February 25, 201015 yr I know that condo conversions are in vogue right now, but are we anywhere near a point of saturation? Also reducing some of the Class B-C office space, while it may look good for occupancy numbers, wont this remove some of the cheaper rents from companies that may be looking to move but not afford Class A space. I fear becoming over zelous on condo conversions and drastically reducing the capacity for white collar jobs. Then again if this can make the case for building on the Public Square Super Lots then do it. Do it now!
February 25, 201015 yr It would probably be better to go with apartment rather than condos at this point. I highly doubt the owners of 'Union Trust' would pursue condos as a residential alternative.
February 25, 201015 yr ^^ That's good point but I think we have a long way to go before we have to worry about a lack of Class B space downtown. I've read that several Class B buildings are 30-40% vacant. Crains recently reported that the Leader and Baker Buildings on East 6th are both about 40% vacant. Also the May Co. building will basically be empty once Key moves over to the Higbee Building.
February 25, 201015 yr It would probably be better to go with apartment rather than condos at this point. I highly doubt the owners of 'Union Trust' would pursue condos as a residential alternative. I agree. One bedroom apartments downtown are pretty tough to find. "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
February 25, 201015 yr yes. but it wasn't the same bank. when the depression hit and FDR declared the national bank holiday to stop the run of withdrawls, several banks reopened weeks and months later. Union Trust (the largest bank in the country outside of NYC) did not. What was left of Union Trust's deposits were actually given to National City, which is what vaulted them to a higher stature (they also recieved the remaining deposits of Guardian Trust which also was shut down). Commerce Trust opened in the late 30's and moved into the union trust building (which was built in 1920). EDIT: Many felt Union Trust got the present day National City treatment and was unfairly forced to merge when they probably could have emerged just fine... ahhh... the irony.
February 25, 201015 yr It would probably be better to go with apartment rather than condos at this point. I highly doubt the owners of 'Union Trust' would pursue condos as a residential alternative. Isn't there some 5-year rule about converting historic buildings into condos...meaning they need to be apartments for the first 5 years. I swear remember reading that a few years ago. Or am I just crazy...
February 25, 201015 yr ^Yes, when using historic tax credits. It will be interesting to see the eventual plans for this building. This would definitely be able to compete with 668 in regards to luring renters. The lobby of the building is TOO kick ass... ahh, the possibilities.
March 4, 201015 yr Yeah!! Here's more on the Rosetta move. Now 80,000 sq feet! :clap: FYI-Rosetta is what became of Brulant when it was bought out in 2008. Digital agency Rosetta plans to bring nearly 400 jobs to new downtown Cleveland offices By Michelle Jarboe, The Plain Dealer January 25, 2010, 3:05PM CLEVELAND, Ohio -- An interactive marketing agency plans to bring nearly 400 jobs to downtown Cleveland, into a largely empty office building just off Euclid Avenue near East Fourth Street. Rosetta, the nation's largest independent digital agency, is signing a 10-year lease on 80,000 square feet in a former National City building at 629 Euclid Ave. http://www.cleveland.com/business/index.ssf/2010/01/digital_agency_rosetta_plans_t.html Just found this video...I'm guessing it was made to hype up employees:
March 4, 201015 yr This is really going to be a great company to have downtown. Very young workforce too. Certain to inject alot of life downtown. I happened to notice that the Cleveland Challenge thing, the one that pitted the colleges against each other doing Cleveland challenge things etc.... that the winning team worked at Rosetta..
May 9, 201015 yr Have a couple of friends who work for them, it's a good company. Gotta love stealing away a company from the suburbs.
May 9, 201015 yr Tangential fact: I recently received an "insider" report on the Seattle CBD. 20% commercial vacancy rate. I think this is referring to Class A space. Could 'commercial' refer to retail? They meant office towers. When Wa Mu collapsed, it emptied out a brand new 40 story office tower. Chase only took a few floors. The building I am in, Columbia tower, 76 floors is 20% empty. Update. Seattle's Columbia tower (76 stories) is over 40% vacant. Owner has defaulted on mortage payments.
