CRAINSCLEVELAND.COM I FEBRUARY 5, 2024
How the Browns land big concerts And why Swift’s Eras Tour isn’t one of them
See OFFICE on Page 17
Scientist probes ancient mystery
Cleveland among top cities for office-to-apartment conversions in 2024. PAGE 17
Discovery one of ‘most astonishing’ in 2023
Office market blues Landlords troubled by rising costs and weak demand
By Stan Bullard | Grim realities are settling in for the Greater Cleveland office
market. Inflation, not improving market conditions, is prompting office building owners to boost asking rents and the best statistic is that year-over-year office vacancy regionally stayed flat at 21.7% at the end of 2023 from the prior year.
By Paige Bennett
This is a story about how the Cleveland Browns land concert acts at their stadium — including two big ones this summer — but since this is the Year of Our Lord 2024, we must first answer the city’s most pressing question: “Why isn’t Taylor Swift coming?” “Yes, I get asked about that often,” sighed Michele Powell, vice president of event development for the Haslam Sports Group. “Obviously, we’d love to have her.” Powell has communicated as much — many, many times — to Swift’s promoter, the Messina Touring Group. But while Swift has played plenty of shows in Cleveland, including then-FirstEnergy Stadium in 2018, she’s in the middle of one of those zeitgeisty moments that rivals the Beatles in 1964 or Michael Jackson/Bruce Springsteen in the mid-1980s. One industry executive told me her Eras Tour is “probably the biggest touring act in history.” Consequently, there was no need for Swift to play Cleveland in 2023 when she was already playing Detroit, Pittsburgh and Cincinnati. And while Swift did add some North American dates for 2024, they were October and November when Indianapolis (dome) and Toronto (dome) made sense. An outdoor stadium on Lake Erie? Not so much. “That October-November time frame, that’s a really big challenge for us,” Powell said. But wait! Her boyfriend, Kansas City Chiefs tight end Travis Kelce, is from Cleveland Heights! Can’t she have the Kelce family put in a good word?
A Cleveland Museum of Natural History (CMNH) scientist is part of a research team that’s raising questions about who created the earliest forms of stone tools. Artifacts uncovered on the Homa Peninsula in western Kenya suggest that a distant cousin of human ancestors could have been the first stone tool users. The researchers found old stone tools that had been used to butcher hippos, along with fossils of the hominin Paranthropus. “One of the big questions (the findings) raised was who was making these old stone tools,” said Emma Finestone, assistant curator of human origins at CMNH. “Because the hominin that we found associated with the stone tools was not expected to be a tool user and isn’t a direct ancestor of our lineage. It’s like a distant cousin that went extinct that most people didn’t credit with using stone tools.” The work is being led by scientists with the CMNH, Queens College CUNY, the Smithsonian's National Museum of Natural History and the National Museums of Kenya. They published their findings — which took place between 2016 and 2018 — in a paper in Science early last year. It was named one of the 11 most astonishing scientific discoveries of 2023 by National Geographic. But the work is far from over, Finestone said, who was one of Crain’s 40 under 40 in 2023. Researchers will return to the site again this summer to conduct fieldwork and see if there is further evidence, such as more hominins, to show that Paranthropus may have used these tools.
CRAIN’S CLEVELAND BUSINESS ILLUSTRATION
By Joe Scalzo
See CONCERTS on Page 16
See MYSTERY on Page 16
VOL. 45, NO. 5 l COPYRIGHT 2024 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED
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MANUFACTURING Cleveland-Cliffs CEO who criticized U.S. Steel’s move to sell to a Japanese company says Cliffs’ offer is off the table.
BARS & RESTAURANTS Akron’s Lock 15 has been acquired by The Brew Kettle in the latter’s first rollup involving an active craft beer brand.
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Cliffs CEO: U.S. Steel bid is ‘absolutely gone’ Comments come days after he said the ‘saga is not over’ By Joe Deaux, Bloomberg
The combative CEO of Cleveland-Cliffs Inc. who lambasted United States Steel Corp.’s decision to sell itself to a Japanese steelmaker said his company’s offer is off the table. Lourenco Goncalves said that his $54-a-share cash-and-stock bid for U.S. Steel is gone and won’t be a backup if Nippon Steel Corp.’s $55-a-share cash offer that was accepted by the iconic American steelmaker falls through. “That transaction is no longer available, it’s no longer a backstop for their failure,” he said in a Thursday, Feb. 1, interview. “If they can’t close — I don’t know where they are at this point — that offer is gone, that offer no longer exists.” U.S. Steel shares fell as much as 2.2% after the comments. Shares of Cliffs rose 1.55% at market close in New York on Feb. 1.
Cleveland-Cliffs CEO Lourenco Goncalves said that his $54-a-share cash-and-stock bid for U.S. Steel is gone. | CONTRIBUTED
quisitions, though there’s nothing imminent. He wouldn’t say if he’d make another offer for US Steel if the Nippon deal collapsed, reiterating his position. “The beauty about dealing with me is I don’t speak in code,” Goncalves said. “I’m a very blunt guy. That offer is absolutely gone. That deal is gone. It’s over.” The comments also come after JPMorgan Chase & Co. analyst Bill Peterson suspend— Lourenco Goncalves, CEO of Cleveland-Cliffs Inc. ed his ratings on Cliffs and U.S. Steel, citing its The CEO’s comments come advisory capacity to Cliffs over its two days after he called U.S. proposed U.S. Steel offer. GonSteel’s agreement with Nippon a calves said JPMorgan has been severe miscalculation and ac- one of their banks on the proposal cused the Pittsburgh-based com- and doesn’t know why the firm pany’s board of intending to now decided to suspend coverage. “You need to ask JPMorgan,” he “break the backs” of the influential said. “JPMorgan has been one of United Steelworkers union. Goncalves did say Cliffs is al- our banks in the transaction, but ways looking for mergers and ac- the transaction is now gone.”
BLOOMBERG
“That transaction is no longer available, it’s no longer a backstop for their failure.”
Above: The Cleveland-Cliffs Inc. Cleveland Works steel mill. Top: The U.S. Steel Edgar Thomson Works mill in Braddock, Pennsylvania.
Medical Mutual plans to buy Paramount Health of Toledo By Scott Suttell
Cleveland health insurer Medical Mutual is growing to the west. The company on Monday, Jan. 29, announced it plans to acquire Paramount Health, a Toledobased health insurance company owned by ProMedica. Paramount, which offers Medicare Advantage, Individual ACA, commercial group and short-term insurance plans, does business primarily in Ohio and Michigan. Financial terms of the deal weren’t disclosed. Medical Mutual said it expects to transaction to close by May 1, pending regulatory approval. Steve Glass, Medical Mutual’s president and CEO, said in a statement that the deal will bring together “two companies that share a lot more than just being headquartered in Ohio. We share a common vision — to help people live healthier.” Paramount will be a whollyowned subsidiary of Medical Mutual and will continue to offer its existing health plans. There “will be no
immediate change to how current members do business with either company,” Medical Mutual said. Medical Mutual, founded in 1934, serves more than 1.2 million Ohioans through health, life, disability, dental, vision and accident/critical illness plans. Paramount Health Care, formed in 1988, serves more than 77,000 health plan members and 308,000 dental plan members Medical Mutual said it’s “working through transition plans” and that it “expects to welcome Paramount employees into its organization when the transaction closes.” A Medical Mutual spokesperson didn’t immediately respond to an email seeking further details. Arturo Polizzi, president and CEO of ProMedica, said in a statement, “As ProMedica has further sharpened its focus on core health system operations, we embarked on a thoughtful process to transition ownership of our Paramount health insurance business. We were hopeful we could identify a
potential new owner with a similar mission and commitment to community, and we found those qualities in Medical Mutual.” Medical Mutual said it will “continue to deliver its own branded products and services” in Northwest Ohio “that have access to our robust provider networks, which includes the ProMedica health system.” Separately, Medical Mutual announced that all ProMedica primary care providers, specialists, hospitals and outpatient care clinics, which already are part of many Medical Mutual commercial group networks, are now part of its Medicare Advantage and Individual ACA provider networks. The inclusion of ProMedica “adds access to approximately 1,500 providers in 55 specialties to Medical Mutual members” in Northwest Ohio, Medical Mutual said. ProMedica’s health system comprises 11 hospitals, five urgent care centers and 220 physician offices.
Medical Mutual is acquiring Paramount Health, a Toledo-based health insurance company owned by ProMedica. Paramount will continue to offer its existing health plans. | COSTAR
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Saint Ignatius receives $10M gift for new wing By Paige Bennett
A massive $185.9 million restoration project in Cleveland’s Playhouse Square will receive $1.95 million in tax credits. | PLAYHOUSE SQUARE
Playhouse Square, Valor Acres are awarded state tax credits Part of $100M Transformational Mixed-Use Development program funding By Kim Palmer
Two projects in Cuyahoga County will receive a total of nearly $12 million in tax credits as part of $100 million awarded in the state’s third round of Transformational Mixed-Use Development program (TMUD) funding. Overall, 15 projects representing $2.6 billion in catalytic mixed-use development investment—estimated to spur $401 million in new payroll across the state—were selected by the Ohio Department of Development for the state tax credits, according to a Monday, Jan. 29, announcement. “Through this program, we recognize the impact of mixed-use developments to create vibrant and sustainable spaces that revitalize neighborhoods and enhance the quality of life for residents,” said Lydia Mihalik, state development director, in a statement. In Cleveland, a massive $185.9 million restoration project centered around Playhouse Square will receive $1.95 million in tax credits. The project is expected to support approximately 699 con-
struction jobs and a subsequent 525 permanent jobs. The redevelopment includes transforming the nine-floor Bulkley Building at 1501 Euclid Avenue into 84 apartments, with a portion available for short-term rental by cast and crew members from shows appearing at Playhouse Square. Renovations on the Hanna Building at 1422 Euclid Avenue include retrofitting the 24,000-square-foot fourth floor into a flexible co-working space called “Backstage at PSQ.” The project is part of ongoing efforts to bring in more residents and visitors to the country’s largest performing arts center outside New York City. Tax credits were also awarded to the first phase of Brecksville’s Valor Acres project for the new construction of a massive mixeduse development on vacant land near the 103-acre SherwinWilliams Research & Development Center campus. Ten million dollars in tax credits will be used as part of the DiGeronimo Companies financing for the $678.7 million master plan that includes a hotel, four mixed-use buildings with 368
residential units, nearly 12,000 square feet in retail, more than 45,000 square feet of office space and parking facilities. The overall project, which is being developed in partnership with the city of Brecksville, is expected to result in approximately 677 construction jobs and an estimated 784 permanent jobs. “These projects are creating dynamic spaces for Ohioans to live, work, and play,” said Gov. Mike DeWine in a statement. “With these investments, we are empowering communities to better themselves for the future and spur more economic growth in Ohio.” The TMUD program allows for tax credits for demolition, site improvement, new construction and land or building acquisition. This round of awards represents more than 13.3 million square feet in construction or redevelopment, totaling about $77.9 million in urban investment and $22 million for general projects. The Ohio Tax Credit Authority awarded the credits during a meeting in Columbus. All projects are recommended by the state’s Department of Development.
