Crain's Cleveland Business

REAL ESTATE: Fierce contests for scarce houses bring a long-awaited recovery. PAGE 10

SPORTS BUSINESS

Cleveland State is hoping to keep men’s basketball coach Dennis Gates ‘as long as we can.’

PAGE 6 CRAINSCLEVELAND.COM I MARCH 1, 2021

MANUFACTURING

Goodyear hopes to capitalize on differences

Replacement market, China sales are keys to Cooper deal

BY DAN SHINGLER

With its recently announced $2.8 billion acquisition of Findlay-based Cooper Tire, Goodyear Tire & Rubber Co. is getting more than a new brand name it intends to keep.

The Akronbased tiremaker is also getting market share in segments in which Cooper excels, additional manufacturing capacity and a much larger presence in China, where GoodWells year and Cooper Inside: Deal each have one faccould boost tory, said GoodGoodyear’s tech, year chief finansustainability cial officer Darren edge. Page 18 Wells.

“It’s a big improvement in our position in North America,” Wells said. “At the same time, it nearly doubles our presence in China … and that’s the one market in the world where Cooper has a lot of original equipment business.”

The deal is a good one for Goodyear, according to Wells — as well to analysts and investors, who at one point last week bumped up the company’s stock price by more than 20%.

It might be because the companies are very different.

See GOODYEAR on Page 19

MANUFACTURING

MAJOR MELTDOWN Shipping slowdowns, disrupted labor forces have caused problems up and down the supply chain

Demand is high, but supply chain challenges have meant companies can’t produce as much as they’d like, said Brian Lennon, CEO and president of General Die Casters in Twinsburg. General Die Casters makes aluminum and zinc die castings for a variety of industries. | GENERAL DIE CASTERS

BY RACHEL ABBEY MCCAFFERTY |

With COVID-19 cases dropping and vaccines rolling out, the end of the pandemic seems to be in sight.

But some of the problems it’s created for business are likely to persist a bit longer.

In the manufacturing space, companies are dealing with a host of supply chain challenges, from slower shipments to spiking prices.

The issue is garnering federal attention. President Joe Biden on Feb. 24 called for a comprehensive review of risks in a variety of domestic supply chains like semiconductors, high-capacity batteries and pharmaceuticals.

The executive order also mandates that the reports include policy recommendations on how to address the risks found in these supply chains. But for now, companies have to navigate these hurdles on their own.

Overall, supply chain issues have

been coming and going throughout the pandemic, creating a bit of a “whack-amole” situation for companies, said Guhan Venkatu, group vice president at the Federal Reserve Bank of Cleveland.

There’s been everything from postal delays to raw material shortages to a freight system stressed by online orders to workforces out due to COVID. And those challenges have led to higher raw material and freight costs.

See SUPPLY CHAIN on Page 20

EMPLOYMENT

Minimum wage hike is overdue, but employers worry about impact NEWSPAPER

VOL. 42, NO. 8 l COPYRIGHT 2021 CRAIN COMMUNICATIONS INC. l ALL RIGHTS RESERVED

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BY JEREMY NOBILE

Mallorca owner Laurie Torres worries a $15 federal minimum wage coupled with abolishment of the tip credit, as proposed by Democrats in the House and Senate, could have a detrimental impact on her downtown Cleveland restaurant.

Even if phased in over the coming years through 2025, such changes

would likely mean raising menu prices and cutting employee hours to offset higher labor costs, she said. An immediate increase would be even tougher to manage.

Torres said she is relieved the measures can not be considered as part of President Joe Biden’s $1.9 trillion COVID relief package working through Congress, as a Senate official ruled Feb. 25. She’s hopeful lawmak-

ers don’t push the legislation through separately.

In good times, restaurants of all types tend to operate on margins of between 3% to 5% on average, pretax, according to the National Restaurant Association. Those margins have largely narrowed amid the pandemic.

See WAGE on Page 20

2/26/2021 3:23:41 PM

HEALTH CARE

White paper explores health disparities, pinpoints solutions

Research by UnitedHealthcare and Health Action Council lays out tips for wellness programs BBY LYDIA COUTRÉ

As employers consider and implement education and wellness programs to help control employee health care costs, it’s important to consider the varied and nuanced factors that impact health.

That’s the overarching message behind a recent white paper by UnitedHealthcare and Health Action Council (HAC), a nonprofit coalition representing midsize to large employers that aims to enhance human and economic health.

When analyzing health data, averages can hide a lot, said Craig Kurtzweil, vice president of the UnitedHealthcare Center for Advanced Analytics.

“You need to look underneath that; you need to look at some of the variability,” he said. “And then start to think about — knowing what you know about your population and where those gaps and opportunities are — how do you start to develop a much more customized, targeted solution?”

The study analyzes five chronic health conditions (hypertension, diabetes, back disorders, asthma and mental health/substance use) across more than 280,000 employees of Health Action Council members who are insured by UnitedHealthcare, using data from UnitedHealthcare and

its third-party administrator line of business UMR, as well as pharmacy data from OptumRx, also part of UnitedHealthcare Group.

The white paper offers a more robust analysis than individual employers may be able to take on, Kurtzweil said. These broader insights can help employers address employee health issues, said Patty Starr, President and CEO, Health Action Council. For instance, it may offer context for an environmental impact or regional issue that has affected health at one of a company’s sites — which data from one employer may not reveal.

The study, “Finding the uncommon: Revealing disparities in care and prescribing for common conditions,” is the fourth annual white paper that HAC and UnitedHealthcare have done together, examining various influences of health not seen in normal claims data alone.

Breaking down data into subsets helps identify opportunities to address disparities, improve employee health and make care more affordable, Starr said.

Within the population included in the study, data revealed a number of disparities, including: Blacks are 63% more likely to have hypertension; women with hypertension are sub-optimally treated with evi-

Kurtzweil

Starr

dence-based drugs across all age groups; those in rural areas have a disproportionate percentage of mental health and substance use diagnoses.

Oftentimes employers apply a one-size-fits-all solution across their entire employee population, Kurtzweil said, but more comprehensive data like those in the white paper can help provide “pinpointed solutions,” which can be more effective.

The solutions might be more customized messaging about wellness and health programs to ensure employees are equipped and educated with what they need to be active in their health, he said.

Employers can also examine whether their internal policies may contribute to employee health issues, Starr said. For instance, is a company’s time off policy driving ER misuse?

Although the study does include a

few months during the pandemic, Kurtzweil said that the focus was on pre-COVID-19 data to examine health disparities that have long existed. The pandemic drew attention to these issues and to the importance of holistic health of employees, Starr said.

The pandemic also significantly reduced preventive care and wellness in the past year, Kurtzweil said.

In a post-COVID world, employers need to focus on returning to care and wellness to help bring compliance, screenings and health engagement back to 2019 levels — and then improving upon them going forward, he said.

The paper ultimately lays out several tips for employers to jumpstart their strategies, including targeted wellness programs and education to address conditions prevalent in an employee population; an exercise, stretch or meditation program to decrease injuries and their severity; and targeted messaging around health.

It also suggests promoting virtual care where appropriate, covering medications for certain chronic conditions as preventive care and looking for opportunities within a benefit plan design to implement protocols around the continuum of care, such as requiring physical therapy or chi-

ropractic care for back disorders before more aggressive treatment options.

Some of HAC’s employer members have begun to think about wellness programs through a risk-management lens, Starr said. For instance, a company that adds stretching to the start of a shift would not only measure employee participation, but also looking at injuries and short-term disability before and after implementing the program.

“How I start to measure and think that through changes my dialogue and my measurement and expands it,” Starr said.

The pandemic brought new awareness to health issues that existed before COVID-19, Starr said. This offers employers a “phenomenal opportunity” to evaluate the programs they offer around employee health, how they are measured and ultimately, whether it has worked for them, she said.

“If it has, that’s great. How can we enhance and advance and grow it further?” Starr said. “And if it hasn’t, what can we change to make the type of improvement we want to both on a short-term basis and on a long-term basis?”

Lydia Coutré: lcoutre@crain.com, (216) 771-5479, @LydiaCoutre

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EDUCATION

Cuyahoga Community College, RTA link up on job training hub Transit authority has urgent need to develop new talent, hopes to give leadership ranks a lift

BY AMY MORONA

Cuyahoga Community College and the Greater Cleveland Regional Transit Authority are teaming up on a new job training hub initiative.

The move comes as both institutions have been hit hard amid the pandemic. Tri-C’s fall 2020 enrollment declined by 19%, and RTA’s already declining ridership reportedly saw big drops last year, too.

In a recent release announcing the program, officials said the focus is on helping RTA find new employees, upskill its current workforce and boost its leadership ranks.

The institutions have collaborated in the past, but this initiative solidifies the working relationship even more. Officials said there’s a memorandum of understanding between the two organizations for the job hub.

The transit group is paying the college for any training sessions it provides.

“Our growing partnership with RTA works to enhance employment opportunities at a time when so many in our community are facing financial hardship,” Tri-C president Alex Johnson said in the statement.

“These programs are more than an investment in our city — they’re an investment in people.”

Workforce development programs have long been a staple of communi-

Cuyahoga Community College and the Greater Cleveland Regional Transit Authority are teaming up on a new job training hub initiative. | GREATER CLEVELAND REGIONAL TRANSIT AUTHORITY

ty colleges’ offerings. This includes more transactional pairings, such as when an employer reaches out to an institution to help train a specific amount of people on a set skill.

But the most successful partnerships have one thing in common, said Jim Jacobs, president emeritus of Michigan’s Macomb Community College and a research affiliate at the Community College Research Center.

“It’s a long-term, continuous rela-

“THESE PROGRAMS ARE MORE THAN AN INVESTMENT IN OUR CITY — THEY’RE AN INVESTMENT IN PEOPLE.” — Tri-C president Alex Johnson

tionship which is based on mutual gains and the willingness of both sides to see each other as important

players in the community,” he said.

The goal for RTA to develop more talent is an urgent one. About a third of employees across all departments will be eligible for retirement over the next four years, officials said.

“We’ve seen a downward turn in people that are wanting to go into skilled crafts or mechanical trades,” said George Fields, RTA’s deputy general manager for human resources.

So it can be tough to hire mechanics or bus operators, positions Fields said RTA is “almost always” looking to fill. This collaboration will help develop people who are interested in those types of roles, though it’ll focus on other opportunities, too.

Here’s an overview on how that pipeline for drivers works. RTA recruits and screens eligible students.

They then head to Tri-C to take a 40hour course to earn their temporary commercial driver’s license, or CDL, before moving back to RTA to complete more specific training. Students eventually take their permanent CDL testing at the Ohio Bureau of Motor Vehicles.

Fields said this roughly 12- to 14week process streamlines some barriers people previously had experienced when trying to get into the industry and gets more people in the candidate pool. Students earn $16 an hour during this time. The rate gets bumped up to $18.27 after they grad-

uate and join RTA’s staff. The amount can hit more than $30 after five fulltime years on the job.

Keviona Weakley is working to become an operator right now. After previously working in the food industry, the 31-year-old spends her days learning how to navigate the freeway and memorizing bus routes.

“I do like the driving, but I would like to see what else RTA has to offer,” she said.

There are plans to roll out more opportunities through the partnership throughout the year, including supervisory training taught by the college to upskill RTA’s current workforce.

Plus, RTA plans to tap into talent via existing courses such as Tri-C’s “Workforce Success Program,” a class aimed at teaching people workplace skills like interviewing and time management, to fill entry-level labor and janitor positions.

“We’ll be working together to get even more in tune with what types of workforce development opportunities might fit the communities that we serve,” Fields said. “This is really an ongoing partnership and ongoing opportunity for both of our organizations to make this education and employment impact in Northeast Ohio.”

Amy Morona: amy.morona@crain. com, (216) 771-5229, @AmyMorona

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REAL ESTATE

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Scannell Development Co. of Indianapolis has lined up two more sites, taking to four the number of industrial buildings it plans to construct this year in Northeast Ohio.

The developer of Cornerstone Business Park in Twinsburg and multiple buildings in Strongsville is moving to closer-in suburbs to find infill locations for its next two projects here, in Valley View and Bedford Heights.

Scannell plans to construct a 300,000-square-foot warehouse at 5585 Canal Road in Valley View and a 145,000-square-footer on the 24000 block of Aurora Road in Bedford Heights.

Tim Elam, a Scannell managing director, said in an interview, “We’re trying to find good infill sites as tied into the market as we can. It’s hard to find them, but we’re also working on a few more.”

The developer is working through the planning process with the Valley View project and has a request for architectural design review pending March 9 for the Bedford Heights project.

The Bedford Heights project is such an infill location that it technically calls for demolishing an existing building, the 50-year-old Aurora Upper Intermediate School, which was closed 15 years ago and has had several temporary tenants.

Scannell acquired the site from the Bedford School District for $900,000.

It previously obtained a rezoning to industrial from institutional use from the City of Bedford Heights to ready the project.

Terry Coyne, a Newmark vice chairman who represents Scannell on the Bedford Heights building, said the site will have strong visibility, and the building will be designed to serve multiple tenants rather than a single one. He said it may benefit from a substantial number of construction contractors and suppliers that already have located in the area.

Elam said it’s likely about three tenants will occupy the Bedford Heights structure. He said planning a speculative, multitenant building differs from building a structure for a single tenant. For instance, a mul-

The industrial buildings to be built in Valley View and Bedford Heights by the Scannell Development Co., a partner in constructing Cornerstone Business Park in Twinsburg (above), will share a similar look. | CONTRIBUTED

titenant building needs to be designed so doors, windows and electrical controls are located to serve occupants of different sizes.

