SATURDAY, MAY 13, 2017

Busy month: 3 big downtown Cleveland projects?

 

The next month may be very busy with Downtown Cleveland construction announcements. As a follow-up to my recent posting The Cleveland Skyscraper Building-Binge Starts, it appears that three projects will be making news very soon. One project is a surprise.

 

...I've also learned from several sources that Medical Mutual's board of directors met this week and have decided on an office consolidation plan, including new downtown headquarters. The address or size of this office building isn't known, but at least several major Northeast Ohio developers responded to a request for proposals from Medical Mutual last year on new or renovated buildings for Ohio's largest health insurance company. It is quite likely the public will learn in the next month about the winning proposal. Medical Mutual said it would prefer to lease its new location, even if it was built specifically for the insurer.

 

Medical Mutual also is moving forward on a new suburban office, apparently for its Consumers Life Insurance subsidiary based in Strongsville. There will be some corporate consolidations but those may involve its much smaller Beachwood and Copley locations. It isn't known if the Toledo office is part of the office consolidation plan.

 

In Northern Ohio, Medical Mutual has these existing offices (lease information according to LoopNet.com):

 

MORE:

http://neo-trans.blogspot.com/2017/05/busy-month-3-big-downtown-cleveland.html

Is the handsome old Rose Building then the next apartment conversion?

Is the handsome old Rose Building then the next apartment conversion?

 

I would think it's the next big conversion. I consider May Co. an active project.

KJP  - Are we on the cusp of an anouncement?

KJP  - Are we on the cusp of an anouncement?

 

The MM board acted two weeks ago on its office consolidation plan. There will be news coming soon. Hopefully as soon as this week.

KJP  - Are we on the cusp of an anouncement?

 

The MM board acted two weeks ago on its office consolidation plan. There will be news coming soon. Hopefully as soon as this week.

 

Will this news be determinative on the future of the HQ, or just an announcement of consolidation?

Will this news be determinative on the future of the HQ, or just an announcement of consolidation?

 

I have incomplete information, but what I do have is that Medical Mutual has decided which offices are getting consolidated, which ones aren't, and where offices will be located.

Will this news be determinative on the future of the HQ, or just an announcement of consolidation?

 

I have incomplete information, but what I do have is that Medical Mutual has decided which offices are getting consolidated, which ones aren't, and where offices will be located.

 

Great! That's about all I think we can ask for

Could these be the Medical Mutual office buildings in question?

 

mm1.jpg, on Royalton Road in Strongsville.

mm2.jpg, on Sprague Road in Strongsville.

mm3.jpg, East Ninth and Prospect, downtown.

Royalton Rd is the old location for MM's Consumers Life Insurance Co. Sprague is the current location. MM will no longer be in its current Strongsville or downtown locations. I don't know where their new suburban and downtown locations will be, nor do I know if either will be new construction or not. But from what I've learned they won't be where they are now.

Royalton Rd is the old location for MM's Consumers Life Insurance Co. Sprague is the current location. MM will no longer be in its current Strongsville or downtown locations. I don't know where their new suburban and downtown locations will be, nor do I know if either will be new construction or not. But from what I've learned they won't be where they are now.

 

So no consolidation??

 

So no consolidation??

 

Some consolidation. Don't know how much. So I'm as anxious as you and others to hear the details.

Crap. Source now says nothing was decided at the last board meeting and the decision on facility needs was pushed to the 6/20 board meeting. There are also rumors that MM could stay at the Rose building due to the short time frame before the leases expire and that negotiations for the new site(s) have stalled.

6/20 Will be here soon.  Hopefully they will announced plans to build a new building. 

 

If MM stays put, then we need to hope for Sherwin Williams.

I think MM is floating the rumor they could stay put as a negotiating ploy. It sends a message that, if they can extend their lease at their downtown location, they can extend their leases at their other locations as well, for as long as necessary to get the best deal from the owner of their new location, be it an existing or new building.