Saint Ignatius High School has received a $10 million gift that will fund a new academic wing. Brittan and Fred DiSanto committed the funds to the Ohio City high school’s Campaign for Vision ’30. It is one of the largest gifts in the school’s history and the largest from the DiSantos, according to a news release issued Thursday, Jan. 25, by Saint Ignatius. It will fund the construction and operation of a new threestory academic wing that will feature a visual arts department with multiple studios and a dedicated Advanced Placement studio, the news release says. Construction is slated to begin in early 2024 and be completed in August 2025. The private all-boys Jesuit high school also announced the public phase of its campaign for Vision ’30, the school’s strategic plan. Paul Pace, chairman of the board of regents, said in a statement that the campaign has a capital fundraising goal of $50 million, along with another $50 million to build the school’s endowment. “With its focus on academic excellence, faith formation and affordability, the school’s Vision ’30 strategic plan provides a clear roadmap not only for the next ten years but for generations of students to come,” Fred DiSanto, who is a former chairman of the board of regents, said in a statement. “This gift, like our other gifts, is about the mission of the school with its focus on Catholic education in the 500-year-old Jesuit tradition of forming ‘Men for Others.’ Brittan and I are excited to be able to support that vision through the development of academic facilities and programs that will enhance the learning
Fred and Brittan DiSanto committed $10 million to Saint Ignatius High School’s Campaign for Vision ’30. | SAINT IGNATIUS
experience and opportunities for the students and provide a stateof-the-art learning environment similar to what they will experience in college.” Fred DiSanto is chairman and CEO of Ancora, a Clevelandbased provider of family wealth advisory, retirement plan management and investment management services. He is also a 1980 graduate of Saint Ignatius High School. Brittan DiSanto is a visual arts professional. The couple has supported a number of projects at the school, including the Welsh Academy and Kesicki Hall, the Breen Center for the Performing Arts and numerous scholarships, according to Saint Ignatius. “We have been working with Brittan and Fred for several years on plans to enhance our visual arts facilities. With their gift, we will not only see those plans become reality, but we are also able to significantly enhance our academic facilities with several new classrooms, student common areas, and student support services,” said the Rev. Ray Guiao, president and chief mission officer at Saint Ignatius, in a statement. “We are extremely grateful to Brittan and Fred for their ongoing generosity and their passion for our mission.”
FEBRUARY 5, 2024 | CRAIN’S CLEVELAND BUSINESS | 3
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It’s not getting any easier to deal with the government. While that might be a hindrance to most, it’s been driving business for State & Federal Communications, an Akron firm that works with companies in highly regulated industries, lobbyists and others that need to stay in compliance with a long list of rules. “We’re doing well,” said Elizabeth Bartz, the firm’s CEO, from her new offices in downtown Akron’s O’Neil’s building, known for the big department store it once housed on South Main Street. “I’m on the third floor. I overlook the Rubber Ducks’ stadium,” Bartz said. “And I love baseball.” State & Federal is not a law firm or lobbyist. Instead, it helps lobbyists, corporate clients and others to stay on top of the regulations that affect their businesses and industries, and to ensure they comply with them. There’s no shortage of demand and Bartz needed more space when her lease expired last year at her former offices on Mill Street, where she had 19,000 square feet. She said she had two requirements when she decided to look for new digs: She wanted to get her people onto a single floor instead of two, and it had to be space in downtown Akron. She said she found both in her new office space, which her firm moved into last October. She now has a staff of 43 people, she said, including 38 in Akron and five in Washington D.C. Business has been good over the past three years, Bartz said, so she’s added more people.
health insurance program and whatever FMLA provides,” she said, referring to the Family Medical Leave Act that applies to employers with 50 or more workers. It’s a threshold she knows she needs to cross. “I know so many people who are like ‘I don’t want to go over 50 people,’” she said. “But you can’t do that because your company is never going to grow with that fear.” Her firm’s services are as in demand as ever, she said. That’s partly because as the nation becomes more polarized, its regulatory landscape can change from one president and congress to the next, if not in the actual rules than in how they are monitored and enforced. And new technologies, such as artificial intelligence, invariably result in new regulations companies must follow. Bartz’s greatest challenge now might not be finding new business but deciding how to keep hers going. She’s 65, she said, and doesn’t have children in— Elizabeth Bartz, State & Federal Communications CEO volved with or interested in takThat’s brought her business to ing over the business. Bartz thinks she has a solution new levels and the firm had revenues of $8.7 million last year. For to that though. She’s working a manufacturer, that might be with the Ohio Employee Ownersmall potatoes. But for a firm ship Center at Kent State Univerthat’s strictly service and doesn’t sity to structure an employee have material costs, it’s a bigger stock ownership program that number—and one that Bartz is would enable her to sell the company to the people who work proud of. “I don’t have any inventory,” there. “We’re starting our discussions she quips, She’ll probably need more this week,” she said last month. In the meantime, she also has people still, she said, and plans to hire more this year and in another lease to sign. The lease on her small office in Washing2025. “As we get close and closer to ton is about to expire, she said, 50 people, which might be in the and she might need more space next two years, we’re going to there than she did in the past as need to be prepared, with a new well. After not hiring since 2017, she added a couple of people in 2021, a couple more in 2022 and then added four last year, she said. The additions included salespeople she said, a function, amazingly, that Bartz said she hadn’t focused on as much in previous years. But when the pandemic hit, her constantly growing firm took a rare step backward, she said. Sales were down about 3% in 2020. New salespeople, new government regulations for clients to contend with, and the increasingly choppy waters of government overall, all helped State & Federal bounce back quickly. “We were down 3% in 2020. But we were up 9% in 2021, then 11% in 2022 and we were up 4% last year,” Bartz said.
“I know so many people who are like ‘I don’t want to go over 50 people.’ But you can’t do that because your company is never going to grow with that fear.”
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In quest for growth, Brew Kettle acquires Lock 15 By Jeremy Nobile
Akron’s Lock 15 has been acquired by The Brew Kettle in the latter’s first rollup involving an active craft beer brand. Financial terms of the deal, which involves a 100% acquisition by the Brew Kettle via its parent company, were not disclosed. The transaction was completed last month. Connections between Lock 15 and the Brew Kettle go back to the former’s formational years. Prior to opening at the Cascade Lofts in downtown Akron in the summer of 2018, Lock 15 founders weighed the idea of running a satellite Brew Kettle location in the area. However, stakeholders decided to pursue an independent endeavor instead. “Way before we ever opened in the first place, we were approached by the Brew Kettle,” said Lock 15 cofounder and head brewer Joe Karpinski. “At the time, it didn’t make sense to partner with them because the idea would’ve been just another Brew Kettle location as opposed to the brand identity that we’ve created.” With popular beers—including mainstay offerings like the 1913 Pilsner, Instigator Double IPA, Pretty Boy Peanut Butter Porter and the Grandfather German Lager—and an elevated food menu compared to many other brewpubs, Lock 15 did seem to carve out a piece for itself in a crowded craft market.
The acquisition fits into Brew Kettle’s ambitious growth plans, which are designed to be fueled in part through M&A. | GUS CHAN
the mix.” As far as Brew Kettle’s motivations, this acquisition fits into its ambitious growth plans, which are designed to be fueled in part through M&A. “The company brings top-line revenue to the global Brew Kettle enterprise, which is obviously interesting to us,” said Brew Kettle CEO Evan Schumann. “And the other thing is it’s well-managed and cash-flow positive, which is also helpful in an industry where you’re not finding that very of— Joe Karpinski, Lock 15 cofounder and head brewer ten.” The Lock 15 But like so many others in the brand will benefit from tapping hospitality sector, Lock 15 has into the Brew Kettle’s broader been grappling with increased distribution footprint, which food and labor costs, higher in- spans all of Ohio’s largest metros. terest rates on debt, flat sales and And then there are the various taprooms in the Brew Kettle a less sticky clientele. Amid a downturn in craft beer portfolio that will carry the Akand an increasingly challenging ron brewery’s beers. While there are no plans in the economic environment, talks of works to expand brewing operaa partnership were revisited. “The beer and restaurant in- tions at this time, it is expected dustry is in a tough spot right that Lock 15 will scale up pronow,” said Karpinski, who adds duction. “The Brew Kettle is much more general manager to his title with the ownership transition. “Sales of what I would call a global of beer on and off-premise are brand within the state, distributdown. Margins have been get- ing as far as we do and being as ting closer to razor-thin. And we large as we are. But we don’t needed a way to increase our have as much distribution in margins, which has been very some of our micro markets, if hard to do in the last couple you will, in our backyard with a more localized following,” years.” A reduction in costs that Schumann said. “That is what comes with the increased scale Lock 15 does for us.” Karpinski said Lock 15 has 47 and improved buying power for ingredients and materials will be employees. There are no layoffs a key benefit of rolling under the anticipated as a result of the combination as the brewery is Brew Kettle umbrella. “Being able to have the pur- expected to otherwise continue chase power of a larger organiza- running its own business as it tion is crucial to help us increase was. As such, there are no immedithose margins,” Karpinski added. “And it benefits Brew Kettle as ate plans to alter its beer portfowell because that is just more lio or food menu. Really, the idea is for Lock 15 leverage with the companies we are working with by adding us to to continue doing what it’s been
doing, just as a more effective business. “We are not going to drop the quality of what we are doing to improve our margins,” Karpinski emphasized. Schumann echoed that sentiment. The goal is not to try and fix something that’s not broken but to improve or enhance operations where it makes sense. “Lock 15 is more boutique than the Brew Kettle. We are not very
nimble. But the beauty of Lock 15 is they are very nimble and have somewhat of an elevated experience (whereas) we are very much a sports bar brewpub theme,” Schumann said. “They are making smaller batch brews, which lets them be more creative. So we can do more innovative and creative runs there as needed. And their larger runs that they are currently outsourcing, we can take over those as well.”