“There’s a little guesswork due to the site, but we draw on our experience dealing with multiple tenants over the years,” Elam said.

Mayor Fletcher Berger of Bedford Heights said he was “pleasantly surprised” when Scannell surfaced as the buyer of the school property. The company just last year completed a large building on Miles Road in the suburb that’s now occupied by an Amazon delivery center.

“It’s been little used since the district closed the school there,” Berger said. “It’s time for it to go.”

There is some empty land nearby that Berger hopes may yield another project soon to give a fresh look to that stretch of the artery in Bedford Heights.

Meanwhile, Scannell on Feb. 16 obtained a contingent approval from the Valley View Planning Commission for its plans, according to Valley View Mayor Jerry Piasecki.

“It’s an exciting project,” Piasecki said. “Scannell indicated it plans to move forward quickly.”

The two projects are in addition to two buildings that Scannell previously announced it would construct at Cornerstone this year.

Elam declined to say how much the Valley View and Bedford Heights proj-

ects will cost to construct. However, the Valley View project will cost about $20 million and the Bedford Heights building about $10 million, according to industry estimates for constructing such buildings. The estimates do not include costs for adapting space for specific users, which vary widely.

The Scannell projects are part of a boom in constructing industrial properties in the country and region driven by the rise of e-commerce companies such as Amazon and Wayfair, and the reshoring of manufacturing.

Even with the rapid expansion, demand has been keeping vacancy in the region low.

The Cushman & Wakefield Cresco brokerage estimates 3.7% vacancy in industrial buildings throughout Northeast Ohio as of the end of 2020.

The areas for the latest Scannell projects are, incredibly, in even better shape with less available space.

In the eastern suburbs, which include Bedford Heights, vacancy is 3.4%. The south suburbs, which include Valley View, have a 3% vacancy rate, the Cushman & Wakefield Cresco report stated.

Scannell has developed 85 million square feet of property over the last 30 years, located in 44 states and three provinces in Canada.

Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

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GOVERNMENT

Public transit advocates make the case to boost funding in state budget Substitute to House Bill 74 would increase funds provided to transit agencies by $90M annually

BY KIM PALMER

Responding to a barrage of criticism from transit advocates, Ohio legislators have significantly boosted funding for public transportation in the 2021-2022 budget.

The Ohio House Finance Committee on Thursday, Feb. 25, accepted a substitute to House Bill 74, committing $97 million a year in total funding annually for public transit agencies hit hard by low ridership and pandemic-related expenses.

The increase is a far cry from the paltry $7.3 million a year, in state funds only, originally proposed by Gov. Mike DeWine’s executive budget for the transportation agencies.

That was a 90% drop from the $70 million in funds in the 2020-2021 budget.

“It was a welcomed surprise,” said Jason Warner, director of strategic engagement for Greater Ohio Policy Center, a nonprofit, nonpartisan organization advocating for smart growth strategies, of the substitute bill being accepted by the committee The bill proposes a total of $193.7 million over two years in a mix of state and federal funds for public transit.

Legisislators in the statehouse, Warner said, are willing to commit $46.3 million in general revenue funds, $66 million in federal “flex funds” and $81.4 million in Federal Transit Authority funding to public transportation over two years in the 2022-23 biennial budget.

Originally, the state provided federal flex funds, but if this amended budget item passes, $33 million annually will be “set aside” by the Ohio Department of Transportation for transit use and public transportation.

More than $40 million a year in Federal Highway Administration (FHWA) funding comes from what the state receives from the 18.4-cent federal motor fuel tax. Warner explained that Ohio’s motor fuel tax can only be used to fund highway and bridge construction and maintenance (a restriction enshrined in the Ohio Constitution).

The addition of the federal flex funds is something his group has been advocating, Warner said.

“Even before we saw the executive budget proposal, Greater Ohio was going to be advocating for the use of the federal flex funding,” he said. “We do think that there’s a place for the federal flex funding, so we’re supportive of that.”

The original sparse funding proposal from DeWine’s office came as a surprise to some Ohio lawmakers who were hoping to make sure transportation services could safely continue for essential workers and the 10% of Ohioans without a vehicle during the pandemic.

Ohio Sen. Sandra Williams, D-Cleveland, said she was told the administration justified the deep cuts to public transit agencies because of funding provided from the CARES Act.

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“The reasoning from the administration is that budget was reduced because the state transportation systems received about $700 million in CARES Act funding,” said Williams, who recently was appointed to the state Senate’s transportation committee.

Those funds, Williams said, were for COVID-19 related expenses only, and most of the funds were spent before the end of 2020.

“These agencies spent all that money right away, so they would not lose it. So many of those places may not even have money left over for this year,” she said.

Ohio Reps. Mike Skindell, D-Lakewood, and Terrence Upchurch, D-Cleveland, introduced House Bill 141 before the amended bill was accepted by the committee. HB 141 would augment the $7.3 million in transit funding with $100 million from the state’s general revenue fund and $50 million from federal flex dollars annually.

The governor’s budget, Skindell said when introducing HB 141, ignores the “need to create a transportation system that addresses Ohio’s changing demographics and transportation preferences, links people to jobs and training opportunities, and provides access to businesses and health care.”

Even the $70 million a year committed to transit agencies in the previous budget, which was treated as a one-time increase to address major infrastructure fixes around the state, ultimately was reduced because of COVID-19 cuts required by the governor at all state agencies, Skindell said in a statement on the bill.

Ohio’s public transportation funding has been on a downhill trajectory for nearly two decades. A budget that sent $42.3 million a year in 2000 to transit agencies fell to $6.6 million in 2018. That ranks the state among the lowest per capita of any state on public transportation.

“The historic cuts and underfunding in public transit have resulted in higher fares and cuts in bus services, including senior and disabled transportation options, across the state,” Upchurch said in a statement about his legislation.

The chronic underfunding has not gone unnoticed. In early February, the American Society of Civil Engineers released its 2021 Report Card for Ohio’s Infrastructure, and based on 16 categories of infrastructure, the state received an overall grade of Cand a D for transit.

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SPORTS BUSINESS

CSU is aiming for long-term hoops success with Dennis Gates Second-year coach has revived program, which gives a boost to university’s marketing efforts BBY KEVIN KLEPS

Scott Garrett, in his fourth month as the director of athletics at Cleveland State University, had just made his first major hire.

It was July 30, 2019, a few minutes after Dennis Gates had been introduced as the Vikings’ men’s basketball coach.

Garrett, in describing the search process to Crain’s that day, said, “The cream rises to the top.

“And I think we’ve found our guy,” the AD added.

At the time, Gates was a well-regarded 39-year-old who had spent the last eight years as an assistant coach at Florida State University. Now, he’s a back-to-back selection as the Horizon League Coach of the Year (a first for Cleveland State) who has the Vikings a few wins from their first NCAA tournament appearance in 12 years.

CSU, at 16-4, claimed a share of its first regular-season conference title in 10 years and entered the Horizon League tournament as the top seed.

The rapid transformation of the university’s most visible athletic program, following a four-year stretch in which the Vikings were a combined 40-89, is surprising even to Garrett.

“For those of us who are behind the scenes and get to see how these guys operate every day, I think you could feel that we’re headed toward something very special, but certainly nobody would have predicted a conference championship and a 1 seed and a legitimate chance to make the NCAA tournament in Year 2,” the AD said. “You’d be foolish to have really thought that would happen.”

Dennis Gates led Cleveland State to its first regular-season championship in the Horizon League since 2011. He’s been selected as the league’s Coach of the Year in each of the last two seasons. | CLEVELAND STATE UNIVERSITY

Turning around a men’s basketball program that had fallen on hard times was a big part of Garrett’s job, and it was important to the university. CSU president Harlan Sands has called athletics “the front door” to the institution, because of the excitement it can create and the recruiting boost it can provide.

Gates took over a program that had a slew of players transferring or looking to get out. In two years, he’s established the Vikings as a league power and a favorite to play in March

Madness for only the third time in school history.

CSU, which will host a Horizon League tournament quarterfinal on March 2, needs three wins to earn an automatic bid to the NCAA tournament.

Gates said he’s never focused on “wins and losses.” Instead, it’s about “lessons” and “getting better every day.”

The Vikings had a conference-best nine players on the academic honor roll in the fall. The team’s grade-point average was 3.43 that semester, and it’s

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risen to 3.74 in the spring. Eight players were on the dean’s list in the fall.

Garrett said the coach consistently discusses his “FLAT DUET mantra.”

Those are what Gates classifies as his eight core values: friendship, love, accountability, trust, discipline, unselfishness, enthusiasm and toughness.

He also has his “three Cs,” which are winning championships in the classroom, in the community and on the court.

The pandemic has shifted some of those habits, such as visiting patients in hospitals and reading to elementary school students, to virtual experiences. But Gates said his players are committed to helping out.

Garrett agrees.

“He, the (coaching) staff, the kids, they live and breathe that every day,” CSU’s director of athletics said.

‘As long as we can’ The natural assumption any time a young coach has success at the mid-major level is major institutions will come calling.

Such speculation is “a part of the business,” Gates said.

“What it says,” the coach continued, “is that we’re doing something right, but it’s a reflection of my players and our staff. I can’t control the narrative of what people put out. I can only continue to try and be as best as we can each day.”

Gates went on to say one of his “main goals” is to be the all-time wins leader at an institution.

Gary Waters, the last coach to lead the Vikings to the NCAA tournament, is atop the win column at CSU with a 194-172 mark in 11 seasons. Waters and Kevin Mackey, who guided the Vikings to a Sweet 16 trip in 1986, are the only CSU coaches with winning records during their tenures.

Cleveland State gave Gates a fiveyear deal with base salaries that ranged from $280,000 to $300,000. In 2020-21, the coach has a $285,000 base salary, plus $25,000 for media obligations. He’s also pocketed at least $44,000 in basketball and academic bonuses, and has the potential to make more in the next month.

Even if Gates’ 2020-21 earnings

wind up being well above $350,000 (the coach’s pay was reduced 10% for a period of six months as part of CSU’s budget cuts last May), the cost to the university will be significantly below the $450,000 former coach Dennis Felton was receiving in salary, media obligations and deferred compensation.

At least 74 Division I men’s basketball coaches, according to USA Today, are making $525,000 or more.

When Gates was hired, his $280,000 salary ranked seventh among the 10 Horizon League coaches at the time.

“Obviously our goal is sustainability of this type of success, and that means keeping coach Gates here as long as we can and keeping his staff together as long as we can,” Garrett said.

To do that, the AD said, CSU has to, once some sense of normalcy returns, pump up its ticket and sponsorship revenue, and keep adding to its pool of donors. More than half of the season-ticket holders for men’s basketball already have renewed their seats for 2021-22.

“We’ve gotta generate the resources that it takes to compete at the top of this league,” Garrett said. “I’m very hopeful that we’ve got a plan in place and we’ll be able to buoy this success into sustainability. That’s our priority right now, to make sure we’re focused on doing that.”

CSU’s annual Giving Day recently concluded with the athletic department projected to raise more than $300,000, or at least 12% ahead of its 2020 total. The Viking Fund, a donor program that was launched in 2019, has grown from 104 to 183 members in 2020-21.

Brandon Longmeier, the assistant athletic director for the Viking Fund, said the dollars raised have stayed flat, which he attributes to fans not being able to attend basketball games. (The fund’s perks have included hospitality at athletic events.)

Asked how a successful men’s basketball program can aid the fundraising efforts, Longmeier said, “It doesn’t hurt, I can say that much. It’ll help a whole lot next year, when our intent hopefully is to get the fans back.”

The contributions, while more difficult to secure, are as crucial as ever because of the financial constraints that have been brought by the pandemic.

The athletic department’s revenues have been vastly impacted by the cancellation of the 2020 NCAA tournament and the loss of lucrative “guarantee games” (the Vikings had been slated to bring in almost $300,000 for matchups at Duke, Kentucky and Nebraska, but had to settle for about $45,000 to play at Ohio State), though Garrett said expenses are down “quite a bit” because of travel reductions.

The Vikings’ efforts to capitalize on the men’s basketball team’s success have been extensive. There have been virtual watch parties and pregame chalk talks with season-ticket holders, alumni engagements with the 1986 team and promotions that are geared toward 2021-22.

“We’re anxious to get the doors open, and I’m very optimistic that next year will look ‘normal’ and we’ll be able to leverage all of this success into more butts in seats next year,” Garrett said.

Kevin Kleps: kkleps@crain.com, (216) 771-5256, @KevinKleps

6 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

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CRAIN’S EDITORIAL FORUM

RETURN TO OFFICE The Crain’s newsroom along with local experts, will tackle relevant issues as employees start to return to the office.

Topics will include: office setup, health and wellness, hybrid work models and more.

April 14th | 11a – 12p REGISTER TODAY: Crainscleveland.com/events/return-office Interested in advertising/sponsorship opportunities? Contact Crain's: mike.schoenbrun@crain.com

PERSONAL VIEW

RICH WILLIAMS FOR CRAIN’S CLEVELAND BUSINESS

Ohio has hundreds of pending unemployment claims from last spring.

Mine was one of them

EDITORIAL

Opportunity for all S

ome problems are obvious, and yet the solutions remain elusive — even when those solutions would lead to substantial social and economic benefits.

Such is the case with a story we ran Feb. 22, by education reporter Amy Morona, headlined, “Ivory towers: How higher education is failing Black Americans in the Midwest.”