June 23, 201014 yr Huntington Building news (should this go somewhere else): Huntington Building in downtown Cleveland sold to Florida's Optima International Optima is considering putting a hotel in a portion of the 21-story building, which would embellish its mixed-use nature as it already features retail space on its lower levels. Retaining it primarily as an office building is an option, Mr. Schochet said, “but we'll have to see how that plays out.” Asked about potential residential uses for the building, Mr. Schochet said, “I don't think so.” http://www.crainscleveland.com/article/20100623/FREE/100629946
June 23, 201014 yr wow....so we may end up with 2 hotels at the E.9th and Euclid intersection.....Huntington and Schofield. (and Breuer...?? ;) )
June 23, 201014 yr Heres the PD version of the Huntington Bldg. sale. 18.5 million! Seems like a steal (valued at 41.5 million). Its says they are already talking to Hotels. MTS, we may get our wish's answered yet.... Miami investor buys Cleveland's Huntington Building for bargain price Michelle Jarboe, The Plain Dealer Posted: 06/23/2010 5:36 PM Chaim Schochet, an Optima investment executive, said Wednesday that he hopes to remake the Huntington Building with a combination of offices and hotel rooms. Though the building could be spruced up and maintained as offices, Schochet sees more potential in splitting up the large floors between different uses. Optima is working with the New York office of noted architecture and engineering firm Skidmore, Owings & Merrill LLP on plans for the mixed-use project. "We're in talks with a few hotels, and we need to get a commitment from one of them to make that possible," said Schochet, who is competing with several other downtown property owners and investors who are chasing hotels. http://mobile.cleveland.com/advcleve/db_/contentdetail.htm?contentguid=hQYygf1A&full=true#display
June 25, 201014 yr Anyone know if the new Huntington Bank building owners have done a good job with One Cleveland Center, or 55PS
June 25, 201014 yr Well... I know they've been putting money into one cleveland... that is better than a lot of property owners around here.
July 6, 201014 yr I moved the posts about the Breur Tower (the ex-Ameritrust Center) to: http://www.urbanohio.com/forum2/index.php/topic,20128.0.html "In the souls of the people the grapes of wrath are filling and growing heavy, growing heavy for the vintage." -- John Steinbeck
August 17, 201014 yr ANOTHER hotel development downtown? Nice! Optima pays $46.5 million for Penton Media building in downtown Cleveland Published: Tuesday, August 17, 2010, 1:47 PM Updated: Tuesday, August 17, 2010, 2:25 PM Michelle Jarboe, The Plain Dealer Michelle Jarboe, The Plain Dealer CLEVELAND, Ohio -- Optima Ventures LLC has continued its downtown-Cleveland buying spree, snapping up the Penton Media building for $46.5 million. The investor, based in Miami, bought the office building in a deal that closed Monday, according to property records. The seller was K/B Fund IV Cleveland LLC, a real estate investment fund managed by KBS Realty Advisors of Newport Beach, Calif. More at: http://www.cleveland.com/business/index.ssf/2010/08/optima_pays_465_million_for_pe.html
August 17, 201014 yr The only hotel project they reference is the possible redevelopment of the Huntington Building.
August 17, 201014 yr ANOTHER hotel development downtown? Nice! Optima pays $46.5 million for Penton Media building in downtown Cleveland Published: Tuesday, August 17, 2010, 1:47 PM Updated: Tuesday, August 17, 2010, 2:25 PM Michelle Jarboe, The Plain Dealer Michelle Jarboe, The Plain Dealer CLEVELAND, Ohio -- Optima Ventures LLC has continued its downtown-Cleveland buying spree, snapping up the Penton Media building for $46.5 million. The investor, based in Miami, bought the office building in a deal that closed Monday, according to property records. The seller was K/B Fund IV Cleveland LLC, a real estate investment fund managed by KBS Realty Advisors of Newport Beach, Calif. More at: http://www.cleveland.com/business/index.ssf/2010/08/optima_pays_465_million_for_pe.html They're referring to the Huntington Bldg.
August 17, 201014 yr Correct me if I am wrong, but this seems to be one of the first office real estate transactions in which the seller did not take a bath on the sale. Is this a sign that maybe the market has stabilized?
August 17, 201014 yr ^ also in the article it mentions that Penton Building is almost 92% occupied. Sounds like a pretty good building to have in their portfolio. Still very interested to see what they do with the Huntington Bldg. Power-washing the E9th side would be my first recommendation. I am really tired of staring at its dirty, dirty exterior.
August 17, 201014 yr ANOTHER hotel development downtown? Nice! Optima pays $46.5 million for Penton Media building in downtown Cleveland Published: Tuesday, August 17, 2010, 1:47 PM Updated: Tuesday, August 17, 2010, 2:25 PM Michelle Jarboe, The Plain Dealer Michelle Jarboe, The Plain Dealer CLEVELAND, Ohio -- Optima Ventures LLC has continued its downtown-Cleveland buying spree, snapping up the Penton Media building for $46.5 million. The investor, based in Miami, bought the office building in a deal that closed Monday, according to property records. The seller was K/B Fund IV Cleveland LLC, a real estate investment fund managed by KBS Realty Advisors of Newport Beach, Calif. More at: http://www.cleveland.com/business/index.ssf/2010/08/optima_pays_465_million_for_pe.html They're referring to the Huntington Bldg. WHOOPS! Thanks.
