gottaplan

Maybe Benesch is holding out hope for Stark as means to leverage best deal from current landlord or others? What is their current level of commitment? Nonbinding LOI? Not saying that's what's happening but it does happen all the time....

not trying to beef with you. Intro was launched before the start of the commodity escalation. And it's timber framed. SW may be started after prices come back down. Or maybe it's so large it doesn't matter. Or maybe people are gathered right this minute trying to devise a plan to counter the impact of steel price on the overall project budget.

I dont know about that. Have you seen the costs of steel? https://fred.stlouisfed.org/series/WPU101707 Projects are literally being cancelled or delayed every day now because of this. Not to mention skyrocketing lumber costs, used for shoring, framing, safety railing, etc. And glass shortages. Yeah, it's really not a great time to be kicking off a project, large or small

on some levels you are right, but you can't add new buildings with hundreds of thousands of SF of new office without adding significant new tenants. Cleveland office market is still a shell game. Some are poached from the suburbs occasionally (Cross Country Mortgage) while others leave the City for the suburbs.

Viewing all this Nucleus in a slightly different lens, the last office building in Cleveland was Flats East Bank, built in 2013. It's struggling to stay afloat, has been refi'd multiple times in last 3 years and needed a major TIF extension recently also. In that building with all the incentives and subsidy, rents are still well over $30/sf. Say $35 depending on where you are in the building and how much SF you have. Key Tower has rents in same range for arguments sake. The last other office building to take a swing was the office phase of "INTRO" in Ohio City. That building would've required rents close to $40/sf to make it work. They never even got close to getting someone to sign on and that would've been an awesome location, right by the market, walkable, transit stop right there, great bars & restaurants nearby.... So someone tell me again what rents Stark needs to make a go of the office space in Nucleus?

Hmm. Is it SW? Or Progressive? Because Progressive is reducing square footage. Technically so is SW by consolidating locations under 1 roof for R&D

AECOM just gave back a floor in their own building. E&Y continues to give back space in their own building. Cleveland Cliffs has a full floor available of their own space.... more & more coming as leases come due. We're barely seeing the tip of the iceberg in downsizing. The Oswald building, 1100 Superior has some real hurdles with tenants downsizing there. Building owners can't react fast enough. And that's just downtown. The suburban market is even worse

Look I get it new buildings are exciting, much more so than parking lots. Just being realistic here on whether or not this thing happens. It couldn't get across the line before covid and I don't think the financials got any better regardless of what's happening in state legislature to increase incentives... shell out more for a building that doesn't make sense while we have existing buildings that can hardly afford to keep the lights on (literally)

it still won't get built. There's not enough tenants for the office. The construction costs are too high. KJP you should write an article on the ACTUAL amount of vacancy in downtown cleveland office buildings. Include what's actually vacant and what is "shadow space" which is technically under lease but will never be occupied and is quietly being marketed for sublease but will never happen. It's staggering. We already have a completely empty office building right at the corner of 9th & Lakeside. It's been empty for a year. Office buildings all over are struggling. It's not going to get better. Most major firms are planning to reduce square footage. Put that in your blog

whatever Ken. I know several of those firms are not growing and are quietly trying to sublease a large portion of their space. Anyhow, it ain't happening. The construction & subsequent rents are too high, their aren't enough tenants in the market and it just doesn't work.

this project is dead. It aint happening. It didn't pencil before Covid and it doesn't now regardless of new incentives or subsidy. There's zero demand for new office in Cleveland and the housing portion is not enough to justify the increased construction costs. It's dead.

I think you're right - and the FBI already has a location on the near east side of downtown cleveland... back to my original point though, how did the city get so close to signing a deal at that 1801 Superior site, if it literally was never an option per the Feds? Why bother? It should've been crossed off the list immediately. But it wasn't. They went to detailed programming & design & RFP and final negotiations on this site. And here it is 3years later and they are not much farther along

well that's not what I heard and Homeland Security isn't carrying the cost, City of Cleveland is, but you're right, we'll never know.

the development agreements are all signed, incentive deals are inked and the building design is underway. Brecksville has a zoning amendment on the ballot for may 4th for this parcel. It's moving forward.

there was only 1, maybe 2 tenants left in the building that were holding out, trying to leverage a nice deal to relocate. One of them was the YMCA as I recall...