^ Well said, and I think the SW is doing the same thing.  Float rumors of building elsewhere to get best deal

I think MM is floating the rumor they could stay put as a negotiating ploy. It sends a message that, if they can extend their lease at their downtown location, they can extend their leases at their other locations as well, for as long as necessary to get the best deal from the owner of their new location, be it an existing or new building.

 

Spoke with my neighbor who works at MM, he told me they are all anticipating news soon. He asserted - based on nothing but his gut - that they are strongly considering a move to a suburb. I pray this is not the case.

With the volatility in the health care industry this is possible. We all know it is cheaper in the suburbs.

Remember Eaton moved moved to !-271 and they were supposed to go to FEB. I would not be surprised if they

go to the new development in Orange Township.

Does the Pinecrest Development in Orange have room for what MM is looking for?

Anyone know about the size of Pinecrest?

^Not even close to enough

The  only Suburban piece of property I have heard mentioned is a parcel of land at 130th and Pearl in Parma Heights. It was originally supposed to be "Cornerstone ", essentially a scaled back Crocker Park. However, the developer was running a Ponzi Scheme and the whole thing went under about 10 years ago. All in all I think the space is 10-11 acres. It is also close to 480 and 71, so it makes sense logistically.

 

From my limited understanding of the place, Wells Fargo owns it and will only give it up for a "major" tenant.

 

Again though, this is conjecture and in no way a concrete assertion from my friends at MM.

With the volatility in the health care industry this is possible. We all know it is cheaper in the suburbs.

Remember Eaton moved moved to !-271 and they were supposed to go to FEB. I would not be surprised if they

go to the new development in Orange Township.

 

Not all suburbs are cheaper. The eastern suburban submarket in the first quarter of 2017 on average commanded 60 cents more per square foot than downtown does, and their vacancy rate was lower, according to Jones Lang LaSalle.

 

FYI, the city of Parma Heights invested $580,000 to make street and utility improvements for Cornerstone. Pin Point Retail is marketing the site, but their focus appears to be on neighborhood retail. It's really not that close to the interstates:

http://pinpointretail.com/listings/the-shops-at-pearl-130th-parma-heights-oh/

http://parmaheightsoh.gov/en-US/the-shops-at-pearl-and-130th.aspx

With the volatility in the health care industry this is possible. We all know it is cheaper in the suburbs.

Remember Eaton moved moved to !-271 and they were supposed to go to FEB. I would not be surprised if they

go to the new development in Orange Township.

 

Not all suburbs are cheaper. The eastern suburban submarket in the first quarter of 2017 on average commanded 60 cents more per square foot than downtown does, and their vacancy rate was lower, according to Jones Lang LaSalle.

 

FYI, the city of Parma Heights invested $580,000 to make street and utility improvements for Cornerstone. Pin Point Retail is marketing the site, but their focus appears to be on neighborhood retail. It's really not that close to the interstates:

http://pinpointretail.com/listings/the-shops-at-pearl-130th-parma-heights-oh/

http://parmaheightsoh.gov/en-US/the-shops-at-pearl-and-130th.aspx

 

I drive the route nearby 3-4 times a week. It is about 7-9 minutes to 480, pending traffic, and about 12-14 to 71. Not the immediate proximaty, but the relative proximaty to two interstates is my focus.

 

Though, as I said, this was merely something I heard in conversation. I've also heard that a Meijer Grocer may be moving in.

I drive the route nearby 3-4 times a week. It is about 7-9 minutes to 480, pending traffic, and about 12-14 to 71. Not the immediate proximaty, but the relative proximaty to two interstates is my focus.

 

At that distance, it's a neighborhood retail development. I live 10 minutes from I-71 in Lakewood, and no one in Lakewood would say they live near I-71. I could **maybe** see MM picking that site only for their Consumers Life Insurance Co. which is now located in Strongsville.

 

Though, as I said, this was merely something I heard in conversation. I've also heard that a Meijer Grocer may be moving in.

