Downtown Cleveland: Plenty for rent, little to buy

According to census data, from 2013-2018, downtown Cleveland was the city’s fastest growing neighborhood with a 48% increase in population, but most of those residents are renters. If they want to buy something downtown, things become more problematic.

The Avenue Exterior Corner.jpg

According to census data, from 2013-2018, downtown Cleveland was the city’s fastest growing neighborhood with a 48% increase in population, but most of those residents are renters. If they want to buy something downtown, things become more problematic.

The latest statistics from Downtown Cleveland Alliance (DCA) show there are over 8,400 market rental units downtown (some of which like the Lumen and the May Apartments are still in the lease-up phase), but there are less than 500 condos and townhomes available to buy. Home ownership in downtown Cleveland is at 5.1%, whereas comparable downtowns had home ownership rates of nearly 23%, according to a 2018 study.

Veteran realtor Torry McJunkins, founder of “The City Team,” said the demand for “for sale” housing is strong, but the supply is weak. She deals with both downtown renters who are ready to transition to ownership, as well as people who are looking to move there for the first time.

“I have clients who are looking to move into a downtown condo. Some of them are paying rent of 2,000 to 3,000 dollars a month who are ready to buy. They’re hoping to find a one-floor, two bedroom two bath, with parking and I have nothing to show them,” McJunkins said.

McJunkins and other realtors have found that these consumers often abandon their plans for living downtown and find places in Tremont, Detroit Shoreway, or Ohio City.

Cleveland’s lack of available “for sale” housing is driven by a number of factors, ranging from the lingering effects of the 2008 recession, to more stringent demands by banks when financing “for sale” dwellings, to the potential for developers to earn more from building apartments than condos or townhomes.

McJunkins is concerned that very little is being done to address this shortage. In 2019, Knez Homes developed twelve townhome units at The Avenue, selling ten before the Covid-19 pandemic hit, but Phase II is on hold until the pandemic plays out.

DCA marketing director Heather Holmes says the organization has been advocating for the creation of additional for-sale housing options downtown since the release of the 2018 housing market study. Currently, they’re participating in the city of Cleveland’s tax abatement study; advocating for Ohio Senate Bill 39, the Transformational Mixed Use Development tax credit, which could be used for sale housing; and working with developers to convert older, historic market rate housing into condominiums.

Dr. Laurel Beverley, who has lived in a downtown condominium since 2007, said the lack of “for sale” housing comes up frequently in conversation.

“We run into so many people who can’t find units to buy downtown. There seems to be this huge demand to be able to buy, whether its empty nesters who are used to home ownership, there are younger couples who are starting families who want to own a home, and there just aren’t enough properties to purchase on the market,” Beverley said.

The interior of Dr. Laurel Beverley’s condo at the Pinnacle.

The interior of Dr. Laurel Beverley’s condo at the Pinnacle.

An Easy Choice

This is Beverley’s second time living in downtown Cleveland. From 2002-2003 she rented a place while she was completing a fellowship at the Cleveland Clinic. In 2007, she moved back from Boston with her now-husband.

For Beverley, the decision of where to live was easy. “I enjoyed living in a city environment with the conveniences it has to offer, so there was no consideration to live anywhere but downtown Cleveland.” 

The Pinnacle Condominiums building on Lakeside Ave.

The Pinnacle Condominiums building on Lakeside Ave.

The couple bought in on the pre-build of a unit in the Pinnacle Condominiums where they now make their home with their daughter.

The difference between the downtown she left and the one she moved back to was noticeable.

“I saw a distinct difference on Sundays when the Browns were home versus when they were away was the most obvious thing. With the restaurants and nightlife, you certainly saw a lot of people on weekends, but on a Sunday afternoon or a Tuesday evening, it wasn’t as lively and there weren’t as many amenities downtown. When I came back, you could really see the changes downtown and it has grown so much. There are more people, apartments, grocery stores, and things to do that keep people downtown.”

Being able to enjoy all that downtown living has to offer, while doing most of it on foot is a major appeal to Beverley.

“My husband worked downtown, so pre-Covid he walked to work every day. When we come home for the weekend, the car stays in the garage. We walk to restaurants, or to the Mall, or walk or bike to Ohio City, or the West Side Market. We head over to Voinovich Park, or we take our daughter to the playground behind the Great Lakes Science Center.”

Why the discrepancy?

There are currently 27 condos available downtown with spaces in the Water Street, Pinnacle, Cloak Factory, Joshua Hall, Park, Sincere, Erie, Grand Arcade and American Book Bindery buildings.

Prices range from a 1 bedroom/1 bath, 650 square foot condo in Water Street selling for $119,000, to a 2 bedroom/three bathroom, 2,585 square foot condo in Pinnacle going for $1,659,000.

McJunkins said that the downtown housing market is still suffering the effects of the 2008 recession, which brought housing construction to a halt.

David Sharkey agrees. Sharkey is president of Progressive Urban Real Estate, a company that since 1986 has specialized in bringing together buyers and sellers who are interested in real estate in Cleveland and the inner-ring suburbs.

“Since the recession, banks have wanted to lend to multi-family rentals,” Sharkey said.

The view from a balcony at The Avenue Townhomes.

The view from a balcony at The Avenue Townhomes.

Bo Knez, the founder and president of Knez Homes said not it’s only easier to obtain financing to build apartment buildings than “for sale” properties , but there’s more potential to make money.

