The new definition of transformational -15 stories or more, costs at least $50 million , is 350,000 square  feet or more, is mixed usage and recoups the tax credit money invested 

That’s not exactly epic proportions, and smaller in scope than the original defnition, which required 20 stories, or more.  And 350,000 square feet- well, in terms of a  comparison, the Terminal Tower, which Stark references when putting Nucleus in context, and which  began construction in the year 1926, is 577,000 square feet.  

  The December 18 PD article by Michelle Jarboe states that Nucleus is already “scaled back”. Wouldn’t you just love to see that rendering?  One more thought - the idea that the house just “ran out of time” on HB 469 is weak. The great city of Cleveland deserves better. Some phone calls to the Ohio Senate might help. Here’s hoping that Nucleus is still very much alive and not too much smaller at all. 

Edited December 19, 20186 yr by CleveFan

I doubt anyone following this thread has seen the proforma for this development, but there are many ways to make money on a development deal like this.  To me, either the deal doesn't pencil out unless there is significant public subsidy/incentives, or Stark is refusing to accept a smaller return/longer payback.  Either way, it's a sad state of affairs for Cleveland.

 

As for the next recession, let's all be mindful that in some aspects the last recession of 2008 was worse than the Great Depression.  Another "slow down" may be around the corner but hopefully not a recession like 2008.  A slowdown might be a good thing for Stark's project - lower margins by contractors/suppliers, etc.  For the office market, rents are not swayed much by economic upturns/downturns.  Hotel, retail & apartments are though

^I don't expect a recession like 2007-08 i expect something more like a "normal" recession.  But I pretty much agree with your analysis. Although, I think the office market could struggle a bit because firms might decide to wait out any new hiring or office expansion until the economy ticks up. 

17 minutes ago, gottaplan said:

I doubt anyone following this thread has seen the proforma for this development, but there are many ways to make money on a development deal like this.  To me, either the deal doesn't pencil out unless there is significant public subsidy/incentives, or Stark is refusing to accept a smaller return/longer payback.  Either way, it's a sad state of affairs for Cleveland.

 

As for the next recession, let's all be mindful that in some aspects the last recession of 2008 was worse than the Great Depression.  Another "slow down" may be around the corner but hopefully not a recession like 2008.  A slowdown might be a good thing for Stark's project - lower margins by contractors/suppliers, etc.  For the office market, rents are not swayed much by economic upturns/downturns.  Hotel, retail & apartments are though

 

In response to your either/or, I would present you with another scenario. That the initial mix of uses didn’t pencil out and the developer has shifted to a new mix of uses to make it work. But that it takes time to rework a large project like this.

19 minutes ago, freefourur said:

^I don't expect a recession like 2007-08 i expect something more like a "normal" recession.  But I pretty much agree with your analysis. Although, I think the office market could struggle a bit because firms might decide to wait out any new hiring or office expansion until the economy ticks up. 

 

Some may be waiting to do new hiring. But others may still be willing to move downtown to attract younger workers. And younger workers typically earn less than older workers. So if there are higher rents (and there probably are) from moving downtown to a brand-new Class A building, those can be offset somewhat by a younger workforce.

 

And what little scuttlebutt I hear about Stark's project, my understanding is that his new mix will be heavier on office, lighter on residential, devoid of hotel but constant on retail. Stark loves his retail.

27 minutes ago, CbusTransit said:

 

In response to your either/or, I would present you with another scenario. That the initial mix of uses didn’t pencil out and the developer has shifted to a new mix of uses to make it work. But that it takes time to rework a large project like this.

agreed on all accounts but it's about to be 2019.  This project has been tinking around for about 4-5 years now.  Seeking subsidy/incentives, seeking tenants, adjusting mixes of uses....  

Stark isn't a publicly held corporation. He's not on anyone's timer but his own.

 

Edited December 19, 20186 yr by KJP

I also wonder if he is waiting to complete the Beacon before moving forward with Nucleus.  Once he gets Beacon leased up and stabilized, he can obtain permanent financing and maybe pull equity of it too.

