MidTown Tech Park was built as a spec building as is Link59.

Like I said, the market has to tighten up a bit first. But I would think that some spec space could be added to one of the new buildings rumored for the large corporations seeking new office space. That doesn't mean it is a spec building. But in a tighter market, the anchor tenant could leverage financing for a bigger building with a marketable share of it being spec space.

^Where in the world does a spec. office building get built ANYWHERE these days, let alone Cleveland (maybe London, perhaps New York)?  How in the world could you get financing?

 

Dino Palmieri is doing one right now in Chagrin Highlands.  Shell is up no signed tenants

 

PD reports there is a signed tenant.

 

http://www.cleveland.com/beachwood/index.ssf/2015/09/post_21.html

I understand why there's no news on Sherwin Williams new HQ, considering the Valspar acquistion hasn't been resolved. But I'm surprised there has been no news regarding the Medical Mutual HQ. Given their projected timeline of due diligence as well as their lease at the Rose Building, I was expecting some noticeable movement by Fall 2016. Are they waiting on some other development? Maybe joining with another significant office tenant in a new building?

I understand why there's no news on Sherwin Williams new HQ, considering the Valspar acquistion hasn't been resolved. But I'm surprised there has been no news regarding the Medical Mutual HQ. Given their projected timeline of due diligence as well as their lease at the Rose Building, I was expecting some noticeable movement by Fall 2016. Are they waiting on some other development? Maybe joining with another significant office tenant in a new building?

 

 

I know in late November they were looking at all the RFPS for new office space. Things are moving behind the scenes.

What more can you say about MM's RFP? Such as total square footage of office space desired? Open floor concepts? Mixed use building? New construction preferred? Were they willing to consider locations outside of downtown?

I would love to see new construction for MM but I think they may be looking at existing space.  45 Erieview would be a good fit for them.  Didn't MM need about 250k sf?

I know their acquisition of HealthSpan may change that but that back office stuff may stay in the burbs.

I would love to see new construction for MM but I think they may be looking at existing space.  45 Erieview would be a good fit for them.  Didn't MM need about 250k sf?

I know their acquisition of HealthSpan may change that but that back office stuff may stay in the burbs.

 

Medical Mutual has a requirement for 380,000 square feet, as much space as it has in The Rose Building, 2060 E. Ninth St., with about 1,300 workers downtown. It also has 700 workers in Beachwood, Copley and Strongsville offices that it may consolidate together in some to-be-determined fashion.

SOURCE: http://www.crainscleveland.com/article/20160410/NEWS/160409783/skyscraper-intrigue-swirls-downtown

 

The suburban office space was renewed with a lease termination date designed to coincide with the end of MM's lease at the Rose Building. So I think it will all be consolidated under one roof. The suburban offices total between 100,000 and 200,000 square feet. This doesn't include any workers from HealthSpan which is headquartered in Cincinnati. So I think 400,000 sf is the total minimum -- unless they plan to keep some workers in the suburbs.

^Could be but downsizing seems to be what these companies are doing lately. Key bank cut back their space needs, Forest City seems to be doing the same.  Wonder how much space MM will actually need. To me our best bet for new construction (fingers crossed) will be SW.

No question. I recall that, earlier in this thread, some folks who work for developers speculated that MM's 1,300 downtown workers could fit into 225,000 sf of open-floor format, vs the 380,000 sf of individual office rooms in their current 100+ year old building.

Millennia remains in the hunt for Key Tower. http://www.crainscleveland.com/print/article/20170105/NEWS/170109904/millennia-cos-remains-in-hunt-for-57-story-key-tower

EDIT: a pretty remarkable drop in vacancy in just one year is noted in this sentence about downtown Cleveland:

 

"Vacancy among top-tier Class A properties fell to 13.5% at the end of 2016 from 17.9% in the last year's like period."

 

Survey: Rent rates are on rise downtown

January 08, 2017

By STAN BULLARD

 

Slowly, almost imperceptibly, the downtown Cleveland office market is undergoing one of its biggest changes in more than two decade: Rents are inching up.

 

Taking a new spin on the traditional year-end office market survey, Andrew Batson, director of research in the Great Lakes Region of the JLL realty brokerage, reported average asking rents in the city center climbed 2.5% this past year and promise to keep climbing through 2020 if no new office buildings go up.

 

Look for Class A asking rents downtown, which currently average $24.69 per square foot, to rise $1 per square foot by 2020 if rents appreciate as expected for the next few years.

