Maybe I'm alone in this, but the 515 stuff makes me nervous. I think that old original rendering of the tower is ugly, and my worst fears (born and raised in CLE, what can I say) are that that thing gets built and nuCLEus gets scrapped down the road. It's be great if he builds both (and has a newer, better vision for the 515 tower), but personally, I'd like for the full focus to be on nuCLEus, which would be such a game changer.

 

I doubt Bobby Stark is going to dust off the architectural plans from 2005 for whatever he does there.

Maybe I'm alone in this, but the 515 stuff makes me nervous. I think that old original rendering of the tower is ugly, and my worst fears (born and raised in CLE, what can I say) are that that thing gets built and nuCLEus gets scrapped down the road. It's be great if he builds both (and has a newer, better vision for the 515 tower), but personally, I'd like for the full focus to be on nuCLEus, which would be such a game changer.

 

 

I understand the fears, but even if that happens, I still think it would be a net plus for the city.  The parking lots remain a blank canvas for future development, and we still get a tower on 515 with hundreds of new residents.

 

That said, I of course hope that we get both ;-)

If NuCLEus fails to materialize I don't believe it will be the result of a lack of residential demand. It will be because they cannot get the deals they want from retailers.

What Stark is trying to do between Prospect and Huron hasn't been done downtown since before the recession -- construct a new-build mostly residential tower. The Avenue District was the most recent example. And the scale of this project is far larger than the Avenue District.

 

So I would expect lenders to be cautious. How do you address lender concerns? By developing the project incrementally and starting with the lowest-hanging fruit. Stark can renovate the Herold Building with residential, but that doesn't really prove anything nor does it push the envelope. A new-build, low-risk residential tower would push the envelope and prove whether downtown can support it. How do you reduce the risk? By building the tower in a location that already has most of the site prep work already completed and waiting to be finished.

 

That's 515 Euclid. Not only is it the only place where a residential tower can be built so inexpensively downtown, but it is a block away from nuCLEus' bullseye. BTW, Pinnacle condos on Lakeside is a comparable precedent, as it was built on top of a warehouse-turned-parking structure. But that in a different era of residential financing, and it was a condo development where pre-sales could demonstrate to lenders that the project would succeed. I have to think Stark is going after rental apartments, but I could be wrong. Either way, I expect him to make an announcement soon of his intentions with this building.

Pietro lied.  They set the price high to make as much money as possible.  This LA company does not care about anything else.  But I am super excited to see what Bob Stark can do here!

What Stark is trying to do between Prospect and Huron hasn't been done downtown since before the recession -- construct a new-build mostly residential tower. The Avenue District was the most recent example. And the scale of this project is far larger than the Avenue District.

 

So I would expect lenders to be cautious. How do you address lender concerns? By developing the project incrementally and starting with the lowest-hanging fruit. Stark can renovate the Herold Building with residential, but that doesn't really prove anything nor does it push the envelope. A new-build, low-risk residential tower would push the envelope and prove whether downtown can support it. How do you reduce the risk? By building the tower in a location that already has most of the site prep work already completed and waiting to be finished.

 

That's 515 Euclid. Not only is it the only place where a residential tower can be built so inexpensively downtown, but it is a block away from nuCLEus' bullseye. BTW, Pinnacle condos on Lakeside is a comparable precedent, as it was built on top of a warehouse-turned-parking structure. But that in a different era of residential financing, and it was a condo development where pre-sales could demonstrate to lenders that the project would succeed. I have to think Stark is going after rental apartments, but I could be wrong. Either way, I expect him to make an announcement soon of his intentions with this building.

I was about to ask do you think stark would be willing to include some condo's, maybe on the top floor? This way he could have those pre-sales to maybe entice lenders...

What Stark is trying to do between Prospect and Huron hasn't been done downtown since before the recession -- construct a new-build mostly residential tower. The Avenue District was the most recent example. And the scale of this project is far larger than the Avenue District.

 

So I would expect lenders to be cautious. How do you address lender concerns? By developing the project incrementally and starting with the lowest-hanging fruit. Stark can renovate the Herold Building with residential, but that doesn't really prove anything nor does it push the envelope. A new-build, low-risk residential tower would push the envelope and prove whether downtown can support it. How do you reduce the risk? By building the tower in a location that already has most of the site prep work already completed and waiting to be finished.