If you haven’t read the piece, by all means do so. A one-sentence summary: “Black Americans in Chicago, Cleveland and Detroit, as well as the nation, remain underrepresented at our best colleges and overrepresented at some of our worst.” And some numbers: In Cleveland, nearly half of city residents are Black, but Case Western Reserve University, the city’s most selective college, reported only 6% of its population was made up of Black students in 2018. (At nearby public universities, the numbers were a little better — 8% at Kent State and about 15% at Cleveland State.) The situation is similar in Chicago and Detroit, two other markets explored in the analysis.

The selectivity issue matters, Morona wrote, because students at those institutions “have higher chances of graduating,” thanks in part to the THERE ARE ORGANIZATIONS schools’ vastly higher spending on instructional DOING GOOD WORK TO and academic support.

CLOSE GAPS, INCLUDING Meanwhile, Black students are significantly CLEVELAND’S SAY YES TO overrepresented at EDUCATION AND COLLEGE for-profit colleges — NOW GREATER CLEVELAND. schools where graduation rates generally are low and students are left with substantial debt and little to show for the investment. The result: “In each of the counties that house Chicago, Cleveland and Detroit, the rates of white people with bachelor’s degrees are more than double the number of Black Americans with those same credentials,” Morona wrote.

That kind of educational attainment gap has enormous ramifications on future earnings for students, and, more broadly, on equality and opportunity in a region. In Cleveland, with a stagnant population and an economy that still needs a jolt, we’re doing ourselves no favor if we’re not maximizing the potential of all citizens.

We didn’t get into this situation quickly, and the answers aren’t fast, either. As Ryan Fewins-Bliss, the executive director of the Michigan College Access Network, said in the story, “We have to do systems-level change at the K-12 level and definitely at the higher ed level in order to see these problems be fixed.” Wil Del Pilar, a vice president at the national nonprofit educational advocacy group The Education Trust, added, “Truthfully, the way we should be funding these institutions should be flipped. We provide the most resources in higher education to the students with the most advantage, and we provide the least resources in higher education for those students who are most disadvantaged.”

There are organizations doing good work to close gaps, including Cleveland’s Say Yes to Education and College Now Greater Cleveland. The work ahead is significant, all along the educational timeline.

A recent report from the Brookings Institution, meanwhile, underscores the importance to the Midwest of its research universities — and takes note of the challenges those schools are having in boosting enrollment.

As Brookings noted, the Midwest is home to 20 of the world’s top 200 research universities, including CWRU and Ohio State. Those universities are “an important fulcrum for the economic revival of the Midwest’s older industrial communities,” according to Brookings, and public schools, in particular, play a key role in “closing higher education attainment gaps by race and income.”

But Midwestern states and their higher education institutions “face fierce demographic headwinds, in the form of an aging population and declining school-age enrollments,” according to Brookings. One notable stat: “Regional public university enrollment in the Great Lakes region reached its high point in 2011 with over 971,000 students, but has fallen by over 10% since.”

There are other challenges exacerbating the enrollment decline, including COVID-19 and state disinvestments in the Midwest. Plus, Brookings says, “hostile state legislatures and growing anti-intellectualism” make schools “easy targets for further cuts.” This storm of factors holding back educational opportunity holds us all back.

Executive Editor: Elizabeth McIntyre (emcintyre@crain.com) Managing Editor: Scott Suttell (ssuttell@crain.com) Contact Crain’s: 216-522-1383 Read Crain’s online: crainscleveland.com

On April 10, 2020, I lost my job. On Feb. 12, I finally received unemployment benefits.

It took 10 months, dozens of phone calls — and one fortuitous email exchange — before I managed to secure payment for the five weeks when I was jobless last spring.

During hours on hold, listening to ele- Michelle vator music through my earbuds, I JARBOE thought about how lucky I was. I had found a new job, here at Crain’s. I lived in a two-income household. I had the luxury of making those calls with few disruptions.

I wondered how many people had given up, defeated by a bureaucratic, overburdened system while juggling remote school for their children or caring for vulnerable relatives during a global pandemic.

During a recent phone conversation, a spokesman for the Ohio Department of Job and Family Services told me my experience wasn't the norm.

“Your case is a little untypical,” Thomas Betti said.

But in late February, as Ohio approached the one-year anniversary of its first detected case of COVID-19, there still were 601 unresolved unemployment claims from March 2020, he said. The state had 135 pending claims from April, the month when my job was eliminated during broad newsroom cuts at The Plain Dealer. Over 2,000 claims dating from May through August haven’t IN LATE FEBRUARY, AS been settled.

Many of those requests, for OHIO APPROACHED THE traditional unemployment, ONE-YEAR ANNIVERSARY are in limbo because the state is waiting for additional docu- OF ITS FIRST DETECTED ments from applicants, Betti CASE OF COVID-19, THERE said.

STILL WERE 601 He could not provide figures on long-outstanding UNRESOLVED claims under the federal Pan- UNEMPLOYMENT CLAIMS demic Unemployment AssisFROM MARCH 2020. tance (PUA) program, which broadened the pool of eligible applicants to include self-employed people, independent contractors and other workers who, in normal times, would not qualify for unemployment insurance. Those numbers, he said, are skewed due to fraud.

The PUA pool is where I ended up, despite the fact that I’d held the same job since 2007.

My problem? I had a baby in early 2019. After eight weeks of “disability” and four weeks of vacation, I spent the rest of the year on unpaid maternity leave. I returned to work in January 2020 and was laid off 12 weeks later.

Ultimately, staying home with my daughter made me ineligible for benefits — though it took me three months, an appeal and frequent calls before a representative told me that I was certain to be denied.

She counseled me to apply for PUA but cautioned that the state’s system would not let me backdate my request to April. The department’s technical services arm would have to adjust my account to let me file claims.

So in early July, I applied through the PUA program and sent an email to the address for backdating queries. Then I waited. And waited.

The state deemed me eligible for $189 a week, the minimum amount Ohio offers. The federal government would tack on $600 a week, under the CARES Act relief law. But nothing happened.

Write us: Crain’s welcomes responses from readers. Letters should be as brief as possible and may be edited. Send letters to Crain’s Cleveland Business, 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113, or by emailing ClevEdit@crain.com. Please include your complete name and city from which you are writing, and a telephone number for fact-checking purposes.

See JARBOE on Page 21

Sound off: Send a Personal View for the opinion page to emcintyre@crain.com. Please include a telephone number for verification purposes.

8 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

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OPINION

PERSONAL VIEW

Struggling small businesses should explore strategic bankruptcy ASAP

BY ADAM FLETCHER

The SBRA includes several important changes to the traditional Chapter 11 rules, however. Most noIf struggling small businesses want to survive long table is the removal of hurdles that enough to reach the economic recovery forecast for the often made reorganization infeasilatter half of 2021, they should begin exploring a strateble for small businesses: gic bankruptcy reorganization now, in advance of a The administrative costs of a Chaplooming March 27 deadline to utilize enhanced bankter 11 bankruptcy proceeding are sigruptcy protections that became available to many small nificantly reduced in an SBRA probusinesses in the spring of 2020. ceeding by eliminating certain More economic stimulus measures from the federal Fletcher is a standard Chapter 11 requirements government appear likely, but if the Paycheck Protec- partner at such as the presumptive appointment tion Program is any guide, much of those funds will not BakerHostetler of a creditors committee (whose fees find their way into the hands of the small businesses in Cleveland are funded out of the debtor’s assets), that need them most. Small businesses could soon face who focuses on significant quarterly fees payable to mounting collection pressure from banks, landlords bankruptcy the Office of the United States Trustee, and other creditors that will become less willing to enter matters and the need to file a lengthy “disclointo forbearance agreements or other accommodations sure statement” explaining the terms as they face increased upstream pressure from their of the debtor’s proposed bankruptcy plan. own investors, creditors and regulators.

In 2020, many large, iconic companies filed Chapter  The debtor has the exclusive right to propose a bank11 bankruptcy, including JCPenney, Neiman Marcus, ruptcy plan throughout the entire SBRA proceeding, Brooks Brothers and Briggs & Stratton, just to name a which avoids conflicts over competing plans proposed few. In contrast, bankruptcy practitioners have noted by creditors that can sometimes consume a standard the surprising paucity of Chapter 11 bankruptcy filings Chapter 11 case. by smaller businesses, especially given the outsized ef-  The SBRA allows the owner of a small business to file fect of the pandemic on them. Many small business their own bankruptcy case alongside the bankruptcy owners are choosing to simply close up shop and liqui- case for the business and modify the terms of a mortdate. Their hesitancy to instead attempt a bankruptcy gage on the owner’s principal residence so long as the reorganization is likely attributable to a widely held per- loan was used to finance the owner’s business rather ception that Chapter 11 bankruptcy is too costly and too than to purchase the residence. slow, and that the owner will probably lose control of  In a standard Chapter 11 bankruptcy, to win court apthe business in the process in any event. Until recently, proval of its proposed bankruptcy plan, the debtor must obtain approval of the plan by at least one “impaired” that perception was accurate all too often.

Things changed dramatically in late 2019, when Con- class of creditors (a group of creditors proposed to regress passed the Small Business Reorganization Act ceive less than 100% of what they are owed). This re(SBRA), which was designed to address long-standing quirement is eliminated in an SBRA proceeding, and a complaints that Chapter 11 bankruptcy had become proposed plan can be approved even if no impaired unwieldly and often unusable for many smaller busi- class votes in favor of the plan.  The SBRA eliminates the single bignesses. The SBRA went into effect gest disincentive for owners of small Feb. 19, 2020, but its benefits were MANY SMALL BUSINESS businesses to file Chapter 11: the initially available only to businesses with noncontingent, liquidated OWNERS ARE CHOOSING TO “absolute priority rule.” This rule normally requires all creditors to receive debts totaling no more than SIMPLY CLOSE UP SHOP 100% of what they are owed before $2,725,625 (excluding certain debts, the owner can retain their stake in such as shareholder loans). The AND LIQUIDATE. THEIR the business. The practical effect of debt limit was quickly increased to HESITANCY TO INSTEAD this rule is that, in the absence of full $7.5 million under the Coronavirus payment of all creditors, the existing Aid, Relief, and Economic Security ATTEMPT A BANKRUPTCY owner could stay in place only if the (CARES) Act passed in the spring of REORGANIZATION IS owner injected substantial addition2020, giving more businesses access to an SBRA proceeding. But that in- LIKELY ATTRIBUTABLE TO A al capital into the business (in esbuying their own business creased debt limit is set to expire on WIDELY HELD PERCEPTION sence, back out of bankruptcy). But in an March 27, at which point compaSBRA proceeding, the court can apnies with debt over $2,725,625 will THAT CHAPTER 11 prove a plan that calls for creditors to again become ineligible to file an BANKRUPTCY IS TOO receive less than 100% and still leaves SBRA bankruptcy. the existing owner in place, as long A quick comparison of an SBRA COSTLY AND TOO SLOW, as the plan commits the business’s bankruptcy to a traditional Chapter future “disposable income” (defined 11 bankruptcy illustrates why the AND THAT THE OWNER to exclude income reasonably needSBRA is so beneficial to small busi- WILL PROBABLY LOSE ed for the continued preservation nesses and their owners. An SBRA proceeding is a special subset of CONTROL OF THE BUSINESS and operation of the business) to repayment of the business’s pre-bankChapter 11 bankruptcy (the type of IN THE PROCESS IN ANY ruptcy debts for a period of at least bankruptcy case in which the busithree years. ness reorganizes and survives), and EVENT. UNTIL RECENTLY, Small businesses with debts in the powerful tools in the Chapter 11 THAT PERCEPTION WAS excess of $2,725,625 that have surtoolbox are equally available in an ACCURATE ALL TOO OFTEN. vived this long would be well adSBRA proceeding, including: vised to immediately begin explor The “automatic stay” that halts foreclosures, evictions, contract and lease terminations, ing the possibility of a strategic bankruptcy collection actions, and just about every other kind of le- reorganization before the debt limit to utilize the SBRA gal proceeding or action outside the bankruptcy court drops on March 27. Advance planning will give businesses the time needed to gather relevant data and evalthat could negatively affect the debtor or its property.  The ability to “reject” contracts and leases that have uate their options with a bankruptcy professional to become burdensome or unnecessary due to changed determine whether the powerful tools available in an SBRA proceeding could help rehabilitate the business circumstances.  The ability to propose, confirm and enforce a Chapter and provide it a fresh start, free from crushing debt that 11 plan that allows the debtor to pay creditors at a frac- could otherwise prevent the business from surviving through 2021 and into the future. tion of what they are owed.

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2/25/2021 2:51:57 PM

NEW NAME

REAL ESTATE

Keith Brandt, the new market leader in Northeast Ohio, brings a different profile to CBRE PAGE 14

The long way home Fierce contests for scarce houses bring a long-awaited recovery to parts of Greater Cleveland, spur soaring offers in others ``BY MICHELLE JARBOE | Scott Heisel

had been trapped in his house for more than a decade, pinned in place by a mortgage that exceeded the value of his three-bedroom bungalow on Cleveland’s West Side.

Last year, the frenetic pace of home buying across the region finally gave him an out. In October, Heisel and his wife, Aubrey Welbers, sold their home in the Jefferson neighborhood for $113,000 — $9,500 more than Heisel, then single and in his early 20s, paid for it in 2006.

A record-low supply of available homes, combined with cheap debt, spurred swift sales and sharp price growth across Greater Cleveland last year. The residential real estate market is likely to remain a bright spot in a pandemic-stricken economy, thanks to strong buyer demand, low mortgage interest rates and soaring savings among consumers who haven’t lost their jobs.