The Brew Kettle enterprise currently encompasses five Northeast Ohio brewpubs under that moniker. There also are plans in motion for a Brew Kettle in Brunswick Hills and a large-scale production facility/ taproom/restaurant in Medina. Construction for that could begin in the next few years. Additionally, the company owns the defunct Canton Brewing Co.—a reopening of which remains in progress—and it has a stake in Lowellville’s L’uva Bella Winery. Since Crain’s reported on the Brew Kettle’s vision for building the most dominant craft beer company in Ohio, Schumann said the business has been fielding a slew of inquiries from indie craft brands in Ohio and beyond searching for a business partner. But not every deal that comes before it is going to be a good fit. “We were surprised by the outreach we received from the market after that original article posted and their interest in this sort of consolidated effort,” Schumann said. “We will continue to look at those.” “We are looking for good opportunities in markets that we feel are underserved, that we feel fit within a portfolio of brands that we feel we don’t already have or wellmanaged operating companies that are looking to scale through a larger company like ours,” he added. “There is a lot of bad debt out there, and we are not looking to save poor operating companies out of 12% interest rates. We are looking for opportunities that fit in our portfolio and that can maximize on what our infrastructure has to offer.”
“The beer and restaurant industry is in a tough spot right now.”
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Flats East Bank to get a ‘performance stage’ Plan originally proposed by the late Scott Wolstein By Marcus Gilmer
The Flats East Bank is getting yet another destination spot as a “performance stage” originally proposed by the late Scott Wolstein is now in the works. The stage. announced Monday, Jan. 29, by Downtown Cleveland Inc., will be a “plug-and-play” platform designed by Hengst, Streff and Bajko Architects. It also will include “embedded theatrical lighting and power,” giving the stage flexibility in terms of performances it can host. The stage is expected to be completed and dedicated this spring to coincide with the Flats East Bank event season. According to the announcement, it will be located “adjacent to the Cuyahoga River and The Flats at East Bank Apartments.” In a statement announcing the stage, Wolstein group principal Iris S. Wolstein said, “My late husband Bart would be so proud of the continued evolution of his vision for the Flats East Bank. We thank Downtown Cleveland, Inc. for their assistance in bringing
this wonderful stage and also the state-of-the-art video boards earlier this year. These additions will enhance the Flats for many years to come. This project has truly been a labor of love for Bart, myself, and our late son, Scott.” A $500,000 grant was made from the state’s Ohio Facilities Construction Commission to help fund the stage with “additional financial support” coming from Destination Cleveland and the Flats East Bank. Downtown Cleveland Inc. President and CEO Michael Deemer said in the announcement, “The project would not have been possible without everyone’s collaboration. This stage affords us the opportunity to attract more visitors to enjoy Downtown Cleveland and patronize its businesses.” It’s just the latest splash of development to be announced for the Flats East Bank. Earlier in January, restaurant and bar operator Bobby George gained approval from the Cleveland City Planning Commission for a proposed river garden project along Old River Road. Crain’s has reached out for any potential renderings of the proposed stage.
The stage will be located “adjacent to the Cuyahoga River and The Flats at East Bank Apartments,” an announcement said. | STAN BULLARD
A “for sale” sign stands in the yard of a house on Cleveland’s East Side. | CRAIN’S CLEVELAND BUSINESS
Home-price growth slows amid high mortgage rates By Prashant Gopal, Bloomberg
Home-price growth in the US decelerated in November as high mortgage rates weighed on potential buyers. A national gauge of prices climbed 0.2% in November from October, according to seasonally adjusted data from S&P CoreLogic Case-Shiller. That’s slower than the 0.6% gain in October from a month earlier. Buyers have been sidelined by high mortgage rates, which hit a recent peak in October at 7.79%. While borrowing costs have since eased, buyers are still confronting a major affordability crunch, with prices remaining relatively high due to a lack of homes for sale. Northeast Ohio has seen similarly sluggish growth. Singlefamily home sales across the region in December were down 2.6% from November’s numbers, according to MLS Now. While not surprising, given that December
is typically one of the slowest months, total sales were still down 10.5% from December 2022. Price growth for single-family homes was also slow across NEO in 2023, increasing just 3.3% over 2022. For December 2023, the average sale price was $232,265, up 3.7% over December 2022.
city reporting lower prices compared to a year ago. House hunters have been facing the lack of supply for months now, which pushed sales of previously owned homes in 2023 down to the worst level in nearly three decades. New home sales have fared better, exceeding economists’ forecasts in December. The Federal Reserve has indicated that it’s turning its attention to rate cuts, moves that may help lower mortgage rates. Investors have been seeking to gauge the future timing of any cuts from the central bank, which met last week and left rates unchanged. Mortgage rates have “since fallen over 1%, which could support further annual gains in home prices,” Brian Luke, head of commodities, real and digital assets at S&P Dow Jones Indices, said in a statement.
Single-family home sales across Northeast Ohio in December were down 2.6% from November’s numbers. — MLS Now On a year-over-year basis, national price gains accelerated with a 5.1% increase in November, up from 4.7% a month earlier. A measure of 20 cities rose 5.4% with Detroit posting the biggest gains, followed by San Diego. Portland, Oregon, was the only
By Crain’s Staff
Inflation has driven up the prices of a lot of things, including airfare. And that’s certainly true for travelers flying out of Cleveland Hopkins International Airport. But, according to a study that looks at changes in airfare nationwide, it could be worse. According to a study from USA Today’s Blueprint, the average cost of airfare at the 100 busiest airports in the nation is up 29% since 2021 when the COVID-19 pandemic was still hampering travel— even as more passengers returned
to the skies. According to the report, Cleveland has had the 33rd-highest overall increase in the cost of the average roundtrip ticket with a 33% uptick. That average roundtrip ticket will now cost you an average of $361, $91 more compared with 2021 prices. That’s a good chunk of change but still not as big a jump as other Great Lakes region airports. Minneapolis-St. Paul led the nation with a 48% increase since 2021, making the average roundtrip ticket cost $422, a $136 increase. Chicago O’Hare saw a similar
43% increase to $391 per average roundtrip, an increase of $118. And Detroit saw a 41% bump to an average ticket cost of $429, up $126 from 2021. The good news? Prices were steady across the country from 2022 to 2023 with a 1% dip. The average cost of a roundtrip ticket from Hopkins stayed even at $361 after a -0.3% drop. Despite all the fluctuations, according to the report, Cleveland still finds itself in the top third of cheapest airports to fly out of as of 2023. CLE’s $361 average ticket cost is tied for 29th with Nashville and Denver.
CONTRIBUTED
Yes, airfares are up at Hopkins—but it could be worse
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Dude Wipes cleans up with Browns partnership “When we can find somebody who wants to lean into what we’re doing and have fun, it works for both brands.”
By Joe Scalzo
— Ryan Meegan, Dude Wipes CEO
Dude Wipes sponsored the “White Out” halftime show for the Cleveland Browns’ Dec. 28 game against the New York Jets. | CONTRIBUTED
chance that fans could potentially poke fun at this partnership,” Erica Muhleman, the Browns’ SVP of corporate partnerships, said. “But if you do it in fun and engaging ways, it ties in nicely. And there wasn’t anything where we didn’t at least talk to marketing about to make sure they were comfortable. “Obviously, corporate partnerships and marketing work hand-in-hand, and this one our head of marketing was involved with from the beginning so there was that comfortability, not just with marketing but with ownership as well.” In addition to the three White Out games, Dude Wipes sponsored a “Going for 2” campaign, where they donated $2,000 to the Crohn’s and Colitis Foundation for every successful 2-point conversion. (The final total was $8,000.) Dude Wipes also sponsored “Wipe Away Wednesdays,” where fans could engage with the team on social media and “turn the page to the next weekend’s game.” But the company’s biggest promotions, by far, came on Dec. 28. The pregame light show was the Browns’ highest-rated in-game feature of the season with fans, while the halftime show was third, the team said. Even better, 83% of fans remembered that Dude Wipes was the game’s presenting sponsor — the average is around 34% — in part because the company distributed more than 42,000 wipes following the win over the Jets. As for the jersey swap? Let’s call it a learning experience. Before the game, Dude Wipes offered to swap any old Browns quarterback jersey from 19992021 for a white jersey of either Joe Flacco, Deshaun Watson, Nick Chubb or Myles Garrett free of charge. They tried to communicate that there were only 100 jerseys
available — “We didn’t know if we’d even end up giving away 10 jerseys,” Meegan said — but most fans didn’t get the message, leading to Dude Wipes getting, uh, dumped on by unhappy fans on social media. (One woman reached out to the company afterward, saying she’d driven 80 miles with her four sons for the jersey swap. Dude Wipes gave her four Flacco jerseys.)
