Dick Pace will master lease 60,000 square feet of ground-floor retail at the arcades, also called the Colonial Marketplace, and attempt to revive the property.
Clik here to view.
View full sizeDeveloper Dick Pace stands next to an empty store window in the Colonial Arcade. Pace hopes to revive the tired and half-empty retail space in the building, and the attached Euclid Arcade, by appealing to local retailers, stores that represent the "best of Cleveland" and service businesses for downtown residents and professionals.CLEVELAND, Ohio -- A Cleveland developer who built a successful technology incubator in the city's Midtown neighborhood is tackling another tough spot: Downtown retail.
Dick Pace will master lease 60,000 square feet of retail at the Colonial and Euclid arcades in Cleveland.
The connected buildings, also known as the Colonial Marketplace, support a 175-room Residence Inn hotel and sit just steps from the bustle of East Fourth Street. But the ground-floor shopping space is half-vacant and, outside of the lunchtime rush, the long corridors are hushed as a chapel.
Under a deal set to close this week, Pace will take control of 49 storefronts, 20 of them empty. He plans to move his company, Cumberland Development, out of Midtown and into an awkward corner space in one of the arcades. And he'll take on a significant challenge, finding the right retail mix for unusual buildings in a downtown that has struggled to attract, and keep, stores.
Clik here to view.
View full sizeBetween Tower City, a Warehouse District grocer and mom-and-pops scattered across downtown, the central business district isn't a retail desert. But small storefronts still sit empty, even on major thoroughfares. Apparel stores, including the recently shuttered Dredgers Union on East Fourth, have stumbled. Multi-tenant properties, including the Colonial Marketplace and the better-known historic Arcade, are searching for an identity, and an audience.
"I don't think it has ever gone through an extremely thorough, extremely aggressive campaign where somebody really focused on (the arcades)," said Tom Yablonsky, executive director of the Historic Gateway Neighborhood Corp. "They are non-traditional spaces, so I think it takes a very personal, on-the-ground, involved approach."
Pace believes he's found a strategy. He'll focus on local retailers and entrepreneurs, in an effort to bring together the best of Cleveland and offer shopping and services to young professionals and a growing crop of downtown residents.
By leasing all the space, then sub-leasing it to retailers, Pace will assume more risk than someone simply marketing the property. By being there every day, he'll have a chance to see what works, what doesn't, who should move in, and who needs to move out.
"For me to do well, I've got to get the space leased, and keep it filled," he said. "That's very different than a paid manager who is drawing a salary."
If anyone can make the arcades hum again, Pace is the guy, his peers say.
In the 1980s, he worked to recruit apartment dwellers to the Warehouse District, as onlookers scoffed at the prospect of people living downtown. In 2006, Pace was a pioneer in Midtown, where he bought the historic Baker Electric Building and transformed it into a home for start-ups and small companies. That 50,000-square-foot building, on Euclid Avenue, is full.
"Dick is a visionary," said Allen Wiant of PlayhouseSquare Real Estate Services, which has been managing the Colonial and Euclid arcades since early this year and brought Pace into the mix. "You have to have somebody who has some skin in the game, who is really willing to reach out to people to make this happen."
Built in 1898 and 1911, respectively, the Colonial and Euclid arcades run between Euclid and Prospect avenues, near East 6th Street, and are viewed as key north-south links in the district.
Clik here to view.
View full sizeBuilt in 1898 and 1911, respectively, the Colonial and Euclid arcades were renovated in 2000. The buildings are linked by a food court, and tall buildings at the north and south ends of the complex house a Residence Inn hotel. Developer Dick Pace hopes to reposition the property with retailers and businesses that will appeal to young professionals and downtown residents.In 2000, a $30 million renovation connected the buildings through a food court, now lined with Indian, Japanese and Middle Eastern restaurants. Developers carved out hotel rooms in tall buildings on either end of the complex and the second floor of the Colonial Arcade.
Steve Rudolph, general manager for the Residence Inn Cleveland Downtown, said occupancy levels and average daily room rates have been rising annually, for the last three years. He would not share details.
"Up to this point, retail has not helped the hotel," he said. "But we're thrilled with Dick Pace being involved and just the ideas and the direction they're taking. We're thrilled to death."
With Dimit Architects of Lakewood, Pace is evaluating the space, considering new signs and toying with renaming and re-branding the property. With the Downtown Cleveland Alliance, he is planning an event to solicit opinions from young professionals and downtown residents.
"Often, developers make a mistake by not getting the input of the end users," he said. "We've got some good anchors on the food service side. The food court that exists, they get good business. I think we need to reposition it so it represents a higher quality experience. What we have to do is go beyond food."
That doesn't mean replicating East Fourth, home to restaurants and entertainment venues. And Pace believes it doesn't mean recruiting national brands, despite past downtown retail plans that tagged the arcades as potential sites for upscale outlet stores.
With tiny spaces, some just 200 square feet, local businesses are the sweet spot, he said. That could mean art galleries. Or retail outposts for local museums. Or a concierge dry cleaner or laundry service for people who live and work downtown.
"It's not going to be a department store," he said. "It's not going to be Beachwood Place mall. But it's going to have a vitality to it."
Existing tenants, many of whom met Pace on Thursday, greeted the news with enthusiasm -- and some apprehension, as they wait to see what changes he will make.
Gary Cohen of Colonial Coin & Stamp, a family business and Colonial Arcade tenant since 1921, still wants action on a broader retail strategy for downtown.
"It's like putting together a puzzle," Cohen said of filling the holes between districts. "One of the big pieces they need is shopping, and regular shopping's not going to bring people downtown. They need the premium outlet-type concept to bring people down from the suburbs."
Evan DeWitt, the owner of DeWitt Diamond & Gold Exchange, hopes quirky, local tenants move in. So does Kelly Kandah, the owner of Colossal Cupcakes, a seven-month old business with a storefront on Euclid Avenue. The newest tenant in the complex, Kandah is considering plans for a second, food-related business.
"I was really happy and relieved," she said of meeting with Pace. "He and I were definitely on the same page, as far as getting fresh new things in here, a younger crowd, stuff that's more appealing and trendier."
On Twitter: @mjarboe