For-profit developers discover the East Side (Click for article)
Cleveland Crains Business September 21, 2019 04:00 AM
Five Knez Homes "For sale" signs dot empty lots on a Cleveland street. Three of them note the home sites on grass-covered parcels have been sold. Is it Tremont? Or Ohio City, where Knez signs seem to be everywhere?
No, these are on East 123rd Street between Wade Park and Ashbury Avenue.
Walter Jacobs, who lives nearby, considers the big, looming change on the short block OK.
"I'd rather see structures there than wide open spaces," Jacobs said. "Late at night, people dump stuff on empty lots, so it's not safe for the neighbors."
In pockets on Cleveland's East Side, from the lake to I-490, for-profit builders and real estate developers are staking claims near high-poverty areas that have not seen the stunning changes of the city's West Side. Areas that previously were the domain of dedicated not-for-profit development groups are seeing a surprising and substantial set of new players and projects.
Consider the corner of Hough Avenue and Ansel Road. That's where an affiliate of Signet Real Estate Group of Akron has started constructing the Axis at Ansel, a 163-unit apartment building costing $35 million to develop. It's a site some insiders think may be ahead of its time: The other end of its block on Hough is home to a boarded-up midrise apartment building.
The Hough address is not offputting to Kevin Belt, Signet's vice president of development, regardless of its decades-old association with the Hough riots.
"Go to the site," Belt said, "and you'll see the transformation. With all that is happening there, the Hough name didn't scare us. It's the next area of development for the city and University Circle. It makes a lot of sense for us to be where we're at."
A big part of the target market for the five-story building is medical students studying nearby at the $500 million Health Education Campus of the Cleveland Clinic Foundation and Case Western Reserve University. The developer is constructing the project where the neighborhood Orr Park formerly stood, and is replacing the park nearby as part of its purchase agreement with the city of Cleveland.
Signet's Axis is on the west side of the landmark Rockefeller Park. Meanwhile, other action is on its east side, technically along East 105th Street between Superior and Ashbury avenues, in the Circle North area, one of three Neighborhood Transformation Initiatives that Mayor Frank Jackson launched in 2017 with the goal of increasing commercial, residential and business development in parts of the city that haven't seen the reinvestment remaking the city's near West Side.
Most visibly, the $15 million Glenville CircleNorth Building is nearing completion at 1400 E. 105th. It contains 63 moderately priced rentals with retail on its first floor, including a City of Cleveland-sponsored retail incubator that will open this fall. The developer, Finch Group of Boca Raton, Fla., has completed multiple University Circle projects, and was selected for the formerly city-owned site through a request- for-qualifications process.
On the blocks around the structure other things are happening. The Orlean Co. of Beachwood plans to build 26 homes on single-family sites within the Circle North boundaries.
Also surfacing in Circle North is Rick Maron, the founder of MRN Inc., which developed th East Fourth Neighborhood and Uptown in University Circle. Maron has won city approvals to build an eight-suite apartment building at 11427 Ashbury that's designed to unite the micro-apartment trend with moderately priced rentals. Maron did not return five calls to his cellphone., and three phone messages and an email to MRN also were not returned.
Meantime, Knez Homes of Concord Township is "heavily involved" not only at the Circle North area but other parts of the East Side as well. Bo Knez, founder and owner of Knez, said he believes big parts of the area near Circle North will look different within the next year.
"Our investment in land for the last three years has emphasized the East Side," he said.
The company has sold 15 houses on the East Side and has another 15 under contract in neighborhoods ranging from Glenville to Fairfax. The product is similar to what Knez builds on the West Side but carries prices slightly lower, in the range of $250,000 to the low $300,000s. Knez also recently got approval from the city for a 15-suite townhouse project called Ashbury Pointe at East 120th Street and Ashbury.
Meantime, multiple other projects are afoot throughout the East Side, ranging from the proposed adaptive reuse of Longfellow School, 650 E. 140th St., to senior-citizen housing by Vesta Corp. of Weatogue, Conn., to Vazza Real Estate Group of Boston's One Midtown, a 23-unit townhome condominium development at East 73rd Street and Euclid, where units start at $409,000.
Multiple factors account for the upswell.
Knez said he believes it's a natural movement because the entire city is "primed for development," adding that the East Side has the advantage of more empty land than other parts of the city. He also emphasized that buyers want to be near the cultural aspects of University Circle, which he described as "second to none."
Construction workers on his projects have been boots on the ground in Glenville for two years, Knez noted.
"We have had zero police reports," he said. "We've not had a piece of graffiti or any broken windows."
Residential and commercial developments today are reaping the benefits of investments in infrastructure made over years, said Brian Smith, the founder of Health Tech Development LLC of Cleveland, a real estate development company he formed after retiring from the Cleveland Clinic as director of construction. That and other jobs give him more than 30 years of experience working on East Side projects.