 

That's 515 Euclid. Not only is it the only place where a residential tower can be built so inexpensively downtown, but it is a block away from nuCLEus' bullseye. BTW, Pinnacle condos on Lakeside is a comparable precedent, as it was built on top of a warehouse-turned-parking structure. But that in a different era of residential financing, and it was a condo development where pre-sales could demonstrate to lenders that the project would succeed. I have to think Stark is going after rental apartments, but I could be wrong. Either way, I expect him to make an announcement soon of his intentions with this building.

I was about to ask do you think stark would be willing to include some condo's, maybe on the top floor? This way he could have those pre-sales to maybe entice lenders...

I'd be curious to see how condos would do now. I keep reading articles about how the downtown area doesn't have condos like the inner ring suburbs do for the empty-nesters. It's like someone just needs to take the first plunge and prove if it's feasible or not, but nobody wants to stick their neck out.

What Stark is trying to do between Prospect and Huron hasn't been done downtown since before the recession -- construct a new-build mostly residential tower. The Avenue District was the most recent example. And the scale of this project is far larger than the Avenue District.

 

So I would expect lenders to be cautious. How do you address lender concerns? By developing the project incrementally and starting with the lowest-hanging fruit. Stark can renovate the Herold Building with residential, but that doesn't really prove anything nor does it push the envelope. A new-build, low-risk residential tower would push the envelope and prove whether downtown can support it. How do you reduce the risk? By building the tower in a location that already has most of the site prep work already completed and waiting to be finished.

 

That's 515 Euclid. Not only is it the only place where a residential tower can be built so inexpensively downtown, but it is a block away from nuCLEus' bullseye. BTW, Pinnacle condos on Lakeside is a comparable precedent, as it was built on top of a warehouse-turned-parking structure. But that in a different era of residential financing, and it was a condo development where pre-sales could demonstrate to lenders that the project would succeed. I have to think Stark is going after rental apartments, but I could be wrong. Either way, I expect him to make an announcement soon of his intentions with this building.

I was about to ask do you think stark would be willing to include some condo's, maybe on the top floor? This way he could have those pre-sales to maybe entice lenders...

I'd be curious to see how condos would do now. I keep reading articles about how the downtown area doesn't have condos like the inner ring suburbs do for the empty-nesters. It's like someone just needs to take the first plunge and prove if it's feasible or not, but nobody wants to stick their neck out.

Sure, you are right, but at the same time, I don't think anyone is going to push 100+ units right out of the gate.

 

As I have said before, I really don't think Stark is going to be too vocal about 515 as an effort to keep the folks that are wating for Nucleus to come online to keep waiting for that.  I dont think he wants to rob from himself.  I do agree with KJP in that 515 is a test run for lenders.  He is going to show them successful preleasing for a development that can go much sooner then Nucleus, without much advertising. 

515 is about as close to a 'lock' as you could get for new residential construction success downtown. it would be kinda like a nouveau reserve square. maybe it could be mixed condo and rental. regardless, it's good idea to develop it as far as demonstrating the feasibility of nucleus and other new build stuff for sure. i never thought of the develoment of 515 as taking away from nucleus, feb or anything else, not sure with it being the same developer though.

It's like someone just needs to take the first plunge and prove if it's feasible or not, but nobody wants to stick their neck out.

 

Sadly, it's more like someone (Zaremba at Avenue District) did take the firs plunge, and lost his shirt. And his building. I'm hopeful the condo market will come back, but I'm guessing we're going to see some more conversions or low rise/townhouse projects work before anyone is able to take the plunge on high rise condos again.

oh yeah i forgot about the avenue struggles. that was a different era and the area is not nearly as as ideal as 515. i dont think anyone ever expected that the avenue would be a great success, or go under. it was definately a grand, overreaching experiment and ahead of its time. in the here and now 515 is much more likely to be successful no matter who finally develops it. the only way to know for sure is take it on and put the feelers out for a few floors of condo presales. so we'll see.

Don't forget there is the Grand Arcade (with 100+ units), Pinnacle (New construction), the Coat Factory, Water Street, and several condos on West 9th, all in the Warehouse District. The Point in Gateway and The Park on Public Square are also condos. There is a demand.