“That promotion ended up going insanely viral,” Meegan said. “Hand up, we could have done a better job communicating that we only had 100 jerseys and we’re sorry for anyone over the confusion. Hindsight is 20-20, but I wish we would have had 500 or 1,000 jerseys because people were lined up forever.” Dude Wipes’ final promotion came during the wild card playoff
game against the Texans on Jan. 13, when fans at 50 Browns Backer locations had a portion of their bar tabs covered by Dude Wipes. The company also gave away product samples and had more promotions ready for the weeks ahead. “We were hoping for a couple more wins,” Meegan said, “or at least one more win.” Those will have to wait until next season. Both sides are excited about the partnership’s possibilities, although Dude Wipes will always look to push the envelope a little further than the Browns are willing to go. (Case in point: Dude Wipes’ “Best clean, pants down” commercial campaign was a no-go with the Browns.) The Browns are OK with being cheeky, but Meegan knows some ideas will get flushed. “And that’s fine; we’re a chameleon in many ways, depending on the partner and the advertising medium,” he said. “Bathroom humor can get pretty vulgar, so we tried to keep things professional. Overall, the Browns allowed us to be who we are.”
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One of the (ahem) crappy things about being the CEO of Dude Wipes is knowing, partnership-wise, most companies are going to run away from you like you’re a bulldog that just ate a burrito. “We always joke that we’d love to do something with Chipotle or Taco Bell, but they’re probably not going to do anything with us,” said Dude Wipes CEO Ryan Meegan, whose company makes wipes marketed to men. “Especially since we always troll them online on social media, saying things like, ‘You’re going to need us afterward.’” Meegan figured the Cleveland Browns felt the same, which is why he was so surprised last year when Eric Clouse, then the chief commercial officer of the Haslam Sports Group, asked Meegan if Dude Wipes was interested in entering the NFL space. “We always laugh when properties sign us up because we’re like, ‘They don’t know the storm that’s coming,’ but the Browns were great sports about it,” Meegan said. “When we can find somebody who wants to lean into what we’re doing and have fun, it works for both brands. “Them being the Browns, it was a match made in heaven.” Dude Wipes, which was founded in Chicago in 2012, is now available in more than 15,000 stores nationwide, including Discount Drug Mart, which signed on because of the success of the Browns partnership, Meegan said. (Dude Wipes are marketed as “flushable wipes” and the company cites a California study as proof, but the Northeast Ohio Regional Sewer District maintains flushable wipes aren’t flushable.) The Browns built their Dude Wipes collaboration around their inaugural White Out series: three games where the Browns “wiped” their orange helmets and wore all-white helmets and uniforms. The promotion culminated with the playoff-clinching Dec. 28 home game against the New York Jets, where Dude Wipes sponsored successful pregame and halftime White Out shows, and a not-quite-as-successful pregame jersey swap. (More on that in a second.) Dude Wipes’ goal with the partnership wasn’t necessarily to lift sales in Northeast Ohio — although it did, Meegan said — but to boost national awareness and generate headlines and buzz. “We certainly accomplished that,” Meegan said. “Multiple times.” For the Browns, the goal was to find a partner that made sense for the White Out series (check), enhance the fan experience (check) and have fun without going too far (check, mainly because there were multiple internal checks before each promotion). “Fundamentally, there’s a
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A look inside Benesch’s new Key Tower perch New offices on eight floors of Key Tower staked out by the Benesch law firm are bright, sharp and contemporary with many elements to reflect the firm’s culture. But the most surprising point is that the firm took enough space to allow its main office to grow 20% in the future. Efficiency is how Gregg Eisenberg, Benesch’s managing partner, says the firm accomplished that in the same size footprint it vacated last year at 200 Public Square. Even so, it’s staggering to see newly outfitted offices with empty partner, associate and administrative suites for the future at a time when most firms are downsizing. “We plan to fill it all,” Eisenberg said with confidence coming from a recent track record for growing organically and through acquisitions. There is room for 225 attorneys in the new suite. Benesch now has 175 in the Cleveland space. Benesch is following a strategic growth plan it launched in 2015 when it had 140 total attorneys. Now it has 410 attorneys nationally in six offices outside Cleveland from New York City to San Francisco and Shanghai. “And our headquarters remains in Cleveland where we started 85 years ago,” Eisenberg said. “We felt we had to stay in downtown Cleveland. And Key Tower had the room we needed.” The biggest shift in the firm’s office layout is at its main entrance on the 49th floor where it has created what Eisenberg likes to call a “community space.” Instead of the small reception area and isolated waiting room at 200 Public Square, the new space is bright and open with a level of design that’s similar to a hotel or restaurant entry in terms of furnishings and finishes. Besides the area for visitors to sit while waiting for appointments, there is a billboard-sized media wall and a 14-seat bar. A barista prepares coffee full time. Liquor bottles show it also serves as a spot for cocktails for staffers after hours on Thursdays and there is a tablestudded dining room with expansive downtown views. Eisenberg said the space serves several purposes: a location for staff to get coffee and grab a seat to catch up in the mornings as well as firm meetings and for clients. That’s also more important post-pandemic. The firm has in-office days Tuesday through Thursday and what it calls a “work where you work best” approach to the other weekdays. Benesch had a stairway cut into the floor to connect the 48th and 49th floors. Attorneys and administrative staff interviewed in the course of a tour of the Benesch office all point to 49 as the biggest shift in the space. There are also booths in coffee/dining rooms on each floor next to soft seating. The 49th floor also accommodates a massive training room — dubbed the Aronoff room in honor of the famed George Aronoff, a
DANIEL PRUCEY PHOTOGRAPHY/BENESCH
By Stan Bullard
long-serving senior partner — reflecting the firm’s commitment to continuing education. Bob Porter, design director at Vocon, the Cleveland architecture firm, said, “We designed it so the architecture did not get in the way of Benesch being Benesch.” At the get-go, long before Benesch landed at Key Tower, designers were told the firm valued its culture for collaboration between attorneys and education for existing lawyers and the next generation. With warm woods and soft metals, the space is designed to be welcoming and there was nothing stodgy to be found. Benesch also did not miss any opportunity to
incorporate its branding in the space. The seats surrounding the bar are the same blue as the background of its logo. A triangular grouping of three triangles on the logo is replicated in the wood background behind the receptionist’s desk. Visitors see the logo on rugs outside the entry doors on each floor. The white lettering of the logo is replicated on walls in the space, sometimes varied with off-white and cream colors. And, of course, the technology is up to date and conference rooms are set up so in-person professionals and those in other offices or locations are seamlessly present. The other advantage of the
space was that it was already designed to accommodate a law firm as it was formerly occupied by the Cleveland office of Squire, Patton & Boggs, which downsized its footprint within the tower. Otherwise, all eight floors were “stripped down to the bones,” Eisenberg said, to accommodate Benesch. Some big questions for law firms in this period were answered by Benesch years ago. It decided not to consider hotelling lawyers in 2015 when it set on its expansion trek. The firm considered using a standard size for all attorney offices, but Eisenberg said it chose to keep various-sized partner and associates offices, Eisenberg said.
The larger partner offices also fit the firm’s dedication to training younger lawyers. The larger partner private offices have tables to allow them to work easily with more junior lawyers. And associates are frequently located nearby. The partner suites are 14 feet by 14 feet while the associate offices are 10 feet by 14 feet, Porter said, and have one less window than those of the partners In Eisenberg’s office, he has a coffee table surrounded by chairs. “It’s quite a difference to interview someone sitting on a couch,” Eisenberg said, instead of the typical chair facing a desk. His desk, however, has desk blotters for three others to join him at it. David Mayo, a litigator, began his tenure as a Benesch partner when it was located in what’s now known as the Tiffany Glass Building, then the Citizens Building, 850 Euclid Ave., before it moved to 200 Public Square. He looked around his new office and said it was the same size as his first one. “This is lovely,” Mayo said of the new office, where he has a pair of binoculars to take advantage of a view of home plate at Progressive Field during baseball season. The top-to-bottom remake also allowed the workflow at the firm to be improved. Susan Hill, a Benesch legal administrative assistant, observed that the new office benefits from locating attorneys on the same floor by practice area. “It started out that way at 200 Public Square,” Hill said, but that changed during the firm’s growth spurts as it added more space over the years. For example, corporate real estate is at 47 and the corporate/commercial finance groups are at 48. The only section of Benesch’s office where multiple workstations are lined up next to one another is on the 42nd floor, the home for administrative services. All workstations in the law firm’s office are sitto-stand desks. And attorneys have two sit-to-stand setups, one for a desk, the other for their computer screens and keyboards. Aside from its own office, the Key Tower location has benefits for Benesch staffers. “You don’t have to leave the building if you want to get lunch outside the office,” Eisenberg said. “There’s also dining at the Marriott, which is a convenient location for visitors to stay so they don’t have to go outside.” Key Tower and the Marriott are attached on the ground floor. There’s also something to be said for locating in a skyscraper teeming with bankers, accountants, companies and other law firms. Julie Gurney, Benesch’s director of practice and industry initiatives, said she likes the beautiful appearance of the new office but prizes the atmosphere in the building. “There’s a buzz here,” she said, “It’s a vibrant and exciting feeling when you come in, much like you feel when you visit New York City.”