After years of being underwater, unable to refinance or obtain home-renovation loans, Heisel and Welbers unloaded their house at a higher price than they ever expected. They were able to lock in a similar monthly mortgage payment on a larger home less than 2 miles away.

“It’s insane,” said Heisel, expressing amazement that a global pandemic is serving as an apparent accelerant for buyers. “You almost feel guilty having made money.”

See BUYING BOOM on Page 12

Homeowners Scott Heisel and Aubrey Welbers in their new house in Cleveland.

KEN BLAZE FOR CRAIN’S CLEVELAND BUSINESS

10 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

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FOCUS | REAL ESTATE

From ‘blighted’ factory to chic entertainment venue

Foundry Social owners turn former industrial site in Medina into playground for grown-ups

BY JUDY STRINGER

Let’s get this part out of the way.

It has been a bumpy start for Foundry Social, an arcade/bar nestled in a former factory a few blocks northwest of Medina’s square. The 30,000-square-foot entertainment establishment opened November 2019, adjoining an indoor go-karting track the property owners had launched four years earlier.

Gene Whaley, one of those owners, said while foot traffic is beginning to pick up after “a rough summer and fall,” the venue is averaging about half the weekly guests it had pre-COVID. The space is large enough to operate without capacity limits for social distancing, and he said weekends are busy — albeit today’s customers tend to come in groups of four to six rather than eight to 10.

“What we are really missing is the ability to have larger groups, things like corporate trainings or class reunions,” Whaley explained. “We have an event room that holds 150 people, and it hasn’t been used in almost a year.”

Yet for him — or Medina economic development director Kimberly Marshall, for that matter — the pandemic can’t diminish the success of turning a vacant eyesore into an attractive and thriving business.

“When we bought the building seven years ago, it was in pretty bad disrepair, barbed-wire fencing and concrete, and it was all boarded up,” Whaley said. “We have transformed the site into something that adds to the neighborhood, and that is probably what we are most proud of.”

Marshall put it more bluntly: “They

Kailey Reau serves up some of Foundry Social’s fare. The entertainment venue has turned a former industrial site into a fun zone for adults. | CONTRIBUTED

took a blighted building and made something meaningful out of it.”

Most recently the Henry Furnace Co., the 150,000-square-foot Foundry Street building dates back to the 1860s, according to Marshall, when it was first used to make iron kettles and skillets. Manufacturing activities there are believed to have ceased sometime before 1992, and the property was used primarily for warehousing until it was vacated in 2011.

That same year, Medina was award-

ed a $1 million Brownfields Assessment Grant — roughly $112,000 of which it earmarked for environmental studies at the Henry Furnace site.

Marshall said the studies revealed a clean bill of health and paved the way for Whaley and partners Greg Cordray, Steve Madden and Brian Fontanella to acquire it at auction.

Medina County property records indicate the 2013 purchase price was $307,800. Whaley estimates the partnership spent about $5 million in ren-

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ovations, opening High Voltage Karting in a 30,000-square-foot back section of the building in March 2015.

They spent another four and a half years planning and constructing Foundry Social, which Whaley describes as “an entertainment complex geared toward adults” with duckpin bowling, billiards, bocce, corn hole and 25 to 30 “old-school” video games such as Centipede and Galaga.

“Most arcades have games for kids; ours are games are for grown-ups,” he said.

The owners most recently opened MAD Brewing Co., a lounge tucked inside Foundry Social with 24 beer taps. Some of those taps feature MAD’s (which stands for Making A Difference) own craft line, which is brewed offsite, while others are occupied by rotating guest brewmasters.

“We’re trying to find a mix of a bigger, more well-known regional brewer that maybe doesn’t have a local footprint, some medium-sized ones and then also the home brewer who wants to give it a shot,” Whaley said.

“The point is to support other entrepreneurs.”

Redevelopment row Marshall said the Henry Furnace site’s rebirth is part of a broader transformation in the surrounding neighborhood.

As a low-to-moderate income area, the ward benefited from a $300,000 Community Development Block Grant — money used for improvements to roads, sidewalks and waterlines, she said. The city also in-

stalled a splash pad and made other upgrades at nearby Ray Mellert Park, and an apartment owner in the neighborhood invested $2 million in updates to his property.

That progress, Marshall added, builds on recent redevelopment closer to Medina Square. The formerly vacant Chamber of Commerce on North Court Street site — now the Raymond Building — is home to a trio of retail businesses on the first floor and five upper-level apartments.

The once-condemned Farmers Exchange Building south of the square has emerged as a mixed-use property with a brewery in the basement, a restaurant, coffee shop and marketplace at ground level, and 16 apartments overhead.

And the city is poised to break ground on what is currently being called Liberty View, a $9.3 million, four-story development along West Liberty Street. It will include street-level storefronts and upper-level loft-style housing.

While Foundry Social falls outside of the city’s 2014 strategic plan that Marshall credits with being the catalyst for these downtown developments, she said it does fit squarely into the larger vision of making underutilized industrial sites “much more viable.”

“In that sense, they have been very successful,” she said. “The owners have more space there and continue to look for opportunities that are a fit for what they are already doing, and they are community-minded — both of which are good things for Medina.”

Contact Judy Stringer: clbfreelancer@crain.com

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FOCUS | REAL ESTATE

BUYING BOOM

From Page 10

Local real estate agents say their business soared last year after the spring disruptions of stay-home orders. And demand hasn’t slowed.

Now the industry is holding its breath, waiting to see whether more sellers move off the sidelines.

Recent data from Redfin, a Seattle-based real estate brokerage, shows only nine weeks’ worth of listings on the market in the Cleveland metropolitan area. That’s far shy of the four to six months’ worth of inventory that traditionally constitutes a “balanced” market, one in which neither sellers nor buyers have the upper hand.

In Cleveland and its inner-ring suburbs, where some neighborhoods still haven’t healed from the mid-2000s housing bust and Great Recession, that imbalance is helping homeowners like Heisel and Welbers climb out of what felt like an inescapable hole.

“That’s a really big deal because it was so hopeless, I think, for so many people,” said Frank Ford, a housing researcher in Cleveland. “This is sort of the light at the end of the tunnel.”

In hot parts of the city and sought-after suburbs, meanwhile, the scarcity of listings is fueling bidding wars and pushing prices to unprecedented heights.

In Solon, real estate agent Monica Yost Kiss worked with clients who paid $28,000 over the list price for a four-bedroom colonial in November.

Early this year, those clients sold their previous home, also in Solon, for $20,000 more than the asking price.

The buyers sweetened the offer by pledging to close in only 30 days.

“People aren’t reducing their expectations. If they want certain qualities in a house, they’re keeping those expectations, as they should,” said Kiss, who is part of a sales team at HomeSmart Real Estate Momentum in Beachwood. “But once they find something they love, it’s game on. …

They’re increasing their budget and flexibility to the max they can, sometimes against the advice of their financial advisors or their Realtor.”

Aubrey Welbers works in her new home in Cleveland. The high demand for houses allowed Welbers and her husband, Scott Heisel, to sell their former home after years of being underwater. | KEN BLAZE FOR CRAIN’S CLEVELAND BUSINESS

COVID effect Scott Heisel and his wife, Aubrey Welbers, recently moved into a three-bedroom colonial in Cleveland after a hot market allowed them to finally sell their former home for $9,500 more than Heisel paid for it in 2006.

Inventory crunch is a challege for buyers, an opportunity for sellers The supply of available homes has fallen to record low levels in Northeast Ohio and across the country.

As buyers spar over scarce listings, prices are soaring.

Metropolitan area

20,000

Cleveland

16,218

Akron Canton

15,000

10,000

5,163

Available homes

The pandemic in particular is motivating some buyers, whose space needs changed due to remote work and schooling. Others are sitting on more cash due to federal stimulus checks, canceled vacations and diminished dining out.

Allison Peltz and Eddie Zaborniak scrapped their five-year plan in the fall and listed their 1,500-square-foot townhouse in Cleveland’s Detroit-Shoreway neighborhood for sale. It went under contract after one day and sold for $334,900.

“We were really big travelers before 2020,” Peltz said, “and we were reassessing what we called home and what we wanted our house to be. We jokingly made a list one day of what we would want in our next house, because we had a lot of time.”

The couple looked back at that list — more square footage, a backyard, a deck or patio, a Cleveland address — whenever they felt distracted or discouraged during their search.

They lost bidding wars, even when they offered $25,000 over asking price for a house in the Kamm’s Corners neighborhood. They signed a six-month lease on an apartment.

And then they stumbled over a brick

3,193

5,000 2,335

886 533

2/12

SOURCE: REDFIN

1/13

1/14

1/15

1/16

1/17

1/18

1/19

1/20

1/21

CRAIN’S CLEVELAND BUSINESS GRAPHIC

century home in the Edgewater neighborhood, where the lack of air-conditioning might have been a turnoff for other buyers, Peltz said.

They’re set to close in May. If not for the coronavirus, she said, the couple likely would have stayed put until 2022.

Seth Task, president of the Ohio Realtors trade association, has heard similar stories. But he believes the pandemic actually dampened buyer demand.

Though staying home and saving up cash is compelling some middle- and upper-income families to move, hospitality and service-industry workers who lost their jobs last year were stymied in their quest for homeownership.

“You’ve got all of these industries where there are millions of people that could not buy houses during COVID, and I think that number far outweighs the number of people who were able to buy houses,” said Task, a real estate agent with Berkshire Hathaway HomeServices Professional Realty in Moreland Hills.

He’s not expecting buyers’ appetites to be sated anytime soon. But he’s marveling at the paltry number of listings — down roughly 34% in January in Cuyahoga County from the same month of last year.

To ease the inventory crunch, he said, more existing homeowners need to list their properties for sale, builders have to pick up their pace and policymakers ought to come up with strategies that support new construction.

“If we don’t fix this problem now with building affordable housing, it’s going to get really ugly,” Task said.

“Because it’s math. It’s how many houses are we building versus how many houses are we tearing down versus how many new buyers are coming to the market.”

Some sellers have been holding back due to health concerns. They aren’t comfortable with potential buyers traipsing through their houses.

But sellers are even more worried about scarcity — that they won’t be able to find anything to buy when their existing property sells, said Joe Rath, a Redfin director of real estate operations based in Cleveland.

Redfin identifies Brunswick, Parma and Cuyahoga Falls as the hottest cities in Greater Cleveland based on the volume of competitive offers, how fast homes are selling, and buyers’ willingness to waive contingencies, such as appraisals, inspections or financing.

In South Euclid, an inner-ring suburb, inventory has dwindled to less than one month’s supply.

The bedroom community, battered by the foreclosure crisis like much of the East Side, is seeing more homes sell for upward of $200,000 and very few sales under $100,000, said Sally Martin, the city’s housing director. Recent appreciation is prompting some landlords with single-family rentals to sell their properties to owner-occupants.

“There’s very little distress left,” Martin said. “But if there is distress left, people are tripping over each other to get at it, like sharks at a feeding frenzy.

And then higher-quality properties are going under contract immediately.”

Romance Cox, a single mother living with family in South Euclid, was outbid on several homes before making a successful offer in late January on a three-bedroom ranch in Richmond Heights. That house eluded her in November, when it first hit the market. Deals with two other potential buyers fell apart, though, and the listing popped up again early this year.

12 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

P012_013_CL_20210301.indd 12

2/25/2021 2:19:58 PM

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FOCUS | REAL ESTATE Limited construction leads to inventory challenges

ater k of en a aid.

Permits for construction of single-family homes have been inching up, but they’re still a fraction of what they were before the Great Recession. This chart shows permits for Cuyahoga, Geauga, Lake, Lorain, Medina, Portage and Summit counties. County-level data are not available yet for 2020, though preliminary figures from the U.S. Census Bureau show that permits were up 7.5% from 2019 across the Cleveland metropolitan area.

aid, ayed

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CRAIN’S CLEVELAND BUSINESS GRAPHIC

Homebuilders in Greater Cleveland were busy in 2020, and 2021 looks even better BBY MICHELLE JARBOE

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First-time homebuyer Romance Cox, seen here with her son, Landon, is purchasing a house in Richmond Heights after deals with two other potential buyers fell apart. Her closing date is set for March. | KEN BLAZE FOR CRAIN’S CLEVELAND BUSINESS

A first-time homebuyer and social-media influencer who promotes haircare and beauty products, Cox took a customer service job at KeyBank in August to burnish her credentials for a mortgage. She started house shopping in October, with a price range of $150,000 to $160,000.

“It’s normal to be discouraged or feel defeated, because it is a seller’s market. But just know that your dream home will come,” said Cox, whose closing date is set for early March.

How long will it last?

Welbers and Heisel have settled into a three-bedroom brick colonial on West Boulevard. Heisel, a music instructor, is teaching voice lessons on Zoom. Welbers works from home for an out-of-state industrial supply company. They’ve talked about starting a family.

The couple isn’t sure how to feel about the real estate market. After watching his first home’s value plunge,

Heisel is skeptical about whether the rebound is sustainable. He worries that dizzying price increases will be followed by another crash.

Task, the Ohio Realtors’ president, said people ask him daily if another housing bubble is forming.

“No, and it’s an emphatic no,” he said, pointing to pent-up and looming demand from young buyers, along with move-up buyers who want more space and aging Baby Boomers hoping to downsize. There simply aren’t enough homes to accommodate them.

If there is a slowdown, he said, it will only return the market to equilibrium, with more modest price gains.

