The Buzz in our Own Backyard

Walk down Euclid Avenue during lunchtime, and you’ll hear excitement brewing among pedestrians.

“I wonder what’s going in that building.”

“Wow, they finally opened this section of the street!”

“Look at the new bus stops. That’ll be convenient.”

“Things are really coming together!”

After more than three years of construction, Northeast Ohioans are seeing the light at the end of the tunnel for the Euclid Corridor Project. The $168.4 million project will serve as a major RTA artery connecting downtown to the Cleveland Clinic and University Circle. But the project represents much more than improved transit time along Euclid Avenue. Many believe it’s the beginning of another renaissance in Cleveland.

Since plans began in the early 2000s, everyone — from political pundits to bloggers — has scoffed at the Euclid Corridor Project, declaring it a waste of time and money. But David Browning, managing director for CB Richard Ellis in Cleveland, points to the development at Cleveland State University, the Cleveland Clinic and the pockets of retail and office locations along the Euclid Avenue spine that have occurred over the past few years.

“There are so many plans in the works along that line and around the city. People are finally seeing the glass half full with the Euclid Corridor completion,” he says. “And with the current energy crisis and rise in gas prices, maybe the stars are aligning for this project. When the [Health Line] opens, maybe Clevelanders will be ready to leave their cars and use public transportation.”

From a commercial real estate point of view, Browning is optimistic about two projects in particular that would create new office space along the Euclid Corridor and hopefully lure more businesses back downtown. At East Ninth Street and Euclid Avenue is the K&D Group’s $200 million redevelopment project of the former Ameritrust complex. K&D plans to transform it into a mixed-use lifestyle center encompassing almost 10 square city blocks. Plans include a 13-story office tower; Hotel Indigo, a luxury boutique hotel; a new Class A office building of 200,000 to 350,000 square feet; 50,000 to 100,000 square feet of retail space and a new multistory 600-car parking garage.

In May, the Richard E. Jacobs Group and commercial real estate firm Hines announced plans for a 21-story office tower on the western end of Public Square. The plans call for a two-story entrance and lobby flanked by two street-level retail spaces, approximately 500,000 square feet of commercial office space and an attached three-level garage.

It’s too soon to predict how the influx of new office space will affect Cleveland’s downtown office vacancy rates — today, the rates hover around 17 to 18 percent. But Brian Hurtuk, vice president of brokerage services for CB Richard Ellis, expects the rates to remain steady for the next 12 to 24 months, due in part to office expansions from existing companies. “There haven’t been a lot of new corporations moving into the region, but the businesses here today are adding significant square footage with each move,” he says. “Companies add an average of 25 percent more square feet with every office move.”

Accounting firm Ernst & Young and law firm Tucker Ellis & West LLP are two examples of such growth. This year, both firms announced plans to move into the new office buildings that are part of the Flats east bank project when their leases at the Huntington Building end in 2011.

Although the moves will leave significant space in the Huntington Building, Hurtuk says there is still plenty of time to find new tenants to fill the Tucker Ellis and Ernst & Young void. “The Huntington Building still is a question mark, but if the market continues to function as it has for the past few years, I don’t think they’ll have a hard time finding tenants,” Browning says.

Smaller development projects are also contributing to the Euclid Corridor —as well as Northeast Ohio’s — rebirth. For example, law firm Cowden Humphrey Co. LPA recently moved from the Terminal Tower to a new 50,000-square-foot office building in the city’s burgeoning Midtown neighborhood at Euclid Avenue and East 44th Street. The firm co-owns the building with Heartland Developers Inc. “I would have never guessed such a nice building [would be built] in that area, but those are the projects we’re seeing more and more of,” Hurtuk says.

Those smaller projects are also attractive to the startups and small companies reshaping Northeast Ohio’s economy. Many high-tech firms have migrated from the suburbs to downtown areas like PlayhouseSquare, which has become a hub for tech activity. “Excluding some of the big tenants, the average tenant in downtown Cleveland probably has an office space of 5,000 to 7,000 square feet,” Hurtuk says. “Smaller firms want to be downtown because of all of the amenities it offers.”

Hurtuk believes it will still take some persuading to get more businesses downtown, but the market is in line for a healthy future. “After all, for so many years, people have seen downtown as a big construction site,” he says. “But now that projects are coming together ... there are good times ahead; we just have to be patient.”