 

Now a Meijer store is believable in such an Interstate-remote area.

FYI, the city of Parma Heights invested $580,000 to make street and utility improvements for Cornerstone. Pin Point Retail is marketing the site, but their focus appears to be on neighborhood retail. It's really not that close to the interstates:

http://pinpointretail.com/listings/the-shops-at-pearl-130th-parma-heights-oh/

http://parmaheightsoh.gov/en-US/the-shops-at-pearl-and-130th.aspx

 

I wonder what the return on those investments will be....

 

MM's board meets one week from today. Will the board have a HQ facilities deal it likes and will act upon favorably?

Fingers crossed! 

 

Anyone hear anything about Sherwin Williams?

Fingers crossed! 

 

Anyone hear anything about Sherwin Williams?

 

The **earliest** we may hear anything is next month. This is from the office developments thread....

 

Just a part of a PR release regarding SW.

 

Sherwin-Williams will announce financial results for the second quarter ended June 30, 2017 on Thursday, July 20, 2017. At that time, Sherwin-Williams will provide its outlook on the combined company for the third quarter and full year 2017, and conduct a conference call to answer questions.  Further details regarding the call will be available in coming weeks.

Will you hug a Medical Mutual board member today?

.... ^ what does this mean?

So cryptic. Sounds like good news though! Hopefully...

 

Any more details on when/what we can expect to be announced?

.... ^ what does this mean?

 

If the board decides something good today regarding their facilities, you may want to hug them. Lots of different directions they could go, however.

Damn, and here I was thinking a good decision was already made.

 

Well hopefully the outcome of today is something we can all get behind and will have an impact on Downtown.

So does anyone know what is the outcome

of today's board member meeting?

So by all accounts, the "big decision" wasn't made yesterday as negotiations are still underway. Apparently MM likes a site or sites but doesn't like the numbers and wants to make it work. However, the board reportedly made some smaller, related decisions regarding the relocation of some business functions out of MM-owned buildings. I'm not sure which ones those are as  I don't know what to make of that last part. They involve a small number of employees, so moving them again in a few years wouldn't be a big deal. It **could** be a good sign. But it's still frustrating that the big move apparently wasn't decided yet.

Thanks KJP.  When is the next board meeting?  Is there a online list of board members?

Do we know if there is a desire among the decision makers to stay downtown?  I know it was brought up before that they may be considering suburban sites... but I am curious whether that was just a strategic play or an actual serious potential destination.

Do we know if there is a desire among the decision makers to stay downtown?  I know it was brought up before that they may be considering suburban sites... but I am curious whether that was just a strategic play or an actual serious potential destination.

 

From what I've gathered they want to remain at the Rose building.  However it's just not a reality because the end goal is to bring those from Strongsville and Beachwood back downtown.  There are certainly buildings downtown big enough to house them all but not sure if any have the occupancy available.

https://www.medmutual.com/About-Medical-Mutual/Corporate-Profile/Leadership/Board-of-Directors.aspx

 

 

Do we know if there is a desire among the decision makers to stay downtown?  I know it was brought up before that they may be considering suburban sites... but I am curious whether that was just a strategic play or an actual serious potential destination.

 

From what I've gathered they want to remain at the Rose building.  However it's just not a reality because the end goal is to bring those from Strongsville and Beachwood back downtown.  There are certainly buildings downtown big enough to house them all but not sure if any have the occupancy available.

 

So, are they not even considering a new building?

What if there plan is to keep the rose building, but also anchor a new tower on the hippodrome lots? Even though the building that housed 811 is in the way (makes you wonder why it so suddenly closed), it's feet away across the E 8th street alley.

Someone mentioned camera drones checking out the backside of the building... maybe it's to see how potential connections to the existing building would work. 

iS 811 ON Euclid or Prospect

It was on prospect.

So, are they not even considering a new building?

 

They may be considering a new building but they wouldn't own it. Medical Mutual has said that they do not want to own whatever building they end up in even if it's new. So the negotiations may be over the long-term lease of that building.