8 | CRAIN’S CLEVELAND BUSINESS | FEBRUARY 5, 2024
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Fogg’s not done building on Seasons Road in Stow By Dan Shingler
Things have been leasing so well in Stow, where Fogg & Co. now has more than 1 million square feet of light industrial space under its roof, the developer says it plans to build more big buildings on spec. And why wouldn’t it? The company already has leased out all of its existing space and only has a new vacancy now because of a tenant’s financial crisis. Its cluster of big buildings on Seasons Road is being used by a growing list of tenants involved in distribution and light manufacturing. “They lease fairly quickly,” said Fogg Chief Operating Officer Mark Ray, who added that the site has become a de facto industrial park is full, save for a 200,000-square-foot space left by biotech firm Athersys Inc., which recently filed for Chapter 11 bankruptcy. “If it weren’t for that bankruptcy, we’d be 100% full now.” Not that he seems worried. While the loss of a tenant taking that much space might set off alarms for many landlords, Fogg already is seeing interest in the Athersys space. And when previous tenants have moved, their space was quickly taken, Ray said, pointing to what happened in 2023 when the delivery company DHL vacated about 80,000 square feet on Seasons Road. “Immediately, a tenant across the way took their space and then another tenant took that space,” Ray said. “We never had any space even hit the market from that.” That consistent demand and the resulting success of the buildings is what’s kept Fogg building more, and why it plans more still at the site. Fogg constructed its first building there in 2015, Ray said, and good response led the developer to build five more buildings, all of them along Seasons Road in Stow. near the border with Hudson on both sides of Route 8. They tend to be about 200,000
Two of the first big buildings in Fogg’s Seasons Road development in Stow lie just east of Route 8 near the Hudson border. | DAN SHINGLER
square feet in size or a little more. That’s the sweet spot for distribution sites in particular, said Ray Fogg Building Methods President Michael Merle. In Columbus, where regional distribution reigns, distribution centers tend to be about 500,000 square feet in size, Merle said. But he said in Northeast Ohio, they tend to serve smaller geographies, and about 200,000 square feet is the “sweet spot.”
others use them for distribution, manufacturing or service. Crown Lift Trucks, for example, services its machines at its facility in the Fogg development. The most recent tenant to arrive, Haydon, makes metal struts and other components for the construction industry and has taken the last building completed, 250,000 square feet on the south side of Seasons Road just west of Route 8. New Jersey-based Haydon will start out using the site for distribution and quickly begin using it for manufacturing as well. It hopes part of its sales come from the Ohio construction market, including work related to the development of Intel and its suppliers downstate. “That’s a big reason we came here,” said Haydon President Chad Collins. Fogg has room for at least
“There was a big void there between Macedonia and Akron, and that was a perfect location for that development.” — Aaron Davis, senior adviser with SVN | Summit Commercial Real Estate Advisors Most of the Seasons Road buildings are occupied by companies that use them for distribution—such as Home Depot, packaging company Veritiv or Eastern Metals Supply—while
three more buildings, Ray said, and is planning them now. One will be the complex’s biggest building yet, if it goes ahead as planned, at 360,000 square feet, also on the south side of Seasons and west of Route 8 at the back of the development. Closer to Seasons, there’s room for two smaller buildings of about 115,000 square feet each, Ray said. He said Fogg plans to build the first of those three starting this year but has not finalized its decision on which will come first. It might not matter. Demand remains strong for spaces like the ones Fogg has built, and it’s in a great location at the right time, said Aaron Davis, senior adviser with SVN | Summit Commercial Real Estate Advisors in Akron. “Fogg does an excellent job,” Davis said. “They have a product that lends itself very strongly to distribution, and it tends to sell itself. ... They have a great location, too. There was a big void
there between Macedonia and Akron, and that was a perfect location for that development.” There have been some recent reports of a softening of the light industrial market in and around Cleveland, where Newmark recently reported that vacancy rates for that sector rose to 5.1% in the fourth quarter of 2023, up from 4.6% in the third quarter. So far, that’s not the case south of the city, though, where Davis said demand is still strong. He said he thinks that might change, though, as more space currently under construction comes on the market. Fogg should still do well though, Davis predicts, because other spaces are being developed east of Akron near Shalersville and not in the same corridor between Akron and Cleveland. “There’s about 300,000 square feet of new industrial and distribution space coming up here soon, but nothing in that area is being done except what Fogg is doing,” Davis said.
By Scott Suttell
Private employers in Ohio could be in line for another rate reduction in their workers’ compensation premiums. Gov. Mike DeWine and administrators of the Ohio Bureau of Workers’ Compensation in late January, asked the agency’s board to approve a 7% rate reduction. BWC estimates the rate reduction, if approved, would lead to Ohio’s private employers paying a collective $67 million less in premiums in the next fiscal year. BWC board members will consider the rate-reduction request at
a meeting on Feb. 23. If approved, the reduction would take effect July 1, which is the start of the state’s next fiscal year, In February 2023, the BWC board reduced premium rates for private employers by an average of 8%. Since then, there has been only one year in which rates rose for private employers: 2017, when the average increase was 1.9%. BWC notes that the proposed 7% rate cut “represents a statewide average,” and that the actual premium chance for an individual employer depends on factors that include payroll lev-
els, recent claims history and participation in various BWC programs. The proposed reduction for private employers would follow a 3.9% rate reduction for public employers — counties, cities, schools and others — that went into effect Jan. 1. BWC says the average rate levels for the 257,000 private and public Ohio employers in the BWC system “are at their lowest in at least 60 years,” a reflection of investment gains and financial management that have strengthened the system, plus a higher level of attention to safety programs.
BLOOMBERG
Private employers could get 7% reduction in workers’ comp rates
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SHOWCASE INDUSTRY LEADERS AND THEIR CAREERS
RECOGNIZE TOP ACHIEVERS IN NORTHEAST OHIO’S PREMIER PUBLICATION New Hires / Promotions / Board Appointments Retirements / Special Acknowledgments
MAKE AN ANNOUNCEMENT Debora Stein / dstein@crain.com CrainsCleveland.com/POTM
Home health care poised for huge growth How Cleveland health systems are providing care outside of hospitals By Paige Bennett
With the home health care market poised for exponential growth, Cleveland’s major health systems are taking different approaches to providing acute care outside the walls of a hospital. Home health is expected to see substantial growth in the near future, increasing by $312.33 million between 2022 and 2027, according to a report released last year by Technavio. Hospital officials say home care can decompress the acute care space and reduce health care costs by preventing readmissions, but it requires a multidisciplinary approach.
What’s leading to the rise? Elliane Irani, an assistant professor at Case Western Reserve University’s Frances Payne Bolton School of Nursing, said the country’s significant aging population is the biggest factor contributing to the rise of home care. By 2050, the population 65 and older is expected to be 83.7 million, which is nearly double the estimated population in 2012, according to the U.S. Census Bureau.
care, and the Centers for Medicare and Medicaid Services (CMS) has been rolling out programs tied to value-based care in recent years. Couple these factors with the pandemic. CMS introduced the Acute Hospital Care at Home waiver during the COVID-19 public health emergency, allowing certain hospitals to provide hospital-level care inside patients’ homes. Many waivers expired when the public health emergency ended last May, but others remained in place under the Consolidated Appropriations Act of 2023, which extended the program until the end of 2024.
Cleve inclu hom
What are Cleveland health systems doing? Expanding home care services has been a big part of University Hospitals’ strategy for succeeding in both the fee-for-service and value-based models, said Dr. Peter Pronovost, UH’s chief quality and clinical transformation officer. Pronovost, who is also the Veale Distinguished Chair in Leadership and Clinical Transformation, said the health system has been looking at how to provide more ambulatory care at home for patients who don’t need to be in the hospital. The system previously had CMS’s home care program, he said, but the program had requirements (providing meals, requiring a certain number of visits per day) that made it restrictive. UH has since developed a home care program that Pronovost said is more flexible, allowing patients to receive the exact amount of care they need. “Now, kind of the post-COVID (world) where we still have staff shortages, many hospitals are struggling financially, and there’s an ever-increasing movement towards value, keeping people healthy at home through home care just makes so much sense,” Pronovost said. “Every hospital, in general, loses money on a general hospital admission. And most (patients) don’t need to be there. And while that patient is in that bed, we’re not able to care for the people who do need to be there, like highly advanced surgery patients and cancer care.” Expanding home care services
“This is a strategy to win on both fee-for-service and value (side).” — Dr. Peter Pronovost, UH’s chief quality and clinical transformation officer Irani said many conditions associated with aging require complex care that can be provided more cost-effectively in the home. Over the last decade or so, the trend has been for patients who are suitable for home care to be discharged slightly earlier and receive care at home, she said. Irani’s work has mostly focused on patients with heart failure as a cardiovascular condition. These patients are ideal candidates for home care, she said, as they are generally at a high risk for readmissions. “(Home care) was perfect for them because you could just discharge them home and then you would know that they wouldn’t be readmitted within 30 days,” Irani said. As the country’s aging population has grown, so has the valuebased care model, which incentivizes providers to meet certain goals related to health care costs and patient outcomes. Americans older than 65 are eligible for Medi-
means UH can deploy care from a primary care doctor or a hospital, provide ICU-level remote monitoring or send a paramedic or nurse to give a patient medicine or do a blood test at their home, Pronovost said. “This is a strategy to win on both fee-for-service and value (side),” he said. “Because on the fee-for-service side, we’re losing money on these medical patients. They get them out of the hospital and, luckily, we have demand, we backfill and meet our community needs for access to surgery and cancer care. We also have share savings contracts where we’re at risk for the total cost of the care and because their readmission rates are low, they don’t have to go to the hospital, our ED utilization is low, and (patients) are
healthier.” Heather Woodard, director of nursing for the Center for Connected Care at Cleveland Clinic, said the pandemic opened up a “whole new window” of options for patients when it comes to care at home. “(There’s) the comfort of just knowing that you can talk to your doctor, and you don’t have to leave your home to receive the same quality of care,” she said. “I want to age in place. I want the services brought to me. My risk of infection, my risk of being contaminated by somebody else who is sick is now lower. Therefore, it can improve my outcomes.” The Clinic’s Center for Connected Care provides clinical programs to help patients with their post-hospital needs, includ-
ing services home care, hospice, medical care at home primarycare physician practice, home infusion pharmacy and home respiratory therapy and others. The center cares for the “sickest of the sick,” Woodard said, such as patients who have undergone surgical procedures and would have previously been in a nursing facility. The pandemic accelerated the number of offerings available through home care, said Tom Lowenkamp, executive director of senior care operations at MetroHealth. The Clevelandbased health system has geriatric primary care clinics and a specialized Red Carpet Care program that’s geared toward patients with chronic conditions or those with poor outcomes. MetroHealth also
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Cleveland Clinic’s Center for Connected Care provides clinical programs designed to help patients with their post-hospital needs, including services such as home care, hospice, medical care at home primary-care physician practice, home infusion pharmacy and home respiratory therapy. | CLEVELAND CLINIC PHOTOS
has a joint venture with the Visiting Nurses Association of Ohio, which provides home health, hospice and mental health care. “Pre-COVID, much of it was focused on the elderly,” Lowenkamp said. “You have that traditional issues around transportation or just frailty. Or post-acute. So, after (patients) have been in the hospital, they need support. PostCOVID, we’re really looking at the entire spectrum.” He said many patients prefer the ability to be seen at home. The model doesn’t work for all cases or types of conditions, he said, but mounting data suggest that home care can result in better patient outcomes and reduced health care costs. Initial findings from a CMS research letter published in the Journal of the American Medical Association found that patients who received care under the Acute Hospital Care at Home program had a low mortality rate and minimal complications. Another advantage to home care, Lowenkamp noted, is that it allows caregivers to see what’s going on in a patient’s home environment, which can help them understand the patient’s social determinants of health. “It’s one thing to talk to the patient when they’re inpatient,” he said. “Do you feel safe in your home? Do you have access to food? Do you have access to transportation? Do you have your medications properly arranged? It’s
another to go out to their home with a nurse or a therapist. See there’s no food in the fridge or the front door lock isn’t working.” In 2021, the Clinic conducted a case study to assess the value of post-acute care at home. It found that it was feasible for a patient population that typically goes to a skilled nursing facility to achieve improvements in function that are comparable to those they would receive in a facility. But officials say that getting home care right requires a multidisciplinary approach. “It takes an inpatient team. It takes a care management team,” said Steven Pamer, administrator and director of rehabilitation services at the Clinic’s Center for Connected Care. Pronovost agreed that collaboration is important to the success of virtual care. UH gets pharmacists, paramedics and other specialists involved in the process to address a patient’s needs, he said. Pronovost predicted that the variety of home care offerings will continue to evolve as interest grows in the area. “We will see an ever-growing number of types of diseases that are managed there, an even greater number of procedures and therapies that are being offered there,” he said. “I think we’ll see many, many more aggressive therapies and even earlier discharge of surgical procedures to get monitored at home.”
