The Geis Cos. proposal at East Ninth Street and Euclid Avenue represents an investment of more than $180 million, including a new Cuyahoga County headquarters building.
The Cleveland Trust Rotunda sits at the corner of East Ninth Street and Euclid Avenue in downtown Cleveland. The building is part of the Ameritrust complex, which a developer hopes to buy and remake with offices, apartments and retail. Cuyahoga County officials announced the potential deal Tuesday.
CLEVELAND, Ohio -- The Geis Cos. plan to build a new Cuyahoga County headquarters on East Ninth Street could revive a stricken downtown Cleveland intersection and whisk the shroud off the long-vacant Ameritrust complex.
County Executive Ed FitzGerald announced Tuesday that Geis, a Streetsboro developer, will buy the Ameritrust complex, demolish a dingy office building and construct a new home for the county. If the County Council concurs next month, 700 to 800 government workers will move to East Ninth, just south of Euclid Avenue, in mid-2014.
The announcement surprised some onlookers after months of speculation about where the county would move. With details trickling out Tuesday, local real estate experts said it's difficult to tell how good of a deal the county is getting. But all of them said FitzGerald's decision and the Geis plan, an investment of more than $180 million, will lure additional development to a troubled section of the center city.
"That is a huge investment in Ninth and Euclid, which as you know has been kind of our albatross in terms of downtown development for a long time," said Joe Marinucci, chief executive officer of the Downtown Cleveland Alliance, which represents property owners.
The Geis proposal calls for buying the seven-building Ameritrust complex from the county for $27 million. Brothers Greg and Fred Geis would raze the P and H buildings, a dingy office complex just south of the Ameritrust tower on East Ninth. An eight-story building, designed for the county, would replace it.
At 222,000 square feet, the building was the smallest among four competing plans the county seriously considered. Other bids required the county to lease up to 50,000 square feet of additional space in multi-tenant properties.
New construction isn't the county's cheapest option. But the Geis proposal offered the county a ground-floor presence in a single-tenant building, which the government can buy for $1 at the end of a 26-year lease. And the deal came with the promise that a local developer with a strong track record would pay a premium for Ameritrust and remake the complex with high-end apartments, retail and offices.
"I think an argument can logically be made that while new construction is expensive, old construction is not cheap," said Allen Wiant of PlayhouseSquare Real Estate Services. "To demolish interior space in (an older building), it can be significant. And pretty soon you haven't saved much."
Documents provided by the county and CBRE Group Inc., its real estate consultant, show that Geis made a creative pitch on aggressive terms.
The county's costs would shake out to just over $30 per square foot per year -- slightly less than other developers are charging for new construction in Cleveland. And the county will be surrounded by growth, if the Geis brothers can turn the Ameritrust tower into 215 apartments, bring housing and offices to the Swetland Building at 1010 Euclid Ave. and find a store or restaurant to fill the Cleveland Trust Rotunda at Ninth and Euclid.
"We are excited to be part of the rejuvenation of the East 9th corridor. This will fundamentally transform a long dormant and crucial section in the city," Greg Geis wrote in an email Tuesday. He declined to comment further.
A second-generation family business, Geis is best known for suburban industrial projects. Since 2010, though, the Geis brothers have created a technology park in Cleveland's Midtown neighborhood, invested in a troubled downtown condo tower and proposed building offices on 20 acres of city-owned land near the downtown lakefront.
Developer John Carney, part of a team that also bid on the Ameritrust complex, expressed his regrets Tuesday but lauded Geis.
"They're obviously a very good company with a good track record and are enthused about downtown," said Carney, who was working with investor Agnew Limited Partners LLC. "It's great to get more people interested as downtown does better, because there are plenty of projects to go around."
The big question, now, is what will happen to the former Huntington Building at 925 Euclid Ave. Optima Ventures of Miami bought the building for $18.5 million in mid-2010 and pursued the county to fill space as private tenants trickled out. Huntington Bank left for offices at 200 Public Square, the former BP Tower, and accounting firm Ernst & Young and law firm Tucker Ellis will move to the Flats East Bank project next year.
Chaim Schochet, an Optima investment executive, did not return a phone call Tuesday.
Wiant and Marinucci said that building might make sense as a mixed-use project. The occupancy rate for downtown apartments reached 97 percent this year, accelerating developers' drive to turn older office buildings into homes. A revived Ameritrust complex across the street, with a new county headquarters building and hundreds of workers, can only help make that intersection more appealing.
"It will now bring life to a corner that has been dead for what, 20 years, with a real project and a real developer, allowing the landmarks to stay in place so you don't lose the Cleveland history and, at the same time, bringing efficiency to our county government that it hasn't had for a very long time" said Bob Nosal, executive managing director of the Newmark Grubb Knight Frank brokerage in Cleveland.
"Everybody wanted (the county headquarters) to be at Ninth Street, whether it ended up at the Huntington Building or the Ameritrust tower."
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