I can agree with that.

Same here.  I don't think county employees crossing into their place of employment will hurt street traffic all that much.  They will still head out on the sidewalk for coffee, lunch, and of course lots of smoke breaks!

Ameritrust deal won't be market panacea

Empty office space already absent from vacancy rates, which industry observers use to judge metros' real estate health

By STAN BULLARD and JAY MILLER

4:30 am, December 17, 2012

 

The proposal by developer Geis Cos. to buy the former Ameritrust complex for a mixed-use project that would include a new headquarters for Cuyahoga County should do downtown Cleveland a lot of good by injecting life into the intersection of East Ninth Street and Euclid Avenue, real estate types agree. However, the potential deal's impact on the office market, statistically speaking, would be...

 

READ MORE AT:

http://www.crainscleveland.com/article/20121217/SUB1/312179969

Hmm interesting. First, i wish i was a subscriber so i could read more... lol. but second, i never knew the Ameritrust complex wasnt counted in vacancy rates. Im sure its answered later in the article, but why is that? is it because it wasnt owned by a private company and truely "open" for teneants and was counted differently as a government facility?

Usually they pull up after a google search, but this one is not working.

Hmm interesting. First, i wish i was a subscriber so i could read more... lol. but second, i never knew the Ameritrust complex wasnt counted in vacancy rates. Im sure its answered later in the article, but why is that? is it because it wasnt owned by a private company and truely "open" for teneants and was counted differently as a government facility?

 

That's correct. Government-owned office buildings aren't counted in the office "market" because the available space cannot be sold or rented on the open market. Thus it has no bearing on prices, etc.

More broadly, I don't think buildings are included in the office inventory total if they aren't accepting tenants.  So, for example, I don't think the East Ohio Gas Building figures into the vacancy rate either.  And the Hannah annex is probably out now too.

Usually they pull up after a google search, but this one is not working.

 

Just hit print and then cancel.  THe whole article will appear. 

Hmm interesting. First, i wish i was a subscriber so i could read more... lol. but second, i never knew the Ameritrust complex wasnt counted in vacancy rates. Im sure its answered later in the article, but why is that? is it because it wasnt owned by a private company and truely "open" for teneants and was counted differently as a government facility?

 

That's correct. Government-owned office buildings aren't counted in the office "market" because the available space cannot be sold or rented on the open market. Thus it has no bearing on prices, etc.

 

Gotcha, thank you.

 

That was one reason i loved this option. but even tho its not going to be subtracted from the numbers, thats still a LOT of empty space that will be coming off the market and being filled. still great!  :-D

^  Not that one! Strap is closer:

 

More broadly, I don't think buildings are included in the office inventory total if they aren't accepting tenants.  So, for example, I don't think the East Ohio Gas Building figures into the vacancy rate either.  And the Hannah annex is probably out now too.

 

To clarify, though, EOG would have been out of the running when it was shut down as an office building, not when it was acquired to be redeveloped, same with the Ameritrust Complex.  Abandoned isn't vacant for the purposes of market analysis, as those buildings aren't part of the active market anymore.  Government buildings and single occupant, owner occupied buildings also aren't part of the market.

Maybe this isn't the best thread to ask in, but are any other properties downtown that are (almost) empty but not counted in downtown's vacancy rate? May Company?

Maybe this isn't the best thread to ask in, but are any other properties downtown that are (almost) empty but not counted in downtown's vacancy rate? May Company?

 

Only if it's marketed as office space, which I believe May Co.'s is.

 

OK, here's a diagram I found in my files from the K&D plan that might be of interest here.......

 

http://www.cleveland.com/cuyahoga-county/index.ssf/2013/01/cuyahoga_county_council_vets_ameritrust_deal.html#incart_river_default

 

Cuyahoga County Council vets Ameritrust deal

 

CLEVELAND, Ohio -- Cuyahoga County Council will take its first public look today at plans to unload the mothballed Ameritrust complex for $27 million.

 

In a proposal Executive Ed FitzGerald announced last month, Streetsboro-based Geis Cos. would build a new government headquarters on part of the property to lease back to the county for $6.7 million a year.