First of all, I will say that I am a big believer in Stark and think that him being the developer lends an incredible amount of not only credibility but also respect to the project. I know he'll do it right, and get the right players involved and rowing in the same direction.

 

That said, just to recap since there seems to have been a lot of news... Stark has only raised $9.5MM in equity according to a recent SEC filing, when he will need an amount around 20% of the project's entire cost. He can also count the TIF and tax abatement directly into his pro forma... I am going to guess that the SEC filing does not include Stark's own equity contribution, and also that J-Dek wouldn't really be in on this deal unless they had money or knew of money.

 

All that said, we are now talking about adding a residential tower at 515 Euclid, while nothing on the Prospect-Huron site has been reduced in scope. So the project has grown?

First of all, I will say that I am a big believer in Stark and think that him being the developer lends an incredible amount of not only credibility but also respect to the project. I know he'll do it right, and get the right players involved and rowing in the same direction.

 

That said, just to recap since there seems to have been a lot of news... Stark has only raised $9.5MM in equity according to a recent SEC filing, when he will need an amount around 20% of the project's entire cost. He can also count the TIF and tax abatement directly into his pro forma... I am going to guess that the SEC filing does not include Stark's own equity contribution, and also that J-Dek wouldn't really be in on this deal unless they had money or knew of money.

 

All that said, we are now talking about adding a residential tower at 515 Euclid, while nothing on the Prospect-Huron site has been reduced in scope. So the project has grown?

 

The project hasn't grown as the 515 tower appeared in at least one of his early massings and the two corporations he formed relating to 515 Euclid were incorporated at about the same time as the corporations relating to the site at/near/between Huron, Prospect and East 4th.

 

However, we were all drawn to the latter address by the sheer scale of that component, sort of a magician's misdirection -- be it intended or not.

 

My guess is that Stark's first phase (or perhaps phases 1a and 1b) of nuCLEus will consist of the following:

 

> Demolition of the parking deck on Huron and the "Mr. Albert's building" on Prospect

> Renovation of the Herold Building on Prospect and development of the vacant lot at Prospect/East 4th

> Laneway conversion of East 4th between Huron & Prospect, plus additional streetscaping

> Construction of the multi-level parking pad, laneways and ground-floor retail between Prospect and Huron

> Construction of a residential tower atop 515 Euclid

 

Needless to say, that's still a significant addition to Cleveland and would change downtown quite dramatically. What I know of Stark, he will not talk about these as phases or sequences. He thinks holistically so when someone suggests phasing to respond to market conditions and lender interest, he almost takes that as a personal offense. But few things get built when you want them to, and Stark is well aware of that.

 

Stark has invested $26 million to buy the property for this site (and the Warehouse District lot too, BTW!) but let's assume Stark has only 20 percent equity in that. He also has $3 million from the county in the form of a loan, which I seem to recall is being financed by casino revenues. And eurokie noted the TIF and residential tax abatement, which could comprise a significant portion of the financing. But the $9.5 million, a 20 percent debt-to-equity ratio, means the base amount of what they could develop right now would have a value of about $47 million. That actual amount is much more with the TIF and tax abatement, so we're likely looking at all of the above elements, less the tower atop 515 Euclid, as what Stark can afford. And if he's putting his own personal equity into 515 Euclid, then that can be part of this initial phase as well.

First of all, I will say that I am a big believer in Stark and think that him being the developer lends an incredible amount of not only credibility but also respect to the project. I know he'll do it right, and get the right players involved and rowing in the same direction.

 

That said, just to recap since there seems to have been a lot of news... Stark has only raised $9.5MM in equity according to a recent SEC filing, when he will need an amount around 20% of the project's entire cost. He can also count the TIF and tax abatement directly into his pro forma... I am going to guess that the SEC filing does not include Stark's own equity contribution, and also that J-Dek wouldn't really be in on this deal unless they had money or knew of money.

 

All that said, we are now talking about adding a residential tower at 515 Euclid, while nothing on the Prospect-Huron site has been reduced in scope. So the project has grown?

 

The project hasn't grown as the 515 tower appeared in at least one of his early massings and the two corporations he formed relating to 515 Euclid were incorporated at about the same time as the corporations relating to the site at/near/between Huron, Prospect and East 4th.