"I don't mean just roads and bridges," Smith said, but things such as the addition of the Dave's Supermarket at Hemingway Development's Link 55 project between Euclid and Chester Avenue, which benefits consumers farther east than its former Payne Avenue location.
Another factor is simply that "the economy is good," Smith said. Combine that with record low-interest rates and real estate developers' constant need, after a decade of growth, to find new markets and the East Side starts to pop up as a potential overlooked market. It's a local variation on the desire of Columbus apartment developers to finally venture north with projects from Ohio City to Rocky River.
Smith said that Cleveland has a unique opportunity because so much vacant land surrounds University Circle and the city's health care institutions. "That's not the case in most other cities with major hospital systems," he noted.
Chris Ronayne, president of University Circle Inc., said a decade of sustained real estate development in University Circle and the adjoining MidTown area have created momentum for the other projects.
Incentives are another part of the formula. One is the Greater Circle Initiative, which provides $10,000 in down-payment assistance for homebuyers from University Circle institutions.
More is on the way. David Ebersole, Cleveland director of economic development, said the city is preparing to unveil later this year a partnership with several local banks to offer $44 million in acquisition and development loans in a mixture of city and bank funds.
Ayonna Blue Donald, director of the Cleveland Department of Building and Housing, said Glenville CircleNorth and other initiatives take advantage of the years of effort the city and others have put into demolishing foreclosed and abandoned homes. Since 2006, the city has razed 1,473 structures in Glenville and a total of 10,522 in the city as a whole.
"I am over the moon in terms of excitement," Donald said in an interview. "We have created a clean palette and we are starting to see development."
In Smith's case, he launched his company to focus on opportunities in areas near the Greater Cleveland Regional Transit Authority and city of Cleveland's HealthLine, the bus rapid transit system on Euclid, and the new Opportunity Corridor connecting East 105th Street with the I-490 interchange at East 55th.
His first project in the new venture became a reality when he and his partners opened the first Tru by Hilton hotel in the region this summer at 6955 Euclid Ave.
Through North Park Place Partners Inc., he and his partners shelled out $750,000 in August to buy the one-time Kaiser Emergency Hospital at 11203 Stokes Blvd. from the Cleveland Clinic. Smith said he plans to demolish the four-story building, which dates from 1965, to redevelop the site with townhouses.
At the same time, the impact of the new for-profit projects is strictly baby steps.
Frank Ford, senior policy adviser of the Western Reserve Land Conservancy, worries that attention to East Side gains may undercut efforts to continue fighting the East Side's housing woes.
"A small pocket does not mean you have affected the larger neighborhood. Let's not forget the job is not over," Ford said. "Just blocks away from Ashbury there are people who can't get $10,000 for their home. There are parts of Glenville where residents live surrounded by abandoned homes, who worry about what happens when the sun sets."
Meantime, John Anoliefo, executive director of Famicos, a nonprofit that has worked on community organizing and residential rehabilitation on the East Side for more than 45 years, said he is happy to see Signet, Knez and others arrive.
"The work that Famicos or any nonprofit does in a community is not to become the main developer," Anoliefo said in an interview. "What we have done is serve as the developer of last resort because no one is doing it. In Hough and Glenville, we have taken the time to set the table. The for-profits can see a market taking shape now and can make their money."
For example, Famicos did various projects, from new homes to rehabs, in the Circle North for the last 15 years. One effort involved buying 13 huge, historic homes nearby on Wade Park Avenue and converting them from doubles back to single-family homes and selling them for $200,000 to $300,000.
"We sold the last one in 2018," Anoliefo said. "That and other projects on Ashbury have allowed Knez and others to come in."
That means the nonprofit has moved on to other adjoining areas in Glenville, where challenges remain in terms of decent, affordable housing, and has undertaken a broader mission in health and wellness.
Stanley R. Miller, a Methodist minister and retired Ohio Bell Telephone Co. vice president who grew up in Glenville and moved back from Pepper Pike, said in an interview that he believes East Side real estate development outside University Circle and MidTown is not broadly appreciated because few suburbanites travel the side streets.
"People only talk about flight from the East Side," Miller said. "A house on Wade Park does not stay empty. Drive it any Saturday and you see guys working from ladders. You see people walking around pushing baby carriages. So much is being done, it's amazing."
Cleveland.com Updated Jun 24, 2019; Posted Jun 24, 2019
By Susan Glaser, The Plain Dealer
CLEVELAND, Ohio -- Can’t decide whether to stay in downtown Cleveland or the city’s cultural district, University Circle, east of town?
Now you can split the difference at a new hotel that opened this past weekend in Midtown. The 114-room Tru by Hilton is a new brand designed to appeal to hip, price-conscious travelers.