Miller Road is only half interchange currently and will become full interchange. City of Brecksville already working on the engineering.

interesting part here is that the Valor Acres site is now combined with the former Dalad parcel along I-77 and is now about 190 acres. SW is planning to take all of it and sit their facility right in the middle surrounded by nothing. No adjacent office buildings, maybe a small hotel. I think the plans for a grocery and modest retail have all gone away. Looks like Digeronimo's are left trying to squeeze their ancillary development into this back corner because that's all that's left for them. Not really a great move by Brecksville allowing this all to go this way... Edit: The site plan here, scroll down, is nowhere near accurate any longer. https://www.valoracres.com/

so here we are about 3 years after the City walked away from the turnkey deal to put them in the old Plain Dealer site at 1801 Superior. That was roughly a $50 million deal and they would have been in by now. They are still probably 3 years away and paying the County something like $9 million a year in rent at the Justice Center.... it's really sad the local media isn't reporting more on this debacle

the gap is just too large on this project - no amount of tax credits or subsidy is going to get it to a point where lenders are ready go support it. It might sit on the shelf for a couple years and come back in some modified version again but I think there's other deals also sitting on the shelf which hold more promise than this. Like Centennial....

local leaders are finally starting to understand that it no longer makes sense to subsidize a project like this, UNLESS it's luring a major employer from out of the area. Why spend money on a project like this to pull a major tenant out of an existing building that is also critical to the City's success? This is nothing but a shell game. Pulling tenants from one building to put them in another. It doesn't work. Flats East Bank has been much closer to building a small office building on adjacent parking lot, but hasn't because tenants aren't there. Now add in the pandemic and how many people are permanently in "work from home"..... there's just not any data to support building new developments with significant office component. Look how many large existing office buildings are sitting empty now in downtown Cleveland. 55 PS, nearly empty and the handful of users are on month to month leases, could flee at a moment.... Tower at Erieview, pretty much the same... 45 Erieview is completely vacant now. And then factor in how many floors are actually leased but completely unoccupied. Cleveland market won't be in a position to build new office space for a couple years. Might as well subsidize the existing office buildings to allow them to make improvements to their facilities, more energy upgrades, etc. Still get the benefit of construction jobs and update the buildings overall for long term. The apartment market for new construction is juuuuust about tapped out also.

pandemic is forcing landlords to accept lower rents... Benesch will probably renew at 200 PS for something like $33-$35/sf. The rents at any new construction project in Cleveland are minimum $42/sf or more like $45 plus annual escalations. Those are huge differences not to mention the buildout and relocation costs would cost millions.

this project is dead. No amount of subsidy or special TIF is going to save it. The only saving grace that Stark had was an anchor tenant in Benesch and they are in the midst of re-signing at 200 PS. Without an anchor office tenant, the rest of the deal is smoke & mirrors. Retail? Nah. Hotel? Nope? Apartments? meh. Don't forget also, Stark's plan was to build this with a non-union construction company.... which was not going to fly.

I think the bank stocks will be a buying opportunity soon. THey are going to get crushed in next month as defaults start hitting the books. Ultimately I expect another bailout to them but that window will be the time to buy as they write off maximum losses and take the bailout money to resume lending

really glad to see this moving forward. I've always hated that dumb plaza. I bought paint a few months ago at the SW store and the manager there seemed very indignant, like they were NOT going anywhere and she seemed sure that Harbor Bay plans would not be approved by Ohio City...

Working through a midwest market call related to construction activity, it was brought up that Ohio, along with Michigan and many other states use gas taxes to fund DOT road/bridge budgets. Nobody is driving/using gas and it's crushing these state budgets. That's why a national infrastructure bill is probably right around the corner. What are some solid plays for that strategy? Heavy equipment manufacturers, concrete, steel, aggregate...