Last year, the average sale price for a house in Northeast Ohio increased 13.7%, to $201,705, according to data from MLS Now, a listing service that tracks transactions in 18 counties.

Annual sales of new and previously owned homes in the region rose 5.8%.

“There’s nothing wrong with appreciation, so let’s not be so afraid of

it,” said Task, who started working in real estate in 2005 and spent the next six years watching home values fall.

Many suburbs rallied years ago.

On Cleveland’s West Side, the median sale price last year was on par with its 2005 peak, according to recent research from Ford, a senior policy advisor at the Western Reserve Land Conservancy. But on the city’s East Side, the median sale price still is less than $50,000 in many neighborhoods. And some close-lying suburbs still haven’t fully regained lost ground, based on Ford’s analysis of sales of one- to three-family homes.

A robust 2021 could put more long-captive homeowners like Welbers and Heisel closer to relief.

“It’s a very positive development, which probably is a positive development for hundreds if not thousands of people,” Ford said.

Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe

For homebuilders in Greater Cleveland, 2020 was a blockbuster year. The outlook for 2021 is even better.

“It has been absolutely crazy for the last month,” said Mike Kandra, president of the Home Builders Association of Greater Cleveland. “New construction is kind of what people are heading toward, simply because there’s no supply of existing homes.”

Scant listings and ferocious buyer demand are promising to buoy new construction into 2022 and beyond.

Local builders say they’re barely able to keep up in an industry that’s still a fraction of what it was before the Great Recession of 2007 to 2009.

In the Cleveland metropolitan area, construction permits for new single-family homes rose by 7.5% last year, according to preliminary data from the U.S. Census Bureau. But annual permits still are down more than 50% from the early 2000s. And builders say they’re contending with escalating costs, scarce land and labor shortages, along with some pandemic-induced hiccups.

“If I could have 200 units in the ground tomorrow, I think that the majority of them could be absorbed if they were in the proper neighborhoods and proper price points,” said Bo Knez, the owner of Knez Homes in Painesville.

Last year, Knez sold close to 100 homes in Cleveland and the suburbs.

The company is on track to complete a similar number of houses this year but has dramatically ramped up its efforts to develop land for other builders. Demand from both local and national builders surged in early 2020, said Knez, who estimated that he has 500 to 600 lots in the pipeline from Brunswick to Akron to Perry.

“I think we have a good run ahead of us,” he said, citing the movement of millennials, in their 20s and 30s, into the first-time buyer market and demand from move-up buyers looking to downsize.

In Cleveland’s Fairfax neighborhood, just south of the Cleveland Clinic’s main campus, Knez has tied up more than 60 lots to build single-family homes. The first house will be complete in mid-March, and buyers have agreed to pay about $300,000

each for the first five. The houses carry 15 years of property-tax abatement, so owners will only pay taxes on the land.

“We don’t have any finished product anywhere in the city of Cleveland that’s not sold,” Knez said.

Chardon-based Payne & Payne, a family-owned builder that offers inhouse design services, is preparing for a record year. In 2020, the company sold 38 homes. The firm’s average project costs $750,000 to $1 million.

Mark Verdova, vice president of Payne & Payne Builders, said buyers have shifted away from open floor plans in favor of creating “away spaces,” such as home offices. They’re focused on outdoor living areas as well, such as screened-in porches and decks. Verdova predicts that those design features will have staying power long beyond the pandemic as remote work grows.

At Edgewood Homes in North Royalton, Kandra has seen a shift to ranches, a preference for first-floor master suites and more spending on upgrades. His company builds in the suburbs south of Cleveland at prices of $600,000 to upward of $1 million.

Edgewood sold five homes last year and already has six on the books for 2021.

Kandra and other builders are anxiously watching the costs of construction materials rise. So far, skyrocketing lumber prices — which hit a record high in February — aren’t dissuading buyers.

“It’s really difficult to price homes out,” Kandra said, citing a recent project where lumber price fluctuations added 3.6% to the total cost of a home. “We’re fighting through it.

People don’t balk at it too much because it’s cheap to borrow money.

There’s a counterbalance.”

He’s also still grappling with supply chain disruptions that make it difficult to get garage doors, appliances and other materials on time.

“I don’t know when people are going to be able to catch up,” Kandra said.

“Maybe when housing slows down a bit.”

But nobody’s expecting that to happen anytime soon. “Hopefully,” Verdova said, “we have another three to five years of a really booming homebuilding market.”

Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe

March 1, 2021 | CRAIN’S CLEVELAND BUSINESS | 13

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2/25/2021 2:20:44 PM

FOCUS | REAL ESTATE

Brandt brings a new name, different profile to CBRE

Keith Brandt in CBRE’s offices in the Ernst & Young Tower in downtown Cleveland. Brandt has been named managing director and market leader of CBRE’s Cleveland business. He will oversee the operations of the company’s Cleveland and Akron offices.

GUS CHAN FOR CRAIN’S CLEVELAND BUSINESS

After out-of-town experience with two area real estate giants, new leader to run NE Ohio offices BBY STAN BULLARD

Commercial real estate was not Keith Brandt’s first choice for a career even though it provided his first career job after college.

Instead, working 30 hours a week as a salesman for Kay Jewelers and the J. Riggings men’s clothing store at the former Euclid Square Mall to pay his way through Case Western Reserve University set him on a path in corporate real estate instead of engineering or medicine.

Brandt is the new Northeast Ohio market leader for the CBRE Group, a Dallas-based global real estate services firm, and leads the brokerage offices in Cleveland and Akron as well as operations throughout the area. While he learned real estate living in the Cleveland area, he’s a new name among local property deal-makers and owners. That’s because he worked previously in successive positions at Richard E. Jacobs Group and its Jacobs, Visconsi & Jacobs Co. predecessor in its heyday as a mall owner. That was followed by Forest City Realty Trust Inc. and its predecessors until it was bought by Brookfield Asset Management of Toronto in 2018. While he learned real estate living locally, his contacts professionally outside Forest City and Jacobs were primarily national or out of town, like his assignments.

Brandt remained with Brookfield as a senior vice president and was responsible for driving revenue at properties around the country. He didn’t want to transfer to Chicago to stay with Brookfield, which led to CBRE. “I was on a plane 40-45 weeks a year,” Brandt said of much of his 25-

year career, especially the last years at Forest City when he visited regional offices around the U.S. “There was no Zoom then. Now I get to go home to my wife and three sons rather than a hotel room.”

Along with other duties, Brandt served as part of the leasing team for Jacobs before and after the 1996 opening of SouthPark Mall in Strongsville.

Brandt recalled working on drawings of SouthPark and, as a junior staffer, updating the status of leasing plans by coloring them in by hand.

In 1996, he got his first assignment as a mall manager at, as it happened, the only mall the company ran for a third-party client, located in Tulsa, OK. “It was a challenging asset, with just 65% occupancy,” Brandt recalled. “I didn’t know who not to call.

I landed five national tenants and took it to 85% occupancy. They realized this guy has an engineering degree but he knows how to sell.”

After that, he managed Belden Village Mall in Canton and the three Jacobs-owned malls in Columbus. That role included overseeing all revenue projections and leasing for each mall, along with other duties.

So how did a college graduate with a degree in biomedical engineering from CWRU wind up at Jacobs? That goes back to the former Euclid Square Mall, at the time a Jacobs asset. By the time Brandt graduated from CWRU and worked in retail, he realized that he enjoyed working with people and selling. That made him wonder if engineering, a major he’d pursued because he was proficient in math and science, was the right fit.

At the same time, his girlfriend and future wife, Charlene, worked in

marketing for Euclid Square Mall for Jacobs. Brandt decided to take a year after graduation to pursue something else and interviewed for a job with the Westlake-based real estate developer and owner.

He remembers the final interview, with the late Richard Jacobs in the room, where he was asked what he wanted to do with his life.

“I said, ‘I’m 21,’’ Brandt said. ‘‘‘How do I know what I want to do the rest of my life?’ ” It must have been an acceptable answer. He got a job at Jacobs. A year-

“YOU REALLY HAVE TO TAKE A PERSONAL INTEREST IN PEOPLE. PEOPLE ARE WHAT DRIVE THE INDUSTRY.” ——Keith Brandt, Northeast Ohio market leader for the CBRE Group

long training program followed. It included steps such spending a month reading leases in the law department and then time with all the company’s major units.

“It was a great deep dive into real estate,” Brandt said, and he learned he loved the property business. When Jacobs sold its malls in 1999, he lined up a job at Forest City by the time the Jacobs executive staff was largely let go.

Timing worked in his favor. His initial job at Forest City was managing Chapel Hill Mall in Akron. However, Forest City was in a big growth period from 2000 to 2009, adding a development or two and as much as 2 million square feet of retail space yearly. He moved through the ranks to become

senior leasing director in retail. By the time the company was sold, he was a senior vice president for office, residential and retail leasing. The turf included everything outside New York City and Boston, from Washington, D.C., to San Francisco.

“The Ratners (Forest City founders) are visionaries,” Brandt said. “As we did projects around the United States, they felt the more difficult it was to do a project, the better the project. Competitors won’t try to do the same thing.”

That meant Brandt got to help sell retailers on going into the Short Pump Town Center in Richmond, Va., when the idea of a two-story, open-air shopping center with mall-style tenants was a new one. And, among Forest City’s most productive markets, he served as asset manager for the $1 billion San Francisco and Union Square retail center in California.

At Forest City, Brandt considered James Ratner, longtime president of its commercial division and later a chairman of the company, his mentor.

“He is one of the brightest people in real estate. As I moved vertically through Forest City, (he) taught me important things about the business,” Brandt said. “But everyday he’d ask me about my family and my kids. You really have to take a personal interest in people. People are what drive the industry.”

That imprint is reflected in how Brandt is tackling the job at CBRE. With 345 staffers in the region, ranking as the largest company on Crain’s Cleveland’s 2021 list of Commercial Real Estate Brokerages, CBRE is more than a typical real estate brokerage.

Although it covers office, industrial and retail property types, the public

company’s local operations include advisory, transaction and valuation services; investment sales; real estate finance; and property management.

Since joining CBRE last month, Brandt has been doing hourlong Zoom calls with individual staffers — videoconferencing being a business lifeline in the pandemic — throughout the area and learning intricacies of the outfit’s broad scope.

Appreciating that range of businesses suited Brandt for the position, according to Michael Copella, CBRE’s Ohio market leader. He said the company felt fortunate to find an executive with Brandt’s management and real estate expertise to lead its Cleveland-area operations.

David Browning, previously CBRE’s Cleveland market leader who worked with Copella in finding a successor as part of Browning’s transition back to full-time brokerage, said Brandt has “a larger view of real estate than you get with a commissioned broker. It’s hard to get if you are a siloed broker in one segment.”

Copella also noted that Brandt stood out from other candidates because of his passion for Cleveland.

For his part, Brandt said helping CBRE grow in the region will also help his hometown grow, a way of giving back to Cleveland.

One benefit is already apparent.

“My sons recognize the CBRE name on signs on properties we have here,” Brandt said, a big change from telling them about property developments that were massive but lacked local recognition.

Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter

14 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

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FOCUS | REAL ESTATE | ADVISER

Leasing vs. owning real estate: What’s best for your business?

BBY ROB ROE

Throughout my career, I’ve come across many clients who want to own their own building. After all, owning your own property comes with advantages, notably building equity and direct control of your occupancy costs.

This year entered a new twist in the owning vs. leasing real estate debate: the COVID-19 pandemic.

Controlling the physical environment including but not limited to air quality, social distancing and cleaning are at the forefront of corporate decisionmakers minds today. Owning doesn’t make the most sense for everyone. And as companies come to a crossroads in their real estate strategy, it’s crucial they choose the option that makes the most sense for the bottom line and business operation.

Understanding your business needs The typical narrative is that buying property is the more stable option if you have the capital, while leasing provides you greater flexibility. When owning, the goal is to get the highest return on your investment. And when leasing, you’re hoping to occupy at the lowest cost.

It’s best to solidify your intentions

when looking at commercial real estate by answering these questions: ``What your company’s workplace strategy and space utilization?

Roe is managing ``How do tech- director at JLL. nology challenges impact the real estate? ``Is recruiting and retention of employees (growth) important to the success of your company? ``Is location relative to serving your client base? ``Will the physical space needs change in the future? What would your exit strategy look like for either option?

The most important thing to do at the consideration stage is to maintain a realistic mindset and weigh the pros and cons as they relate to your bottom line.

The pros and cons of buying explained Buying real estate can be the preferable option for more stable businesses that have capital they are looking to invest. The advantages of buying your own building are:

OWNING DOESN’T MAKE THE MOST SENSE FOR EVERYONE. AND AS COMPANIES COME TO A CROSSROADS IN THEIR REAL ESTATE STRATEGY, IT’S CRUCIAL THEY CHOOSE THE OPTION THAT MAKES THE MOST SENSE FOR THE BOTTOM LINE AND BUSINESS OPERATION. ``You establish a long-term solution. ``You ensure stabilized occupancy costs with no rent increases, expiring leases or landlords in general. ``You build equity over time. ``The property operates how you see fit.

There is also the opportunity for rental income if you were to buy your own building. If your business only occupies a portion of the space, you may want to rent it out to other tenants to create an additional source of income throughout your ownership.

On the other hand, owning a property comes with its disadvantages, too, including: ``Costly upfront spending on acquisition and renovation of the property. ``Capital may be better invested back into your business. ``Physical growth limitations. ``Ongoing property and systems

maintenance and upkeep. ``Property value may depreciate over time due to the cyclical nature of real estate.

