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The Population Boom in Downtown Cleveland is Very Real and Very Good. But How Long Can It Continue? 

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"The top-line, for-sale market is pretty well baked at $300 per square foot," Howells says. (In Chicago, for comparison, the same sort of supremely high-end properties might draw $600 to $1,000 per square foot.) From acquiring a building, running through a full gut and rehab job, and selling, developers are looking at a break-even proposition.

That's not a terrific backbone for the housing market here.

"The only way to make money on these deals is tax credits," Howells says. Developers can pick up 25 cents on the dollar through the state and 20 cents on the dollar through the feds, then couple that with, say, a five-year tax abatement through the city of Cleveland. Once approved, projects can skate through the build-out process and open the floodgates to easy rental revenue.

Michael Cosgrove, Cleveland's director of community development, says that there's been a general increase in tax abatement issuances over the past 10 years or so. (Tax abatements allow property owners and developers to lock in a tax rate that will not increase with time — say, for the next 15 years.) "We're seeing the new construction certainly increasing," he said. "A lot of what you're seeing downtown is market driven. Now, that market is helped by the tax abatement certainly, but a lot of it is the character of millennials and empty-nesters. The tax abatement certainly, I think, is still needed to incentivize development, not only downtown, but throughout the city."

And incentivize it has. Between 2010 and 2014, downtown saw $4.5 billion in residential and commercial development, much of it helped along by the city's policies. Howells says Cleveland has been "aces" in terms of its public handling of downtown development. Still, he says that others in the private sphere — others in his shoes from around the city — should begin discussing longer-term implications.

"Thousands of apartments coming online in the next 12 to 18 months are all going to be rentals for the next five years," Howells predicts. "What happens in year six?"

There's the central question. Everything after year five is gravy, insofar as developers simply recouping their costs. The whole framework of renting property is rather non-committal on both sides of the table, really. Always is.

"It's something fairly obvious on the surface, but something that no one talks about," Howells says.

Part of the issue — the vague concern downtown — is that the market is shifting into high gear at a weirdly fast pace. And while the pure employment tax numbers in the city make for great news each year, there hasn't been a moment to catch our breaths and reorient our civic identity.

Consider this: When LeBron James announced his return to Cleveland in the summer of 2014, and the Republican National Convention was bestowed on Cleveland around that same time, Howells sold six units that he had been sitting on for two years. Just like that. (The term "LeBronomy" is asinine, but it holds water here. This is real movement.)

But as Howells and others look around, and as the downtown rental narrative inflates further into 2016, his fear is an exodus in five years, leaving behind a ton of inventory downtown. That happens if nobody is committed to downtown through ownership.

To tackle that central question, one runs into a chicken-or-egg scenario. Does mass ownership prompt the lifestyle amenities that make a neighborhood a neighborhood? Or does it really take a Heinen's and a Geiger's to begin signaling to people that ownership — a hard stake in the community — is valuable? Howells, for one, points out that the addition of a local grocery store in the heart of downtown is a game-changer. ("You ask me that even two years ago, and there's no way," he says of the revelatory 2015 Heinen's opening.)

"It's those incentives that get the smart money to buy," Howells says. "If Cleveland over the next five years can prove to people that it's worth it to own — that type of New York mentality — that's when you're really going to see things take off. I don't think you have stability until you have ownership."

Two years ago, when downtown Cleveland's population was soaring — though still far off from where we're at today — DCA president Joe Marinucci told The New York Times that a downtown population closer to 20,000 would light up the neighborhood in "a truly round-the-clock" way. Imagine: Pedestrians flowing through the city's streets at all hours, living, working and playing.

The arc is bending in that direction. What those thousands of new residents do with the city's character will be a show worth watching.

***

Scanning the market as it unspools around downtown Cleveland right now, there's ample opportunity to rent. On one hand, according to recent reports, only between 20 and 30 housing units are selling per quarter. But rentals? The second a unit becomes available, property managers hit up the waiting list and begin talking with prospective tenants. It's not hard to move an apartment unit like that in the city's core.

This is Cleveland, for now.

Amit Patel, the CEO of Quo, helps people get acquainted with the vast inventory in Cleveland. He does most of his work online — chatting and emailing with clients as they tour apartments around the city — but he's walked these buildings and he knows which lifestyle niches are satisfied by which address in town. The most common and widespread now? Luxury.

"I'm noticing a lot more are opening up their pockets, banks are lending more, and the demand is there," Patel says. He looks sunnily toward that inevitable year six — a time when he sees property owners ponying up for whatever facelifts might be needed and a time when the ongoing population boom surges to keep those properties inhabited.

Rents will surely go up. Demand, it's expected, will remain in sync with the growing supply.

Patel joins us as we tour the Bingham on a bustling afternoon. Downtown Cleveland at midday is a throbbing neighborhood in action: friends gathering for lunch; workers dashing down the street to run errands between meetings; Uber drivers threading through the buses and trolleys and delivery trucks of Euclid Avenue, then shepherding riders westward into the revitalized Flats. This is the delightful street-level consequence of having so many people down here now.

We're hoping to get a sense of what it's like to apartment-hunt in Cleveland these days, and Patel points us to the well-regarded Warehouse District building. This is one of the most popular buildings in the city. We find out very soon that if you'd like to move in, you'll have to get in line behind upwards of 100 other people. This is not unique to the Bingham, though this place has never found itself below 95-percent occupancy.

Here, a one-bedroom place will cost $1,258 to $1,575. The upper end of the three-bedroom tier, for comparison, hovers around $2,750. These are all certainly nice places, we see, but if you're trying to sneak into a downtown address for under $1,000, well, tough luck for the most part. The market is pushing quickly past that point. "West Sixth has some studio lofts that are under $1,000 — barely under $1,000," Patel says. "I mean, nothing is available right now; but yeah, there are some units up there that you can get for under $1,000."

Both anecdotes and data point to that $70,000 to $80,000 income range again as a baseline for entry to the downtown life. It's becoming part of the downtown identity — more so than ever before — and part of a further wedge between the city core's economic outlook and the city's outlying neighborhoods.

As income inequality becomes clearer in Cleveland, there's surely no sign that the willing customer base for upscale downtown rentals will slow.

"[Property managers] are really studying what their tenants are wanting," Patel says. "Yoga is a big thing now in Cleveland. So they have a yoga studio up there. Tenants don't have to go anywhere else for certain things. They're paying attention. It's not just about collecting rent."

And it's about a lot of things, actually, because the context of Cleveland's reinvention is a tapestry. This resilient city is humping the positive trends into a completely new and uncharted future. Housing, of course, plays a major role in how we'll define ourselves.

It's the story you can't escape: the evolution of Cleveland. Among the most shared stories of this so-far young year has been Cleveland's national ranking at No. 8 in terms of attracting millennial professionals. Eighth! Cleveland!

Perhaps the growth simply points to more apartments — bigger, nicer apartments with crisp lake views and hot yoga studios ­— hitting the market with higher, more New Yorkian rents. Maybe, as Howells might hope, we'll see more ownership flood downtown in the next five or 10 years.

"We are on the early edge of this fifth migration, and our explosive millennial population growth is changing the face and trajectory of Cleveland," said Lillian Kuri, program director for arts and urban design at the Cleveland Foundation. "We need to understand its impact on the city and the neighborhoods, and rapidly harness the local and regional resources to sustain this momentum."

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