CLEVELAND — The $80 million project to restore and revitalize 55 Public Square has already started just a month after K&D Group closed on the property, less than two months after it was nearly caught up in an FBI investigation, and before the project has even been able to apply for tax credits.
“I really feel like this building is going to go back to what it always was, which was one of the premier buildings in the city,” said K&D Group CEO Doug Price. “It had some of the most prestigious law firms in the city here and they slowly left because of neglect.”
Price says he hopes to start much of the construction in August 2021 and that the first tenants could move in as quickly as a year later. The full project could be completed in 18 months.
The (former) problems
Much of that neglect appears to have happened under the former owners, Optima Management. County records show Optima bought the property in 2008 for $34 million. In 2013, John Q’s Steakhouse closed in the restaurant space on the corner of West 3rd Street and Frankfort Ave, a half block from Public Square.
In August 2020, the building was caught up in an FBI investigation that alleges a series of brazen, fraudulent schemes orchestrated by Ukrainian businessman Igor Kolomoisky, who was tied to a Ukrainian bank. The lawsuit alleges funds were laundered through a corporate loan from the bank he controlled and used to finance real estate acquisitions like those in Cleveland.
One of those holdings was 55 Public Square.
Price says K&D Group had been working for three years to buy the building from Optima and had previous agreements fall through.
Eventually, the Department of Justice tried to seize the building, worrying Cleveland real estate experts that years of litigation could cause the property to deteriorate further.
The reality is that the federal government stepping in actually helped.
“We were able to deal right with the Department of Justice and they really did speed things along,” said Price. “Everybody’s best interest was to get the building away from Optima so the bleeding stopped, the tenants stopped moving out and the money went to the right place.”
On February 12, 2021, records show K&D Group purchased the property for $14 million.
The new plans
The roughly 40% of the building’s office space that is currently occupied will be relocated to the upper floors of the building, making room for construction to start on 156 new apartment units in the bottom half.
“They lay out perfectly for apartments because the core is in the center, they’re all glass, so you get tremendous views,” said Price, referring to structures built around the same time and in the same style as 55 Public Square.
In the last year, Downtown Cleveland has added more than 1,200 new apartment units, and yet the occupancy rate only dropped a little bit to 84% full. Price says as more people get vaccinated, there will be even more demand to live in a downtown setting.
“If you really want excitement and the latest and greatest living, it’s downtown,” said Price.
Of the 156 apartments, around 100 will be 525 square feet, intended for younger residents looking to live downtown as the rental price per square foot continues to increase.
“Everywhere we have those style units, they’re in extremely high demand because of the coast,” said Price. “We’ll be at $1,000 to $1,100 on those units.”
Rent for a two-bedroom apartment in other buildings just a few blocks away on Euclid Avenue can be as high as $2,400 per month.
Behind the building, the crumbling parking garage on the corner of West 3rd and St. Clair Avenue is already getting repaired.
“All new lighting, elevators are being redone, it’ll be repaired on the outside so you won’t see that ugly cement block splotch thing all over the place,” said Price.
Price says the floor-by-floor renovation will be bringing new parking spaces back online in the next month and the whole garage is expected to be finished long before Sherwin-Williams begins work on its new headquarters, removing three massive surface parking lots in the heart of Downtown Cleveland.
Price says the parking garage could eventually hold a large video billboard visible on the Public Square side of the building.
There is already a restauranteur in talks to take over the former John Q’s Steakhouse, according to Price. The roughly 10,000 square foot space would also get a new patio facing Public Square and a new rooftop space, helping to bridge the gap between restaurants on East Fourth Street and the Warehouse District.
“If you’re in Public Square and you want to go somewhere to eat, it’s somewhat of a challenge right now,” said Price.
A rooftop just one story off the ground is still likely to have a good view of Public Square and the surrounding streets because, Price says, he expects the segment of Sherwin-William’s headquarters that will be on the parking lot immediately off Public Square will not be too tall.
“This building in front of us will only be two stories,” said Price, pointing out of the windows in 55 Public Square’s lobby. “According to what I’ve seen, so 55 keeps its real high profile in the square.”
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