The pros and cons of leasing explained Most businesses lease office space, and leasing is particularly beneficial for businesses that are new, such as startups, which are prone to grow suddenly and quickly. For businesses on a steady growth trajectory, they often need to invest their capital back into their business to maintain growth or distribute profits to partners and shareholders. That said, the advantages to leasing property include: ``Capital is retained for corporate investment. Landlords typically invest in the renovation of the space as a component of the rental rate.

``Typically, there are several more diverse and geographic leasing options. ``Property maintenance and upkeep are handled by the landlord. ``Flexibility to expand, reduce or move on lease expiration or through lease clauses.

Like owning your property, leasing comes with its drawbacks, including: ``No equity in the property. ``Rent increases over the lease term are typical. ``Missing out on third party leasing opportunities and income streams. ``Less control over maintenance and updates to systems.

Reviewing lease terms with your tenant representative can mitigate many risks in the long run and ultimately help you negotiate more competitive occupancy terms. Focusing solely on rental rate and not a comprehensive solution can be a costly long-term mistake.

Owning vs. leasing will always be at the forefront of a company’s real estate decision. To take out the guesswork, consider your objectives and find the right professionals to help thoroughly evaluate each scenario and determine which one will set your business up for success in the long run.

Download our annual Cleveland Skyline report to keep a pulse on downtown office market activity.

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CLOSE DATE: March 19 | ISSUE DATE: April 19 March 1, 2021 | CRAIN’S CLEVELAND BUSINESS | 15

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CRAIN'S LIST | COMMERCIAL REAL ESTATE BROKERAGES Ranked by number of local agents/brokers

RANK

COMPANY

LICENSED LOCAL BROKERS 1-1-2021

LOCAL FTE STAFF 1-1-2021

COMMERCIAL TRANSACTIONS IN NORTHEAST OHIO, 2020 # LEASES SQ. FT.

# SALES SQ. FT.

1

CBRE INC. 950 Main Ave., Suite 200, Cleveland 44113 216-687-1800/cbre.us

46

345

523 6,715,489

195 3,059,362

2

HANNA COMMERCIAL REAL ESTATE 1350 Euclid Ave., Suite 700, Cleveland 44115 216-861-7200/hannacre.com

45

25

— —

3

CUSHMAN & WAKEFIELD | CRESCO 3 Summit Park Drive, Independence 44131 216-520-1200/crescorealestate.com

28

38

3

MARCUS & MILLICHAP REAL ESTATE INVESTMENT SERVICES 5005 Rockside Road, Suite 800, Independence 44131 216-264-2000/marcusmillichap.com

28

5

COLLIERS INTERNATIONAL 200 Public Square, Suite 1200, Cleveland 44114 216-239-5060/colliers.com/cleveland

6

PROPERTY TYPE FOCUS AREAS AND SPECIALTIES

OFFER PROPERTY MANAGEMENT SERVICES?

TOP LOCAL EXECUTIVE(S)

Office, industrial, retail, medical, land, flex space, multifamily, specialty, hospitality, data center

Y

John Latessa, president, Midwest Keith Brandt, managing director Emily Vanuch, operations supervisor

— —

Brokerage, corporate services, property management, accelerated auctions

Y

R.M. "Mac" Biggar, president

— —

— —

Industrial, office, retail; serving owners and investors

Y

Nathan Kelly, president, managing director

12

— —

— —

Multifamily, retail, office, industrial, health care, hospitality

N

Michael Glass, division manager Grant L. Fitzgerald, regional manager

25

40

— —

— —

Retail, industrial, self-storage, multifamily, office

Y

Brian A. Hurtuk, managing director, Cleveland

NAI PLEASANT VALLEY 1093 Medina Road, Suite 100, Medina 44245 216-831-3310/naipvc.com

20

15

— —

— —

Office, industrial, retail, health care, investment, self storage

Y

Alec J. Pacella, president

7

JLL 127 Public Square, Suite 1430, Cleveland 44114 216-861-7171/jll.com/cleveland

17

156

— —

— —

Office, industrial, retail, health care, hospitality

Y

—

7

PASSOV REAL ESTATE GROUP 3401 Richmond Road, Suite 200, Beachwood 44122 216-831-8100/passovgroup.com

17

7

— —

— —

Tenant and landlord representation, investment sales, land sales/assemblages, development, disposition, marketing

Y

David I. Stein, managing director Steven Passov, partner

7

PLATZ REALTY GROUP 3768 Boardman Canfield Road, Canfield 44406 330-757-4889/platzrealtygroup.com

17

—

— —

— —

Office, retail, industrial, apartments, investment properties

Y

Don Thomas, managing partner

10

ALLEGRO REALTY ADVISORS LTD. 1938 Euclid Ave., Suite 200, Cleveland 44115 216-965-0630/allegrorealty.com

15

23

— —

— —

Office, industrial, retail

Y

Michael L. Cantor, managing director, principal

10

GOODMAN REAL ESTATE SERVICES GROUP LLC 25333 Cedar Road, Suite 305, Lyndhurst 44124 216-381-8200/goodmanrealestate.com

15

7

73 446,068

20 511,024

Retail, restaurant, office, investment sales in all property types

N

Richard H. Edelman, principal, senior vice president Randall J. Goodman, principal, president

12

SVN | SUMMIT COMMERCIAL REAL ESTATE 3009 Smith Road, Suite 25, Akron 44333 234-231-0200/svnsummitcommercial.com

11

2

59 —

32 —

Corporate, hospitality, industrial, land development, medical office, multifamily, office, restaurant, retail, self-storage

Y

Jerry Fiume, managing director

13

GERSPACHER REAL ESTATE GROUP INC. 5164 Normandy Park Drive, Suite 285, Medina 44256 330-722-5002/gerspachergroup.com

10

3

— —

— —

Office, retail, industrial, multifamily, special purpose, investment, land

Y

Troy L. Gerspacher, president, broker

14

KOWIT & CO. REAL ESTATE GROUP 6009-B Landerhaven Drive, Mayfield Heights 44124 216-514-1400/kowitrealestate.com

8

4

121 435,829

5 194,680

Retail and office leasing, land sales, property management

Y

Brad Kowit, partner

14

LEE & ASSOCIATES CLEVELAND 30050 Chagrin Blvd., Suite 302, Pepper Pike 44124 216-282-0100/leecleveland.com

8

10

— —

— —

Office, industrial

Y

Joseph Greenberg, partner

14

NEWMARK 1300 E. 9th St., Suite 105, Cleveland 44114 216-861-3040/ngkf.com

8

9

— —

— —

Office, industrial, investment properties, land, retail, multifamily, medical, parking garages and lots, specialty

Y

James Clark, executive managing director

17

COLDWELL BANKER COMMERCIAL EMMCO REALTY GROUP 3681 S. Green Road, Suite 201, Beachwood 44122 216-292-3700/emmcorealtygroup.com

7

6

— —

— —

Office, retail, property management, investment sales, leasing

Y

Jeffrey E. Soclof, president

17

RJ WOHL CO. 1991 Crocker Road, Suite 600, Westlake 44145 440-835-0300/rjwohl.com

7

10

— —

— —

Office, retail, warehouse, investment sales, land acquisition

Y

Jack M. Sanfilippo, executive vice president

17

WEBER WOOD MEDINGER (WWM REAL ESTATE) 25800 Science Park Drive, Suite 150, Beachwood 44122 216-464-7100/wwmrealestate.com

7

8

— —

— —

Corporate real estate services, industrial, office, health care, multifamily, retail, investment sales

N

Blair Wood Kevin G. Joseph, partners

20

ARNOLD J. EISENBERG INC. 24500 Chagrin Blvd., Suite 120, Beachwood 44122 216-831-6773/arnoldjeisenberg.com

6

3

— —

— —

Retail, specializing in tenant representation and third party leasing

Y

Steven B. Eisenberg, president

20

AVISON YOUNG 600 Superior Ave. E., Suite 910, Cleveland 44114 216-609-0303/avisonyoung.com

6

8

40 1,250,000

15 685,000

Office, industrial, health care

N

Christopher J. Livingston, managing director

20

COAKLEY REAL ESTATE CO. LLC 1382 W. 9th St., Cleveland 44113 216-772-4700/coakleyrealestate.net

6

1

15 65,000

2 30,000

Commercial and residential

N

Francis M. Coakley, president

20

GLOBAL REAL ESTATE ADVISORS INC. 8585 East Ave., Mentor 44060 440-255-5552/globalcommercialre.com

6

1

25 258,000

43 750,000

Industrial, land, investment

N

Tim Sawicki, senior vice president

24

EDWARD J. LEWIS INC. 27 S. Hazel St., Youngstown 44503 330-746-6581/ejlewiscommercial.com

5

3

27 285,478

11 278,663

Industrial, office, retail, health care, development land

N

Jim Grantz, broker associate

24

FASS MANAGEMENT REAL ESTATE SERVICES 3705 Lee Road, Suite 100, Shaker Heights 44120 866-861-4761/fass-res.com

51

5

15 200,000

28 —

Office, retail, mixed, multifamily

Y

Akil S. Hameed, CEO, owner

24

GREEN BRIDGE REAL ESTATE 7155 Pearl Road, Suite 203, Cleveland 44130 216-452-9292 /greenbridgerealestate.com

5

0

15 100,000

20 500,000

Multifamily, industrial, office, retail

N

John Wagner Matthew King, partners

Researched by Chuck Soder (csoder@crain.com) | Information is supplied by the companies. Broker figures in some cases include contractors; some may do residential deals. NOTES: 1. Excludes 25 brokers who focus on residential property.

Get all 37 brokerages and hundreds of executives in Excel format. Become a Data Member: CrainsCleveland.com/data March 1, 2021 | CRAIN’S CLEVELAND BUSINESS | 17

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AKRON

Goodyear’s deal could boost its tech, sustainability edge Acquisition of Cooper Tire will bring new expertise, bolsters resources to drive innovation BBY ERIN PUSTAY BEAVEN RUBBER & PLASTICS NEWS

This is the moment that Akron-based Goodyear Tire & Rubber Co. has been preparing for: the future mobility moment.

Electric vehicles, autonomous vehicles, connected vehicles — they’re here, and Goodyear has worked to position itself as a leader in a new mobility ecosystem.

“At Goodyear, we have proactively embraced this change, leaning forward and adapting our business in meaningful ways,” said Richard Kramer, Goodyear chairman, CEO and president, in a recent conference call with reporters.

Today, Goodyear feels even better about its position within the tire industry and remains confident in its ability to adapt, not only to a new mobility landscape, but in offering more sustainable tire products. That’s because the tiremaker is poised to purchase Cooper Tire & Rubber Co. The $2.8 billion deal not only would expand Goodyear’s global presence, it would boost the tiremakers’ expertise in areas of sustainability and new mobility.

“We believe that bringing the two companies together will make us a stronger, more competitive force in the industry, which is challenging,” Cooper Tire CEO Brad Hughes said in the call. “It’s a global industry with a lot of competition and a lot of new technology coming to the market.”

Getting the newest, most sustainable tire technology to the market is only part of the equation, according to both Kramer and Hughes. The key, they said, is doing it quickly.

“It’s not even that (new mobility) is on the horizon,” Kramer said, “but it is right in front of us, and it’s gaining speed.”

Goodyear’s development of soybean oils for use in tire compounds is a major step forward on the sustainability front. The tire maker is aiming to produce 100% sustainable tires.

consumers and more advanced autonomous technology within the transportation sector.

Goodyear is ready to tackle those challenges too, Kramer said, pointing to his company’s research and development efforts focusing on connected and autonomous vehicles.

Electric revolution Last year was a landmark one for electric vehicles (EVs). According to data from the Center for Automotive Research, EVs were the best performing segment of 2020. While overall vehicle sales dropped about 17%, EVs fell only 4.8% in a challenging year that also saw low gas and oil prices, factors that typically hurt EV sales.

Now, more automakers are poised to bring electrified models to the market, and they’re investing heavily in the technology, especially for the light vehicle market. General Motors Co. has pledged that all of its light vehicles will have electric powertrains by 2035. Ford Motor Co. aims to do the same in Europe by 2030.

As such, Goodyear is determined to be a leader in the production of tires for electric vehicles, and it has focused product development to fine-tune areas such as noise reduction (particularly through the use of foams in tires), rolling resistance and managing the increased weight of electric vehicles.

Those efforts already are paying off, according to Kramer, who said that roughly half of the new original equipment (OE) fitments Goodyear recently secured are for electric vehicles.

During a fourth-quarter earnings call Feb. 9, Kramer noted that Goodyear is heading into 2021 with momentum on the OE fitment side.

Goodyear’s OE fitments, he said, were up 6% in the fourth quarter, out-

As electric vehicles continue to capture market share, opportunities for OE fitments will continue to increase. | GOODYEAR PHOTOGRAPHS

performing the industry overall.

“While I’m pleased with our recent performance,” Kramer said in the earnings call, “I’m even more excited about the gains we expect in our OE business in 2021 and beyond.

“OEMs are recognizing the commitment we’ve made to developing tires that will help them transform their portfolios to more energy-efficient and eco-friendly vehicles, while delivering performance capabilities consumers demand.”

Goodyear recently earned coveted OE fitments on high-profile electric vehicles such as GM’s electric Hummer and Lordstown Motors’ Edurance pickup, as well as Volkswagen Group’s ID.3. Opportunities like these should only increase as automakers step up their e-mobility game, committing more resources to the development of EVs. Data released late last year by the

Center for Automotive Research indicates that by 2025, EVs will account for 18% of total vehicle sales. By 2030, they should have roughly 28% of the market share.

