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Cleveland: Downtown & Vicinity Residences Discussion

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This graphic made me realize something...

 

http://media.cleveland.com/pdgraphics_impact/photo/9046029-large.jpg

 

Office users want the latest and greatest office spaces -- Class A. Some of the office towers built in the East 9th corridor in the 50s/60s could be updated with new features, technologies and amenities. But there's too much office space for the number of office users. Tenants ought to be condensed into fewer buildings to boost overall district occupancy and leasing rates.

 

So the question is, if this could/should be done (of course financing remains a problem), which buildings would make great residential conversions? The lesson from 668 Euclid and the overall downtown Cleveland residential market is that there is great demand for one-bedroom rentals in urban settings. Selecting which buildings to convert should be done carefully and strategically so as to avoid dispersing them so sparingly that each converted building becomes an oasis in an after-hours office dead-zone. But they shouldn't all be concentrated in just one place otherwise it doesn't address the larger after-hours dead zone.

 

So here's my suggestion. The totally vacant East Ohio Building (a 1950s glass box) and the 54% percent vacant Superior Building (a 1920s beauty), at opposite corners of East 9th and Superior, seem to be likely candidates. And with the Hampton Inn, these three buildings should add some after-hours life to the area.

 

Another building (from the map above) I would target is the Chester Commons building, which is near Reserve Square, Chesterfield and the Avenue District. With these and other nearby buildings, plus the rebuilding of the Chester Commons/Perk Park, this could create a round-the-clock setting for residents, visitors and office workers.

 

That's my thought for the day.


In 1976, the City of Cleveland issued NINE building permits. NINE. When we start to feel down about the progress of development here vs. other cities, remember how lifeless Cleveland was and how far it's come.

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What about key bank center? Once key bank leaves it could go down to 18%. I just cant imagine Key Bank center or the east ohio building being residential. Could it actually be done?

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Unfortunately, the other lesson from 668 is that residential conversions of office buildings take a lot of public subsidy in our market.  The Superior Building is intriguing because it might qualify for the state historic tax credits, but not sure how much public money there's going to be for the empty (and emptying) post-war office buildings.

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What about key bank center? Once key bank leaves it could go down to 18%. I just cant imagine Key Bank center or the east ohio building being residential. Could it actually be done?

 

Why is Key leaving?

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What about key bank center? Once key bank leaves it could go down to 18%. I just cant imagine Key Bank center or the east ohio building being residential. Could it actually be done?

 

Why??  Personally I think KB would be better as a boutique hotel.  A loews or Palamor hotel conversion.  The EO would be a great residential building due to it's location.  Put a restaurant and service oriented retail in the lower level and were cooking.

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I'd really like to see EOG get converted to residential. It's probably my favorite "glass box" in the city.

 

It's got a very interesting color for a glass box. But I don't know what the interior spaces are like and if they would make for a suitable residential conversion. The fact that it's totally vacant makes it an intriguing possibility. You don't have to spend any money on early-terminating leases.

 

And historic tax credits could make the Superior Building a better candidate for conversion. But if you have this building and EOG go residential, plus the Hampton Inn, and add a couple of residential-type retail operations, cafes and restaurants on the ground-floor of nearby buildings, the East 9th-Superior intersection could get some decent 24-hour life.


In 1976, the City of Cleveland issued NINE building permits. NINE. When we start to feel down about the progress of development here vs. other cities, remember how lifeless Cleveland was and how far it's come.

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What about key bank center? Once key bank leaves it could go down to 18%. I just cant imagine Key Bank center or the east ohio building being residential. Could it actually be done?

 

Why?? Personally I think KB would be better as a boutique hotel.   A loews or Palamor hotel conversion. The EO would be a great residential building due to it's location. Put a restaurant and service oriented retail in the lower level and were cooking.

 

Cause they look like office towers lol and because the same thing that KJP said....

 

 

It's got a very interesting color for a glass box. But I don't know what the interior spaces are like and if they would make for a suitable residential conversion.

 

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Somewhere on this board we talked about a conversion of the EOG building.  At the time, I said that it wasn't feasible because condo dwellers want balconies (I am not so sure about that how, but whatever)

 

Then Mayday either posted a picture of a twin of the EOG building undergoing a residential conversion with balconies or created the graphic himself.

Either way, it was pretty cool.

 

I've tried to find it with no luck.

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The EOG is a near perfect layout for residential conversion... and believe it or not... it is eligible for historic tax credits (federal anyway, with Kasich taking over in Columbus I am pretty sure the state program is dead). yup, we're coming up on the time when even the post war stuff is becoming eligible (it was built in 1959, after 50 years it is eligible)

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^Good to know!  That one is my favorite too.