 

MORE:

http://www.crainscleveland.com/article/20170108/NEWS/170109860/survey-rent-rates-are-on-rise-downtown

Content marketing software company BrightEdge moves into larger Cleveland office

January 11, 2017

By SCOTT SUTTELL 

 

A Silicon Valley-based software company that opened a Cleveland office in 2015 has moved into larger digs downtown.

 

BrightEdge, which produces content marketing software, on Wednesday, Jan. 11, officially opened a 10,000-square-foot space within Tower City that has 21 employees — twice the number it had in 2015, when it opened a small office in the Fifth Third Building.

 

The company says it plans to hire 45 people this year, ranging from entry-level to managerial-level employees. BrightEdge is looking to hire outbound sales representatives, account executives and sales managers.

 

MORE:

http://www.crainscleveland.com/article/20170111/NEWS/170119927/content-marketing-software-company-brightedge-moves-into-larger

Cleveland's growing role as a hub in the new content marketing world

John Kosich

6:16 AM, Jan 12, 2017

8:45 AM, Jan 12, 2017

 

CLEVELAND - When Ohio Governor John Kasich stopped in Cleveland last week there was a phrase he said that has always bothered him. "The rust belt, who wants to live in a rust belt," he asked.  "We're not a rust belt we're an idea and a knowledge belt now."

 

An example of that can be found on the fifth floor of Terminal Tower in the new offices of BrightEdge, a Silicon Valley-based content marketing software company that held the grand opening for it's new Cleveland office Wednesday. It's a 10,000 square foot space that is home to 21 employees now with space for another 45 positions.

 

BrightEdge Co-Founder Lemuel Park said they were drawn to Cleveland because of its growing role as a hub for the rapidly growing content marketing industry and the pool of talent that Northeast Ohio provides.

 

MORE:

http://www.newsnet5.com/news/local-news/cleveland-metro/clevelands-growning-role-as-a-hub-in-the-new-content-marketing-world

In a chart at the link below, Jones Lang LaSalle estimates that, at current trends, downtown Cleveland Class A vacancy will fall from 13.5 percent to 6.9 percent in the next five years. FYI: Anything below 10 percent typically justifies the construction of a new office building.

 

http://www.us.jll.com/united-states/en-us/Research/US-Cleveland-Office-Insight-Q4%202016-JLL.pdf?d86a5656-23d2-4fa5-a9bc-e19deb4b9ef8

 

Office Insight

 

Cleveland | Q4 2016

 

All indicators point to a strengthening downtown

 

Residential conversions have had a dramatic effect on office vacancy

At the start of 2010, more than 4.2 million square feet (m.s.f.) of office product

sat vacant downtown. Fast forward to 2016, and downtown vacancy has declined

to 3.1 m.s.f. By 2020, vacancy is projected to sit at 2.2 m.s.f., less than half the

2010 figure. Conversion of office properties into residential use has been the

primary driver behind the dramatic reduction in office vacancy. Cleveland’s

downtown population is surging and developers have converted, or plan to

covert, more than 15 underperforming office buildings (totaling 4.2 m.s.f.) to

residential use. The redevelopment of these properties has reduced the

downtown office supply and has led to a tightening of market conditions.

 

Class A options downtown for large users are diminishing quickly

Vacancy rates in Class B buildings have seen dramatic declines as tenants have

spilled over from office-to-residential conversions. Class B vacancy spiked in the

first quarter of 2015 at 34.8 percent and has subsequently declined as residential

conversions have commenced. Class B properties have not been the only

benefactors, as Class A assets have also recorded gains. These premier office

buildings have benefited from a flight to quality as well as the reduction in the

office supply. Class A vacancy currently sits at 13.5 percent, down from 18.1

percent in the first quarter of 2016. Pending decisions by Forest City and

Millennia Companies will likely drive Class A vacancy down even further.

 

Rents are poised to move higher as the downtown office market tightens

Rents in the Cleveland office market are known for their consistency. This can be

a nuisance for landlords but a benefit for tenants. However, with so much

disruption taking place in the downtown office market, rents have broken free

from their static state. Asking rents downtown are up an average of 2.5 percent

year-over-year. And with market conditions forecasted to become even more

constrained over the next few years, rents are poised for further gains. Class A

asking rents downtown currently average $24.69 per square foot, and by 2020,

office tenants could be paying an extra $1.00 per square foot if rents appreciate

at a modest pace of 1.0 percent annually for the next few years.