This trend toward electrification reinforces the need for a combined Goodyear-Cooper Tire company to aggressively pursue new technologies and develop products for electric, autonomous and shared vehicles, officials said.

“Scale and breadth are also key to winning in new mobility,” Kramer said in the earnings call. “The change is driven by electrification of vehicles; shared mobility and the commercialization of autonomous vehicles are resulting in unprecedented disruption in the legacy auto industry and forced significant R&D investment.”

Those investments are taking root in more complex and reliable advanced drive-assistance systems for

Cooper, for its part, brings with it a deeply rooted expertise in guayule as an alternative rubber source. The Findlay-based tire maker heavily invested in R&D of guayule for a fiveyear period.

Backed by a $6.9 million grant from the U.S. Department of Agriculture, Cooper worked with Clemson University, Cornell University, More sustainable future PanAridus and the Agricultural ReWhile OEMs and consumers are search Service of the USDA to exfocused on the latest automotive plore the viability of guayule as a rubtechnology, they’re keeping their ber source for tires.

According eyes on matters of to sustainability.

Hughes, the strength “WE BELIEVE THAT For the tire indusof a combined Goodyear-Cooper compatry, sustainability PERCENTAGE OF ny lies not only in the matters on a number SUSTAINABLE combination of the of levels. From the sourcing of raw ma- PRODUCTS IN TIRES IS expertise each brings to the table, but in the terials to the manu- ONLY GOING TO combined resources facturing footprint to they have to further the lifecycle of the INCREASE, AND WE’RE tire itself, sustain- ON A PATH TO DO THAT, drive innovation in a demanding, evability is a core focus.

“I would say that EVEN DOUBLING WHERE er-changing industry. on a couple of “(There are) opWE’RE AT TODAY. A fronts here, we portunities to bring have been obvious- 100% SUSTAINABLE together two portfoly thinking more lios of technology about the sustain- TIRE IS WHAT WE’RE that are being develability of our prod- MOVING TOWARD.” oped in the two orgaucts going fornizations for some ——Richard Kramer, Goodyear ward,” Kramer said chairman, CEO and president tires right now, but in the earnings call. more as you’re lookOne of those areas involves the de- ing down into the future of the tire and velopment of soybean oils as a re- automotive industry,” Hughes said in placement for petrochemicals within the media call. “Bringing those portthe tires compounds. Goodyear has folios together, combining them, made big strides with this develop- looking where there is overlap and opment and looks to continue its re- portunity to accelerate, opportunity to prioritize and to put certain technolosearch in this and other areas.

“We believe that percentage of sus- gies together to advance the outcomes tainable products in tires is only going faster — that’s the exciting part.” to increase, and we’re on a path to do that, even doubling where we’re at to- Rubber & Plastics News is a sister day,” Kramer said. “A 100% sustain- publication of Crain’s Cleveland able tire is what we’re moving toward.” Business.

18 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

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From Page 1

Goodyear is one of the three largest tiremakers on the planet (according to several industry rankings, Bridgestone leads the pack, followed by Michelin and Goodyear) and is a huge corporate powerhouse that sells a lot of high-end tires, thanks to its long history of big budgets for research, development and testing. Its decades of industry dominance and name recognition make it the provider of choice for many U.S. automakers.

Cooper, on the other hand, is a much smaller company. But it has built a strong presence in some U.S. market niches that Goodyear has not cultivated as well, including value-oriented replacement tires and especially tires for light trucks and SUVS. Goodyear now hopes to combine all of that into one, bigger, more diverse and growing company, Wells said.

“The Cooper brand has a different meaning and is focused on different parts of the market than the Goodyear brand. So, our view is that they really complement each other well.

Our intention is to get the best out of both of the brands,” he said.

For example, while Goodyear tires come stock on many light trucks and SUVs, a lot of those vehicles end up with Cooper tires when it comes time to replace them. By combining the two companies, Goodyear would get both parts of that business.

“It really broadens our appeal to truck and SUV owners … they’re really

strong in the replacement market in the U.S. for those vehicles,” Wells said.

Also on the replacement side, Cooper makes some more value-oriented tires. They represent a segment of the tire market that’s exhibited the strongest growth in recent years, especially in tough times, said John Healy, managing director of Northcoast Research in Cleveland and an equity research analyst who follows both Goodyear and Cooper.

“I think it makes a lot of sense,” Healy said of the deal. “It gives Goodyear a really strong brand and enhances their position in that value segment of the tire market, which is probably the most buoyant part of the market in terms of growth these days.”

Growth is something that’s eluded Goodyear in recent years, to put it lightly. Its sales reached a peak of $22.8 billion in 2011 but have since declined to $12.3 billion in 2020.

Company officials think the Cooper deal can help reverse those fortunes.

“Our sales levels had come down over the years and there were a number of reasons for that, but this gives Goodyear a chance to get back into growth mode,” Wells said.

Toward that end, Goodyear also will pick up relationships with hundreds of independent tire dealers, many of which are big fans of Cooper. Goodyear already has more than 600 U.S. stores and relationships with thousands of other retailers, Wells said.

“They have a very loyal dealer base of independent retailers,” Wells said.

“We’re going to have more ways to reach the end consumer, which I

think is ultimately good — and we’re going to have a wider array of products to offer.”

Then there’s China, where a population of 1.4 billion people is still developing its auto market. Things are flipped there, with Cooper having a good relationship with automakers thanks to joint ventures, while Goodyear enjoys a larger share of the tire replacement market.

“It’s only been in recent years that there’s been a significant replacement tire business there,” Wells said.

“It’s gradually shifting toward more

“I THINK IT MAKES A LOT OF SENSE. GOODYEAR, AS A RESULT OF THIS TRANSACTION, WILL BE MAKING ABOUT 40 MILLION MORE TIRES THAN THEY HAD BEEN.” — John Healy, managing director of Northcoast Research

tires for replacement and (the Chinese) haven’t made that transition yet. … They really don’t have much of a replacement tire business there, but we do,” he said of Cooper.

If Goodyear can put all of those pieces together as planned, it will regain some market share in the U.S., capture a larger and ongoing portion of the Chinese market and return to growth — which is why Healy said he likes the deal and why he thinks the

market does, too.

“I think it makes a lot of sense,” said Healy, one of several analysts to applaud the deal. “Goodyear, as a result of this transaction, will be making about 40 million more tires than they had been.”

Goodyear made 126 million tires in 2020, according to its financial reports, including 56.7 million in the Americas, 24.8 million in the Asia Pacific region and 44.5 million in other parts of the world.

KeyBanc analyst James Picariello reportedly told clients in a note that the transaction “represents the rare instance of a clear, great deal for both parties.”

Investors have expressed strong approval for the deal as well. Goodyear’s shares had been trading for less than $14 per share before the deal. Upon the transaction’s announcement, its share price jumped more than 20% to above $17 per share, before settling back to about $16.50 and holding at or above that level as of late last week.

There may be a naysayer, however.

Though it’s yet to pass judgment, Moody's Investors Service announced Feb. 23 it was placing the debt ratings of both companies on review for a possible downgrade.

Moody’s said it wants to see how Goodyear handles Cooper’s debt and what the combined balance sheet of the company will look like, though it said any changes in Goodyear’s credit rating would likely be limited to “one notch.”

Cooper, according to its most re-

cent financial filings, has about $314 million in long-term debt and finance leases. Goodyear, however, has $5.4 billion in long-term debt and finance leases.

Wells said he’s not overly concerned, in part because of the transaction’s structure. Goodyear has said it will pay Cooper shareholders a little more than $54 for each of their shares, with $41.75 of that coming in cash and the rest in the form of Goodyear shares.

“The combination of stock and cash we’re using to do the transaction is actually going to improve our balance sheet. … The debt-to-EBITDA improves substantially,” Wells said.

He said it’s typical for rating agencies to place companies on watch while evaluating the impact of large acquisitions and will address their questions.

“We expect to meet with the rating agencies to discuss the impact of the transaction,” Wells said.

Healy said he largely agreed with Wells’ assessment. Meanwhile, Fitch Ratings affirmed Goodyear’s debt ratings on Feb. 23. Though it stated that the rating outlook for Goodyear “remains negative,” Fitch said Goodyear’s rating is supported by its plan to fund the transaction with a cashand-stock combination, “with the potential for an incrementally stronger credit profile in a few years once synergies are achieved” from the combination of the two companies.

Dan Shingler: dshingler@crain.com, (216) 771-5290, @DanShingler

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MARCH 1, 2021 | CRAIN’S CLEVELAND BUSINESS | 19

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WAGE

From Page 1

“If payroll goes from being 35%, 45% of expenses to 50%, I make zero money as a business owner and I either have to raise prices significantly to make up for that or close the doors,” said Torres, vice president of Cleveland Independents, a coalition of locally owned restaurants.

The loss of the tip credit is a whole other animal and what Torres deems as the greater worry, both for her as a business operator and her wait staff.

In fine-dining establishments like Mallorca, top servers can purportedly bring in around $85,000 a year thanks to high-dollar tips. That’s more than two-and-a-half times the annual base salary for a full-time employee earning $15 an hour. That income would evaporate with a flat hourly wage and no tips.

“No small business restaurant can afford to pay a waiter what they make with their tips,” Torres said.

With tips eliminated, the restaurant would likely lose its best servers as they seek out jobs with better wages, Torres said. The tip credit is what enables the retention of prime wait staff she says Mallorca couldn't afford otherwise.

Ohio’s minimum wage is $8.80, and tipped employees earn a base pay of half that. If the employee’s wages with tips don’t meet the equivalent of minimum wage, the restaurant makes up the difference.

“I will say that I’m a Democrat and I stand on the same platform in the sense I believe in fair wages and a safety net. I absolutely believe we should help people rise up,” Torres said. “But when it comes to the restaurant industry, you are looking to make a blanket change that changes the entire dynamic of the industry.”

But doing nothing with minimum wage also achieves the same in terms of helping people most in need.

And certainly not all low-wage workers are in high-end restaurants.

Six of Ohio’s 10 most common jobs — which include servers, fast food employees, home health aides and cashiers — pay too little to support a family of three without food assistance, according to Policy Matters Ohio.

“Many individuals who are facing the need of a $15 an hour wage increase are working two and three jobs just to make ends meet, with many of them still in poverty,” said Marsha Mockabee, president and CEO of the Urban League of Greater

SUPPLY CHAIN

From Page 1

For example, David Klotz, president of the Precision Metalforming Association in Independence, said steel prices have “skyrocketed” to a 13- or 14-year high. And lead times have been increasing, too. In a recent news release, Klotz noted that steel lead times “have gone from four to six weeks in October 2020 to 12 to 16 weeks now.” Overall, high demand and low supply means Klotz has seen members with presses ready to run, but no raw material to use.

The supply chain has been a challenge recently for metal stamper Automation Tool & Die Inc. in Valley City, with prices as high as they’re been since the summer of 2008, said vice president Randy Bennett. Spot buys are “non-existent,” he said, and program buys are coming in late. And mills are getting more selective. Bennett said increased demand from sec-

Enrique Munoz serves a guest at Mallorca in downtown Cleveland. Mallorca owner Laurie Torres has voiced some concerns about the impact of a federal minimum wage increase to $15 as sought in the Raise the Wage Act of 2021. She frets the act may also result in elimination of the tip credit, which she said helps some waiters, especially at fine dining establishments, earn pay well above minimum wage. | CONTRIBUTED

Cleveland. “So how does one begin to move toward economic self-sufficiency when they are not able to support a family working one or even two jobs?”

One answer, Mockabee said, is raising minimum wage.

But how employers manage that is a cause of concern.

What’s the research say?

From hospitality to retail to manufacturing, employers of lower-wage workers tend to worry about the worst-case scenarios that might result from increased labor costs, like cutting staff or closing. The smallest companies may be at more risk for absorbing the increases as larger and more diversified companies where scale provides other opportunities to offset rising costs. That’s especially tors like residential projects and automotive has meant mills are being pulled in a lot of different directions.

And this has had tangible impacts for manufacturers. Late orders have meant shifted production schedules at Automation Tool & Die. And Bennett said his shop even had a standing product order canceled at the mill, which meant the company had to scramble to find steel.

Bennett said he’s been working through the pricing hurdles with his customers, but the “fear of shutting somebody down” because of late deliveries has been his biggest concern.

Darrell McNair, president and CEO of MVP Plastics Inc. in Middlefield, said allotment restrictions have put pressure on the amount of product the company can bring in. Basing purchases on previous buys makes it so suppliers can serve all their customers with limited products, but it’s been difficult for anyone to stockpile goods.

The COVID-19 shutdowns depleted everyone’s inventory, said Brian

true for small, indie restaurants, said Ohio Restaurant Association CEO John Barker.

“The big companies will figure this out,” Barker said, “but as you get smaller it gets very difficult.”

Proponents of higher wages prefer to emphasize the greater good that could come from raising people out of poverty at a point when the value of wages has failed to keep up over time in one of the world’s wealthiest countries.

A February Congressional Budget Office report on the Raise the Wage Act of 2021 offers a mixed message in terms of the pros or cons of the plan, which it estimates could increase the federal budget deficit by $54 billion over the next decade and reduce employment by 1.4 million workers by 2025.

However, the change could also lift some 900,000 people out of poverty, Lennon, CEO and president of General Die Casters Inc. in Twinsburg.

And demand came back faster than expected.