August 17, 201014 yr ANOTHER hotel development downtown? Nice! Optima pays $46.5 million for Penton Media building in downtown Cleveland Published: Tuesday, August 17, 2010, 1:47 PM Updated: Tuesday, August 17, 2010, 2:25 PM Michelle Jarboe, The Plain Dealer Michelle Jarboe, The Plain Dealer CLEVELAND, Ohio -- Optima Ventures LLC has continued its downtown-Cleveland buying spree, snapping up the Penton Media building for $46.5 million. The investor, based in Miami, bought the office building in a deal that closed Monday, according to property records. The seller was K/B Fund IV Cleveland LLC, a real estate investment fund managed by KBS Realty Advisors of Newport Beach, Calif. More at: http://www.cleveland.com/business/index.ssf/2010/08/optima_pays_465_million_for_pe.html They're referring to the Huntington Bldg. WHOOPS! Thanks. It's the small type...right? ;) ;)
August 17, 201014 yr Can anyone do a very quick approximation, running the numbers, on how long it might take to pay back that purchase price, based on typical lease rates, and a 92% occupancy? Of course there are myriad of other factors like taxes, maintenance, etc, just curious if it's more like 10 yrs or 20 yrs
August 18, 201014 yr Can anyone do a very quick approximation, running the numbers, on how long it might take to pay back that purchase price, based on typical lease rates, and a 92% occupancy? Of course there are myriad of other factors like taxes, maintenance, etc, just curious if it's more like 10 yrs or 20 yrs Total square footage is 559869. Not sure how much of that is leasable. Let's assume 80%, so you have approximately 447,895 sq ft of leasable space. Rates average about $17 per square foot. With a 92% occupancy you're looking at about $7,005,080.93 in revenue per year. The revenue potential of the building (if 100% leased) would be approximately $7.6 million. At $46.5 million purchase price it should be about 7 years before the total revenue exceeds the purchase price. Of course taxes, maintenance, and other factors aren't taken into account so you can probably cut that revenue in half for a more realistic net income number.
August 18, 201014 yr ^$17 sounds awfully low for downtown office space, even if its age makes it Class B (don't know if that's the case here).
August 18, 201014 yr ^Source: http://www.cbre.com/USA/US/OH/Cleveland/property/pentonmediabldg.htm?pageid=1 Loopnet.com shows $19.95 per sq ft. http://www.loopnet.com/xNet/MainSite/Listing/Profile/Profile.aspx?LID=15303458&SRID=1060034187&StepID=101&jli=y
August 18, 201014 yr Space is listed from $17.95 - $19.95 /sf. Optima likely put debt on the property - at 75% loan-to-value, they would probably be paying somewhere in the neighborhood of $2.5m-$3.0m annually in debt. Add, $1.1m for taxes and as well as utilities, maintenance fees, management fees, etc., it will be much longer than 7 years to pay off, if ever. Typically they would amortize the debt over 25 years with a balloon payment after 10, at which point they would refinance, probably again at 75% loan-to-value where they can pull some equity out and use for other deals.
August 18, 201014 yr I posted this article on another thread... I am not really sure what to make of this because is someone investing here in the hope of making some interesting things happen downtown and with the prospect of being on the brink of a possible new boom... OR, is this just a million dollar "home flipping" investor thing? I know nothing, so that is why I am posing the question. We want real investment here that is of a stakeholder sense...not a "let's cash in on their misfortune" thing. Educate me.
August 18, 201014 yr Space is listed from $17.95 - $19.95 /sf. Optima likely put debt on the property - at 75% loan-to-value, they would probably be paying somewhere in the neighborhood of $2.5m-$3.0m annually in debt. Add, $1.1m for taxes and as well as utilities, maintenance fees, management fees, etc., it will be much longer than 7 years to pay off, if ever. Typically they would amortize the debt over 25 years with a balloon payment after 10, at which point they would refinance, probably again at 75% loan-to-value where they can pull some equity out and use for other deals. Interesting, thanks guys for the rent numbers. Wow that's low. But depending on when leases were signed, the existing rent roll may be producing more or less than that $17-$20/sf, no? I'm assuming rents were higher before the crash, but don't know for sure. CorySnyder, do you know if it's still possible to get financing with that kind of LTV these days for a commercial building (even if almost full)? I don't know otherwise, just curious if your pro forma is based on current post-crash practices or pre crash. These buyers paid cash for the Huntington, but that may because of its future vacancies and its low price.
August 18, 201014 yr believe it or not... those rents are pretty typical downtown. I think key tower is in the $27-29 range, w/ 200 public square not far behind, but most rents are typically between $15-20 / sf. I keep waiting for out of town companies to figure this out.