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Hannah Ubl
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FEBRUARY 5, 2024 | CRAIN’S CLEVELAND BUSINESS | 13
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CRAIN’S LIST LARGEST COMMERCIAL PROPERTY SALES OF 2023 Ranked by price
Rank
Price/ Square feet or number of units
Property
Price per sq. ft or unit
Property type
Transaction date
Seller
Buyer
$70,609,000 1,121,538 sf
$62.96
Health care
Dec. 19, 2023
Menorah Park
Outcome Healthcare
$55,967,320 647,000 sf
$86.50
Industrial
Feb. 23, 2023
Associated Materials Inc.
Spirit Realty Capital Inc.
$52,000,000 1,300,000 sf
$40.00
Industrial
July 19, 2023
Avgeris & Associates Inc. | Franklin Partners
Aligned Data Centers
$49,094,895 335,736 sf
$146.23
Office
Dec. 1, 2023
McKinley Inc.
First Energy Corp.
$47,000,000 210,497 sf
$223.28
Industrial
July 27, 2023
Broadstone Net Lease Inc.
Real Capital Solutions Inc.
$41,750,000 147,135 sf
$283.75
Retail
Nov. 17, 2023
Site Centers
Carter Properties
$40,000,000 e 281 units
$142,349
Multifamily
Oct. 31, 2023
Weston Inc.
Berger Investments
$38,000,000 900,000 sf
$42.22
Office
June 30, 2023
Sherwin-Williams Co.
Bedrock Management Services LLC
$37,750,000 192 units
$196,615
Multifamily
June 1, 2023
Vision Development Inc.
Monarch Investment and Management Group
$31,500,000 203,153 sf
$155.06
Retail
Sept. 28, 2023
Devonshire REIT II
Marcus Corp.
CLEVELAND UNIVERSITY CIRCLE $31,000,000 11 COURTYARD 154 units 2021 Cornell Road
$201,299
Hospitality
July 6, 2023
Snavely Development Co.
Apple Hospitality REIT Inc.
$24,125,000 204,897 sf
$117.74
Retail
Sept. 28, 2023
DRA Advisors
Rubin Realty
$22,400,000 324,752 sf
$68.98
Industrial
Dec. 13, 2023
LCN Capital Partners
AIC Ventures
$21,300,000 181,596 sf
$117.29
Retail
Feb. 1, 2023
Seritage Growth Properties
Fidelis Realty Partners
$18,000,000 188 units
$95,745
Student
June 7, 2023
Alpha Residential LLC
Gold Zone Rentals
$18,000,000 35,000 sf
$514.29
Retail
April 3, 2023
MedVet Associates LLC Realty Income Corp.
$17,700,000 147,568 sf
$119.94
Health care
Dec. 27, 2023
Menorah Park
Eliza Jennings
$17,500,000 145,006 sf
$120.68
Industrial
June 21, 2023
Scannell Properties
Chick-Fil-A Inc.
$17,500,000 96,613 sf
$181.14
Retail
March 7, 2023
MotorCars Inc.
Martin Management Group
$17,300,000 208,420 sf
$83.01
Industrial
Oct. 2, 2023
Jade-Sterling Steel Co. Inc. | Hurtuk and Daroff Co.
Real Capital Solutions Inc.
$16,700,000 59,139 sf
$282.39
Health care
June 30, 2023
Village at Marymount
Nexus Capital Investments LLC
PARK CENTER FOR SENIOR LIVING 1 MENORAH 27070 Cedar Road Beachwood, 44122 STATE ROAD 2 3773 3773 State Road Cuyahoga Falls, 44223 HAYES AVE. 3 2509 2509 Hayes Ave. Sandusky, 44870 ENERGY BUILDING/ORANGERIE MALL 4 FIRST 76 S Main St. Akron, 44308 TOD AVE. SW 5 5300 5300 Tod Ave. SW Warren, 44481 BAY PLAZA 6 WEST 29998-30006 Detroit Road Westlake, 44145 STANDARD 7 THE 99 W. Saint Clair Ave. Cleveland, 44113 OFFICE TOWERS 8 LANDMARK 101 W. Prospect Ave. Cleveland, 44115 AT ASHLAND 9 DISTRICT 1800 Arrowhead Way Ashland, 44805 SHOPPING CENTER 10 PAVILION 24001-24601 Chagrin Blvd. Beachwood, 44122
Cleveland, 44106 COMMONS 12 CREEKSIDE 9559-9569 Mentor Ave. Mentor, 44060 MAJESTIC PARKWAY 13 5300 5300 Majestic Parkway Bedford Heights, 44146 SEARS AT BELDEN VILLAGE MALL 14 FORMER 4100 Belden Village Mall Canton, 44718 ZONE VALLEY 15 GOLD 1494 Stratford Drive Kent, 44240 EMERGENCY VET & SPECIALTY 15 CLEVELAND CARE 20400 Emerald Parkway Cleveland, 44135 WEILS 17 THE 16695 Chillicothe Road Chagrin Falls, 44023 AURORA ROAD 18 24200 24200 Aurora Road Bedford Heights, 44146 INC. PORTFOLIO 18 MOTORCARS 2926 Mayfield Road Cleveland, 44118 STEEL CO. 20 JORGENSEN 26400 Richmond Road Bedford Heights, 44146 VILLAGE AT MARYMOUNT 21 THE 5200 Marymount Village Drive Garfield Heights, 44125
Crain's does not independently verify all information, and there is no guarantee these listings are complete or accurate. Some prices may include business value in addition to real estate. e. Crain's estimate.
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CONCERTS From Page 1
“I’ll work on that one,” Powell said, laughing. “I’ll go directly through them and see what I can do.” The good news is, the Rolling Stones ARE playing Cleveland in June 2024, the band’s first date in the city since 2002. (The Stones were going to play Cleveland in 2020, but the date was wiped out by COVID-19.) Plus, Billy Joel and Rod Stewart will perform together for a one-night-only date in September, which was another win for the city even if, yes, the press conference announcement could have been an email. “It’s going to be a really big summer for Cleveland,” Powell said. So, how do the Browns land stadium acts? And what are these concerts worth, both to the Browns and the city? To answer those questions — and a few more — I turned to Powell, as well as Barry Gabel, the SVP of marketing and sponsorship sales for Live Nation; David Gilbert, the president and CEO of Destination Cleveland and the Greater Cleveland Sports Commission; and the aforementioned industry executive, who has spent 20 years in the business and knows this market well, but who I agreed to keep anonymous in exchange for his candor. Why do artists/bands choose Cleveland Browns Stadium? The biggest reason, obviously, is because they think they can sell a lot of tickets. Some of that depends on the artists’ popularity (which can ebb and flow), but some of it depends on how long it’s been since they played in each city. That worked in Cleveland’s favor with the Stones, who are only playing 16 cities this summer and whose next-closest sites are Chicago and Philadelphia. “These tours are predominantly driven by promoters who are asking themselves, ‘Is this viable?’” Powell said. “It needs to be the right demographic and the right market.” While Swift and the Stones can sell out anywhere, someone like Cleveland native Machine Gun Kelly only did one football stadium on his 2022 Mainstream Sell-
MYSTERY From Page 1
“Finding that hominin at that site doesn’t mean that they’re definitively the tool user,” Finestone said. “But it really opens up the question of ‘Were these early stone tools made only by our own ancestors? Were they made by our ancestors and our cousins? Or were they made first by our cousins and perhaps our own ancestors co-opted the technology?’ That’s one of the big questions that still needs to be answered.” The group will also be working to determine the time period the tools are from. They currently have a window of 2.6 and 3 million years ago. Learning the exact time period is important for interpret-
Cleveland native Machine Gun Kelly played a concert at then-FirstEnergy Stadium in the summer of 2022. | CLEVELAND BROWNS
out Tour and it was FirstEnergy. Puerto Rican rapper Bad Bunny, meanwhile, did a massive stadium tour that same summer, “but he’s probably not going to do that in this market,” Powell said. Cleveland Browns Stadium has a capacity of 67,431 for football games, but that number shrinks to about 45,000 to 50,000 for concerts, depending on the size of the stage. U2 drew 51,849 for their Cleveland concert in 2017 and Taylor Swift had 51,323, which is pretty much the upper limit. There are only a handful of acts in the world that can consistently sell that many tickets and in Cleveland, they tend to be rock or country acts. “This has always been a great rock and roll town, but it’s also been a phenomenal country town,” Gabel said. “It’s a big concert market and it has been since the mid-60s, when the Belkin family put rock and roll on the map. And it doesn’t hurt to have the Rock and Roll Hall of Fame down the street. A lot of performers love that. Machine Gun Kelly loved the idea of having a display at the Rock and Roll Hall of Fame. “So I think there’s a perfect storm of the fact that it’s a great market, people travel here to come to the Rock Hall, the venue’s really accessible and it makes for a rewarding experience.” ing the findings, Finestone said. As the work continues, Finestone said she hopes to build more connections between the research and Cleveland. Last year, she brought a Cleveland State student on the trip as an intern, and she’s looking to bring another local student this summer. She also hopes to incorporate the research at CMNH, which is undergoing a $150 million transformation project. “It’s something that I’m hoping can have a bit of a tie to Cleveland as I continue running field projects there, and I can take students locally and present it to people in the community,” she said. “Obviously, we’re going through a transformation project at the museum. And I’m hoping that I can also in the future as I continue working at this site bring it to the museum.”