 

The rotunda of the complex -- which presides over the intersection of Euclid Avenue and East Ninth Street -- would serve as retail or another public use. The connected 28-story tower would become high-end apartments and 1010 Euclid Ave., also known as the Swetland building, would become apartments and office space.

At the county council meeting right now, a potentially troubling development has emerged. PD reporter Michelle J. McFee (https://twitter.com/mjarboe) has tweeted.......

 

Chaim Schochet of Optima, which owns former Huntington Bldg in downtown #CLE, is asking Cuyahoga County Council to reconsider HQ decision.

 

Chaim Schochet of Optima says he recently upped his offer for Ameritrust to $30M and offered the county a 26-yr lease w/ avg rent of $23.61.

hey, let the  games start, if the county gets the best deal

Bad News ... Optima would not develop the Ameritrust Tower or the P & H Buildings or the Swetland Building.  I hope council sticks with Geis.  Show some love to the local boys who actually get stuff done.

At the county council meeting right now, a potentially troubling development has emerged. PD reporter Michelle J. McFee (https://twitter.com/mjarboe) has tweeted.......

 

Chaim Schochet of Optima, which owns former Huntington Bldg in downtown #CLE, is asking Cuyahoga County Council to reconsider HQ decision.

 

Chaim Schochet of Optima says he recently upped his offer for Ameritrust to $30M and offered the county a 26-yr lease w/ avg rent of $23.61.

 

I'm not too familiar with the politics side of things so this may sound dumb - but can they (optima) even do that?? That's like saying I was the low bid on a project, but after the results were made public, another bidder wanted the job so made a lower bid. That can't happen on publicly funded construction projects, so how could this even be considered here?

^^why would he pay $30m for it and then not develop it?

Well, isn't that what those criminals/commissioners did when they bought this turkey in the first place.

 

Not to mention Gilbert's "phase two" purchase

I guess my question is whether the real estate consultants retained by the county knew about this new offer before tonight and did they have a chance to evaluate and score it.  If not I guess they will have that opportunity in the next few weeks and I would also imagine the Geis now will be allowed to respond.  Clearly there are many more factors than price (of the Ameritrust Building) and the lease rate for the new county space.

"County Council has the right to approve the deal, under the county charter, or negotiate with other developers.

 

At a 5:30 p.m. meeting, council will hear a presentation on the Geis deal, as well as allow comments from rejected bidders."

 

This is the part of the County charter that sucks.  It should be a done deal with the county approving the highest bidder...no 'lets hear comments from rejected bidders' crap to try and get back in the game and negotiate.  This kind of process could drag on forever.

^^why would he pay $30m for it and then not develop it?

It makes me think he may have something already lined up for the property if he is willing to throw down $30MM

 

Did any other bidders come forward at the meeting?

Optima Ventures challenges Cuyahoga County on planned headquarters, Ameritrust deal

 

By Michelle Jarboe McFee, The Plain Dealer

on January 02, 2013 at 10:00 PM

 

CLEVELAND, Ohio -- A major downtown property owner says Cuyahoga County's proposed deal to build a new headquarters at the Ameritrust complex will cost taxpayers at least $34 million more than moving into an existing building.

 

Chaim Schochet of Optima Ventures is questioning County Executive Ed FitzGerald's recommendation that the county sell the Ameritrust complex to the Geis Cos. of Streetsboro and build a headquarters there. Optima, the Miami-based owner of the former Huntington Building at 925 Euclid Ave., tried to lure the county to its historic building and floated its own redevelopment plans for the seven-building Ameritrust property at East Ninth Street and Euclid.

 

Schochet also submitted a revised offer, raising his bid for the Ameritrust complex by nearly $15 million.

 

http://www.cleveland.com/business/index.ssf/2013/01/optima_ventures_challenges_cuy.html#incart_river_default#incart_m-rpt-2

Quite a change ... From the article above: "Geis originally proposed buying Ameritrust for $26.5 million and constructing a 15-story building, with parking on the lower floors and county offices on floors 9 through 15, on the site of the complex's Oppmann Garage, at 944 Prospect Ave. During negotiations, Geis shifted the site of the new headquarters to the northeast corner of Prospect and East Ninth."