Can we kindly limit the rampant speculation.  Some of us check these boards for actual information/intel.  Also, 811 is getting a makeover and going to reopen as something else in the fall.  There's an article in Cleveland Scene about it.  The current concept/menu wasn't working apparently. 

Thanks KJP.  When is the next board meeting?  Is there a online list of board members?

 

One month from now, I believe. A special board meeting could always be held for a very important matter such as this.

Some movement... The following company was recently assigned to be the receiver of the Medical Mutual HQ building and to service the debt on commercial mortgage-backed securities (CMBS)....

http://www.resolutionsemr.com/assignments/medical-mutual-headquarters/

 

EDIT: I'm reminded of this portion of a PD article from last year.....

 

An affiliate of BentleyForbes, a Los Angeles-based landlord, recently said it would be unable to repay or refinance a loan on the Medical Mutual complex, comprised of the 10-story Rose Building and its six-story annex at East Ninth Street and Prospect Avenue. Control of the loan, which matured Jan. 1, transferred in December to a special servicer, a company that deals with troubled commercial real estate debt. If the lender and borrower can't work out a deal, the Medical Mutual complex, at 2060 E. Ninth St., could be the subject of foreclosure litigation or a receivership.

 

http://www.cleveland.com/business/index.ssf/2016/01/medical_mutual_hq_mortgage_in.html

 

So it seems now that this happened -- the MM HQ is the subject of a receivership and RE Solutions is the receiver. If you go to their home page (http://www.resolutionsemr.com/), you'll see that the MM HQ is the only property listed under "latest assignments."

 

BTW, the same company that owns the MM HQ (BentleyForbes) also owns MM's 500-employee Toledo office and MM's small data center in Beachwood. FWIW.

 

BTW2, MM has said any actions involving the ownership of its current HQ (or presumably its Toledo and Beachwood offices) don't affect the company's leases, all of which expire in 2020. While that may be true, it has to affect MM's site search.

So is this good news, Bad news or No news. Anybody have an idea.

Here's my take -- Everything I've heard about MM's possible course of action is that it will not stay in any of its existing buildings across Northeast Ohio and that there will be **some** consolidation. That may mean one building (presumably a new building due to the lack of open space in existing buildings), but more likely it means two buildings (one downtown, one in the suburbs) from what little I've heard. The issue is what is causing the delay in MM's board making a decision? It appears that MM is trying to get a better deal from a developer/property owner. Another angle not exclusive of the one in the prior sentence (and one that I'd not thought of until seeing the news about MM's HQ receiver) is that the delay may also have had to do with uncertainty about the owner of its existing building(s) and trying to get a lease extension from the new receiver so it can strengthen its negotiating stance.

 

That may also extend to the situation involving MM's Toledo building. It has to be a part of this too. Lucas County records show that their building at 3737 West Sylvania Avenue is still owned by BentleyForbes. The owner is shown as:

 

Owner - MMTO LLC A DELAWARE LIMITED LIABILITY COMPANY

Property Address - 3737 W SYLVANIA AVE, TOLEDO OH 43623

Mailing Address - 10877 WILSHIRE BLVD STE 1100, LOS ANGELES CA 90024

 

But the mailing address in LA lists to Fred Wehba. He's the founder of BentleyForbes.

 

If this office is part of the receivership too, it **could** mean that MM's Toledo employees will also be moved. Will they stay in Toledo but in a different building? Or might be they be moved to Cleveland? Are there any efficiencies to be gained by consolidating them into a Cleveland HQ (and/or suburban office). I think the latest news about the receiver means the Toledo office situation was just as fluid as the Cleveland office situation, and they could both be stabilized by the naming of the receiver and by a new Cleveland building site(s).

If MM's board met this month, it would have yesterday. But everything appears quiet. I don't know if they didn't meet or just didn't act on a facility consolidation/relocation plan. None of the usual suspects have heard anything.