CLEVELAND — A major Downtown redevelopment project is headed back to the drawing board.
The owners of the Rockefeller Building just put it up for sale.
Stymied by rising costs and debt challenges, they’ve scrapped a plan to turn empty offices into 436 apartments. Now, they’re looking to unload a landmark— and half a city block— right across the street from the Sherwin-Williams Company's future headquarters.
“We bought it in August of 2020, probably in the height of Covid,” developer Kenny Wolfe said Tuesday. “But it was such a beautiful building, we felt like we had to go for it.”
At a potential cost of nearly $130 million, though, the project was too difficult to pull off.
“The debt and equity markets just deteriorated from Covid,” said Wolfe, president of Texas-based Wolfe Investments. “It just was brutal to try to get a sizable construction loan— and frankly— our lender ran out of runway. So we agreed to sell.”
The real estate listing went live Tuesday through the CBRE brokerage. There’s no advertised price for the property, which includes the historic building, a shuttered garage and parking lots at West Sixth Street and Superior Avenue in the Warehouse District.
“The response thus far has been very positive. … A lot of groups are interested in it,” said Jamie Dunford, the CBRE senior associate who is marketing the property.
'The wealthiest man in the world'
That’s partially about the history – and the prestige.
Industrialist John D. Rockefeller built the office tower in the early 1900s. It has a basement vault, an upper floor lined with closet-sized safes, marble and oak paneling, and a partial cast-iron façade. And it’s eligible for federal and state tax credits for preservation.
But there’s also an opportunity to build something new. The neighboring parking garage is slated for demolition. The surrounding land includes 176 parking spaces.
“There’s even plans out there to do a second tower,” Wolfe said of early concepts for the rest of the block.
New development also could include a garage, in a neighborhood where it’s getting harder to find a place to park. Sherwin-Williams gobbled up about 1,100 parking spaces for its headquarters project, a three-building complex that’s set for completion later this year.
“I think the history is awesome, and I think the opportunity for a new development right next door is just as awesome,” Dunford said.
Tom Yablonsky, a local preservation expert, had an office in the Rockefeller Building for years. He remembers peeking behind peeling plywood and uncovering white marble.
“It was built by the wealthiest man in the world,” he said.
'A very vibrant street'
By 2020, the building had lost much of its glory.
But it was still home to law firms and other small businesses when Wolfe and Agostino Pintus, his business partner, paid $13.35 million for the property. They gradually emptied out the offices to prepare for renovations.
Now, the building is vacant, with boarded-up storefronts. Downtown Cleveland Inc., a nonprofit group focused on the center city, covered up the boards with colorful banners.
Plywood isn’t “a strong strategy for redevelopment,” said Yablonsky, a semi-retired nonprofit executive who serves as a senior adviser to Downtown Cleveland Inc.
“This is a very vibrant street,” he said, “and I don’t think that’s the message you send.”
He hopes the building will become high-end apartments, a hotel or a mix of the two. Something, he said, that reflects the grandeur of the property and its namesake.
'I ... just saw the potential'
An oil baron and philanthropist, Rockefeller was born in New York but moved to the Cleveland area as a young teenager. He’s buried at Lake View Cemetery on the East Side.
He commissioned the Rockefeller Building but, supposedly, never stepped inside it. Instead, he sold the building to his son for $1. His son, also named John, lost the building in a business dispute, according to records from the National Register of Historic Places.
The new owner, Josiah Kirby, changed the building’s name. Then Rockefeller bought it back, paying millions of dollars to reclaim his piece of the city’s skyline.
The Rockefeller name was part of what lured Wolfe and Pintus to the property, which wasn’t formally listed for sale in 2020. Other developers had been trying to buy the building for years with no success. The price was too high. And the deal was too complicated.
Still, Wolfe doesn’t believe he and Pintus overpaid.
“I was coming from outside and just saw the potential, saw the value of the asset,” he said. “And then when Sherwin-Williams announced across the street, it’s just fantastic.”
But they struggled to win competitive state tax credits to help fund the project. And they ran low on time and money, with a short-term lender waiting to be repaid.
Pintus declined to comment Tuesday.
'Get the job done'
Wolfe is focused on other investments. That includes the Bell, the nearly completed apartment makeover of the 45 Erieview Plaza office building on East Ninth Street downtown.
He’s still bullish on demand for apartments here.
“It was just time for us to pass this torch on to another developer that’s going to knock it out of the park,” he said of Rockefeller.
“If it takes me stepping aside to actually get the job done, then absolutely, I’m all for it,” he added. “It’s gonna be much better for the city of Cleveland done, than not.”
CBRE reported this week that Cleveland has more of its office space earmarked for conversions to other uses – like housing and hotels – than any other major American city. But the future of several large projects is in flux due to higher interest rates, construction costs, lending pullbacks, reduced city tax breaks and landlords’ broader struggles.
Still, Dunford said, there’s room to build – if developers can make the math work.
“We’re seeing the downtown population grow more and more and more every year,” he said. “That’s a trend that I don’t believe is stopping. The ability to kind of work, live, play, I still believe is very real in the Cleveland (central business district) today.”
Yablonsky, also, is looking toward the future.
“My favorite thing,” he said, standing next to the Rockefeller Building, “is what it could be.”
Earlier this month, one of Downtown’s tallest buildings changed hands at a steep discount. The $54 million sale of 200 Public Square will have plenty of ripples, impacting everything from nearby office buildings to property-tax payments that flow to the city’s schools.
Related: Skyscraper sells at deep discount to bargain hunter
