On Monday, the county expects to release its long-awaited request for bids from landlords and developers. The county hopes to move its offices in early 2014.
View full sizeThe Ameritrust complex, at East Ninth Street and Euclid Avenue in downtown Cleveland, includes a historic rotunda. Under Cuyahoga County's plan to consolidate real estate, the multi-building complex could be sold as a package or split up.CLEVELAND, Ohio -- Downtown Cleveland's quest for revival could get a boost from Cuyahoga County, which plans to shift hundreds of workers into a new headquarters and sell 13 buildings -- eight of them in or near the heart of the city.
On Monday, the county expects to release its long-awaited request for bids from landlords and developers. By year's end, county leaders hope to have deals in progress -- if not done -- for 225,000 square feet of downtown offices, 200,000 square feet of storage and property sales ranging from the Ameritrust complex on East Ninth Street to the Whitlatch Building on Carnegie Avenue.
The headquarters move, involving 700-plus employees, has the potential to revitalize a little-used building or shore up a multi-tenant property. The prospect of snagging a large, stable government tenant might even spur proposals for new construction, though real estate experts predict the county will land in existing, leased space. The county hopes to move in early 2014.
Selling off county-owned buildings, meanwhile, would shift key downtown Cleveland properties into private hands. Developers already are toying with putting apartments in the Swetland Building, at 1010 Euclid Ave., or demolishing the county's administration building for a hotel, parking or other uses next to the new convention center and medical mart complex.
Other county-owned buildings might become offices, more housing, medical uses or restaurants.
"We aren't used to government doing something this transformational," said Edward "Ned" Hill, dean of the Levin College of Urban Affairs at Cleveland State University. "This isn't just a one-off, one-building process. This is going to affect the entire operation of the downtown real estate market."
Last year, Allegro Realty Advisors of Cleveland recommended that the county sell off properties and seek more efficient office and storage facilities. Now the CBRE Group Inc. brokerage, hired by the county to manage a multi-part real estate process, will market 1.6 million square feet of county buildings and land. Eight of the buildings, comprising 1.4 million square feet, are in or near downtown.
The county needs only a fraction of that space to house employees who now work in the administration complex, a Superior Avenue automotive title building and leased offices downtown and on the west bank of the Flats.
For its new headquarters, the county is seeking a 20-year lease with extension options. But officials are open to buying real estate or building something new.
"We fully expect that there will be at least one new building that gets proposed and at least one existing building that gets proposed," Ryan Jeffers of CBRE told a Cuyahoga County Council committee Wednesday.
CBRE plans to launch its marketing efforts Monday. Responses to the request for proposals are due Sept. 14.
Though the document outlines specific space needs and how the county will evaluate bids, the request for proposals is open-ended. That means landlords can chase the headquarters or storage deals separately. Small investors can pursue one building.
Or large developers and property owners could propose a mega-transaction, offering the county office space while bidding on multiple assets.
"(The county) will change whatever property they go into," said Allen Wiant of PlayhouseSquare Real Estate Services. "It will change the character of it. It will certainly change the financial health of the property. They will drive business. They will drive parking. They will drive retailers and food vendors."
Rent or buy, the county is focused on the central business district, bounded by Lake Erie to the north, East 18th Street to the east, Carnegie to the south and the Cuyahoga River to the west. Vacancy data pinpoint several buildings that could house a 225,000-square-foot user, though property owners might have to move other tenants to make way for the county.
The former Huntington Building, at the northeast corner of East Ninth and Euclid Avenue, is an obvious contender, as accounting firm Ernst & Young and law firm Tucker Ellis prepare to move to a new office tower in the Flats next year. Huntington Bank left its offices and ornate bank lobby in the building last year, for 100,000 square feet at the 200 Public Square building.
Other possible players include the Tower at Erieview, which is 40 percent vacant, and the mostly empty May Co. building just off Public Square, based on data from CoStar Group Inc., a commercial real estate information provider. Local brokers also speculated about the Halle Building, a 383,000-square-foot property on Euclid Avenue.
And Eaton Center, a Superior Avenue building set to lose its namesake tenant next year, will have enough space for the county -- though some of the best high-rise space in the market might not make financial, or political, sense for a government tenant.
Owners and leasing agents for several of those properties did not return phone calls or declined to comment about the county's real estate search.
In choosing its offices, the county will consider cost; the landlord's track record; the building's efficiency; necessary improvements and other factors. Jeffers of CBRE said a strong ground-floor presence is crucial. So is access to public transportation and convenient parking.
View full sizeA screenshot shows the CBRE Group Inc. website for Cuyahoga County's real estate portfolio. The website will go live Monday."It could be a key tenancy in one of the existing buildings downtown," said Joe Marinucci, chief executive officer of the Downtown Cleveland Alliance. "I'm making the assumption that it's most likely an existing building versus new construction, being that the county wants to reduce its costs."
Among the properties set for sale, the Ameritrust complex and the administration building are standouts. The sale and redevelopment of those sites, plus the county lease, could create "a cascading effect" of activity across downtown, Marinucci said.
Unloading Ameritrust also would help shut the door on the county's troubled past. The former County Commissioners bought the several-building complex in 2005, with plans to create a new headquarters there. The move never happened.
In 2009, voters jettisoned old leaders and approved a new form of county government, with an executive and a council. County Executive Ed FitzGerald has cut jobs and pared space needs.
Still, the empty Ameritrust tower stands as a totem to failure. The county has spent more than $45 million on the property and is likely to sell it at a loss. But a private redevelopment deal could generate long-term gains for the county, which would benefit from property tax revenues, added jobs and residents.
"The Ameritrust complex is a behemoth, but it also has historical components and access to tax credits and other resources to help with development," said Deb Janik, senior vice president of real estate and business development at the Greater Cleveland Partnership. "One thing we're blessed with in this town is really good developers who know how to do complex deals."
View full sizeThe Cuyahoga County Administration Building, on Ontario Street, could be redeveloped -- or razed for new construction.The Swetland Building and the adjacent rotunda, both part of the complex, carry state tax credits aimed at restoring historic buildings. Those credits, awarded in 2008, expire this year.
The Ohio Department of Development is open to extending credits, but property owners must demonstrate that they're making progress. That makes finding a buyer for the buildings fast even more important, preservation experts said.
Another part of the complex is tied up in a long-running lawsuit, over the terms and extension of a land lease. Majeed Makhlouf, the county's law director, said the litigation will be included in disclosures to any potential buyers. The dispute, now in arbitration, should not prevent a property sale, he said.
In the past, Cuyahoga County sold real estate to the highest bidder. With a new form of government, under a charter, the county can make more nuanced decisions. Price still matters, but so does the potential to spur development and conserve resources, by making a building more efficient or reusing parts of a structure that is demolished.
County officials and CBRE representatives said they hope to have a list of top bidders in early October -- an aggressive timeline. After negotiations, they expect to choose winners late that month.
"It's actually brave, because there's substantial political risk in doing it," Hill said of the plan. "A sealed bid, open it, done, look at one number, the press looks at it - that's the least amount of political risk. It sounds to me like what the county's trying to do is to have as much positive impact on the economic future of the city of Cleveland as it can."
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