And let's not forgot three significant, recent developments on the equity side ---

1. Diversification of investing in non-East Coast real estate markets (former Rust Belt powerhouses gaining favor)

2. Creation of Opportunity Zones (downtown Cleveland is in one) 

3. Willingness of REITs to accept lower, longer returns

KJP: If indeed Rep. Kirk Schuring does indeed re-introduce HB469 in late January /Early February will this bill

get acted upon right away or will it sit there all year .

 

I do not remember when it was introduced in 2018, but i know the house passed it in June or July

and the Senate had 4 hearing starting in November.

 

When can we see this bill pass if they act on it as soon as possible?

I am an eternal Cleveland OPTIMIST. I love my city and bleed Cleveland all day, every day ... However, I am inclined to believe that all of us will just be left with the grandiose renderings released in 2014 amid all of that hoopla and fanfare. Stark seems to do a lot of talking and little else. Sure, he has The Beacon going up, but that's a far cry from the prolific nuCLEus project in size and scale. I'd welcome almost anything on that particular site, but if it's only going to be a 15 to 20 story structure, that is going to deflate the celebratory balloons of most Cleveland enthusiasts faster than the Hindenburg came crashing to Earth.  

Edited December 19, 20186 yr by John D. Baumgardner
edit

Pesht II

I fully expect a couple of 15- to 25-story buildings and some parking garages with retail on the ground floors. And you know what? I'm cool with that. It means another big surface lot downtown has died a beautiful death.

26 minutes ago, KJP said:

I fully expect a couple of 15- to 25-story buildings and some parking garages with retail on the ground floors. And you know what? I'm cool with that. It means another big surface lot downtown has died a beautiful death.

 

I would be thrilled with that as well.  I just don't think Stark will do anything here.

 

The only thing he has accomplished downtown after 14+ years of getting our hopes up is The Beacon, and for that he entered into a partnership with someone who got the parking garage/foundation for that building at deep discount.

Edited December 19, 20186 yr by jam40jeff

1 hour ago, jam40jeff said:

 

I would be thrilled with that as well.  I just don't think Stark will do anything here.

 

The only thing he has accomplished downtown after 14+ years of getting our hopes up is The Beacon, and for that he entered into a partnership with someone who got the parking garage/foundation for that building at deep discount.

Hopefully if the Beacon creates good business, more development will come! The Beacon is one of my top choices for my new apartment after I graduate in May.

Edited December 19, 20186 yr by CLE_Millennial

1 hour ago, jam40jeff said:

 

I would be thrilled with that as well.  I just don't think Stark will do anything here.

 

The only thing he has accomplished downtown after 14+ years of getting our hopes up is The Beacon, and for that he entered into a partnership with someone who got the parking garage/foundation for that building at deep discount.

 

So the only thing he's done is build the first new high-rise residential building downtown in 45 years? Sounds pretty remarkable to me. 

 

Sure he got our hopes up, but he hasn't let me and other spectators down because this has nothing to do with me or us. It's just a long-running, entertaining show with a lot of fun plot twists. And Stark sure is a showman!

10 minutes ago, KJP said:

 

So the only thing he's done is build the first new high-rise residential building downtown in 45 years? Sounds pretty remarkable to me. 

 

Sure he got our hopes up, but he hasn't let me and other spectators down because this has nothing to do with me or us. It's just a long-running, entertaining show with a lot of fun plot twists. And Stark sure is a showman!

 

I'm not saying he hasn't accomplished anything.  I'm saying that he hasn't accomplished anything even close to his "big talk" projects because, while great, The Beacon is nothing like Pesht or Nucleus, so I'm skeptical that this will come to fruition.

Edited December 19, 20186 yr by jam40jeff

As we all should. But I am hopeful because he hasn't given up on doing something here, whereas Weston apparently has given up on the Superblock. It's a lot easier building megaprojects in Westlake and Woodmere than it is downtown.

To be fair, Weston is doing an industrial park at the former Midland Steel site.