 

^15 buildings (4.2 million square feet) has been converted to residential in 6 years? First time I've seen a number on all the conversions.

^ ^^ That number is the total of all vacant office buildings downtown.  We may end up seeing office building construction in the near future; hopefully the big players (Sherwin-Williams, Medical Mutual) decide to go big and add some height to the skyline.  With that much available space for conversion, I don't mind too much the fact that we haven't seen new construction of residential buildings downtown; save for the Flats which involved major subsidies from multiple parties.  We may be entering an era where the amount of subsidies needed in order to build new will be far less than what was required when the East Bank began construction, which would be great for the downtown market and surrounding areas.  Kudos to the State (though I'm not a big fan of the folks at the Statehouse) as the subsidies from the State for historic conversions have undoubtedly helped push Cleveland to this point.

^I see it now...read it too fast.

We may end up seeing office building construction in the near future; hopefully the big players (Sherwin-Williams, Medical Mutual) decide to go big and add some height to the skyline. 

 

I hope you're right -- but on the other hand I'd rather have 4-6 story mid-rise buildings on EVERY.SINGLE.PARKING.LOT first.  :evil:

Sherwin-Williams needs to make a divestiture to complete Valspar deal

January 26, 2017 UPDATE

 

Cleveland-based Sherwin-Williams Co. (NYSE: SHW) on Thursday, Jan. 26, acknowledged that it needs to sell part of its business to complete the planned $11.3 billion acquisition of Valspar Corp. (NYSE: VAL)

 

"We now expect a divestiture will be required to gain approval from the FTC to complete the acquisition of Valspar," said John G. Morikis, chairman, president and CEO of Sherwin-Williams, in a statement that was included in a news release about the company's fourth-quarter financial results.

 

"We are moving forward on a divestiture that we believe will allow us to gain approval" from the Federal Trade Commission, Morikis added.

 

He said the expected divestiture "has revenues below the $650 million threshold, and we expect to negotiate the divestiture and complete the Valspar transaction at $113 per common share within 90 days."

 

http://www.crainscleveland.com/article/20170126/NEWS/170129863/sherwin-williams-needs-to-make-a-divestiture-to-complete-valspar-deal

But I'm surprised there has been no news regarding the Medical Mutual HQ. Given their projected timeline of due diligence as well as their lease at the Rose Building, I was expecting some noticeable movement by Fall 2016. Are they waiting on some other development? Maybe joining with another significant office tenant in a new building?

hopefully the big players (Sherwin-Williams, Medical Mutual) decide to go big and add some height to the skyline.

 

No hard information to report re Medical Mutual, except that the foot dragging continues, and prepare to be underwhelmed.

What does that mean? Are they moving out or staying put? And will the new building at least be in the city?

What does that mean? Are they moving out or staying put? And will the new building at least be in the city?

If a decision hasn't been made yet, time is so short planning-wise that you can't expect anything earth-shattering.  Staying downtown makes the most sense, but if the numbers don't add up financially, and with healthcare reform in flux, I can see some sort of ultra-conservative decision being made.

H5 buys massive downtown Cleveland data center

http://www.crainscleveland.com/article/20170127/NEWS/170129846/h5-buys-massive-downtown-cleveland-data-center

Millennia Group completes purchase of Key Tower. http://www.cleveland19.com/story/34393997/key-center-in-downtown-cleveland-has-new-owner

^ And hundreds of jobs moving downtown from the suburbs!  :clap: :clap: :clap:

It will be more like dozens but still good to see (most of their employees are on site at various properties across the country).

It will be more like dozens but still good to see (most of their employees are on site at various properties across the country).

 

Millennia has close to 700ee's across the country, around 200 of those employees are located on Rockside rd.  They've previously stated that they were looking for over 30k sq ft of office space to rent.

More....

 

Key Tower returns to local ownership, with $267.5 million sale to Millennia Companies (photos)

http://realestate.cleveland.com/realestate-news/2017/01/key_tower_returns_to_local_own.html

 

BTW Millennia says in their press release they will move "hundreds" of employees from Independence to downtown.

Forest City to lease space at Key Tower for headquarters:

 

 

http://realestate.cleveland.com/realestate-news/2017/02/forest_city_realty_trust_signs.html#incart_river_home

It will be more like dozens but still good to see (most of their employees are on site at various properties across the country).