 

However, we were all drawn to the latter address by the sheer scale of that component, sort of a magician's misdirection -- be it intended or not.

 

My guess is that Stark's first phase (or perhaps phases 1a and 1b) of nuCLEus will consist of the following:

 

> Demolition of the parking deck on Huron and the "Mr. Albert's building" on Prospect

> Renovation of the Herold Building on Prospect and development of the vacant lot at Prospect/East 4th

> Laneway conversion of East 4th between Huron & Prospect, plus additional streetscaping

> Construction of the multi-level parking pad, laneways and ground-floor retail between Prospect and Huron

> Construction of a residential tower atop 515 Euclid

 

Needless to say, that's still a significant addition to Cleveland and would change downtown quite dramatically. What I know of Stark, he will not talk about these as phases or sequences. He thinks holistically so when someone suggests phasing to respond to market conditions and lender interest, he almost takes that as a personal offense. But few things get built when you want them to, and Stark is well aware of that.

 

Stark has invested $26 million to buy the property for this site (and the Warehouse District lot too, BTW!) but let's assume Stark has only 20 percent equity in that. He also has $3 million from the county in the form of a loan, which I seem to recall is being financed by casino revenues. And eurokie noted the TIF and residential tax abatement, which could comprise a significant portion of the financing. But the $9.5 million, a 20 percent debt-to-equity ratio, means the base amount of what they could develop right now would have a value of about $47 million. That actual amount is much more with the TIF and tax abatement, so we're likely looking at all of the above elements, less the tower atop 515 Euclid, as what Stark can afford. And if he's putting his own personal equity into 515 Euclid, then that can be part of this initial phase as well.

 

Great update/summary of where this project stands now.

 

I suppose it's really just semantics as to whether the scope has increased, or gets decreased in the future, and how the tower really relates. I am sure if all is built as planned, the narrative will be that East 4th was the first phase of his & Maron's nuCLEus project, for a little revisionist bravado.

 

I doubt he's finished raising raising equity for the first phase, but the DTE ratio simulation is helpful. On top of having raised the ballpark of $47 million so far, he has A) a very high market value which will enable him to get more financing; and B) generous subsidy from the city that can close the gap that will remain. I'd imagine that the tax abatement could be worth $10-20 million, and the TIF is supposed to bring around $60 million.

 

For a $350M development, he will need $70 million of equity when finished. However, if he takes $80 million off the top from the subsidy, he then only needs around $55 million in equity.

 

I am pretty sure that TIF, depending on how it is structured, can count as an equity contribution.

Unfortunately, this is still being marketed with that awful rendering developed by the previous property owner....

http://crsc.reapplications.com/asp/user/website/PropertyProfile.asp?TransID=29514&ParentID=32584

 

And if the closest comparison to putting a residential tower atop 515 Euclid is Pinnacle (80 residential units, 50 for-sale/30 rental, in a 14-story building atop a 3-story parking garage in 2005), then we can guesstimate what a 515 Euclid tower might be like. I seem to recall Pinnacle cost about $30 million to build a decade ago (or $36 million today), which is dirt cheap for a 14-story tower. The reason why it was so cheap was because it was built atop an existing structure, which is what the 10-story 515 Euclid offers.

When considering the old block of buildings on Prospect, I'd like to see what I've seen done  in other cities as in an historic facade re-creation. Considering the fortuitous fact that this historic block still stands and is significant in the history of rock and roll as explained by Tom Yablonsky, executive director of History Gateway Neighborhood Development Corp. and vice president of the Downtown Cleveland Alliance nonprofit, the building is architecturally and socially significant, because 300 Prospect was an early home of famed music store owner Leo Mintz's Record Rendezvous.

 

According to “The Encyclopedia of Cleveland History,” the store was a sponsor of the late radio disc jockey Alan Freed, who is credited with coining the phrase “rock and roll” for the music genre that emerged from the rhythm and blues popular in the black community.

 

Look at Detroit's Motown or Beale Street in Memphis and you'll see that city's earnest attempt at capitalizing on its musical heritage, which in Cleveland's case is very limited. To not faithfully acknowledge this location would be a missed opportunity. Not to mention that this could be a bright, snazzy look for the street, and IMHO rather cool.

^ fantastic idea!  Possibly even some type of collaboration as a RRHOF annex/branch.