Among its features: a foosball table and board games in the lobby; small, spare but well-designed rooms; and a nightly rate, starting at about $130, that should be substantially less than what larger, more luxurious properties can command both downtown and Uptown.
Tru opened Friday at the corner of Euclid Avenue and 69th Street, in the heart of Cleveland’s Midtown neighborhood, about equidistant between downtown and University Circle.
It’s not the only new hotel in the area. A 175-suite Residence Inn by Marriott opened earlier this month on Chester Avenue at 101st Street, at the east end of the new Innova apartment complex.
They are the first two hotels to be built in the city since the flurry of openings in 2015 and 2016, in advance of the Republican National Convention.
Residence Inn Cleveland University Circle/Medical Center
The 175-room Residence Inn Cleveland University Circle/Medical Center opened earlier this month on Chester Avenue.
Residence Inn Cleveland University Circle/Medical Center
All 175 suites at Cleveland's new Residence Inn have full kitchens.
They bolster an emerging hub of hotels east of downtown, serving the hospitals, colleges and University Circle. In recent years, the Holiday Inn Cleveland Clinic opened on Chester Avenue, the Courtyard by Marriott Cleveland University Circle on Cornell Road, and the Tudor Arms DoubleTree on Carnegie Avenue.
Hospitality analyst Laurel Keller said both new hotels will offer overflow rooms when downtown properties are at capacity — “an increasingly common occurrence.” In addition, she said, each property serves a niche in Cleveland’s expanding hotel scene.
The Residence Inn Cleveland University Circle/Medical Center, with full kitchens in every suite, offers a new extended stay option, across the street from the Cleveland Clinic. Tru by Hilton offers a lower price-point just outside of downtown.
“The Tru is only 2.6 miles east of Playhouse Square,” said Keller, senior vice president of hospitality, gaming and leisure at Newmark Knight Frank. “That’s very close, easy to access, and appealing if the downtown hotels are sold out or if a guest is looking to save a few dollars and doesn’t mind the drive, bus ride, or Uber/Lyft jaunt.”
It’s the first new hotel in the neighborhood in decades, said Max Upton, Health Tech Corridor project manager for MidTown Cleveland. “We’re very excited about bringing new people into the neighborhood.”
Upton believes the new hotel will attract a mix of business and leisure travelers, drawn by new offices and tourist attractions in the area. Among the latter: the Children’s Museum of Cleveland, the Agora, and Masonic Auditorium.
Brian J. Smith, a co-owner of the Tru, loves the location: on a rapidly-developing stretch of Euclid Avenue, along the RTA HealthLine, with easy access to the hospitals, Playhouse Square and many of Cleveland’s top attractions.
The hotel is immediately adjacent to the historic Dunham Tavern, a one-time stagecoach stop and now a museum, which Smith called “Cleveland’s original roadhouse.”
He does wish the neighborhood had a few more restaurants and bars within walking distance, but believes they will come, as more businesses open up nearby.
Upton said the neighborhood is continuing to evolve. “You’re already starting to see it,” he said, with recent openings of Café Phix, Cleveland Bagel and Dave’s Market nearby. Neighborhood stalwart Gallucci’s Italian Foods is across the street from Tru.
“It’s our intent to make this a complete neighborhood,” said Upton, with places to live, play and work.
Smith, retiring this month from his job as director of strategic project development at the Cleveland Clinic, co-owns the hotel with David Fischback, president of Krill Construction, and architect Chris Kaczmar. The three make up Midtown Hospitality.
The hotel, a $12 million project, was built on previously vacant land, purchased from the city of Cleveland and MidTown Cleveland, the community development organization. Owners received a $260,000 loan from Cuyahoga County to clean up environmental hazards on the property, as well as a 30-year tax incentive from the city.
It’s the first Tru by Hilton in Ohio, though several others are scheduled to open later this year.
Hilton introduced the brand in 2016, and it has expanded rapidly, with more than 60 locations across the United States. Its signature features include:
Bright, playful lobbies, divided into four zones: a play zone, lounge zone, business zone and breakfast zone. A 24-hour market serves snacks and drinks, including beer and wine. A large mural in the lobby showcases some of the city’s top attractions, including nearby League Park, the Cleveland Museum of Art and others.
Small, efficient guestrooms, fewer than 300 square feet, with platform beds, 55-inch flat-screen TVs and hardwood floors. There are no chest of drawers or closets here, just hangers and hooks. Originally, the rooms didn’t include desks, but they were added after guests requested them.
Another valuable amenity: Free parking, right behind the building.
“Tru doesn’t allow us to charge for parking,” said Smith, which makes the rooms even more affordable compared to nearby properties. “Where we differentiate ourselves is in the high quality and lower price point. It’s pretty bullet proof.”