Leasing Activity
CBD
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The General Services Administration signed a five-year lease for approximately 33,000 s.f. at North Point Tower (1001 Lakeside Drive). The location will serve as a local office for the Department of Defense Accounting Services.
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Two leases were signed at 200 Public Square this quarter:
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The General Services Administration signed a sublease through September, 2008, for approximately 28,000 s.f. The location will serve as an office to the Department of Health and Human Services.
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Hahn Loeser + Parks LLP signed a five-year lease for approximately 19,000 s.f. Hahn Loeser + Parks will relocate from its current office on the 33rd floor of 200 Public Square to the 28th floor. The move was part of property management’s plan to make large block space available within the building.
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GCA Services Group, a national facilities service firm, relocated its headquarters from Philadelphia to Cleveland. GCA has leased approximately 16,000 s.f. at the U.S. Bank Centre (1350 Euclid Avenue).
Suburban
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Litigation Management, Inc., a medical information management firm, signed a lease for approximately 75,000 s.f. at 6000 Parkland Boulevard in Mayfield Heights, an eastern suburb. One of the largest third party leases signed this year, the building will serve as an expansion of Litigation Management’s current headquarters at 300 Allen Bradley Drive.
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THI Holdings, a national insurance and financial services provider, leased approximately 10,000 s.f. at One Harvard Crossing (20800 Harvard Road). THI Holdings will join Nationwide Insurance, which recently acquired THI, and now occupies approximately half of the 107,000 s.f., Class A office building.
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The Rockside Corridor, one of Cleveland’s major office markets in Independence, has lost at least two (2) key tenants this quarter and is scheduled to lose a third by year end.
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The acquisition of Linde Packaged Gas Co. by Airgas has left approximately 71,000 s.f. of vacant office space on four (4) floors of 6055 Rockside Woods Boulevard (Beacon Place). The space is currently being marketed as a sublease.
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The mortgage fallout caused NovaStar Mortgage to exit the market, leaving over 59,000 s.f. vacant at 6200 Oak Tree Boulevard. NovaStar completed a buyout with building management opening the largest single floor, block office space in Cleveland.
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Countrywide Financial has also planned to close the doors on its 20,000 s.f. operation at 6100 Oak Tree Boulevard by year-end.
Building Sales
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After acquiring IPC US REIT, Behringer Harvard REIT has added KeyBank Center to its Cleveland portfolio. Behringer Harvard is the owner of the adjacent Fifth Third Center. It has been reported that Behringer Harvard purchased IPC for $1.4 billion, paying $600 million in cash and assuming $800 million in debt. KeyBank Center is a 23-story, 535,000 s.f., Class A office building located in Cleveland’s Financial District.
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Duke Property is completing the final steps in its transitions out of the Cleveland market, selling a portfolio of fourteen (14) office properties. The portfolio, which has eleven (11) properties located along the Rockside Corridor and three (3) properties in North Olmsted, totals approximately 1.3 million s.f. of office space. While no deal has yet been reached, it is rumored that Nightingale Properties LLC of New York is the top bidder at $166 million. If the portfolio is purchased by a single investor, it will represent the largest suburban office portfolio sale in the region’s history.
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A North Miami real estate investor recently purchased the Rockwood Center (6505 Rockside Road) in Independence and the Atrium of Westlake (30400 Detroit Road). While details of the sale were not disclosed, county records show the Rockwood Center sold for $2.8 million ($88/s.f.). No price has been recorded for the sale of Atrium of Westlake.
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1100 Superior Avenue (576,086 s.f., Class A), a 21-story office building located in Cleveland’s financial district, recently sold to American Landmark Properties Ltd. While details of the sale have not been disclosed by ownership, county data listed a sales price of $47 million ($82/s.f.). The building was approximately 84 percent occupied at the time of sale.
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55 Public Square (450,000 s.f., Class B), located in the heart of Public Square, is being offered for sale. While no sale price has been assigned market insiders have speculated a sales price of approximately $45 million ($109/s.f.). The building, constructed in 1958, is currently 82 percent occupied.
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Cuyahoga County Commissioners recently listed the Ameritrust Building (428,400 s.f., Class C) back on the market. The building, purchased for $22 million two (2) years ago to serve as a new county administration building, was determined to be economically unfeasible. The county will accept bids until January 15, 2008. The minimum bid price is listed at $35 million and includes the adjoining Ameritrust Rotunda, 1010 Building, H&P Building, Ameritrust Garage, and 944 Prospect Garage.
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BentleyForbes, a Los Angeles based real estate investor, has listed two properties for sale:
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The Rose Building (381,000 s.f., Class B), located along East 9th Street in the CBD, serves as the headquarters for Medical Mutual of Ohio. The 10-story building is listed for sale at $69.5 million ($182/s.f.).
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23700 Commerce Park (51,000 s.f., Class B) in Beachwood. The building, which is 100 percent occupied, is listed at $9.6 million ($189/s.f.).
Construction Activity
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Goodyear has struck a deal with Industrial Realty Group to remain in the Akron CBD. After discussions of relocating, which would end the 108 year legacy in Akron, Goodyear has decided to construct a new headquarters. Industrial Realty will be retained in the construction of the new facility and improvements to existing facilities. In a tentative agreement between the parties, Industrial Realty will also purchase the majority of the outdated current facilities. The proposed plan by Goodyear and Industrial Realty is being hailed as one of the most significant developments in the history of Akron.
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The Cleveland Port Authority recently approved the issuance of $131 million in municipal bonds to fund the construction of a new office building to serve the Veteran Affairs Medical Center in University Circle. The office construction is part of the Veteran Administration’s plan to relocate from their existing facility in Brecksville to University Circle. The project will include a 160,000 s.f. office building, a 122-bed residence for homeless veterans, and a 2,000 car parking garage.
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While speculative office development has been minimal over the past year, industrial and flex development has been thriving. Leading the area in development is Cleveland’s southwest suburbs.
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The Geis/Weston team continues construction on their approximately 400,000 s.f. flex “Diamond Business Center” in Glenwillow.
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Industrial Works Management LLC has discussed plans to begin speculative construction on a 202,000 s.f. flex building in Macedonia, another small southeastern suburb.
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Premier Development Partners LLC has announced plans to begin speculative construction on an 182,000 s.f. flex building in Glenwillow, a small southeastern suburb.
Developers Diversified Realty Corp. has scheduled the development of a new office building (140,000 s.f.) along Richmond Road in Beachwood, in the eastern suburbs, to supplement their current 90,000 s.f. headquarters located near the proposed development site. Developers Diversified plans to occupy 90,000 s.f. of the new development and will complete the remaining 50,000 s.f. as speculative construction. Occupancy is anticipated by fall of 2009.
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