 

What an interesting wrinkle! It sounds like the CBRE analysis showed around a $100,000/year difference in county costs ... Not chump change, but still significant savings over the current sprawled out county offices. Optima's revised bid for Ameritrust also comes in at $3 million above Geis's, which seems like it would just about negate that $100,000/year in savings from the Geis plan (although the county would have to pay $10 million to purchase their space at Huntington and $1 for their space on Prospect). For me, it seems like the best outcome depends on how strong the likelihood is that Optima could finance an apartment conversion at Huntington. Apartments at Huntington and Ameritrust + a new county building = Geis; a nearly entirely vacant Huntington for any lengthy period would be a serious dampener of street vibrancy right there. I am inclined to agree with Schochet that the last thing downtown needs right now is new construction commercial.

What an interesting wrinkle! It sounds like the CBRE analysis showed around a $100,000/year difference in county costs ... Not chump change, but still significant savings over the current sprawled out county offices. Optima's revised bid for Ameritrust also comes in at $3 million above Geis's, which seems like it would just about negate that $100,000/year in savings from the Geis plan (although the county would have to pay $10 million to purchase their space at Huntington and $1 for their space on Prospect). For me, it seems like the best outcome depends on how strong the likelihood is that Optima could finance an apartment conversion at Huntington. Apartments at Huntington and Ameritrust + a new county building = Geis; a nearly entirely vacant Huntington for any lengthy period would be a serious dampener of street vibrancy right there. I am inclined to agree with Schochet that the last thing downtown needs right now is new construction commercial.

 

What would be the alternative for existing office building that would be demolished for the new headquarters? convert to apartments as well? While they are adding "more" office space, the existing is currently sitting there vacant, so it's not like they are building a completely new 8-story office building. They may in fact be adding more "feasible" office space.

Sounds like it's time for the County to commission another study.  :laugh:

Ever think those are about as effective as the lakefront and public square ones? I've got to get into that racket somehow.

Overall, this seems like good news to me.  This is what the county wanted: a bidding war.  A bidding war in downtown Cleveland!  It's a delicate balance - you want the county to get as much money as possible, but you don't want this to drag out forever.

 

It is strange to me that Optima increased it's bid by $15 million.  They obviously didn't think they were going to get outbid.  But this bidding up makes the real estate market seem more valuable.

 

Assuming the Ameritrust building still get redeveloped as the winner plan stated, I tend to agree with Optima: do we need new construction?  Huntington is a great fit for the county.  Before I was thinking, "Well, Huntington is a better fit but Geis had a better bid."  But now that's not the case. 

Assuming the Ameritrust building still get redeveloped as the winner plan stated, I tend to agree with Optima: do we need new construction?  Huntington is a great fit for the county.  Before I was thinking, "Well, Huntington is a better fit but Geis had a better bid."  But now that's not the case. 

 

I'm surprised their isn't legislation in place that says they have to take the initial best bid. It's that way with State construction contracts. Sometimes people leave a lot on the table to their detriment, but that's why it's a competitive bid situation. Otherwise, it would be like taking a test after you know all the answers.

The only way I see that they are getting about it is that it's not strictly apples to apples. There are different buildings, lease rates and terms in play, but for someone to come back and change their bid is a little worrying.

I'm surprised their isn't legislation in place that says they have to take the initial best bid.

 

Me too. And if the county's enabling legislation allows bidders to come back and up their initial bid, then that might be something the county would want to look at amending. While it's nice to get into a bidding war that benefits the taxpayers, I have to wonder when does a bidding war erupt between competitors merely because one is trying to block the other from succeeding and has no intention (or enough money) to actually follow through and do what they claim?

I'm surprised their isn't legislation in place that says they have to take the initial best bid.

