Museum of Contemporary Art (MOCA) Purchases Land for New Museum

The Museum of Contemporary Art, currently located at 8901 Carnegie, in the old Sears department store, closed on its one-half acre of land at the corner of Euclid and Mayfield Road as the new location for the museum. According to Cuyahoga County records, MOCA paid Case Western Reserve $1,000,000, for the half acre piece. The land, formerly known as permanent parcel number 120-29-001, was split into two one-half acre parcels. The transaction closed on December 17, and created a new permanent parcel number 120-29-005, now owned by MOCA.

The Maron family, who is developing their Uptown Development adjacent to this site, is responsible for the demolition of the existing structure. Demolition is currently underway by the Maron's sub-contractor, Andy's Empire. The museum has been designed by world famous architect, Foreign Office Architects, FOA. The building will be approximately 34,000 square feet and its design is sure to spark discussion.

Steve Litt wrote about it on December 26 in the Plain Dealer as one of the highlights of 2010.

The new museum is another example of the amazing activity occurring in the "new downtown" of University Circle. This sale price equates to more than $45 per square foot, and continues the price increases in this burgeoning area.

And I would argue that the price paid by MOCA was actually lower than it should have been given that this land is among the best locations in North East Ohio. Adjacent to the Maron's Uptown Development and in the center of University Circle, it would be hard to find a more prominent site, ripe for development.

On a per square foot basis, the only other recent transaction in the area which is greater is the Maron's purchase of the Brunswick Florist property on Carnegie, adjacent to the Maron's Tudor Arms Hotel, currently under construction at the corner of East 105th and Carnegie, which sold for $1,550,000 in September of 2009. This piece was just shy of half an acre and sold for $73.90 per square foot (on the land basis), or $3,29,084 per acre. Seller was Brunswick Limited Partnership and buyer was Tudor Arms Hotel, LLC. If CWRU had sold this property on the open market, like the Brunswick Florist, a private developer likely would have paid much more. But thankfully, Case Western Reserve University was farsighted enough to know the addition of MOCA would be helpful to the entire community and was reasonable in its sale price.

A few years ago it was common to pay $1,000,000 per acre, but now $1,000,000 only buys you half an acre, if you are lucky. Rapid price increases - something the average Northeast Ohio resident will likely find surprising.

Congratulations to Jill Snyder, Executive Director, Scott Mueller and Stuart Kohl, MOCA board members, and the capital campaign co-chairman on achieving this milestone. We look forward to the groundbreaking, scheduled for February 8th!

Top Ten Commercial Real Estate Highlights for 2010

1. Rosetta's Relocation from Beachwood to Downtown

I was retained by Rosetta to assist them with their search for new, larger offices for the company formerly known as Brulant. The executives told me from the beginning that moving downtown was a possibility. Having moved many companies out of Cleveland, I thought it was a long shot. But after an exhaustive search through out the entire region, the company decided to move into the former National City Bank building at 629 Euclid. Taking almost 80,000 square feet and bringing more than 300 technology jobs to a downtown that is not used to winning. The symbolic impact of a growing technology company relocating into an area where other large companies have chosen to leave, can not be be underestimated. Rosetta's relocation has caused many other companies to consider moving downtown. Only a few months after Rosetta's announcement, windmill developer Juwi relocated into the building, rather than move out of Cleveland into the suburbs.

2. Carnegie Body Being Saved by Ed Crawford

The owner of a small truck repair company, Carnegie Body, met with me one day this past summer to assist him with the sale of his building. Carnegie Body is a well respected name in the truck repair business, and has been around for more than 50 years. The owner had run into difficult times and his lenders were calling their loans and effectively shutting the business down. A receiver had been put into place and had been retained to sell the company, but had been unsuccessful in his efforts. The day I met the owner was the last day Carnegie was operating. As I walked around the building I met quite a few men who had worked at the company for over 30 years. Hard working, honest, strong men, working at jobs which would be gone forever if the company was closed. And for many of these men, getting another job at similar pay and benefits would be virtually impossible. I have been involved in quite a few building sales where the companies had gone out of business, and it was never enjoyable. And for whatever reason, this one really hit me hard. So rather than offer to sell the building for the owner, I told him I was going to call one guy who I knew could bring this business back to life, Ed Crawford, the CEO of Park Ohio. Ed is an accomplished businessman who runs a billion dollar, publicly traded, manufacturing conglomerate. And despite the demands on his time, he is always accessible. I called him and he picked up his own phone. I told him that he should save this business as a favor to the men who worked there, and because I thought, if run correctly, it could make money. It was a long shot. Within 5 days of my phone call, Ed was able to work out deals with the lenders - which was not an easy process, but Ed is an old hand at buying troubled companies, and restart the business. Now, solely because of Ed Crawford, Carnegie Body is operating, the employees are back, and the company is profitable again.

3. Midtown Tech Park Getting Funded and Under Construction

Two years ago a partnership in which my family is involved acquired land on Euclid. It was purchased with the expectation that a building would be built for a specific tenant. When that deal died, the use of the property was unknown. Thanks to the efforts of Midtown Cleveland, the city of Cleveland (specifically Chris Warren and Tracy Nichols), the Cuyahoga County development department, the state of Ohio's development department, and the folks at the Geis companies, the partnership was able to secure both equity and debt in an amount which enabled the development of 128,000 ft. speculative office and lab building. It is currently under construction and is slated for completion in June 1 of 2011. The Health Tech corridor is a growing area, and of this development hopefully will spark much more activity. The goal is to mimic areas like those that surround the University of Pittsburgh and the University of Pennsylvania where there is abundant job creation and a growing real estate market.

