Hudson Holdings of Florida paid $22 million to buy the former Huntington Building at 925 Euclid Ave. on Tuesday. Andrew "Avi" Greenbaum, a Hudson principal, confirmed the sale and the price but was reluctant to discuss redevelopment plans for the 21-story building.
CLEVELAND, Ohio - One of downtown's most prominent office buildings - home to what's often described as the world's largest bank lobby - changed hands Tuesday in a deal that could herald a huge redevelopment project.
Hudson Holdings of Delray Beach, Florida paid $22 million to buy the former Huntington Building, a near-empty office property at 925 Euclid Ave. Andrew "Avi" Greenbaum, a Hudson principal, confirmed the sale and the price during a phone interview but was reluctant to discuss his plans for the 21-story building.
Real estate sources familiar with the project say Hudson could re-purpose some of the largely vacant office space, 1.3 million or so square feet, as apartments and a hotel. The building still would house some offices, plus lower-level retail.
"I will neither confirm nor deny any plans," Greenbaum said, adding that he's keeping the details hush-hush until a media tour scheduled for June 16.
The sale fits neatly into the narrative of a downtown on the rebound.
Now called the 925 Building, the property last sold in 2010 for $18.5 million. At the time, the massive building was generating much more income, but major tenants including Huntington Bank, accounting firm Ernst & Young and the Tucker Ellis law firm were on their way out the door.
The former Huntington Building, now called the 925 Building, contains more than 30 acres of floor space. Five years later, the space is 92 percent empty, according to the Newmark Grubb Knight Frank real estate brokerage, which represented seller Optima Ventures and which will handle office and retail leasing for the new owner.
Hudson saw more value in the building as a makeover play, in a market where apartments are full, retailers are creeping back into the city, office occupancy has leveled out and developers are running out of historic buildings to convert into housing.
"We're urban developers," Greenbaum said, adding that he's built, bought, converted and adapted more than 4,000 residential units and 3 million square feet of commercial space during his career. "We love downtowns. We run around looking at downtown markets where we're seeing a huge resurgence, especially based on the fact that people want to live, work and play in the same place. Where we're finding those markets, those are the areas that we really like to invest.
"We're very bullish on the future of downtown Cleveland," he added.
Chaim Schochet of Optima Ventures, also based in Florida, didn't respond to requests for comment about the sale. Optima now has shed its largest downtown building but still owns three office towers and the Westin hotel on St. Clair Avenue.
Greenbaum said Optima kept the former Huntington Building, also known as the Union Trust Building or the Union Commerce Building, in impeccable shape.
Constructed in 1924, the property was the nation's second-largest office building and carried a $17 million price tag, according to the Encyclopedia of Cleveland History. Terry Coyne, vice chairman of Newmark Grubb Knight Frank's local office, estimates that the building would cost roughly $2.25 billion - or $1,500 per square foot - to replicate today. It would never be built.
"It's part of Cleveland's history where there's just so much grandeur," said Tom Yablonsky, executive director of the Historic Gateway Neighborhood Corp. "Part of it was what the city thought of itself, the audacity to build the second-largest office building in the world and what was considered to be the largest banking lobby in the world. ... If somebody comes along and creates a grand vision for that building almost 100 years later, it's a big story in that evolution, the evolution of Cleveland."
Ornate columns line the bank lobby at the 925 Building. Home to a series of notable banks over the years, the property now houses just a handful of tenants, including a few law firms and the rare lower-level retailer. Greenbaum wouldn't talk about the potential cost of overhauling the building, which includes an upper-floor dining room, lower-level retail corridors, a series of vaults and the L-shaped lobby with soaring ceilings, marble columns and murals by artist Jules Guerin.
The property is eligible for federal and state tax credits for historic preservation. Another developer, whose deal to buy the building fell apart last year, pursued but missed out on a new $25 million state tax credit earmarked for only the largest real estate projects with the broadest economic benefits. The state could award another such "catalytic" tax credit through a competitive process in late 2015.
Hudson stepped in after the previous group, a potential partnership between Time Equities, Inc. of New York and Vintage Development Group of Willoughby, backed out. Greenbaum said one of his employees, an Ohio native named Jennifer Hebrock, stumbled over the 925 Building while looking at other Cleveland-area properties.
"That building, first of all, it is Cleveland," Greenbaum said. "From its size, from its scale, from its scope, from its location, it defines an era. It's so large and grand, and we feel that it can be brought back to its original splendor and its original position. It's like the grande dame of Cleveland."
Driftwood Restaurant Group is talking to Hudson about reopening the bank lobby for banquets and events. Chris Hodgson, partner and chef at Driftwood, said the space could accommodate as many as 2,500 people for galas and fundraisers.
"Since Sammy's left the Metropolitan room," Hodgson said, referring to a defunct catering business that operated the building's skyline ballroom, "we've been begging everybody to let us use that bank lobby. We finally have the opportunity ... to show people one of Cleveland's gems."
To bring back the luster, Hudson faces formidable hurdles, ranging from the sheer size of the building to a lack of controlled parking to support a redevelopment project. On the parking front, Greenbaum would say only that Hudson is "working on our plan."
A tunnel beneath Chester Avenue, on the north side of the 925 Building, links the property to a 1,179-space garage. But Hudson doesn't own that garage. Court records show that the garage's owner, a New Jersey company, is in default on a $16 million mortgage that was bundled with other commercial loans and used to back bonds sold to investors. A trustee for those bondholders initiated foreclosure proceedings on the garage in April.
Longtime 925 Building tenants including barber Frank LeMonte hope that Hudson can overcome any challenges and pull off a revival. As the offices upstairs emptied out, LeMonte lost three-quarters of his business and most of his walk-in traffic. He's one of the few retail tenants, along with a jewelry store and a shoeshine shop, who stayed put. Loyal customers still pop by for a $22 haircut, style and shave.
Activity has picked up since the former Ameritrust complex, now called The 9, reopened as a hotel and apartments, with a Heinen's Fine Foods grocery store at East Ninth Street and Euclid Avenue. Other nearby projects, including a Kimpton hotel, more apartments and a planned Geiger's clothing and sporting-goods store, promise to bring more bustle to Euclid. With the once-troubled intersection coming back to life, perhaps the old Huntington Building is ready for a new chapter.
"We've got a stronger portfolio of investments in town," Joe Marinucci, chief executive officer of the Downtown Cleveland Alliance, said about changes in the center city since the building last sold. "I would assume that the national capital markets are taking notice of that. The housing market remains extremely strong. ... And now we're seeing non-culinary retail downtown. I think the opportunity of creating a mixed-use project for a building of that scope is much stronger than it was five years ago."