OK, so why don’t they choose Cleveland Browns Stadium? The biggest reason is that it’s outdoors in a cold-weather city. Detroit, Indianapolis and Toronto all have domes, so they can hold concerts year-round. Cleveland is mostly limited to the summer months, which means more competition for stadium acts. “The artist needs to be available and the venue has to be available,” Gabel said. “Things like stadium shows don’t just happen where somebody is sitting in the room and says, ‘Hey, let’s put on a show.’ It’s a jigsaw puzzle.” The Browns’ puzzle is even trickier because the Browns play on a grass field, which is more vulnerable to damage from concert acts than turf. The Billy Joel/Rod Stewart concert is on Friday, Sept. 13 — a week after the NFL season begins — which means a lot of people in Berea had to sign off on it. “Even if I get up to five or six concerts in a year, the main business here is still football and I have to work through that,” Powell said. Making matters tougher, there are plenty of other open-air stadiums within driving distance of Cleveland, from Columbus (where Billy Joel played last summer) to Pittsburgh to Cincinnati to Buffalo. Plus, bands can always opt for slightly smaller Progressive Field,
which is hosting Journey, Def Leppard and Heart in July. “If you think about what’s within a two- or three-hour drive, there are a lot of markets that can support a show like this,” Gilbert said. “If you’re in Denver, you’re it. There’s nothing else around. And even on the East Coast, there are a lot of cities together but the population is so dense, you can do Philadelphia and Baltimore and New York. Here, they’re often only going to pick one or two of those. “But I will say this — the Cavs and the Browns get more than their share, which is great. Part of it is because they want it. They know what it means for Cleveland. I don’t know if that’s always the case everywhere.” So how much do these concerts cost? And how much are they worth? To answer that, we turn to our insider, who didn’t have the exact numbers on this summer’s Cleveland show but felt confident in his ballpark figures, no pun intended. The guarantee for stadium acts themselves can range from $5 million to $10 million per night with a percentage of sales, and the Stones are in the upper part of that range. Then there’s the production/ staffing end, which costs as much as $5 million. For instance, setting up a Rolling Stones stadium
show (stage, lighting, video, etc.) takes 7-10 days, “with a good piece of that round-the-clock work,” the insider said. Tearing it down takes another three or four days. Then you add in the cost of stagehands, security, EMT, police, ushers, cleaners and parking attendants and the expense adds up quickly. The good news is, if you sell 50,000 tickets at an average price of $400, that’s $20 million. Add in parking, concessions and merchandise and you can easily make another $5 million. Our insider said the average Stones fan will spend an additional $150 on ancillary items like food, beer, parking and T-shirts. “I don’t know how this all gets chopped up — and even if you had the right numbers, they’ll never admit to it if they don’t like how it looks — but your exposure might be in the $15 million to $17 million range, and you’re bringing in somewhere between $22 million and $25 million,” the insider said. “And that doesn’t even count the sponsorships for the tour. You could be looking at $5 million or $6 million in profit, if not more. “That’s why it’s one of the biggest tours on the planet.” As for what it’s worth to the city and the region? Well, that’s a matter of debate, although our insider believes that, because of inflation, the economic impact will rival that of hosting the Republican National Convention in 2016. (“And they redid the airport for that,” he said.) But even if you don’t buy that optimistic outlook, the concerts will draw people downtown who would have otherwise spent their money elsewhere, whether that’s a neighboring city like Akron or Canton, or a neighboring state like Michigan or Pennsylvania. Plus, it doesn’t hurt to use Cleveland Browns Stadium a few extra times, something Powell and Co. are increasingly trying to do. “People talk all the time how, in the U.S., stadiums are publicly funded,” Gilbert said. “These concerts will bring in tens of millions of dollars (to the city) that would not have been here otherwise. The more uses the better in terms of showing the value back to the community of having a building like this.”
“It’s something that I’m hoping can have a bit of a tie to Cleveland as I continue running field projects there, and I can take students locally and present it to people in the community.” — Emma Finestone, assistant curator of human origins at the Cleveland Museum of Natural History Emma Finestone is part of a team that is researching the earliest stone tools. | CONTRIBUTED
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S
Cleveland is among top cities for office-toapartment conversions By Nazmul Ahasan, Bloomberg
Downtown Cleveland has the largest amount of empty office space in the region, about a million square feet. | DAN SHINGLER
OFFICE From Page 1
That is the picture that emerges from the recently released Newmark brokerage’s Cleveland office report and interviews with office experts as the push-pull between business owners seeking increased office attendance and workers seeking to work-from-home continues after the COVID-19 pandemic dampened demand. “Even a good landlord with good operating cost controls is seeing their operating costs go up,” said Marc Braun, a Newmark managing director, in a phone interview. “Property maintenance costs are up and the cost of constructing tenant improvements is up. In the past (even with slight renovation costs) a new lease would cost $3 a square foot to $4 a square foot in terms of painting the walls and adding new carpet. Now that’s $6 a square foot to $10 a square foot.” Rico Pietro, a principal at Cushman & Wakefield CRESCO brokerage of Independence, makes the same point. “The rents are too skinny,” Pietro said in a phone interview. “It’s more expensive to clean, heat, air condition and maintain a building. The landlords can’t afford to eat that pass-through. With companies that lease space generally not being willing to commit to more than three- or five-year leases while they watch conditions, that makes it harder to amortize the costs.” The boost in rents comes into play when tenants need to sign a new lease to expand or contract— or their current rent expires. Pietro points out one positive in the situation: If office values plummet as the brokerage industry expects, that will lower the property tax burden. Office market surveys, which cover rental buildings of more than 10,000 square feet in size, show that by the numbers, the region’s overall asking rate increased to $19.63 a square foot
as of the end of 2023, up 19 cents per square foot over the year, Newmark said. Year-over-year asking rent growth climbed 2.4% at the end of the year, although rents vary depending on which submarket the building is in, its age and other factors. The good news in the report is that tenants vacated less space than the prior year and minimal office building construction in the region meant 448,210 square feet was emptied in 2023. That is less than half the 947,519 square feet given back in 2022, a measure the office building business terms as negative absorption. Newmark observed the market has lost occupancy each of the past three years, coinciding with when the pandemic juiced up trends already reducing office demand. However, market conditions vary within each submarket in the Cleveland area. Downtown Cleveland has the largest amount of empty office space in the region, about a million square feet. However, its vacancy rate is not the highest because it is the region’s largest office submarket. Vacancy downtown at year-end 2023 was 24% at the end of 2023 from 21% at the same time in 2022. The south suburbs, those surrounding I-77 south of Cleveland, had the region’s highest vacancy rate at 26%, up from 24% at the end of 2022. The strongest office submarket remains the eastern suburbs— generally the towns along I-271 south of Cleveland—came in at 16%, up from 14% in 2022’s like period. The west suburbs, along I-90 west of Cleveland, had 20.8% vacancy at year-end 2023 compared to 20.7% at year-end 2022. And the southwest suburbs, which align with I-71 south of Cleveland, had a vacancy of 16% at the end of 2023, up from 14% in 2022’s like period. Adding to the challenge of shifting market fundamentals for
CLASSIFIED SERVICES CLASSIFIED SERVICES
offices, the outlook has worsened as interest rates were hiked the past two years to fight inflation and building owners are finding lenders have less appetite for the troubled asset class. Pietro said the situation makes it difficult for office tenants to choose a course, even though the office demand situation may sort itself out. “The office occupier is desperate for predictability,” Pietro said. “What’s the right size office? How much flexibility will I need to increase or reduce space? And will the landlord still be the landlord three years from now?” The upshot is that tenants seeking certainty should weigh moving to top-quality or class-A buildings or should look at gravitating to proven markets such as Beachwood or Westlake. “We don’t know what conditions and the quality of life will be downtown in five years,” Pietro added. Braun takes solace in his belief in humanity. “People go to college to make friends,” he said. “That can’t end when you graduate and go into the workforce and work at home. You need contact with other people and mentoring. Many of my best friends are people I have met through work over the years. It can’t go on the way it is.” Braun also sees opportunities for people and businesses who embrace change. “You may need to grow your office or reduce your office. There is space available to do that,” he said. Looking back, he said he has seen the office market strengthen and weaken over the years. The contrast in markets for office space is striking, especially when taking the long view back to the 1980s when the office market was in a big growth mode. “I remember in the 1980s when I took a tenant to a space he really liked,” Braun recalled. “I told him that he better make an offer if he wants it. In two weeks that space was gone.”