 

Millennia has close to 700ee's across the country, around 200 of those employees are located on Rockside rd.  They've previously stated that they were looking for over 30k sq ft of office space to rent.

 

Looks like they are taking 40k sq ft of office space.  That's enough for well over 200ee's. 

Key Tower's new owner, Frank Sinito of Millennia Cos., says he's 'humbled' by opportunity

 

CLEVELAND, Ohio - The new owner of Key Center said he's "humbled" to control the downtown Cleveland complex, which includes Ohio's tallest building.

 

During an interview late Wednesday, Frank Sinito expanded on his plans for Key Tower and the neighboring Cleveland Marriott Downtown hotel. Sinito, chief executive officer of the Millennia Companies of Valley View, closed on the $267.5 million purchase Tuesday.

 

He plans to move Millennia and its roughly 200 employees to Key Tower by July 1. The privately held family of companies, focused on the apartment business, will occupy just over 40,000 square feet on the building's 13th and 40th floors.

 

http://realestate.cleveland.com/realestate-news/2017/02/key_towers_new_owner_frank_sin.html#incart_river_home

Video seems to be removed.  Can you tell us what it was?

Video is unavailable

Copyright infringement.

I doubt they took into account Cleveland's Class C office conversions into apartments. Had they, they might see a different story with regards to absorption rates....

 

Office Sector Growth Stalls, According To Latest Ten-X Research U.S. Office Market Outlook

Portland, Ore., Oakland, Palm Beach, Fla., Orange County, Calif. and Miami Named Top 5 Markets to Buy Office Properties

NEWS PROVIDED BY Ten-X

Feb 08, 2017, 09:16 ET

 

IRVINE and SILICON VALLEY, Calif., Feb. 8, 2017 /PRNewswire/ -- Ten-X, the nation's leading online real estate marketplace, today released its latest U.S. Office Market Outlook, including the top five 'Buy' and 'Sell' markets for office real estate assets. The long-term forecast reveals that the sector's fundamentals appear to be stalling after years of slow recovery, as vacancy rates have plateaued despite a healthy labor market and growing national economy.

 

The forecast indicates Portland, Ore., Oakland, Palm Beach, Fla., Orange County, Calif. and Miami are the top markets in which investors should consider buying office assets. These regions, concentrated in Florida and the West Coast, are being fueled by growing economies, where strong demographics and consistent job growth are fueling robust demand for office space.

 

Houston, Cleveland, Suburban Maryland, Memphis and Milwaukee are the top markets where Ten-X Research projects market conditions might cause office investors to consider selling their properties. These cities are being undermined by weakening labor markets, which have reduced demand for office space and significantly slowed absorption rates.

 

MORE:

http://www.prnewswire.com/news-releases/office-sector-growth-stalls-according-to-latest-ten-x-research-us-office-market-outlook-300404112.html

TransDigm continues to grow through acquisitions. Schroth was founded in Arnsburg, Germany in 1946 and was just sold by Takata of Japan. What will it mean for TransDigm?

 

TransDigm Buys Takata Corp.'s Aerospace Business for $90M

http://finance.yahoo.com/news/transdigm-buys-takata-corp-aerospace-140502525.html

 

Edit: Schroth employs about 150 designers, engineers and production workers in the US and Germany. Takata employs 35,000 worldwide and 18,500 in the USA.

Schroth was founded in Arnsburg, Germany in 1946 and was just sold by Takata of Japan. What will it mean for TransDigm?

 

Takata has been having costly troubles with aviation seat and cabin interior product quality and delivery problems. Schroth is probably not involved and I'd guess was sold at a (huge?)  bargain price. A nice tuck-in acquisition for Transdigm.

^Wasn't Takata the company involved in millions of recalls on faulty airbags?

^Yep. 

FYI

The Latest: Japanese auto parts maker Takata Corp.  pleads guilty to fraud in air bag case. https://t.co/hHL6ENlwSb

Growbots bringing sales operations to Cleveland from Silicon Valley

 

CLEVELAND, Ohio - For the second time in just over a year, Cleveland will become home to part of an emerging growth Silicon Valley startup.

 

Growbots has announced it will build the sales operations for its outbound sales software platform on the west side of the Flats in Cleveland. Last year, BrightEdge signed a long-term lease in downtown Cleveland's Tower City to build its national sales operations.