^ oh great idea - here it is:

 

The design work for the tower was more detailed than I had imagined -- which I had incorrectly assumed was only a conceptual plan:

 

 

515 Garage

 

515 Garage represents six years of continuous design and evaluation.  The primary goal was to provide new retail and parking facilities on Euclid Avenue, with an opportunity to build luxury apartments above.

 

It was determined that concrete would be used for retail floors and steel frame incorporated for residential units. Soil analysis dictated the maximum of 24 stories using a concrete mat foundation.

 

During the four year period an unbelievable amount of studies were prepared looking at parking, housing and retail development.  Although the apartments were not built plans for every level and unit were developed.

 

SOURCE: http://www.studiorfa.com/#/515garage/

Meanwhile, Stark has secured a tenant for a portion of the office component:

 

 

nuCLEus project nabs Benesch law firm as first tenant

 

By Michelle Jarboe McFee, The Plain Dealer

on April 02, 2015 at 5:00 AM, updated April 02, 2015 at 6:26 AM

 

"CLEVELAND, Ohio - A 77-year-old law firm expects to move its offices to the proposed nuCLEus project, in a sign of early leasing momentum for the high-profile, high-reaching development.

 

Leaders at the Benesch firm have reached an agreement with developer Stark Enterprises to occupy roughly 66,500 square feet at a new office building planned north of Quicken Loans Arena. Those offices will be part of a $430 million development that could include a 54-story tower, largely filled with apartments; a bridge-like hotel; stores; restaurants; parking garages; and outdoor spaces."

 

http://www.cleveland.com/business/index.ssf/2015/04/nucleus_project_nabs_benesch_l.html#incart_river

Ironically, that's the firm Stark hired to represent it in delivering nuCLEus.

 

EDIT: Interesting side comments MJM included in her article about the office market.... I'll post those paragraphs in the Cleveland office news thread.

LOL, I love the updated renderings with the half full baseball stadium.  Hilarious. 

 

I like the signage Benesch has on that building.

Many interesting tidbits in the article, and I'm always impressed by how Michelle gets the scoop on these stories before others.

 

Hopefully, the new construction or backfill of 200 PS space can secure new tenants from outside the CBD. While Benesch is downsizing space by 50 percent, 120k sf seems like a lot of space for a law firm with just 220 people. Perhaps they used to be larger?

 

Also interesting how this project beat Flats East Bank's second proposed office tower to gaining tenants. NuCLEus seems like a far more desirable and central location, and Benesch agreed according to the article.

 

Does anyone think or speculate that this project could seek to have some of the retail/parking garage portion open by the 2016 RNC with the rest of the site under construction for a 2018 completion date?

Many interesting tidbits in the article, and I'm always impressed by how Michelle gets the scoop on these stories before others.

 

Hopefully, the new construction or backfill of 200 PS space can secure new tenants from outside the CBD. While Benesch is downsizing space by 50 percent, 120k sf seems like a lot of space for a law firm with just 220 people. Perhaps they used to be larger?

 

Also interesting how this project beat Flats East Bank's second proposed office tower to gaining tenants. NuCLEus seems like a far more desirable and central location, and Benesch agreed according to the article.

 

Does anyone think or speculate that this project could seek to have some of the retail/parking garage portion open by the 2016 RNC with the rest of the site under construction for a 2018 completion date?

 

I doubt Benesech downsized?? they are a giant.  However, seeing the trends in office space, it seems companies are trying to be more efficient with space and there are new models for office space design being implemented across the country.  I know my company has changed their office space in two of our offices to a more space efficient design

 

Looking at the renderings, it seem Benesch shoots two bird with one stone.  Office space and marketing.  They essentially have a billboard at Progressive field without having to pay the indians

Does anyone think or speculate that this project could seek to have some of the retail/parking garage portion open by the 2016 RNC with the rest of the site under construction for a 2018 completion date?

 

I think this has actually been explicitly stated in a couple of articles (at least the first part.)

So if they stay at 200,000 sf, the office portion of the project is now 33% leased. That's a nice start.

So if they stay at 200,000 sf, the office portion of the project is now 33% leased. That's a nice start.

 

And it sounds like they're getting enough interest to increase the office component by 100,000 sf. If they nail down another tenant soon, especially from outside the CBD, that will make easier for them to start to get some retail tenants signed.