Developers are set to repurpose aging office buildings into apartments at a record level this year, as the remote work trend has pushed up vacancy rates for commercial space across American cities. This year, more than 55,300 housing units are being transformed from office buildings, a more than fourfold increase since 2021, according to a study out Jan. 22 from apartment listing service RentCafe. While demand for residential space continues to drive the surge, the 22% year-over-year growth is modest compared to the prior two years. And Cleveland is among the top 10 U.S. cities for this year’s planned conversions.
trix, RentCafe’s sister company. Local and state governments are increasingly incentivizing the conversions, especially as a growing number of office buildings “sit empty in the wake of hybrid work and preferences for newer, more efficient office space” after the pandemic, Ressler said in an email. Leading the charge this year is the Washington, D.C., metropolitan area, where plans are underway to convert office space into 5,820 apartment units, an 88% increase from last year. Following closely is the New York metro area, with 5,215 new apartments planned from former office spaces. A significant contributor to New York’s growth is the makeover of 25 Water Street in Manhattan — previously a JPMorgan &
This year, more than 55,300 housing units are being transformed from office buildings, a more than fourfold increase since 2021. — RentCafe RentCafe’s study estimates Cleveland will convert around 2,000 units, the sixth-most behind cities like New York and Los Angeles. That revelation is likely not a surprise to anyone who’s been following the trend. The report adds that former offices represent 63% of the city’s total conversions, though it also claimed that the conversion process had actually slowed in the city by 10% over last year. Though the rate of growth for these types of conversions has slowed due to higher financing costs and long lead times associated with zoning and permitting, the trend is here to stay, according to Doug Ressler, business intelligence manager at Yardi Ma-
Chase Co. outpost — into 1,263 apartments, the country’s largest project of its kind. In Dallas, which ranks third, the 3,163 housing units being crafted from offices represent 83% of all types of conversions — the highest share among the top cities. Dallas added more jobs over the last year than any other metropolitan area, with an increase of almost 140,000 in November 2023. Meanwhile, Chicago is ranked fourth despite a 9% decline from last year. The Windy City’s largest project, at 135 South LaSalle St., is set to yield about 430 units, roughly a third of the city’s total from former corporate buildings.
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EXECUTIVE RECRUITER
2/2/24 1:19 PM
PERSONAL VIEW
2024 should be a return to the old normal for investors the economy to stem the destructive effects of massive closures along with supply constraints brought about by the pandemic. At the same time, significant amounts of stimulus were provided by fiscal authorities. Then, as restrictions were relaxed and/or lifted, demand resumed while supply remained constrained. This sparked an inflationary impulse not seen in more
PEOPLE ON THE MOVE
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To place your listing, visit www.crainscleveland.com/people-on-the-move or, for more information, contact Debora Stein at 917.226.5470 / dstein@crain.com ACCOUNTING
FINANCIAL SERVICES
HEALTH CARE
Bober Markey Fedorovich
Ancora
Marie Lenarduzzi, CPA, joins BMF as a Partner in the firm’s Tax Services Group. With expertise honed over decades with Big 4 and regional firms, Marie specializes in tax provision management, mergers, acquisitions and compliance across diverse industries. Marie’s prior leadership role as a Tax Practice Leader adds depth to her industry knowledge. She brings a strong commitment to professional growth and advocacy, evidenced through her involvement in mentoring programs and community service.
Ancora is happy to announce that John Micklitsch, CFA, CAIA has been promoted to President & Chief Investment Officer. John has served as CIO since 2013 after joining Ancora in 2006. He will broaden his existing leadership role to include President while continuing to act as a clientfacing investment professional and serving on Ancora’s Executive Committee. John has over 27 years of industry experience and earned a Bachelor of Arts from Duke University and an MBA from John’s Hopkins University.
Crystal Clinic Orthopaedic Center Interventional pain specialist, Timothy Ko, M.D., has joined Crystal Clinic Pain Management. Dr. Ko is a board-certified and fellowship-trained pain medicine specialist and anesthesiologist. He uses minimally invasive techniques and procedures to treat chronic pain and restore function. Dr. Ko is a member of the Ohio Society of Anesthesiologists and the American Society of Anesthesiologists. He sees patients in Fairlawn and Independence.
FINANCIAL SERVICES
Fairway Wealth Management, LLC
BANKING
The Middlefield Banking Company Middlefield Bank has named Michael Cheravitch as EVP/ Chief Banking Officer, overseeing all commercial, business, and consumer banking channels, including digital banking, the retail branch network, consumer lending, investments, and treasury management. He joins MB from F.N.B. Corporation, where he served as SVP/Regional Banking Executive. In addition, his career includes leadership roles at The Cornerstone Fund, Huntington National Bank/First Merit, and Citizens Financial Group/Charter One.
Shawn Hapanowicz has joined Fairway as Director, Business Development. He helps introduce Fairway’s full scope of Hapanowicz wealth management services to the community at large. Shawn has 20+ years’ experience working in the private banking sector and looks forward to bringing Fairway’s holistic, fiduciary approach to a broader group of clients. Taylor Papiernik has joined Fairway as Papiernik Wealth Manager. Taylor holds the CFP designation and has 9+ years’ experience working with high-net-worth families. He will be responsible for delivering Fairway’s full scope of services to both existing and new clients of the firm. Taylor’s commitment to each family is to be an expert on both their personal and financial wellbeing.
LEGAL
Benesch Phil Eckenrode has joined Benesch as a Partner in the firm’s Labor & Employment Practice Group. Phil maintains a diverse practice combining work with clients on matters of employment law, complex commercial litigation, and outside general counsel services. Formerly serving as GC for a privately held company, Phil appreciates the bottom-line impact of litigation strategies as well as how to navigate an ever-changing workforce.
persists, and the numthan a generation. ber of new jobs being Once inflation took created continues to hold in 2021 and pergrow. Against this backsisted into 2022, the Fed drop, we see corporate had to end its ultraprofits rising modestly accommodative stance in 2024, but stocks may and raised interest rates experience some chopdramatically to where piness given current real yields are again in valuation levels, hints of positive territory, the George some short-term comfirst sign of evidence Mateyo is placency, and customthat the days of the “old chief ary election-year dynormal” may be back. investment namics. Positive real yields officer at Key Historically, during are not necessarily bad, Wealth. election years, equity but they could imply a much more discerning lending returns generally tend to be environment lies ahead of us. weaker. This observation, in Consequently, some borrowers large part, is due to outsized levwill struggle, others may see els of volatility experienced in their access to credit to shrink or two of the more recent election disappear altogether, and others years, which were influenced by will find that their cost to borrow non-political events including has increased. As a result, some the Great Financial Crisis (2008) projects may not receive fund- and COVID-19 (2020). In many ing, some job openings may not election years, equity markets be filled, and the economy could have generated respectable but not spectacular returns in the slow. Once the Fed began applying first half of the year, only then to “a pound of medicine” to combat meander sideways during the elevated inflation, the initial re- subsequent summer months, sponse was “an ounce of cure,” before sliding south between Aufor while inflation moderated, its gust and October. But once the decline occurred very gradually. election results were known, In 2023, more progress was stocks typically stabilized and ulachieved, but the patient is not timately reverted higher in the completely healed, and addi- months that followed. Regardless of the election retional “medication” might be needed. Positively, inflation is sults in November, we foresee receding, and additional moder- modest upside for equities and ation seems likely. That said, we believe stock market rallies do not envision inflation falling should broaden out, benefiting and remaining below the Fed’s the “other 493” in the S&P 500 In2% target for a prolonged period. dex relative to the “Magnificent Instead, we believe inflation is Seven.” Bonds, in our view, are likely to hover between 2% and also poised to add to recent 4%, also consistent with the “old gains, although we would caunormal” regime, and not the tion that bonds may exhibit 0%-2% range inflation wavered continued volatility for reasons beyond the Federal Reserve. Refrom 2009-2019. Perhaps the biggest imbalance newed concerns over our counthat existed in recent years was try’s overall indebtedness and the excess savings among con- budget deficits surfaced in midsumers, which rose to more than 2023 and have since subsided, $2 trillion at the height of the but the underlying issues behind pandemic. The presence of these these concerns have not been savings enabled the economy to addressed, a potential source for exceed expectations in 2023, the volatility. The pessimism felt this time manifesting through robust consumer spending. Today, these last year has been replaced with savings have diminished sub- some recently discovered optistantially (returning closer to the mism. The contrarian in us views “old normal”) which should cur- this recent shift in sentiment tail future spending growth as with skepticism, but on balance, well. Nevertheless, we remain despite numerous challenges cautiously optimistic that the and sources of uncertainty, our economy can continue to ex- belief in human ingenuity conpand so long as wage growth tinues to run deep.
CONTRIBUTED
F
the price of money was exceptionally cheap, and borrowing was easy to secure. The Federal Reserve facilitated this by keeping interest rates at/near zero and providing considerable liquidity via its expansive balance sheet. In 2018-19, a “normalization” process was underway. But in 2020, in response to COVID-19, the Fed injected even greater liquidity into
or investors, 2024 may be characterized as a return to the “old normal.” So, what exactly does that mean? To answer this and before we look ahead, we must briefly revisit the past, for in order to know where we might be going, it is important to know where we’ve been. During the 2007-08 global financial crisis and the ensuing decade,
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NOTABLE LEADERS IN FINANCE
Volume 45, Number 5 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except no issue on 1/2, 5/27, 7/8, 9/2, 12/2 and 12/30, by Crain Communications Inc. at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1256. Periodicals postage paid at Cleveland, OH, and at additional mailing offices. © Entire contents copyright 2024 by Crain Communications Inc. All rights reserved. Reproduction or use of editorial content in any manner without permission is prohibited.
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