 

Me too. And if the county's enabling legislation allows bidders to come back and up their initial bid, then that might be something the county would want to look at amending. While it's nice to get into a bidding war that benefits the taxpayers, I have to wonder when does a bidding war erupt between competitors merely because one is trying to block the other from succeeding and has no intention (or enough money) to actually follow through and do what they claim?

 

Or everyone lowballs since they can just up their bid later once they find out what the high bid is.

Or everyone lowballs since they can just up their bid later once they find out what the high bid is.

 

Exactly, when would it end even? Making an absurd statement; they could just keep upping each other by $1.00.

After watching the entire video of CBRE presentation on the County website 3 comments;

1. CBRE recommends spending an additional 20 million more over 20 years from the lower cost proposal (slide at 1:26:30), maybe the county could live with another tenant in the building and save the taxpayer 20 million. http://council.cuyahogacounty.us/en-US/CCWHL-010213.aspx

2. I did not see where CBRE factored in "the County will also be obligated to pay 50% of the annual ground rent payable under an underlying ground lease as ascertained and fixed pursuant to and in accordance with the arbitrators’ decision in that certain lawsuit styled Timothy F. Hagan, et al. v. Cleveland Times Square Holdings at Six Points LLC, et al," which is in the resolution. How much is this? Plus when the county owns the building in year 26 they still pay ground rent, how was this factored in?

3. Why was the Erieview garage only viewed as a quick turn around sale - should CBRE not have presented some analysis of keeping it as an operational garage for twenty years?

The thing about the county moving into the huntington building is they will never own the property.  In twenty five years, the county will have a piece of property that they will control, if geis plan is used. maybe even use as a chip to move elsewhere.  That may be worth paying more in rent.

^Per Michelle's article, Optima updated their proposal

"In a letter sent to FitzGerald on Dec. 20 and distributed to council members Wednesday, Schochet increased his offer for the Ameritrust complex to $30 million. He offered the county a 26-year-lease at the former Huntington Building, with rent starting at $21.25 per square foot per year and increasing by 3 percent every three years, through year 19. And he offered to sell the county its portion of the building after 26 years, for $10 million. "

 

http://www.cleveland.com/business/index.ssf/2013/01/optima_ventures_challenges_cuy.html#incart_river_default#incart_m-rpt-2

Was the site selection process done like a sealed bid auction, or was it more like a request for proposals?

 

If it was more like a RFP, why shouldn't the county listen to participants who want to revise their offer to give the them a better deal?

Was the site selection process done like a sealed bid auction, or was it more like a request for proposals?

 

If it was more like a RFP, why shouldn't the county listen to participants who want to revise their offer to give the them a better deal?

I would assume it was an RFP process due to the fact that it was not limited to just the Ameritrust complex, meaning that you couldn't submit a sealed bid as there could be different options.

I agree that it should be sold to the highest bidder, but there needs to be some time limits put on it.

 

cleveland.com: Cuyahoga County's choice for new headquarters depends, in part, on owning buildinghttp://www.cleveland.com/cuyahoga-county/index.ssf/2013/01/cuyahoga_countys_choice_for_a_new_headquarters_depends_in_part_on_owning_building.html

 

Something is up with cleveland.com right now idk... can only view on my phone but part of this article says:

 

"Some county officials also discounted the 925 proposal because of a plan to save space by filling the grand lobby with cubicles."

 

:wtf: :wtf: :wtf: :wtf: :wtf: :wtf: wait- what?  That really makes me wonder about Optima....

^agreed.  What's the point of a majestic lobby for a public place if it'll again be barely discernible.  I'm also afraid of the amount of property Optima owns in this city, do we want to put all our eggs in one basket including the entire intersection of main and main?

^agreed.  What's the point of a majestic lobby for a public place if it'll again be barely discernible.  I'm also afraid of the amount of property Optima owns in this city, do we want to put all our eggs in one basket including the entire intersection of main and main?

Optima's proposal is full of quirks. Like the option for the county to buy their space for $10 million at the end of the lease. Hmm... $10 mill for 25% of a 100 year old building that Optima themselves paid $18 for a few years ago. And that's after spending around $150 mill over the terms of the lease. What a bargain. :roll:

^May seem weird from the outside, but as long as the county can handle lumpy cash outflows, it should be indifferent to the timing of the various costs and compare simply on the basis of NPV of each proposal. In other words, it's not really useful to view that $10M  in isolation from the rest of the Optima package.