I love the pace at which this seems to all be coming together.  So often in the past it seems like a project this size takes a decade before anything substantial happens.  Loving this momentum!

If the hotel portion raises up to adjust for 100,000 square feet more office space, does this mean the rest of the tower above does as well?

 

I want more height. I'm greedy.

From the article: "Stark might expand the project, now 200,000 square feet on eight floors above a parking garage, by another 100,000 square feet, based on interest from potential tenants. If that happens, a skywalk-like hotel designed to rest atop the office building and to bisect the apartment tower would climb higher into the air."

Other rumored office projects also were too geographically distant, or too nebulous, or aimed at larger companies.

 

Could one of those rumored office projects be Jacob's PS property?  Hmmmmm.

Other rumored office projects also were too geographically distant, or too nebulous, or aimed at larger companies.

 

Could one of those rumored office projects be Jacob's PS property?  Hmmmmm.

 

Any reads my wistful posts about the Jacobs lot knows that was where my head went when reading that! And while I'm sure the Jacobs Group may be aiming that site at larger companies, it doesn't say they've got any nibbles on the line.

 

Still, it's good to see nuCLEus has a major anchor tenant already in pocket. That will win him a lot of credibility with lenders.

If the hotel portion raises up to adjust for 100,000 square feet more office space, does this mean the rest of the tower above does as well?

 

I want more height. I'm greedy.

 

I also enjoy height but I'd prefer they stay at the current height so there is more demand sooner for another tower on a surface lot. I too am greedy.

Hmm interesting retort. Because I want that too.

 

How about we just build multiple massive towers?

 

I'm curious if a design for 515 would be structurally the same as the finished design yet with cosmetic changes, even further reducing the development costs of that project.

I'd like to say that I never would have expected to hear this type of stuff happening in Cleveland, a city that hadn't had a skyscraper in 14-15 years all of a sudden has one that may need to become larger because of interest from tenants? YES PLEASE!

First of all, I will say that I am a big believer in Stark and think that him being the developer lends an incredible amount of not only credibility but also respect to the project. I know he'll do it right, and get the right players involved and rowing in the same direction.

 

That said, just to recap since there seems to have been a lot of news... Stark has only raised $9.5MM in equity according to a recent SEC filing, when he will need an amount around 20% of the project's entire cost. He can also count the TIF and tax abatement directly into his pro forma... I am going to guess that the SEC filing does not include Stark's own equity contribution, and also that J-Dek wouldn't really be in on this deal unless they had money or knew of money.

 

All that said, we are now talking about adding a residential tower at 515 Euclid, while nothing on the Prospect-Huron site has been reduced in scope. So the project has grown?

 

The project hasn't grown as the 515 tower appeared in at least one of his early massings and the two corporations he formed relating to 515 Euclid were incorporated at about the same time as the corporations relating to the site at/near/between Huron, Prospect and East 4th.

 

However, we were all drawn to the latter address by the sheer scale of that component, sort of a magician's misdirection -- be it intended or not.

 

My guess is that Stark's first phase (or perhaps phases 1a and 1b) of nuCLEus will consist of the following:

 

> Demolition of the parking deck on Huron and the "Mr. Albert's building" on Prospect

> Renovation of the Herold Building on Prospect and development of the vacant lot at Prospect/East 4th

> Laneway conversion of East 4th between Huron & Prospect, plus additional streetscaping

> Construction of the multi-level parking pad, laneways and ground-floor retail between Prospect and Huron

> Construction of a residential tower atop 515 Euclid

 

Needless to say, that's still a significant addition to Cleveland and would change downtown quite dramatically. What I know of Stark, he will not talk about these as phases or sequences. He thinks holistically so when someone suggests phasing to respond to market conditions and lender interest, he almost takes that as a personal offense. But few things get built when you want them to, and Stark is well aware of that.

 

Stark has invested $26 million to buy the property for this site (and the Warehouse District lot too, BTW!) but let's assume Stark has only 20 percent equity in that. He also has $3 million from the county in the form of a loan, which I seem to recall is being financed by casino revenues. And eurokie noted the TIF and residential tax abatement, which could comprise a significant portion of the financing. But the $9.5 million, a 20 percent debt-to-equity ratio, means the base amount of what they could develop right now would have a value of about $47 million. That actual amount is much more with the TIF and tax abatement, so we're likely looking at all of the above elements, less the tower atop 515 Euclid, as what Stark can afford. And if he's putting his own personal equity into 515 Euclid, then that can be part of this initial phase as well.

