Although the theaters at Playhouse Square remain dark and shuttered in the wake of the Covid-19 pandemic, the Lumen, a 35-story high rise that officially opens this week with more than 25 percent of its units leased, has added a bright new beacon to Euclid Avenue.
A sleek, glass-walled building, the Lumen soars above the streetscape, offering stunning, little-seen views of Euclid Avenue, downtown and the lakefront. It features 318 elegant one- and two-bedroom suites with floor-to-ceiling windows, homey, thoughtfully designed spaces, and carefully planned, unexpected touches like gas ranges and washer-dryers. Operable windows allow fresh air to flow at a time when many people are taking refuge in the outdoors.
The building’s 22,000 square feet of common space is equally inspiring, from the lobby, which features a mosaic of Selene, the Greek goddess of the moon, to the images of dancers and actors on the walls. Semi-private nooks abound, perfect for the Covid-19 work-from-home era. The building’s 5th-floor terrace and pool deck have comfy seating, outdoor fireplaces and views everywhere you look, while the vista from the 35th floor roof deck puts downtown in a whole new light. Other amenities include a fitness center with workout machines, a yoga studio and a pet spa. The building also has a 530-space parking garage for tenants and visitors.
Will the Lumen be successful during a time of economic upheaval when several Playhouse Square restaurants remain closed and two-thirds of downtown workers are still working remotely? Gina Vernaci, CEO of Playhouse Square, the project’s nonprofit developer, argues the building is the latest example of the district’s phoenix-like ability to recover and adapt to change.
“Eighty-six units have been spoken for virtually, so we’re very excited by the response to the building,” she said. “You don’t have to go to Chicago or New York City to find this kind of product, you can find it right here in Cleveland.”
Filling a gap in the downtown market
While some would question a nonprofit’s role in developing a high-rise market-rate building, just as some question the opulent chandelier on Euclid Avenue, Vernaci says real estate has been “part of the DNA of Playhouse Square since the 70s.” That’s when it first rescued the historic theaters from the wrecking ball and purchased the “pie-shaped” piece of land where the Lumen sits.
Playhouse Square didn’t intend to develop the property. It happened by default. “We spoke to developers, and they all had to bow out because the economics didn’t make sense,” she said. “So, we finally decided to do it ourselves. Because we’re a nonprofit, we’re able to live with a lower margin. We knew if it was going to happen, we had to do it and own it.”
When Playhouse Square purchased the property, they hoped it would someday be worth developing. What a difference 40 years makes. Priced at $2.10 to $3.82 per square foot (the average price downtown is $1.58 per square foot), The Lumen is clearly pushing the market. One-bedroom, 500-800 square foot suites range from $1,500-2,200/month, while two-bedroom, 1,200 square foot suites go for $2,700-3,100/month. The 2-3 bedroom penthouse suites range from $4,770 per month to $7,342 per month.
The Lumen’s luxury offerings fill a gap in the downtown market by catering to high-end renters, Vernaci said. More than 60 percent of the renters who have leased units so far have been from out of town, despite the pandemic dampening relocation, according to Playhouse Square. The average age is 34. New tenants get one month free on a 13-month lease or two months free on a 19-month lease.
Playhouse Square received a $15 million gift from the Richard J. Fasenmyer Foundation that it allocated towards construction, but otherwise did not allocate any of the funds raised for its nonprofit mission to the project. Vernaci said. Playhouse Square financed the $136 million project with the help of a $55 million construction loan, $50 million in tax exempt bonds, a $10 million loan from Cuyahoga County, a $5 million loan from the city of Cleveland, and tax increment financing (TIF) worth $5 million.
Development has always been critical to Playhouse Square’s mission, because as a nonprofit developer they can help determine the area’s success, Vernaci said. “If the area came back, we knew the land had value, and why shouldn’t we have a say in that? We’re providing continuity of experience that leads to engagement. We’re selling the experience of Playhouse Square as much as a show or concert.”
Replacing parking lots with new housing
Downtown Cleveland Alliance director Joe Marinucci said The Lumen addresses the need for more high-end rental housing downtown. “It helps tap into a more mature market, in terms of people considering renting downtown, like baby boomers,” he said, noting that downtown housing has been aimed at millennials and Playhouse Square may attract an older crowd.
(Disclosure: Downtown Cleveland Alliance is an underwriter of The Land.)
Marinucci hopes that the Lumen as well as other buildings like the Beacon at 515 Euclid Avenue will spark more ground-up residential development. “One of the challenges in downtown is that Cleveland is a really inexpensive market for rentals, but it remains an expensive construction market,” he said. “The question is, how do we drive up the price per square foot enough that it makes sense to invest? We still have too many surface parking lots downtown.”
There are some worrying signs that the market is softening. Downtown housing occupancy fell from 92.2% in the 2nd quarter of 2019 to 86.3% in the 2nd quarter of 2020. Marinucci said this is largely because more than 600 new units have come onto the market during that time. Fewer people are visiting and working downtown because of Covid-19, yet there is still demand for living downtown. The price per square foot actually increased during that time, from $1.54 to $1.58 per square foot.
Although the market is clearly expanding with the Lumen and other projects, including the recently-completed May Company, the price per square foot needs to be north of $3 per square foot in order to spur more new high-rise construction. “We’re not there yet,” he said.
Marinucci noted a need for lower-priced units, as well, especially for middle-income downtown workers, which runs counter to new development. Some new developments, such as the Centennial at 925 Euclid, are now pivoting towards workforce housing.
Ralph McGreevy, director of the Northern Ohio Apartments Association, said that although the downtown housing market has softened, The Lumen is in a good spot. “It offers good choices relative to the rest of the market,” he said.
Michael Boeschenstein, project manager with Hines, said that although the project faced many challenges, including additional site work to remove hidden remnants of old buildings and a fallen beam that damaged the building and temporarily halted construction, it was delivered on time and on budget. “This is a first-class project in any major market,” he said.
While Playhouse Square remains in a long intermission, Vernaci said the area will come roaring back — eventually. The Lumen can help light the way, she added. “We had a pandemic and then a world war 100 years ago, and that’s when the theaters were built. After that happened, people lined up around the block. There’s a boom on the other side of this — we just have to figure out how to get there.”
Lee Chilcote is editor and founder of The Land. His writing has appeared in Vanity Fair, Next City, The Plain Dealer, Crain’s Cleveland Business, ideastream and many other publications. Follow him on Twitter here.