Downtown Cleveland’s New Growth Is Happening Inside Old Buildings

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While downtowns in large and fast-growing cities always seem to have at least several new buildings under construction, it may come as a surprise to many people that Downtown Cleveland has seen construction on several buildings each year too. The difference is that Cleveland’s construction is occurring inside already existing buildings.

A new report issued today by the global real estate services firm Newmark showed that 35 office buildings in Downtown Cleveland were converted since 2013 with new uses — primarily residential. That’s just shy of three buildings converted per year.

“Cleveland has emerged as a national leader in converting office properties to new uses such as multifamily, hotels, retail, and mixed-use developments, with a robust pipeline of completed, ongoing, and potential projects reshaping the city’s urban core,” the report’s authors noted.​

Those projects represent more than 7.4 million square feet of renovated buildings with more than 6.6 million square feet of office space converted to new uses. Nearly 800,000 square feet of office space in those buildings was retained and updated.

“These projects have repurposed significant portions of previously empty or underutilized office buildings, playing a major role in the district’s ongoing revitalization,” the authors continued.

The report also noted a dozen more conversion projects are possible. Four of them are already in the planning pipeline — Centennial, 925 Euclid Ave.; Tower at Erieview, 1301 E. 9th St.; Rockefeller Building, 614 W. Superior; and the former Oswald Centre, 1100 Superior Ave.

In total, those represent nearly 3 million square feet of office space. Almost 1.4 million square feet of that is in one building — Centennial. While that project has struggled to move forward despite lavish public subsidies, a pending foreclosure could put the project under new, more financially liquid ownership.

The Tower at Erieview has also started the first phase of its renovation with 227 W-branded by Marriott luxury apartments. Also planned is 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, plus renovated office spaces across 12 floors.

Brady Sullivan Properties of Manchester, NH purchased 1100 Superior at auction last summer for $8.13 million from LNR Partners, LLC. Plans for a partial conversion to residential are still being formulated.

“Cleveland’s central business district continues to evolve as a national model for adaptive reuse, with thousands of residential and hotel units transforming the downtown landscape,” said Steven Timmel, senior vice president at brokerage CBRE, in a written statement.

“This conversion trend, which now includes 1100 Superior Avenue, is reshaping the office market by removing less efficient assets and creating a more vibrant and functional urban core,” Timmel added.

The fate of the Rockefeller Building and its renovation plans remain uncertain. The property was taken over in July by its lender BridgeInvest of Miami and offered for sale along with an adjacent, large swath of undeveloped parking lots.

Looking ahead, the Newmark report identified eight other office buildings that are conversion candidates. They include the AT&T Building, 750 Huron Rd.; IMG Building, 1360 E. 9th; Landmark Office Tower, 45-101 W. Prospect Ave.; Ohio Savings Buildings, 1801 E. 9th and 1111 Chester Ave.; AmTrust Building, 800 Superior Ave.; The Fives, 55/65/75 Erieview Plaza; and the Anthony J. Celebrezze Federal Building, 1240 E. 9th.

Those represent another 4 million square feet of office space, with some being partially occupied and possibly resulting either in partial conversions or their tenants significantly boosting other office buildings.

Terry Coyne, a vice chairman in Newmark’s Cleveland office, said that one of the best uses for an obsolete office building is to update it as a modern office building. He questioned the continued strength of the multifamily market downtown and but said there is an ongoing flight to quality among prospective office tenants.

“If you’ve got a good office space, there’s demand for it,” Coyne said.

That’s apparently one of the reasons why Bedrock is considering a new office tower on Huron at Ontario Street. It could accommodate Rocket Mortgage’s offices from rented space at the Higbee Building plus any one of several major tenants at other downtown buildings whose leases are due to expire in several years.

Potentially aiding these and other developments are expanded development finance tools approved by the Ohio General Assembly last summer. They include increased Transformational Mixed Use Development tax credits, Historic Preservation Tax Credits, Opportunity Zone credits, plus demolition and brownfield grants.

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