 

Great update/summary of where this project stands now.

 

I suppose it's really just semantics as to whether the scope has increased, or gets decreased in the future, and how the tower really relates. I am sure if all is built as planned, the narrative will be that East 4th was the first phase of his & Maron's nuCLEus project, for a little revisionist bravado.

 

I doubt he's finished raising raising equity for the first phase, but the DTE ratio simulation is helpful. On top of having raised the ballpark of $47 million so far, he has A) a very high market value which will enable him to get more financing; and B) generous subsidy from the city that can close the gap that will remain. I'd imagine that the tax abatement could be worth $10-20 million, and the TIF is supposed to bring around $60 million.

 

For a $350M development, he will need $70 million of equity when finished. However, if he takes $80 million off the top from the subsidy, he then only needs around $55 million in equity.

 

I am pretty sure that TIF, depending on how it is structured, can count as an equity contribution.

 

For comparison, here's some debt-to-equity ratios and how subsidies/infrastructure funding have rounded out the financing for a couple of recent projects in the news....

 

http://www.cleveland.com/business/index.ssf/2015/03/detroit_shoreway_apartments_in.html

 

INTESA:

The port will issue up to $60 million in bonds for construction. Related Fund Management LLC, a new player in Northeast Ohio commercial real estate, is in line to buy the bonds. The company is part of New York-based Related Cos., founded by Stephen Ross, a longtime real estate investor and the owner of the Miami Dolphins.

 

Other Intesa financing includes an estimated $5.5 million in public infrastructure funding and $8.4 million in equity from the developers and their partners, according to documents distributed at the port board meeting.

____________

 

BREAKWATER BLUFFS:

The port will issue up to $40 million in taxable bonds for the project. KeyBank expects to buy most of the bonds. Other project financing includes $5.4 million in developer equity and a $12 million loan arranged by the Cleveland International Fund, which amasses money from foreign investors seeking U.S. residency through an increasingly popular federal visa program.

I'd like to say that I never would have expected to hear this type of stuff happening in Cleveland, a city that hadn't had a skyscraper in 14-15 years all of a sudden has one that may need to become larger because of interest from tenants? YES PLEASE!

 

EY and the Hilton definitely count, but they just aren't architectural marvels like this. Cleveland has such a huge stock of 300-400 footers that you don't even notice all of the new ones going up. One of the many ways that our beloved Land is far more urban than even we realize...

^ oh great idea - here it is:

 

 

It's empty now.

I'd like to say that I never would have expected to hear this type of stuff happening in Cleveland, a city that hadn't had a skyscraper in 14-15 years all of a sudden has one that may need to become larger because of interest from tenants? YES PLEASE!

 

EY and the Hilton definitely count, but they just aren't architectural marvels like this. Cleveland has such a huge stock of 300-400 footers that you don't even notice all of the new ones going up. One of the many ways that our beloved Land is far more urban than even we realize...

 

I'm a little skeptical of big skyscrapers at this stage in the game, after all the construction of the overly-subsidized Key and BP Towers screwed up the downtown office market for a long time. I'd rather have 10 shorter buildings with street level retail than one giant self-contained colossus with an attached parking deck. Plus I think shorter, denser skylines beat a few tall buildings.

^I think the mixed use nature of this building/development being hotel, office and residents along with restaurants and retail make this much different than BP or Key.  They were simply large office structures, at a time when strictly modern office space was needed, to cram companies into.  This is redevelopment, not simply building an office building.  But yes, your point is valid in that we crammed 9-5 activity around PS versus 24/7 activity.   

 

I'm a little skeptical of big skyscrapers at this stage in the game, after all the construction of the overly-subsidized Key and BP Towers screwed up the downtown office market for a long time. I'd rather have 10 shorter buildings with street level retail than one giant self-contained colossus with an attached parking deck. Plus I think shorter, denser skylines beat a few tall buildings.