 

Has Kasich said anything specifically about the historic tax credits?  I don't doubt they're the type of spending that would be in his cross hairs, but didn't know if he's already said as much.

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It would be an awesome sight to see balconies added to the building. While in chicago, I learned of many buildings in which balconies where added for conversions. One was even on a historic building where they actually had to have hanging balconies attached to the inside of the building, not the outside

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if you alter the building for balconies... no tax credits.

 

re: kasich.  the quote I heard was that when asked about it he replied that he doesn't plan on having taxes to credit.  Hey, if he can figure out how to keep our state running with no taxes, great.  However he obviously doesn't understand how much more expensive urban redevelopment is than new development in greenfields, and if he doesn't understand that we have to incentivize it in some way to make it happen in states like Ohio... we are in big trouble.

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^Doesn't understand or maybe doesn't care.  "Who would want to live in an an old city?" fits well with "Who would ride a train?"

 

The balcony thing raises an issue with the historic tax credits.  Is the program's insistence on literal facade restoration/preservation too restrictive?  Not sure how else it could be designed, but thought I'd raise it.

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I think it is what it is... it is a preservation program, so I understand the exclusion of altering the building for things like balconies.  Otherwise it would just be a straight up "redevelopment" program, and if that's the case they might as well incentivize demoltion and new construction...

 

but there are a lot of facets that I do feel are too restrictive and incredibly energy inefficient (particuarly in regards to windows).  The building should certainly "look" the way it did when it was built, practically forcing it to function like it is a little crazy.

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if you alter the building for balconies... no tax credits.

 

re: kasich.  the quote I heard was that when asked about it he replied that he doesn't plan on having taxes to credit.  Hey, if he can figure out how to keep our state running with no taxes, great.  However he obviously doesn't understand how much more expensive urban redevelopment is than new development in greenfields, and if he doesn't understand that we have to incentivize it in some way to make it happen in states like Ohio... we are in big trouble.

 

 

This is why I fear his agenda will result in even more sprawl Ohio simply does NOT need. With it, its an "anything goes" statewide assault on buffers, farmlands, forest, etc.... This is not a benefactor to efforts that try to restore the cores. I shudder to think what Ohio would look like if these ways are allowed to go unabated. This guy is utterly clueless and careless.

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wideanglejpg-1eda1a38bb26a06e.jpg

 

This intersection would get a lot of life. Key Bank Center looks like it could easily add balconies

 

Putting anything on the exterior of the Key Bank building would be horrific.  It would function well as a hotel.

 

 

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^Good to know! That one is my favorite too.

 

Has Kasich said anything specifically about the historic tax credits? I don't doubt they're the type of spending that would be in his cross hairs, but didn't know if he's already said as much.

 

Historic tax credits were popular among developers when things were booming, because large corporations who were PROFITABLE then, were purchasing those tax credits for almost 1:1.  Now, those same corporations are no longer posting large profits, therefore aren't looking to offset their tax bills, and the tax credits are selling for maybe 30 or 40 cents on the dollar.  That difference is nearly impossible to make up in the Cleveland arena of real estate development.

 

The new market tax credit program will probably be done away with but most developers won't miss it.  As a program, it came with so many strings attached, developers spent nearly as much in attorney fees as they did getting the actual "free" money.  Not to mention, the entire intent of new market tax credits had become so bastardized that it was being used pretty much anywhere & everywhere because the law was written so vaguely.

 

Any discussion on redeveloping residential downtown is futile until Cleveland seriously adds thousands of jobs downtown and gas gets significantly more expensive.  Only when both of those things happen, will you see people seriously consider living downtown in a large enough group that it warrants redevelopment projects.

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^Good to know!  That one is my favorite too.

 

Has Kasich said anything specifically about the historic tax credits?  I don't doubt they're the type of spending that would be in his cross hairs, but didn't know if he's already said as much.

 

Historic tax credits were popular among developers when things were booming, because large corporations who were PROFITABLE then, were purchasing those tax credits for almost 1:1.  Now, those same corporations are no longer posting large profits, therefore aren't looking to offset their tax bills, and the tax credits are selling for maybe 30 or 40 cents on the dollar.  That difference is nearly impossible to make up in the Cleveland arena of real estate development.

 

The new market tax credit program will probably be done away with but most developers won't miss it.  As a program, it came with so many strings attached, developers spent nearly as much in attorney fees as they did getting the actual "free" money.  Not to mention, the entire intent of new market tax credits had become so bastardized that it was being used pretty much anywhere & everywhere because the law was written so vaguely.

