Tower in 2018 and has worked since the acquisition to secure the various capital sources needed for the significant investment required to reposition the property.
Public financing included Round 29, Ohio Historic Preservation Tax Credit Program; Ohio Senate Bill 225, doubling the State Historic Tax Credit; Round 2, the Ohio Transformation Mixed Use Development Credit; commercial real estate tax abatement; residential real estate tax abatement; and a non-school tax-increment financing abatement.
Another major component of the financial structuring was locking the senior loan via an interest rate swap contract in July 2022, which fixed the pricing of the 10-year treasury for a 10-year loan term.
Other partners are Berardi + Partners Inc., Turner & Townsend, Novogradac & Company LLP, BakerHostetler LLP, Polsinelli, Bricker Graydon, Roetzel & Andress, DiPerna & Co., Rockwell Architecture Planning and Design P.C., Beyer Blinder Belle, and Independence Construction. TurnDev is providing development services and debt financing for the project.
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