If the decision is based on money then the selection is 45 Erieview. It's only by scoring committe evaluation that makes Ameritrust in the lead.

^That's important.  They wanted the deal to have the greatest impact.  This isn't purely a money thing.

^May seem weird from the outside, but as long as the county can handle lumpy cash outflows, it should be indifferent to the timing of the various costs and compare simply on the basis of NPV of each proposal. In other words, it's not really useful to view that $10M  in isolation from the rest of the Optima package.

 

If not from the outside, which angle does this deal not look weird? The Optima deal costs less overall, but what is the county left with after the lease is done? A small portion of a very large, very old, and potentially very empty building.

 

I wasn't looking at $10 mill in a vacuum. The Geis plan has benefits that can't be measured in dollars and cents. There is a reason it scored well on CBRE's evaluation. The $10 mill is another cherry on top of a really weird proposal that only sounds great on paper.

^Oh for sure, I don't think the county's decision was weird, but your post specifically pointed to $10M as a "purchase price" for the portion of 925 Euclid.  Just not very useful to pull out one piece rather than looking at the total cost over the entire term of each of the agreements, and the quality of the space the county would occupy and then ultimately own. Not a big disagreement.  And yes, cost is definitely only one factor here, I agree with everyone.

"Cuyahoga consultant says competing bidder for new HQ is off by $41 million"

 

CLEVELAND, Ohio -- Debate over the best deal for Cuyahoga County's new government headquarters continued Tuesday when the county's real estate consultant poked holes in a developer's claim that his proposal is $34 million cheaper than the favored plan.

Last week, Optima Ventures, a downtown property owner and developer vying to build the headquarters in the former Huntington Building, which it owns, told county council his proposal is at least $34 million cheaper than county Executive Ed FitzGerald's recommendation that Geis Cos. of Streetsboro build a headquarters at the mothballed Ameritrust complex across the street.

 

On Tuesday, Ryan Jeffers of CBRE Group Inc., the county's real estate consultant, told the council that the Optima analysis was off by at least $41 million. CBRE says Optima's largest errors were in estimating operating expenses and parking costs, which were miscalculated by $30.3 million. In all, the county and its consultant found 16 errors in Optima's calculation, according to Jeffers' presentation to the council. (See the full presentation in the document viewer below.)

 

http://www.cleveland.com/metro/index.ssf/2013/01/cuyahoga_consultant_says_compe.html#incart_m-rpt-2

Well, you can't blame Optima for trying.

Well, you can't blame Optima for trying.

 

Wow, that operating expenses "omission" is huge. If that is in fact true, they really tried to slip one by. They even included it in their calcs of the Geis proposal, but left it out of theirs. That's just shady and may have hurt them for anything in the future.

Cuyahoga County Council reviews headquarters proposals

By Laura Johnston, The Plain Dealer

on January 15, 2013 at 6:00 PM, updated January 15, 2013 at 6:51 PM

 

http://www.cleveland.com/cuyahoga-county/index.ssf/2013/01/cuyahoga_county_council_reviews_headquarters_proposals.html#incart_river_default

 

CLEVELAND, Ohio -- Cuyahoga County Council today leaned toward rejecting a developer's request to hire another consultant to weigh two dueling headquarters proposals.

 

"As we near a vote on this project, it is worth taking a second to recognize the volume of work that has brought us this far and to take pride in the professional manner which the county's team has handled the project," council President C. Ellen Connally said to kick off a council meeting. 

 

Council members voted unanimously to move the Geis proposal to next Tuesday's agenda, for a final vote.

 

The clock is ticking down! Years and years of waiting look to be coming to an end...

I'll add my personal opinion - I'm not a fan of Optima, for what it's worth. 

That being said, here's the latest news from Crain's Cleveland Business.

 

http://www.crainscleveland.com/article/20130121/FREE/130129969