 

Any discussion on redeveloping residential downtown is futile until Cleveland seriously adds thousands of jobs downtown and gas gets significantly more expensive.  Only when both of those things happen, will you see people seriously consider living downtown in a large enough group that it warrants redevelopment projects.

 

I doubt that as housing downtown is already at the over saturation piont.  Every new development rents out and there are waiting lists.

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^Good to know! That one is my favorite too.

 

Has Kasich said anything specifically about the historic tax credits? I don't doubt they're the type of spending that would be in his cross hairs, but didn't know if he's already said as much.

 

Historic tax credits were popular among developers when things were booming, because large corporations who were PROFITABLE then, were purchasing those tax credits for almost 1:1. Now, those same corporations are no longer posting large profits, therefore aren't looking to offset their tax bills, and the tax credits are selling for maybe 30 or 40 cents on the dollar. That difference is nearly impossible to make up in the Cleveland arena of real estate development.

 

The new market tax credit program will probably be done away with but most developers won't miss it. As a program, it came with so many strings attached, developers spent nearly as much in attorney fees as they did getting the actual "free" money. Not to mention, the entire intent of new market tax credits had become so bastardized that it was being used pretty much anywhere & everywhere because the law was written so vaguely.

 

Any discussion on redeveloping residential downtown is futile until Cleveland seriously adds thousands of jobs downtown and gas gets significantly more expensive. Only when both of those things happen, will you see people seriously consider living downtown in a large enough group that it warrants redevelopment projects.

 

And actually, I don't think the state's historic preservation tax credit works like the tax credit programs you're describing- it's probably poorly named, in fact.  I believe it's just a cash grant to the developer.  I'm no expert though.

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Tax credits can be generated in a number of ways on a real estate development project, historic preservation is one of them.  How they are used to make money is all the same though - they are sold at auction in a bidding process ahead of the closing for the financing.  That's what generates the cash back to the developer for closing on the project.

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Any discussion on redeveloping residential downtown is futile until Cleveland seriously adds thousands of jobs downtown and gas gets significantly more expensive.  Only when both of those things happen, will you see people seriously consider living downtown in a large enough group that it warrants redevelopment projects.

 

I don't agree. If they are done right, there is a market.  Look at 668, it completely rented out before it even admitted the first residents.

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Tax credits can be generated in a number of ways on a real estate development project, historic preservation is one of them.  How they are used to make money is all the same though - they are sold at auction in a bidding process ahead of the closing for the financing.  That's what generates the cash back to the developer for closing on the project.

 

Are you sure this is the case for the Ohio Historic Preservation credits?  Unlike most federal credits, the Ohio ones are fully refundable, so the holders' actual profitability/tax liability shouldn't matter.  And most of the developers of the Cleveland projects are for-profit companies filing returns, though I' not even sure that matters.  I'm really in over my head here though.  But I thought I remember hearing how the program, despite the name, really isn't a "tax credit" in the way most federal credits are.

 

EDIT: It looks as though the program may have changed after the first couple rounds and the credits are no longer fully refundable; not sure though.

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Any discussion on redeveloping residential downtown is futile until Cleveland seriously adds thousands of jobs downtown and gas gets significantly more expensive.  Only when both of those things happen, will you see people seriously consider living downtown in a large enough group that it warrants redevelopment projects.

 

I don't agree. If they are done right, there is a market.  Look at 668, it completely rented out before it even admitted the first residents.

 

You can't pick & choose and name a successful project here or there, or I can sit back and pick dozens of rental/condo projects that failed & are sitting vacant. 

 

What about the Bingham going bankrupt?  What about the Avenue District project drying up?  What about the Flats East Bank residential portion being cancelled?  You have to look at the overall picture and I stick with my original statement that Cleveland needs a big time hiring increase and gas prices need to get higher before you see a real change in demand.

 

I have to admit, the 668 building's success is a big surprise to me and many others I'm sure.  How many units in that building by the way?

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668 is a residential conversion in downtown that used historic preservation tax credits.  It was wildly successful, so obviously there is a market, like a I said before, if it is done right.

 

 

There are over 200 units in 668 (per Mayday on the skyscraper page :)

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Any discussion on redeveloping residential downtown is futile until Cleveland seriously adds thousands of jobs downtown and gas gets significantly more expensive.  Only when both of those things happen, will you see people seriously consider living downtown in a large enough group that it warrants redevelopment projects.

 

I don't agree. If they are done right, there is a market.  Look at 668, it completely rented out before it even admitted the first residents.