Edited December 19, 20186 yr by mu2010

Has Weston started construction yet? If so, will they build it all at once or in phases? I know Weston does a lot of other projects just as Stark does in Ohio and around the country. BTW Stark moved its HQ from Woodmere to the Warehouse District. Weston's HQ is still in Warrensville Hts.

 

The Asher family of Weston isn't flashy like the Starks, and the Ashers usually don't publicize projects unless they're pretty certain that they'll get built (the Superblock was an exception). So we often don't hear about their projects (mostly light industrial/warehouses) that don't get built. Their bread & butter is a different animal than Stark's bread & butter (PR-rich retail developments). So both are who they are because of their earlier chosen fields of development. But the Weston's experience with the Superblock shows us is that maybe it wasn't a developer's fault that it didn't get built. Maybe Weston's experience served as a confirmation just how difficult it is to build on a downtown parking lot. We may go through several more developers' attempts before one succeeds and confirms that the market has matured enough to support their visions. It's going to be interesting to see what happens next.

 

Edited December 20, 20186 yr by KJP

So just doing some back of the envelope math here and trying to determine what a scaled down nuCLEus might cost and what form it could take. I see this as a single Tower with all of the components, minus the hotel and bridge portion in a 40 floor tower on top of a 5 story above the ground parking deck/podium. So a 40 story building at about 640k sq ft at 16k per floor figuring some 250 dollars per sq ft to build. 160 million would be the cost for the tower and then add about 12 million for the parking garage. So 172 million. So just under 200 million when you add foundation/caisson etc costs. So 5 floor parking garage/600 spaces, 10 floors of office space (160k), 2 floor amenity (restaurant, event space, patio), 28 floors of about 300 apartments. Most of the retail space would be cut out except for what could be placed at street level lining the parking garage, much like the Lumen. There would be no demolition of the existing parking deck and the smaller building that is on site now. These could be rehabbed/replaced in a future phase. Although I hope nuCLEus is built as proposed, 200 million would be an easier sell to investors for Stark while still building a significant 45 story project for the city.

16 hours ago, freethink said:

So just doing some back of the envelope math here and trying to determine what a scaled down nuCLEus might cost and what form it could take. I see this as a single Tower with all of the components, minus the hotel and bridge portion in a 40 floor tower on top of a 5 story above the ground parking deck/podium. So a 40 story building at about 640k sq ft at 16k per floor figuring some 250 dollars per sq ft to build. 160 million would be the cost for the tower and then add about 12 million for the parking garage. So 172 million. So just under 200 million when you add foundation/caisson etc costs. So 5 floor parking garage/600 spaces, 10 floors of office space (160k), 2 floor amenity (restaurant, event space, patio), 28 floors of about 300 apartments. Most of the retail space would be cut out except for what could be placed at street level lining the parking garage, much like the Lumen. There would be no demolition of the existing parking deck and the smaller building that is on site now. These could be rehabbed/replaced in a future phase. Although I hope nuCLEus is built as proposed, 200 million would be an easier sell to investors for Stark while still building a significant 45 story project for the city.

 

That would work for me ... I would still prefer to see some for-sale condo units as part of Nucleus, although I know that's not a simple switch.

Side note: That image is cracking me up with the super-stretched Fifth Third Building! ? 
 

You all may be as interested as I was to learn that Stark Enterprises, as of Dec. 21, has sold its 18,290 sf headquarters building at 1350 West Third Street. The buyer is a company called 1350 W6, LLC. The person who formed that company (earlier this month) was...Robert L. Stark.

 

Stark 1350 LLC bought the property in 2007 for $1.3 million. He was asking for $2.9 million. The sale amount is unknown. Stark apparently sold it to himself to raise capital. And if he deposited the proceeds of the sale into an Opportunity Zone Fund within 180 days of the sale, he could avoid paying any capital gains tax. If the Fund invests in a real estate project in an Opportunity Zone (which nuCLEus is), he could avoid further capital gains tax. I suspect that's what is happening here.

 

BTW, I'm curious about the name 1350 W6. Why W6 and not W3? Is this a typo or suggesting of something else?

 

BTW-2, Also the property exchange via a limited warranty among the same party as grantor and grantee suggests that another party is involved in this transaction. 

