CLEVELAND — A slice of Downtown Cleveland’s waterfront is headed to the auction block, in the fallout from the pandemic and a prominent real estate developer’s death.
Two multi-level retail buildings at the Flats East Bank will go up for sale on Thursday morning. Sandwiched between Old River Road and the riverfront boardwalk, the shed-like structures are barely half-full.
They’re home to a pair of country bars, Welcome to the Farm and I Hate Cowboys; a sports bar called HI 5; and a seasonal nightspot called Glamper.
“There’s clearly potential here and opportunity,” said David Wagner, a principal and managing director at Hanna Commercial Real Estate, which is marketing the buildings to potential buyers. “I think the upper floors that have yet to be occupied could be office. They could be live-work (spaces) or additional event concepts.”
News 5 covered preliminary plans for the three-story project, the third phase of the 23-acre Flats East Bank development, in 2018.
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The buildings ultimately opened on the heels of the pandemic, when Downtown was still reeling.
Then developer Scott Wolstein died in May 2022 at age 69, after a six-month-long battle with aggressive cancer. His vision for revitalizing a prime stretch of the city's riverfront was only partially realized.
Wolstein’s death – the loss of a wealthy, hands-on property owner – led to a flurry of foreclosures and litigation at the Flats East Bank. His family managed to hang onto the office building, now called Oswald Tower, and the adjacent Aloft Cleveland Downtown hotel.
A New York lender took over the nearby Flats at East Bank apartment building in 2023. Later that year, local restaurateur Bobby George bought a controlling stake in several waterfront dining and entertainment venues in the district, along with a 200-space parking lot near Margaritaville.
Now the future of the newest buildings on the block is in play.
An auction is set to take place at the riverfront retail complex at 11 a.m. Thursday. The property is being offered up for bid at the request of the Cleveland International Fund, a lender that’s hoping to recoup more than $14 million.
The private equity fund filed a lawsuit last year when a company tied to the Wolstein family missed payments on that debt.
“This situation is not sustainable,” an attorney for the lender wrote in a court filing in August. Soon after, a Cuyahoga County judge agreed to let a receiver – an outside expert – take control of the buildings during the legal process.
Court records indicate that the case, essentially a negotiated foreclosure, is amicable. The lender believes the buildings “need focused and energetic management to reach their full potential,” a lawyer for the Cleveland International Fund wrote last summer.
Steve Strnisha, the fund’s CEO, declined to comment on the litigation or the auction. The fund historically works with foreign investors seeking U.S. residency through a special federal visa program.
On Monday, Wagner showed off the northernmost building, where chairs already are lined up for the auction inside the former Jade Steak & Sushi space. That restaurant closed last year.
Wagner has been fielding questions from prospective bidders in New York and Chicago, along with inquiries from local investors he won’t identify by name.
“Some of Cleveland’s prominent real estate developers that either have properties on the water – or would like to have properties on the water – have looked at this,” he said. “I mean, this is really the last big link from the retail district to the waterfront.”
The goal of the auction is twofold: To make the Cleveland International Fund and its investors whole. And to bring in an owner willing to spend money – and fill vacancies – in the Flats.
Forward Hospitality Group, the company behind Hi 5, Glamper and the two country-themed bars, isn’t going anywhere. Bobby Rutter, the group’s chief operating officer, said all four brands have long-term leases and will be part of the Flats for many years.
“The auction doesn’t affect our businesses at all,” Rutter wrote in an email.
At Welcome to the Farm and I Hate Cowboys, general manager Anthony Grace can’t wait for the seasonal thaw. Winter is slow in the Flats, but traffic picks up in mid-March with St. Patrick’s Day – and keeps climbing.
On Friday and Saturday nights, there’s often a line out the door, hundreds of people deep.
“We offer live music every single weekend,” Grace said. “People love hearing bands that they never heard before. … It’s just the atmosphere that people like down here. It’s kind of a little reckless – but in a controlled setting. So it’s fun.”
Grace, 26, believes in the future of the Flats. He’s looking forward to the prospect of new neighbors – and maybe some late-night food options – if a new landlord steps in.
“We built a brand here, and it’s one that’s gonna stay,” he said.
Based on phone calls and showings so far, Wagner hopes to see a full house at Thursday’s auction. But it’s always tough to tell beforehand who’s going to show up – and how much they’ll bid.
“An auction gets things happening faster,” he said, noting that any sale will still need approval from the Cleveland International Fund and a judge. If a bidder emerges at the right price, the sale of the buildings could take place in the spring.
“There’s no shortage of interest in … the waterfront,” Wagner added. “The real question is timing. And money.”