 

You can't pick & choose and name a successful project here or there, or I can sit back and pick dozens of rental/condo projects that failed & are sitting vacant. 

 

What about the Bingham going bankrupt?  What about the Avenue District project drying up?  What about the Flats East Bank residential portion being cancelled?  You have to look at the overall picture and I stick with my original statement that Cleveland needs a big time hiring increase and gas prices need to get higher before you see a real change in demand.

 

I have to admit, the 668 building's success is a big surprise to me and many others I'm sure.  How many units in that building by the way?

 

HOLD UP.

 

Many of those projects had nothing to do with the Market demand.

 

You cannot even bring the FEB into the convo as that had NOTHING to with market demand.  I have faith that if the building would have gone up a year earlier today we'd have full rental.

 

The Avenue district dried up?  Please explain that.  the Townhouses were a massive hit and plans were revised and more added.  The project was always planned to be done in phases.

 

The Bingham building itself did not go into foreclosurer the investor group in Illinois did.  HUGE DIFFERENCE and that did not affect the occupancy of the building, which if I recall is over 90%

 

You've made some gross inaccuracies.  You're saying lets look at the overall picture, but lets be sure the picture is level before we start to critique.

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It's all about market demand, this whole thread is about market demand.  Developers pay alot of money to generate market demand data and use it to obtain financing.  If the market demand was there, the lenders would be lined up, but they aren't.  I mispoke on the Bingham but I think your faith in the FEB residential is unjustified.

 

From Crains, September 2010:

 

"Jim Anderson, an agent at the Progressive Urban Real Estate brokerage in Cleveland with substantial sales experience downtown and in Ohio City, said the real estate market is so weak that some fine projects are failing to register no sales in a calendar year. He said 15 downtown and Flats condos have sold so far this year — none at the Avenue District."

 

http://www.crainscleveland.com/article/20100906/FREE/309069963

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I mispoke on the Bingham, but I think your faith in the FEB residential is unjustified.  If the market demand was there, the lenders would have lined up, but they haven't. 

 

 

"Jim Anderson, an agent at the Progressive Urban Real Estate brokerage in Cleveland with substantial sales experience downtown and in Ohio City, said the real estate market is so weak that some fine projects are failing to register no sales in a calendar year. He said 15 downtown and Flats condos have sold so far this year — none at the Avenue District."

 

http://www.crainscleveland.com/article/20100906/FREE/309069963

 

Don't you think the year long court battle that delayed the project was the problem, not market demand??  Don't you think the resulting credit crunch in the financial markets and the economy is the result the project was not funded, not market demand.

 

IF that court battle had not taken place we'd probably have a full built development as first proposed.

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^no, I don't think that was the problem.  And apparently neither does the real estate expert who was quoted in the article as saying that "the market is so weak..."

 

Housing demand is a function of population and population growth.  Have you seen Cleveland's population numbers?  Have you seen how much we've declined from 2000 to 2010 as a city and a region?  Not trying to get off topic, but still defending my original point about how we need significantly more hiring and higher gas prices... 

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And the fact that downtown is one of the nations fastest growning downtown in light of what is going is speaks volumes.

 

If thing were that bad, why do we have such high occupancy and waiting list?

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And the fact that downtown is one of the nations fastest growning downtown in light of what is going is speaks volumes.

 

If thing were that bad, why do we have such high occupancy and waiting list?

 

Exactly! The demand for downtown living is definitely there. As others have said, 668, warehouse district, east 4th street. Yes the city itself has been loosing population as a whole but downtown is a neighborhood within the city which a residential scene is actually growing.

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^no, I don't think that was the problem.  And apparently neither does the real estate expert who was quoted in the article as saying that "the market is so weak..."

 

He's talking about the market for condos, not rentals.  The market is weak because it's so much harder to get credit.

 

Housing demand is a function of population and population growth.  Have you seen Cleveland's population numbers?  Have you seen how much we've declined from 2000 to 2010 as a city and a region?

 

Have you seen the population growth numbers for downtown in the last 20 years? ???

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Tax credits can be generated in a number of ways on a real estate development project, historic preservation is one of them.  How they are used to make money is all the same though - they are sold at auction in a bidding process ahead of the closing for the financing.  That's what generates the cash back to the developer for closing on the project.

 

You're talking about conservation easements. Not tax credits, they are very different.

 

And I couldn't possibly disagree with you more in regards to market demand for downtown living.  Occupancy rates are over 93% downtown.  You can not confuse new sale condo projects to market demand for downtown living.  Condos are dead right now... everywhere for a lot of reasons that I have covered ad nauseum in a multitude of threads.

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