4. Cleveland Clinic Medical Summit Success

I had never attended at the Cleveland Clinic's annual medical event held at the Intercontinental Hotel. While this event did not have any relationship to my day job in real estate, I was amazed at the number of people who came in from around the world, and the general positive feeling being generated from the Summit. You would never get the feeling that Cleveland wasn't doing well if you attended any part of the affair. It continues to get larger and more successful every year and is a great advertisement for our region.

5. Simply Canvas Expansion in the Old Lockheed Martin Building

Adam Freid, the owner and president of Simply Canvas, hired me to help him find a larger home for his business. Adam had relocated from Chicago to Tallmadge and was occupying about 12,000 ft. I helped him move from Tallmadge to the old Lockheed Martin manufacturing facility where he expanded into nearly 50,000 ft. He is a transplant who has grown his business from one employee to 40 employees; in a business which did not exist four years ago working with a technology which did not exist five years ago. It is an example of the creative destruction of capitalism benefiting Northeast Ohio.

6. Continuing Absorption of Class A Industrial Space

Over the past 12 months there has been a positive absorption of space in warehouses with ceiling heights of 24 feet or higher. These buildings are considered class A, and such leases as MAT Holdings, Winston Products, Cleveland Steel Container, and Curbell Plastics, are all examples of this trend. Northeast Ohio has among the lowest vacancy rate for modern distribution facilities in the country, and has lease rates that are as expensive as such areas as Los Angeles or New Jersey. I expect this trend will continue, and by the end of 2011 are market will have tightened to the point where people are considering building new speculative warehouses.

7. Sale of 5777 Grant Avenue, Cleveland Ohio

This property is located on Grant Avenue in Cleveland and is visible from I-77. For a period of time there were large trailers advertising its availability. The building was recently sold to Cleveland Corporate Services, a Cleveland-based education technology company. The buyer could have easily moved their business to the suburbs, but invested in this property retaining quite a few well paying jobs in the city of Cleveland. This purchase was an expansion allowing for further growth and was a story that never received any publicity, but it is very good news.

8. Wine Trends Sale

Sandy Earl, the former owner of Wine Trends, a wine distributor located in Streetsboro, sold her business to Heidelberg Distributors and was left with her building. The property is approximately 32,000 square feet and was built in 2004. It is probably the nicest building in its size range in north east Ohio. Our team was retained to sell her building and we placed a high asking price on it. We began the marketing at the bottom of the market, but we held out for the right buyer and the right price. It took us almost 18 months, but we successfully sold the property to a local manufacturing company which was willing to pay us a premium for the building. While this is a small transaction, it signaled to me that the market had turned.

9. Expansion of Vox Mobile

Vox Mobile is a mobile services business, spun out of MCPC. It has been in business for approximately 4 years and has moved four times. Their growth has been dramatic. They started in free space in Middleburg Heights, relocated to the Magnet building in downtown Cleveland, then moved into a flex property in Independence, and this year are relocating to a multi-story class B. office off of Rockside Road. The company is young, growing, dynamic, all of those attributes needed to help Northeast Ohio redefine itself. Four years ago they did not exist, and now they employ more than 40 people and are growing.

10. Youngstown Incubator's Continued Expansion and Success

The week before Thanksgiving my father and I went to Youngstown to meet with Jim Cossler, the Executive Director of the Youngstown Incubator. About 10 years ago Jim was brought on board to help create the incubator. Now, 10 years later, the incubator occupies more than 35,000 ft.² and houses 350 employees. Jim and his team created a strategy and focused on that strategy to remarkable success. It appears as if activity begets activity, and the incubator is likely going to expand into more buildings as more jobs are created. This is an excellent model for all of northern Ohio to mimic, and was truly an inspiring morning walking around with Jim.

Good Holiday News!

After slipping by 3.6 percent to $304 billion in 2009, charitable giving stabilized in the first nine months of 2010 according to a report released last month by the Nonprofit Research Collaborative. Of the 2,500 organizations responding, 36 percent said total giving rose compared with the same period in 2009 while 37 percent said giving fell, and the remainder reported no change. Most organizations were hopeful about 2011 with 47 percent increasing their budgets, 33 percent planning to maintain their current level of expenditures, and only 20 percent anticipating a lower budget.

Former Bard Building Sells

6091 Heisley Rd. (Mentor, OH), sold on 11/16/2010 for $3,000,000 or $43 per square foot on a 69,000 square foot building. The building was owned by Mentor Bard Properties, which is an entity related to the Osborne's of Mentor. They acquired previously for $2 million. The building was acquired by United States Endoscopy, which is located across the street. Given the features of the building it is an excellent fit for the new buyer. $3 million is below replacement cost but still an excellent price for this property. This sale is yet another sign that the market is recovering.

Swagelok Sells Willoughby Building

Swagelok sold their manufacturing building located at 4800 East 345th street in Willoughby to 4800 East 345th, LLC for $1,920,000 or $28.51 per square foot. We called the city of Willoughby to inquire who was moving into the building. According to City Hall, the new occupant of the building will be Marketing Communication Resource, Inc. of Mayfield Village.

This sale is a good sign for the ongoing recovery in our market. The property is 67,342 sf, built in 1974, and located on 4.99 acres. Some of the building features include 20'-38' clear ceiling height, 2 docks, and 1 drive-in-door.