Edited December 27, 20186 yr by KJP

Another interesting development is that this property, next to the nuCLEus site and bought by a partnership involving Weston, is for sale. This is the former Record  Rendezvous building. The listing promotes its proximity to nuCLEus...

 

https://www.loopnet.com/Listing/300-Prospect-Ave-E-Cleveland-OH/9962106/

 

Edited December 26, 20186 yr by KJP

Thanks for the updates, KJP.  Looks like there is some movement on nuCLEus. And like you've said many time before, "pulling together financing for a project of this scale can be a complex, time-consuming process". I very much hope nuCLEus gets done as I think it is the kind of comple project that can prove to other developers that you can build projects of this scale in Cleveland if you just use a little determination and creativity.

17 hours ago, KJP said:

You all may be as interested as I was to learn that Stark Enterprises, as of Dec. 21, has sold its 18,290 sf headquarters building at 1350 West Third Street. The buyer is a company called 1350 W6, LLC. The person who formed that company (earlier this month) was...Robert L. Stark.

 

Stark 1350 LLC bought the property in 2007 for $1.3 million. He was asking for $3+ million. The sale amount is unknown. Stark apparently sold it to himself to raise capital. And if he deposited the proceeds of the sale into an Opportunity Zone Fund within 180 days of the sale, he could avoid paying any capital gains tax. If the Fund invests in a real estate project in an Opportunity Zone (which nuCLEus is), he could avoid further capital gains tax. I suspect that's what is happening here.

 

BTW, I'm curious about the name 1350 W6. Why W6 and not W3? Is this a typo or suggesting of something else?

 

BTW-2, Also the property exchange via a limited warranty among the same party as grantor and grantee suggests that another party is involved in this transaction. 

 

Just speculation, but this looks like a pretty vanilla deed tax avoidance conveyance structure. Let's hope the sale proceeds are being added to the NuCLEus equity stack.

But I think there's another party to this, otherwise why not do a general warranty deed rather than a limited warranty exchange?

^Right- I was explaining why the conveyance is to an LLC Stark itself formed. An arm's length conveyance at the property level would incur deed transfer tax, so Stark is likely conveying the development to his own new LLC, and then selling the membership interests in the LLC to the third party. @mjarboe wrote about this conveyance structure earlier in the year.

Is the Stark HQ building itself in an opportunity zone?

Could he be selling it to himself for tax credits on improvements?

Or to be sold and torn down to make way for another future project?

Edited December 26, 20186 yr by dski44

29 minutes ago, dski44 said:

Or to be sold and torn down to make way for another future project?

 

As long as it's not sold to Surface Starking LLC.    

6 hours ago, StapHanger said:

^Right- I was explaining why the conveyance is to an LLC Stark itself formed. An arm's length conveyance at the property level would incur deed transfer tax, so Stark is likely conveying the development to his own new LLC, and then selling the membership interests in the LLC to the third party. @mjarboe wrote about this conveyance structure earlier in the year.

 

I'll respond further in the Warehouse District, because I think this is pointing to something happening along St. Clair -- not just being something that contributes to nuCLEus' capital stack.

21 hours ago, KJP said:

Another interesting development is that this property, next to the nuCLEus site and bought by a partnership involving Weston, is for sale. This is the former Record  Rendezvous building. The listing promotes its proximity to nuCLEus...

 

https://www.loopnet.com/Listing/300-Prospect-Ave-E-Cleveland-OH/9962106/

 

 

This certainly makes it looks like downsizing of the project is happening. Redevelopment of that block was part of the original plan, if I recall correctly. Selling it off (along with selling the HQ) shrinks the overall scale while also raising cash.

Weston hasn't done sh!t with the building in the 6 years they've owned it. Perhaps they bought it hoping to piggyback off whatever happened with the rest of the block (this was before Stark bought the building and lot to the east), and have just decided to cash out?

