"Our goal is to continue the pace we have going of about 20 percent a year growth, and within the next five years, we'll be up to 150 stores," Reed said.
BOSTON HEIGHTS, Ohio - Greater Cleveland-based Arhaus Furniture has announced two major milestones for 2014: Arhaus will open its 50th store within a year, and will also break ground on what is ultimately planned to be a 1-million-square foot, $43-million corporate headquarters and distribution center in the Village of Boston Heights, Ohio.
View full sizeArhaus CEO John Reed Homeworks Inc., which does business as Arhaus, operates 46 stores in 18 states, including eight in Ohio, and has spent years searching for a new home because it can't expand any more at its current location in the Village of Walton Hills.
Company executives considered moving some of its operations to North Carolina or South Carolina, before local and state officials offered incentives to convince it to stay and expand in Ohio.
Under the terms of its Community Reinvestment Area Agreement with Boston Heights, the company will receive an 85-percent break on its property taxes for 15 years for keeping 230 jobs in Ohio and adding another 163 at its corporate offices by 2019. Its annual payroll in Boston Heights will increase from an estimated $16.2 million in 2015 to $26.2 million in 2019.
Boston Heights Mayor Bill Goncy said: "As I understand it, they were looking at several other sites in the state, but because of our accessibility to both Route 8 and [Interstate] 271, we were one of their top choices."
Arhaus will be the first major corporate headquarters in the 6.9-square-mile village, with a population of 1,300.
The Village plans to show residents the proposal at a meeting at 7 p.m. Tuesday night at the Fire Station.
"We've been growing quite a bit," said John Reed, Arhaus' co-founder and chief executive. "We're the fastest-growing furniture retailer in the country, according to Furniture Today.
"Next year, we'll have well over 50 stores. We've expanded into Texas, we'll have our first store in Connecticut, and we're adding stores in Chicago and Kansas City. We're looking up and down the East Coast for a couple more stores."
Arhaus has built a reputation for handcrafted, one-of-a-kind furniture for the home or office made by artisans all over the world. Its designers travel the world for inspiration, bringing back raw materials, fabrics, textures and designs that are unique to its stores, including reclaimed and recycled materials from sustainable sources.
"People are getting to know our brand, and as folks in those stores find us, they're responding extremely well," he added.
The name "Arhaus" was inspired by Aarhus, a port city in Denmark called "ar hoos." Reed rearranged the letters and came up with a brand that people would pronounce "our house."
Arhaus ships its inventory to stores and customers from warehouses in Cleveland. Its customer service and marketing departments are also based here.
Greg Teed, chief financial officer, confirmed that state and local tax incentives helped persuade the company to stay in Northeast Ohio. "We considered moving to North Carolina, because we have two vendors there that represent close to 50 percent of our sales, and the State of North Carolina offered a lot of incentives," he said.
View full sizeThe lobby of Arhaus Furniture's corporate offices in Walton Hills, Ohio. Arhaus told the Village it needed the tax break "in order to justify the level of investment in land, equipment, payroll and facilities... while sustaining [its] global competitiveness."
"Several adjacent Northeast Ohio communities were considered along with three viable locations in North Carolina: the hub of our nation's furniture manufacturing and distribution activities," according to the agreement.
"Boston Heights was not considered the most cost effective location, without the requested tax exemption request, in either Northeast Ohio or when compared to potential locations in North Carolina.
"Therefore, the partnership with the State of Ohio, Summit County, and the Village of Boston Heights was not only encouraged, but absolutely critical to making the project move forward."
In exchange, Arhaus agrees to maintain a minimum annual payroll of $20 million, and to "give preference to residents of the Village... when hiring new employees." The company is also reimbursing the village for its attorneys' fees and expenses related to negotiating the agreement with the village and with the Hudson City School District.
And if all goes as planned and the company gets the necessary approvals, Arhaus hopes to begin construction in late spring or early summer on its 770,000-square-foot digs, on a 64-acre site that used to be the former Boston Mills Country Club. The new offices will eventually be four times the size of its 210,000-square-foot space in the Village of Walton Hills. "We're looking to move in at the end of 2014 or the first part of 2015," but will maintain a presence in Walton Hills through 2015, Reed said.
In addition to home furnishings and decor accents, Arhaus two years ago launched a mail-order Arhaus Jewelry division that it also hopes to expand.
"Our goal is to continue the pace we have going of about 20 percent a year growth, and within the next five years, we'll be up to 150 stores," Reed said. "We're excited. We think it's a big deal and we hope it's a big deal for Cleveland."