August 18, 201014 yr I think you can get 75% LTV, however, I have never been involved in a transaction anywhere near that size, so I can't speak as intelligently about loan requirements for a deal that big. It would certainly be easier to get a 75% LTV on a near fully occupied building than a near vacant building. Other factors include what tenants are in the building and when the leases expire. If the building is fully occupied, but all the leases expire within 2 years, there is a bit more risk involved.
August 18, 201014 yr In the largest office tower in dowtown Seattle it is possible to get rent in the $20.00/sf range. That buildingis 40% empty and the owner recently defaulted on its loan payments.
August 24, 201014 yr I'm not sure if this has been discussed much, but Key has remodeled is Higbee space...just in time for a casino to move in downstairs! KEY UNVEILS ITS NEW OFFICE SPACE IN HISTORIC HIGBEE BUILDING ON CLEVELAND’S PUBLIC SQUARE CLEVELAND, August 24, 2010 /PRNewswire/ — KeyCorp is unveiling this week its new high-tech, contemporary office space in the heart of downtown Cleveland following a complete renovation and refurbishment of three floors — about 221,000 square feet — of the historic Higbee Building on Public Square. Approximately 1,000 Key employees – about 20 percent of Key’s Cleveland-based workforce — will occupy the space, which retains a number of architectural elements of the historic Cleveland department store while at the same time anticipates changes in work styles and needs of employees and the highest standards for energy conservation and the environment. The space provides standard offices, but also work areas where staff can temporarily touch down, plug in and meet in small groups, huddle rooms and casual meeting areas with flat-screen TVs for online access and presentations. (See the accompanying Fact Sheet for additional detail and features.) “Our Higbee Building investment demonstrates our commitment to our headquarters city,” said Key CEO Henry L. Meyer III. “It maintains hundreds of jobs in the heart of our city. At the same time, the project capitalizes on new technology, contemporary space planning and anticipates changes in the way we work and employee preferences. In addition, we have designed the renovations with the highest environmental standards in mind.” http://multivu.prnewswire.com/mnr/keycorp/45760/
August 24, 201014 yr Looks nice, i remember walking though when they still were working on the whole thing, Im glad to see it complete.
August 24, 201014 yr Key is really thinking about their future with this office development. This is the type of environment that young people want to work in.
August 24, 201014 yr ^ No i believe this is... :lol: http://maps.google.com/maps?f=q&source=s_q&hl=en&geocode=&q=Beachwood,+OH&sll=41.464498,-81.508732&sspn=0.062775,0.154152&ie=UTF8&hq=&hnear=Beachwood,+Cuyahoga,+Ohio&ll=41.470572,-81.496743&spn=0.003955,0.013722&t=h&z=17&layer=c&cbll=41.470573,-81.494862&panoid=npWf3OJIWgtJP7RT4zSTeg&cbp=12,222.36,,0,3.03
August 24, 201014 yr We laugh, but that could also be a picture of one of Google's or Apple's office buildings.
August 24, 201014 yr This is the type of environment that young people want to work in. That old beaten down buzz phrase again.... "young people" I guess no one over 35 has room to live here then. Doesn't matter that we spend the most in the economy, I guess....offer a more stable and less transient base of residents on the long term. That's not important. Nahhh. :-(
August 24, 201014 yr I think young people now, especially new college grads, will take a job just about anywhere, regardless of the office environment.
August 24, 201014 yr This is the type of environment that young people want to work in. That old beaten down buzz phrase again.... "young people" I guess no one over 35 has room to live here then. Doesn't matter that we spend the most in the economy, I guess....offer a more stable and less transient base of residents on the long term. That's not important. Nahhh. :-( Spare me EC. No one ever said Key or the city should ignore the 35+ population, but it's very important for companies like Key to attract and retain YOUNG talent. Yes, they also need to work to retain good employees at any age, but it's extra important for companies to attract kids fresh out of college because they are cheap and very trainable because they have no other real experience. Typically they can be more easily molded into what Key considers a model employee. I'm not saying an older individual can't be molded in the same way, but it is harder and more expensive. The point is that college graduates are attracted to open, unique work environments. In many cases they don't want to be subject to the standard cubicle, Dilbert-style office environment. Not many people do really, so it's a good thing for Key to provide an alternative work environment.
August 24, 201014 yr I think young people now, especially new college grads, will take a job just about anywhere, regardless of the office environment. On average that might be true, but the talent that banks are recruiting for their leadership programs are still in pretty high demand. Top talent is always in high demand.
August 24, 201014 yr ^ Don't think so, maybe some consolidation. Most of the employees that are moving to Higbee are the ones from the May Co building, which I believe had a larger footprint and more of a standard cubicle feel. They are talking about moving some people from their E 9th building over there. Not sure if it was right away or possibly in the future.
Create an account or sign in to comment