300 Prospect apparently isn't a new listing, but I certainly don't remember it being listed for sale until this past weekend. Its page on Loopnet says the listing was first posted on Nov. 13, 2017. I must be getting old or something.... 

https://www.crainscleveland.com/real-estate/stark-sells-downtown-cleveland-headquarters

 

"Although the change in limited liability corporations shows no sale price for the building at 1350 W. Third St., a mortgage recorded Dec. 24 by Stark indicates it has provided a $1.65 million loan to Rlfed Manager LLC, which was signed by Yaron Kandelker, an Israeli investor with property holdings in Northeast Ohio."

 

"Yaron Kandelker is listed on LinkedIn as the CEO of Y.K. Realife Real Estate Ltd., which lists its location as Israel. Realife's Facebook page shows him and colleagues seeking investments in Moscow and other international locations for residential real estate it controls.  Realife affiliates hold title to 53 single-family homes in Cuyahoga County, according to county records. Kandelker accepted a request to connect on LinkedIn with a Crain's Cleveland Business reporter on Wednesday, Jan. 2, but did not respond to messages with questions about the downtown deal by 12:30 p.m. Thursday, Jan. 3."

 

Anyone with thoughts on this?

 

 

First time posting, and I apologize if this has already been shared, but this seems.....um....different.... than the original plan:

 

http://www.starkenterprises.com/portfolio/nucleus/

38 minutes ago, brownsfan1226 said:

First time posting, and I apologize if this has already been shared, but this seems.....um....different.... than the original plan:

 

http://www.starkenterprises.com/portfolio/nucleus/

Thanks for posting. Glad to read that these are still featured.

 

nuCLEus will introduce laneways to downtown Cleveland, a unique form of urban place making originating in Melbourne, Australia. The laneway at nuCLEus will be a tight intimate space that offers al fresco eateries, one-off shops and cozy little bars, all nestled side-by-side in a unique alley setting with its own individual character and charm.

If you click on the download brochure link in the page that brownsfan1226 posted, there are images of the updated design. A quick look suggests two towers atop 1 floor of retail and about 7 floors of parking.  Taller tower looks to be about 17 stories above the parking and retail (about 25 total) and devoted to office space.  Shorter tower seems to be 22 total or so and devoted to residential with bigger floor plates than the office tower.

Wow......well that is certainly different.......

Big step back here.

not surprising at all

Edited January 23, 20196 yr by BigMacky

Agreed- not surprising, but on the same token, not bad.  There's PLENTY of lots downtown which could support a tall structure.  The current design should do well in this location.  

Here's some of the images...

 

It's not honestly a bad plan, but I wouldn't say its a good plan. Its really hard to be excited about this given what was the pervious plan for the spot and knowing what STARK is building in Detroit. Disappointing to say the least, but ultimately better than a surface lot. 

 

I guess, let's start hoping that this one at least gets built. 

Still looks nice to me. Is this two smaller buildings instead of one big one?

^The office portion of the project was never going to be tall- only the residential component.  And again, there's plenty of space around downtown for that.  This reminds me of the initial design of the project when renderings were originally made.

10 hours ago, surfohio said:

Thanks for posting. Glad to read that these are still featured.

 

nuCLEus will introduce laneways to downtown Cleveland, a unique form of urban place making originating in Melbourne, Australia. The laneway at nuCLEus will be a tight intimate space that offers al fresco eateries, one-off shops and cozy little bars, all nestled side-by-side in a unique alley setting with its own individual character and charm.

 

"Laneways" have been part of the project since the beginning.

As a pragmatist, I think its better to get these mid-rise buildings in than keep waiting for a hard-to-finance skyscraper.  One important thing in the brochure on the website that wasn't captured in the pics posted above is the street level retail this proposal is still committed to.  The plans in the brochure show most of the frontage at street level dedicated to retail.  This will continue the activity of E 4th and hopefully liven up Prospect.

This is what I've been hearing Stark was changing his plan to, but I haven't seen these renderings until now. Glad to see he was willing to adjust his plan to something more doable with fewer incentives available.

 

@DevolsDance  What development does Stark have in Detroit?

Edited January 23, 20196 yr by KJP

I'm honestly happy with this. Mid-size buildings still make downtown feel so much bigger. This is going to fill in a huge gap.