“I think the apartment pro forma works out very well in Cleveland with the rents that are able to be achieved, it just ‘pencils out’ very well, especially with the tax abatements in hand, and it helps the banks secure long-term financing. To this point, rentals have just been a more lucrative avenue than ‘for sale’ product,” Knez said. 

Sharkey added that banks make tougher demands on those developers who want to create “for sale” units.

“When it comes to financing a condominium, banks typically want 50% of the spaces to be pre-sold, so when you are looking at any type of sizeable building of say 100 units, it’s difficult to get 50 pre-sales.”

According to Sharkey, compounding the problem of a lack “for sale” housing stock, is that much of what is available isn’t desirable to buyers.

“There are buildings mired in lawsuits or are ‘cash-only. Other buildings are poorly managed and in constant turmoil. I don’t even consider that inventory. Most people don’t want to buy into a problem, they want to live drama-free,” Sharkey said.

 Beverley is particularly worried about a lack of larger units that could draw younger people with families downtown.

 “There’s a limit in the size of what’s available. There are studio, one, and two bedroom places, but there are very few places that have three or four bedrooms, which is what you need if you want families to stay downtown which is the only way the city will grow. You have to provide the ability for the young couple who wants to stay downtown and raise a family, to have room to grow.”

Filling the void

In 2019, Knez decided to try to fill that gap in “for sale housing.” Knez Homes took over a project started by the late developer Nathan Zaremba and his sons more than a decade earlier. They had plans of developing the area at East 13h and Superior, they called “The Avenue.” The Zarembas’ original concept was rocked by the 2008 recession. After a series of changes, the sons completed 20 of 36 townhomes before selling the development to Knez Homes.

Interior of an Avenue Townhomes unit.

Interior of an Avenue Townhomes unit.

The project has been a success so far, but Phase two, which will add an additional 27 more townhomes, is on hold until the company sees how the pandemic plays out. “We haven’t pulled the trigger until we see if and when the pandemic subsides and then we’ll move forward , but now we’re just holding steady on future development until we know what the economic and social impact might be, because so many people moved downtown for the amenities the area holds, like theatre, restaurants and sporting events,” Knez said.

Sharkey feels more “for sale” opportunities could come about, not by new construction but by building conversion.

“If there is a lag in rentals, then you might start seeing some of these buildings that are currently rental move to “for sale” spaces.

Sharkey explained that those kinds of conversions often occur once a building loses its historic renovation tax credit, which allows for renovation for commercial spaces like apartments, but not condos. He cited the example of the Fries & Schuele building on West 25th Street, which used the renovation credit to construct apartments in the historic part of the building and build condos in the new part. Once the credit ran out, the developers began converting the apartments into condos to sell.

Holmes agrees that 2021 may see more for-sale units coming onto the market. “Demand was so great over the last 5 to 7 years for rental housing that developers continued to invest in market rate options rather than converting older historic prosperties into condominiums,” she said in an email. “With the softening of the market in 2021, we believe these developers will now be more motivated to convert these units into for-sale properties.”

Committing to the revitalization of the city

While Beverley was drawn to what downtown had to offer, Elias Berbari was looking for something else. Living in Willoughby, he was looking for a central location that would put him closer to many of his friends who lived in Lakewood, as well as his family in Strongsville, so he moved downtown in 2014.

Berbari opted to rent an apartment in The Residences at 1717. Arriving at a time of great success for the Indians and Cavaliers, he found living in vibrant downtown to his liking and began exploring the possibility of buying his own place downtown.

“I didn’t think there was a better way for me to commit to the revitalization of the city than by becoming a permanent resident,” Berbari said.

In 2017, Berbari purchased one of The Avenue Townhomes. After some ups and downs, he was able to move into his new place now under the management of Knez Homes earlier this year.

“The price changed a little bit, because the landscape of downtown changed over time, but ultimately, I’m still paying less for a mortgage payment every month than I was for rent. I now own something with more space and it is new.”

Berbari isn’t married and doesn’t have a family of his own, but if and when that time comes, he would consider remaining downtown. He understands the appeal of suburban living, but hopes people would consider making their homes in the city, especially downtown.

“I’m seeing more families with young kids in the neighborhood. It’s not going to be the same experience you have living in a suburb, where you have a front yard where kids can run around unattended, but there are playgrounds and parks here. The school system isn’t the greatest, but it has been improving.” There are also more nearby school options for downtown residents, including the new Campus International K-8 school and high school in the Campus District.

Like Beverley, Berbari appreciates that downtown living affords him the ability to walk nearly everywhere he needs to go, and he’s found there are plenty of places to spend time.

“Heinen’s has been a real quality of life boost for downtown, now that we have a real grocery store. I liked being able to pop over to Progressive Field and buying a cheap Indians ticket and be outside all day. I can see the lake from my apartment. I live next door to Masthead, my favorite brewery. In pre-Covid days, I would meet people there on the patio. You are here when things happen and that’s pretty cool. There are people all around, and that’s something I like, I like being in the middle of it.”

Downtown Cleveland Alliance is an underwriter of The Land, helping to support stories about Cleveland’s downtown neighborhood.

Dan Polletta is a veteran Northeast Ohio broadcaster and writer. He has written extensively about arts and culture, with a special interest in jazz.

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