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Economy and Business


Quick sale of 13 excess Cuyahoga buildings may change downtown Cleveland in different ways
Possible short-term building glut, but a more competitive Cleveland down the road
by WKSU's KEVIN NIEDERMIER


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Kevin Niedermier
 
With its stained glass rotunda dome by Tiffany, Cuyahoga County's 107 year old Ameriturst building is one of the properties it's trying to sell.
Courtesy of Kevin Niedermier
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Cuyahoga County is on a rapid turnaround sale of 13 properties, including its long-time white elephant, the Ameritrust complex. The county wants new owners for the properties by the end of the year. The process it’s using shrinks the usual commercial real estate transaction process of 3 to 4 years in most cases, to just a few month. WKSU’s Kevin Niedermier reports on the potential impact on downtown Cleveland.

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County Executive Ed FitzGerald says moving quickly is important so the sales are part of the rapid development taking place downtown where most of the buildings are. The quick turnaround also gives buyers the opportunity to take advantage of historic tax credits on many of the buildings before they expire. Cleveland State University business professor, Michael Niro, says the streamlined transaction process is probably the first of its kind in the country. And, it could be a challenge for interested developers.

“The bids might be very difficult to get together quickly, but probably most of the companies bidding on these properties have been looking at them for a long time. They been vacant or used very little, and there’s been knowledge that the new government was going to sell them. So they’ve probably considered these properties in their business plans. From a business perspective it’s going to be important to see how they look at the historic and new market tax credits to build out their cost estimates of what they can afford, and if they hold on to the properties in the long term, or if they sell them in a few years.”

The quick sales schedule could lead to a downtown glut

Speed isn’t the only difference in this process. The county is also requiring potential buyers state how they will use the buildings to complement that development which includes the new casino and upcoming convention center and Medical Mart. The county buildings on the block include the  administration building beside the new convention center, and the vacant Ameritrust complex which the county’s old government purchased in 2005. It was to become the new administration building but the county never moved in. The property for sale totals 1.6 million square feet. And while Niro believe finding new owners will be good for Cleveland, he warns that the quick sale may create a glut in the city’s market.

“With nearly 8 percent of the market transacting in a short period of time, it’s going to be a heavy weight to overcome in the next 2 or 3 years. So the new owner will have to move quickly to cover their expenses while also maintaining the focus the county wants. So that’s kind of a 2 edged sword they have to deal with. So it’s going to be an interesting period with the supply going up in the near term, how do prices react? Do we find new tenants locally or do they move in from out of town?”

Many of the buildings are historic landmarks

Niro says another factor impacting eventual buyers is how quickly the county can move its operations out of occupied buildings so redevelopment can begin. The county says its estimated transition times for those buildings will be part of the purchase agreements.About half the buildings are designated historic landmarks and qualify for historic tax credits. Jennifer Coleman heads the Cleveland Landmarks Commission which decides what buildings get historic designations, and what renovations can be made to those structures. She doesn’t expect it to be harder to sell the historic landmarks.  

“As long as the prospective owners are aware that the building is a landmark and that they’ll have to go a review process. That’s the only concern at this point, because we don’t want them not to understand that. We sometimes get that with houses sold in landmark districts and the buyers aren’t aware. It could hinder the county sales, but that’s usually a case where prospective owners don’t know what the Landmark Commission does. But many times buyers want the landmark designation because it adds cache to the building.”

In the end, the sales should make Cleveland more competitive

When the county’s sales program wraps up at the end of the year, Cleveland State professor Niro says, if all goes well, putting its excess buildings to better use should make Cleveland more competitive.

“The focus on bringing more people downtown to the entertainment districts, more people coming downtown for business, more people looking for parking with the casino and things like that, makes Cleveland more competitive. Especially against the West Virginias, Niagara Falls or Pittsburgh or Detroit as we bring more focus to certain areas of the downtown space.”

Developers who want to take part in the sales must submit their bids to the county by September 14th.                                                                                                 

Related Links & Resources
List of Cuyahoga County buildings for sale

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