 

Stark paid a lot of money for those parking lots, thus it will take a lot of revenue from whatever is developed there to earn a reasonable return on that investment. Since Cleveland doesn't have high rents, he's going to have to generate that revenue from putting more revenue sources on that land. And that means going vertical.

Stark paid a lot of money for those parking lots, thus it will take a lot of revenue from whatever is developed there to earn a reasonable return on that investment. Since Cleveland doesn't have high rents, he's going to have to generate that revenue from putting more revenue sources on that land. And that means going vertical.

Or it means relying more heavily on parking. For example, designating 1/3 of the square footage of the site plan to parking.

Stark paid a lot of money for those parking lots, thus it will take a lot of revenue from whatever is developed there to earn a reasonable return on that investment. Since Cleveland doesn't have high rents, he's going to have to generate that revenue from putting more revenue sources on that land. And that means going vertical.

Or it means relying more heavily on parking. For example, designating 1/3 of the square footage of the site plan to parking.

 

That's because the transit service to/from the suburbs is so low-capacity and limited that it doesn't soak up the parking demand. One bus carries only 40 people. One suburban commuter train carries 400 people. One parking space is 300 square feet. So one bus eats up 12,000 sf of parking demand. A typical GCRTA service to a suburban park-n-ride offers 10 buses per direction. GCRTA has five park-n-ride routes which soak up about or 600,000 sf of parking demand. Sounds impressive, but's not that big. Consider that 60-80 percent of the roughly 100,000 downtown commuters drive to work/school. At 60 percent, that's 18 million square feet. At 80 percent, it's 24 million square feet.

 

If you instead run five commuter trains per direction per route, and five routes had been proposed in the past, it soaks up 3 million sf of parking demand vs only 600,000 sf for GCRTA's existing park-n-ride buses. Clearly it's an oversimplified example, but I do believe this range of data is correct.

 

If that was done, the downtown parking lots are worth a lot less as parking, and developers' need for and cost of providing parking is a lot less.

 

Until that is done, parking in a car-dependent city like Cleveland will always be valuable and place financial burdens on developers and opportunity costs for the city because land used for parking produces less tax revenue and more service costs on cities. So Stark had to pay through the nose for the parking lots. And he has to pay through the nose to provide many levels of structured parking for the huge buildings.

Regardless of anyone's feelings about parking, it's parking that makes this project viable.  It will be a HUGE revenue source for the project.

 

Also it's location may pull business away from surface lots, making them less valuable to keep the land operating in that manner

Regardless of anyone's feelings about parking, it's parking that makes this project viable.  It will be a HUGE revenue source for the project.

 

Also it's location may pull business away from surface lots, making them less valuable to keep the land operating in that manner

 

So providing more parking supply devalues remaining parking, and increased car traffic downtown makes alternatives to driving more desirable and hopefully more plentiful. So Punch is right. The parking is a necessary component even if we don't like its volume of supply. How it is supplied (ie: design) is another matter.

Regardless of anyone's feelings about parking, it's parking that makes this project viable.  It will be a HUGE revenue source for the project.

 

Also it's location may pull business away from surface lots, making them less valuable to keep the land operating in that manner

 

Keep in mind that the current lot operators have a lot of clout and they will oppose both transit expansion and parking expansion.

 

Supposedly, they are the ones that shot down Progressive's plan to have integral parking in their tower, causing Peter Lewis to walk away from the whole deal.

Except that Stark now owns the two largest swaths of surfacing parking downtown. Weston, another major developer, owns much of the rest. Sure, they contract out the parking operation. But they are the landlords.

What if the design for the building is pre-fabricated parts, and after the foundation is set, the structure goes up in a month?  Is that possible with a building that high?  (I heard the tallest is around 30 floors [there's a you-tube video where a building in China goes up in 15 days are unfamiliar])

Possible? Yes. Likely? No. This building's structure will vary too much from section to section to really be a good contender for modular construction. Aspects could be but it wouldn't be worth it.

 

One benefit that company in China has is that they have MASSIVE factories churning out their pieces and parts that they've perfected over the last decade or so. We don't have anyone doing that here which would mean you'd need to find somewhere else in order to produce the pieces and ship them. At that point it really becomes cost prohibitive and logistics prohibitive.

 

I'm still waiting on that worlds'-tallest-building-in-90-days plan that company still talks about.