 

Growbots was part of the 500 Startups "batch 12" of tech companies to graduate in 2016. And it was the first company ever to be accepted and funded by 500 Startups without even a beta software to present. In the beginning, co-founders of Growbots Greg Pietruszynski and Luke Deka showed the 500 Startups judges a napkin with the concept on the back and a passion for what the idea could represent.

 

 

http://www.cleveland.com/business/index.ssf/2017/02/growbots_bringing_sales_operat.html

Guess we'll have to wait a bit longer for the new Public Square skyscraper....

 

Sherwin-Williams, Valspar extend term of merger agreement

March 21, 2017

By CRAIN'S CLEVELAND BUSINESS

 

Cleveland-based Sherwin-Williams Co. (NYSE: SHW) announced the closing of its planned acquisition of The Valspar Corp. (NYSE: VAL) has been delayed because a divestiture required to appease the Federal Trade Commission is taking longer than expected.

 

As such, the termination date of the agreement under which Sherwin-Williams will acquire Valspar — for $113 per share in an all-cash transaction — has been bumped from March 21 to June 21. Sherwin-Williams announced in January that it needed to sell part of its business to complete the $11.3 billion acquisition of Valspar.

 

MORE

http://www.crainscleveland.com/article/20170321/NEWS/170329941/sherwin-williams-valspar-extend-term-of-merger-agreement

Relocating a discussion from the John Hartness Brown buildings thread....

 

Seems unlikely. If they want to build a new downtown tower, why not go to nuCLEus, or the Weston warehouse district parking lots, or one of the other prime surface parking lots (like the E. 9th lot next to Progressive Field).  Why knock down buildings?  Why forgo the opportunity to be on a corner?

 

Better yet, why forego the opportunity for one of Cleveland's largest and oldest corporate citizens to tower over Public Square on the Jacobs lot? I'm sure Jacobs would be happy to construct for it a stunning architectural statement about S-W's next 150 years and assume the debt from this venture.

 

That certainly seems to be the most logical spot, no argument from me there.

 

Additionally, if SW continues to grow, the will likely need rental space in a new, different building. As a consequence of their own success, I think SW will be forced to confront this relocation by 2020 at the latest.

 

Just a random, quasi-irrelevant thought, does anyone know if the office footprint of these buildings is greater than the Rose Building --- ala MedMu

 

From http://www.loopnet.com/Listing/16705826/2060-East-Ninth-Street-Cleveland-OH/: The Rose Building consists of a ten-story office building and a six-story annex totaling approximately 381,000 square feet.

 

The Landmark Office Towers that S-W occupies has 900,000 square feet. S-W has also spilled over into the neighboring Skylight Office Tower.

 

Here are the largest downtown Cleveland office buildings (both private and government), according to Crain's: http://ecom.datajoe.com/ecom/download/?l4sWHZE0

First, I would have never thought the Federal Building was larger than Key Tower.  Is that right??  Or am I missing something.

 

I know we have discussed at length rumors from S-W but I have lost track.  I thought at one time we had some insiders who said the Public Square Jacobs lot was not in their consideration for a new building.  Of course, I know everything is a rumor at this point.

^Federal Building is 577K, that list is incorrect.

That surprised me too.

 

EDIT: I've since learned that the 1.5 million square feet includes the 60 stories of federal building hidden below ground.  :-P

^that's interesting that the Terminal Tower ranks 13th!  With its esteemed status and height, one would have thought it would be higher on the list.  (I know, its even lower if that list is old and some floors are being converted to apartments.) Wish Crain's would have put a date on that list.

The floor plates on the upper section of the Terminal Tower are smaller than 100 ft x 100 ft. - pretty skinny compared to modern buildings.

I believe the Federal Building has to be more than 577,000 sq ft. If you divide the 32 floors into the 577,000, that is only 18k per floor. That would be very small floor plates considering how bulky the building looks.

 

So I did some digging into some of my Cleveland books, checked on Wikipedia, and compared these to the Crain's list KJP posted. According to Wikipedia, the building has 577,000 sq ft, but according to most of the info I found in my Cleveland books, the building has 1,000,000 sq ft.  The million sq ft info I found states that the building was erected in 1964, and was build to hold 5,000 employees. That would be 200 sq ft per employee and sounds more reasonable.

 

I found nothing to verify the Crain's 1.4 million sq ft. And if the 577,000 is correct, and is divided by 5,000 employees, that would be only 115 sq ft per employee. The 1 million sq ft still seems more likely.