55 Public Square remake secures over $ 85 million in funding
Mentor’s Cleveland Construction Inc. prepares to work on the latest conversion of an office building by K&D Group to a mix of uses, mostly residential and office, after entering into loans and other investments to fund the project. over $ 85 million.
Doug Price, CEO of Willoughby-based K&D, said in an interview that the company was “super excited” to launch the project. “I think this will contribute to the continued growth of Public Square as the center of the city.” The building at the northwest corner of Public Square faces part of the proposed Sherwin-Williams Co. headquarters, although the painting giant’s office tower is immediately west of it.
The final plan calls for 205 apartments on floors 3 to 15, while office space will be concentrated on the top seven floors of the building. Office tenants remaining in the largely empty structure are relocated to new offices on these upper floors, he said.
Originally, plans called for more office space.
“We were going to keep three floors open for new office tenants,” Price said, “but in today’s market after COVID-19, the more office space that is taken off the market, the better. growth in our office market (downtown) is close to zero. ”
The first floor will be commercial and retail, including the move of the Fahrenheit restaurant by Chef Rocco Whalen from Tremont to the property, and the second floor will house amenities for the tenants of the building.
Typical for the mixed-use office projects in downtown Cleveland, several sources entered into the loans recorded Sept. 17 in Cuyahoga County real estate records.
The largest loan is $ 60 million from the Pittsburgh-based First National Bank of Pennsylvania, which has its regional office in the building. The second largest is an investment of $ 11 million in federal and state tax credits from the PNC Bank of Pittsburgh. However, since federal and state tax credits are only funded after the completion of a historic project and the successful completion of the preservation project, Project 55 Public Square received these funds with a temporary loan. of $ 8.8 million from the Tristate Capital Bank of Pittsburgh which was registered at this time. The financial package also includes a government investment of $ 5 million from the Ohio Water Development Authority, which funds such economic development projects.
K&D Group is investing $ 5 million of its own funds into the project, and Price said a tax increase funding agreement with the city of Cleveland will help fund other improvements associated with the project over time.
Some work on the structure is already underway, including the demolition of empty offices to prepare the building for renovation. Additional $ 5 million repairs to the dilapidated attached parking garage, funded separately, will be completed in November.
“The garage had to be done,” Price said. “It couldn’t wait for the rest.”
Setting up this funding was easier than for other K&D deals in downtown Cleveland, Price said, because it didn’t require funds from another source, like U.S. tax credits for new markets.
The rectangular 55 Public Square floorplate made the design easier than K & D’s latest project, the installation of apartments in part of the Terminal Tower, Price said. This meant that Berardi Partners of Columbus had to prepare 13 layouts for the residential suites, compared to Residences at Terminal Tower, which required 120 different unit designs.
The building’s simple, modern design does not reflect its colorful history.
K&D secured ownership of the building in February in federal foreclosure action after it languished under ownership of Optima International of Miami, with ties to Ukrainian oligarch Igor Kolomoisky and allegations that he was reportedly trapped in international money laundering.
Originally known as The Illuminating Building, due to its long occupation by the former Cleveland Electric Illuminating Co. (now part of FirstEnergy Corp.), the structure was the first example of modern architecture in Cleveland’s high rise and its first cladding in glass and aluminum building, according to “The Cleveland Architecture Guide.” In addition, it was the first scale structure built downtown in 25 years when it was started, due to the economic hardships of the Great Depression and WWII, and the first built with air conditioning. central.
Originally, the building was intended as Cleveland’s first steel frame structure.
However, a shortage of steel at the time changed that. Instead, according to Eric Johannesen’s “Cleveland Architecture, 1876-1976”, the structural columns were reinforced concrete, although this did not alter its sleek, modern exterior.
Previously, K&D converted six downtown office buildings into apartments or a mix of apartments and offices.