“Across the board, I think demand is pretty high on everybody’s part, but I don’t think anybody is able to

“ACROSS THE BOARD, I THINK DEMAND IS PRETTY HIGH ON EVERYBODY’S PART, BUT I DON’T THINK ANYBODY IS ABLE TO PRODUCE WHAT THEY WANT TO PRODUCE.” ——Brian Lennon, CEO and president of General Die Casters Inc.

produce what they want to produce,” Lennon said.

General Die Casters makes aluminum and zinc die castings for industries from automotive to lawn and garden. A problem somewhere along the line for one of its customers can jam up the entire supply chain, caus-

according to CBO, resulting in decreased spending on programs that provide services or benefits to those individuals.

There’s evidence the worst-case scenarios that are often purported to come with a mandated increase in minimum wage don’t ever play out, said Michael Shields, a researcher with Policy Matters Ohio.

He points to a 2015 research paper analyzing various studies since 2000 about the impacts of minimum wage increases, which finds there to be no support for the proposition that minimum wage has had an “important” effect on U.S. employment.

Furthermore, the CBO report indicates that people who may become unemployed as result of the Wage Act may be so for about a year.

“And then it’s quite likely that person comes out ahead based on increased earnings when they get back to work again,” Shields said.

Minimum wage needs to be raised because the value of it has not improved since 1968, Shields said.

This is a factor that influenced Ohio passing in 2006 a law tying minimum wage to inflation, which is why that’s at $8.80 and not the federal level of $7.25.

“I personally believe businesses can find a way to integrate higher wages,” Shields said. “We’ve certainly seen them do that in every state that has passed a robust minimum wage policy so far. I just think there is a lot of reactive fear that I believe, for the broader economy, is not justified.”

In the minimum wage debate, “the argument in the academic world is in a tight range where effects are either zero or perhaps slightly negative for some groups,” said Mark Votruba, chair of the economics department at Weatherhead School of Management.

“Economic models in theory say we should see a negative labor demand effect if the minimum wage is forced above whatever the normal market-clearing wage is supposed to be for low-skilled workers,” Votruba added. “But the evidence hasn’t supported that very strongly.”

The debate continues What makes today’s debate different from those of the past is how this all comes amid the throes of an ongoing pandemic. While the health crisis may seem to be in the early stages of winding down, it casts a pall over the future business prospects nevertheless.

Ryan Neumeyer, a labor and employment attorney and consultant with ing schedules to change.

In addition to sourcing material, finding and keeping people has been a challenge. General Die Casters has raised wages and offered overtime, but Lennon said it seems like everyone is fighting over the same pool of workers.

The workforce challenges raised by the pandemic have certainly affected the auto industry, said Julie Fream, president and CEO of the Original Equipment Suppliers Association in Michigan. Some workers have been concerned about the safety of the work environment, while others have challenges raised by the pandemic — like children at home — that interfere with work. And the sheer volume of work automakers faced when they ramped back up after shutdowns meant companies had to do a lot of hiring.

These challenges extend to all parts of the supply chain, including transportation. That means ships have been delayed in docking and cargo delayed in sorting and shipping.

McDonald Hopkins, said he has clients at smaller manufacturing and construction outfits that worry about raising wages across the board. The idea is employers already paying workers around $15 per hour or more will be expected to hike pay even further in response to minimum wage’s rising tide.

“People are going to want raises, and they’ll have to figure out how to implement those in a tough economic time,” he said.

The phasing in of wage hikes mitigates the shock, but not entirely.

“Most folks are forecasting down and not up. And there are labor shortages already in certain areas,” Neumeyer said. “It’s not that they would close down (because of wage hikes), but it makes things more difficult to plan for in an already difficult time.”

An executive of one Northeast Ohio restaurant with some 150 employees, who asked to be unidentified because of the sensitive nature of the wage debate, said a federal minimum wage of $15 would amount to an estimated $100,000 in additional labor costs annually that would need to be offset.

Doug Petkovic, owner of Flannery’s Pub and a partner in Michael Symon Restaurants, said he supports people fighting for pay increases but that a $15 minimum wage would be tough to swallow.

“Thinking a marked increase in minimum wage is going to solve society’s problems is very shortsighted,” he said. “As someone using minimum-wage earners, you’re basically taxing me to help society, and that’s not fair.”

The ORA’s position is that minimum wage should be addressed at state levels, not federal. A minimum wage that makes sense in one market, like New York or California, shouldn’t necessarily be the standard in another, like Ohio, Barker said, rejecting the idea of a federally mandated one-size-fits-all approach.

“Minimum wage is a blunt instrument that is, I think, more turned into a political football at this point,” he said.

“We would rather have a thoughtful, smart, careful conversation about a minimum wage that works for all, but then let states that can afford to go higher do so. It’s complicated because people take sides and yell, ‘We are not going to do that.’ (The ORA) is not going to do that. But we do press for the president and Congress to think about everybody carefully as we go through this process.”

Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile Slowed shipping has been a big problem for K-J Fasteners Inc. in Eastlake. While the small company does some manufacturing, the bulk of the business is distribution, with about 30% coming from imports.

President Kirk Stonebrook said there’s been a “perfect storm” around imports: shipments slowed because of the increased shipping pressures and tariffs raising prices on finished products and raw materials.

“Whether you’re big or small, whether you sell a lot of domestic product or not, that whole thing is affecting everybody’s supply chain,” Stonebrook said.

“And I’m no different.”

This is the first part in a two-part series looking at the impact COVID19 has had on the supply chain.

Check back next week for a look at some of the ways local manufacturers are managing these challenges.

Rachel Abbey McCafferty: (216) 771-5379, rmccafferty@crain.com

20 | CRAIN’S CLEVELAND BUSINESS | March 1, 2021

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TRANSIT

THE WEEK

From Page 5

The report specifically cited “the long-term chronic lack of state funding for transit, the resulting decrease in transit ridership, and increased age of transit vehicles throughout the state” and called out the $7 million budget proposal as a problem going forward.

“Public transportation here in Cleveland, along with others in the state, has proven that we are absolutely essential,” said India Birdsong, Greater Cleveland Regional Transit Authority CEO and general manager. “And when we face such a drastic reduction like this in state funding, it’s definitely a blow.”

The pandemic brought with it the shutdown of nonessential businesses and has affected public transportation ridership and revenue. RTA reported a 57% decline in passenger fare revenue in January, compared with January 2020, and a 55% decrease in ridership in January compared with the like period a year ago.

In her testimony before the Senate Transportation committee, Birdsong called the administration’s budget disappointing and a “giant step backward given everything we as a transit industry are doing.”

“We are worthy of the allocation of dollars,” she said. “We are not just an essential service. We also support other essential services, make sure folks can get to work, to the hospitals and have to get to the grocery stores.”

Even if the new funding goes into place, most public transportation supporters agree it will not be enough to for any long-term plan for stability.

“Even with the historic funding that was approved two years ago, it just scratches the surface of what the long-term needs are for transit agencies, big and small, across the state,” Warner said.

Birdsong and Greater Ohio Policy Center’s Warner agree that the agencies cannot rely on the whims of the

JARBOE

From Page 8

When I called the PUA phone line to check in, the people who answered were kind, sympathetic — and unable to help.

They couldn’t offer a time line.

They couldn’t talk to anyone tasked with backdating claims. One woman told me I could send a single follow-up email — nothing more, as the backdating staff didn’t want repeat inquiries.

Another representative told me to call more often. Then she acknowledged that might be a waste of time.

Several call-center workers stressed that I should keep my account current by filing ongoing claims. (That wasn’t accurate, a supervisor recently said.) So every week, I logged into the portal and answered the same set of questions, explaining that I was working full-time but waiting on months-old benefits.

“From April to December, there were many people that were in your situation,” Betti told me. “The system didn’t quite fit their parameters, and it required a real person to touch it.

And we struggled with that last piece because of demand and volume.”

The process felt futile, the conversations farcical.

I understood why other applicants had flocked to social media, to unofficial helplines on Facebook and Reddit, for clarity. Close to 11,000 people have joined a private Facebook group for jobless Ohioans. Last

“PUBLIC TRANSPORTATION HERE IN CLEVELAND, ALONG WITH OTHERS IN THE STATE, HAS PROVEN THAT WE ARE ABSOLUTELY ESSENTIAL.” ——India Birdsong, Greater Cleveland Regional Transit Authority CEO and general manager

executive budget, and that lack of predictability makes it difficult to do efficient and meaningful investment.

Others agree that unpredictability is a problem for transportation needs.

During budget testimony, ODOT director Jack Marchbanks told the House transportation committee that overall transportation funding is unpredictable as decreases in gas tax revenues — the result of less driving during the pandemic — most likely will become a long-term issue. The emergence of electric vehicles plays into that as well.

“We believe that the legislature needs to consider a permanent, dedicated source of funding for public transportation,” Warner said. “We are going to be asking the legislature to form a study committee to look at potential sources and dedicated funding.”

The substitute bill has one more scheduled committee hearing before it goes to the floor for a full House vote. If it passes, it would go to the Senate.

Kim Palmer: kpalmer@crain.com, (216) 771-5384, @kimfouroffive week, there were 74,000 subscribers on a nationwide Reddit forum devoted to unemployment.

“The last time I received payment was back in July!” one recent comment on Facebook reads. “July 5, to be exact, and I’ve called a hundred times. ... I’m grabbing at straws here as I haven’t been paid since July and I could cry. What do I do???”

Before the pandemic, Ohio’s unemployment office received 20,000 weekly calls. That volume spiked to 500,000 calls during the first week after the statewide lockdown began.

Since mid-March of last year, the customer service center has received more than 20 million calls, Betti said.

“All we can say is that we understand, and we’re listening, and we’re sorry,” he said of the long hold times and obstructions that some applicants have encountered.

Officials have hired and trained staff, but it’s still a struggle to keep up. The department has been wrangling with an antiquated computer system; adjusting to the PUA program; and reacting to 11th-hour moves by the federal government, which only extended temporary relief programs in late December, after those programs lapsed.

There’s another expiration date looming in mid-March for enhanced federal benefits.

And the state, like many others, has been contending with fraud. Organized scammers flocked to the PUA program last year, using stolen identities to file claims. In recent weeks, those swindlers have turned

ROLLING ALONG: Akron-based Goodyear Tire & Rubber Co. announced Feb. 22 that it’s acquiring Cooper Tire & Rubber Co. in a deal worth about $2.8 billion. The cash and stock deal will expand Goodyear’s product offering, create a stronger U.S.-based manufacturer, strengthen its distribution channels and combine both companies’ strengths in the light truck and SUV product segments, the companies said. The deal also will nearly double Goodyear’s presence in China. The combined company will have about $17.5 billion in pro forma 2019 sales.

The companies said they expect $165 million in cost synergies within two years after the deal. See more, Page One.

Rocket Mortgage plans to double the workforce at its downtown Cleveland mortgage banking hub, located at the Higbee Building just off Public Square. | ROCKET COS.

ON THE GROW: As Rocket Mortgage JOB WELL DONE: George Gund Founramps up hiring in downtown Cleve- dation president David Abbott plans land, the Detroit-based lender will to retire at the end of the year after take advantage of a state tax credit nearly two decades leading the tied to new employment. The Ohio foundation. Upon his retirement at Tax Credit Authority on Feb. 22 ap- the end of 2021, Abbott, who beproved a 10-year, 2.211% job-cre- came the foundation’s president in ation tax credit for Rocket, the mort- 2003, will be weeks away from his gage giant formerly known as 70th birthday. “It has been an enorQuicken Loans. The clock on the in- mous honor to work at this foundacentive deal is retroactive to Jan. 1 of tion and, through it, to fight to make this year and will run through 2030. Cleveland and our country better,” The estimated value of the credit is Abbott said in a statement. “But $9.6 million, but the ultimate dollar change is inevitable, and it is simply amount will depend on hiring and time for me to hand the baton to a payroll at Rocket’s mortgage banking new leader.” The foundation will hub in the Higbee Building, just off conduct a national search for a new Public Square. Stephen Caviness, a president. In 2019, the foundation director of project management for awarded $24.9 million in grants, regional economic development C R Amaking I N ’ S C L EitVthe E L Athird-largest N D B U S I N E SgrantS | group Team NEO, told the five-mem- maker in the area that year, accordber tax credit board that Rocket will ing to Crain’s Cleveland Business retain 721 jobs and $94.1 million in research. payroll at the site. The company has committed to adding 630 jobs and FANS IN THE STANDS: When baseball’s $47.3 million in payroll. As part of the back this season, fans will be, too. tax credit agreement, Rocket must Ohio Gov. Mike DeWine said on maintain operations at the Higbee Feb. 25 that the plan for the baseball Building for at least 13 years. season will involve a capacity limit their attention to the traditional unemployment system. Fraudulent claims are causing snarls for legitimate applicants, victims, businesses and public officials.

More than 7,300 employers have filed reports of potential ID theft related to 21,000 records uploaded during the past six weeks, Betti said.

More than 154,000 individuals, almost 20% of them from out of state, have submitted reports of suspected fraud through an online portal.

Ohio has red-flagged about 7% of traditional unemployment claims and a whopping 56.8% of PUA claims as potentially suspect. In December alone, the state identified $330 million in fraudulent PUA program overpayments.

If my claim ever was put on hold due to fraud concerns, nobody told me. Betti didn’t have access to my file. From my side of the portal, my case simply languished for months.

In early February, though, a friend who experienced her own unemployment challenges gave me an email address for a supervisor. I reached out by email. The supervisor answered. And within a few hours, she had fixed my problem. I was able to submit weekly claims for April and May. A few days later, my unemployment compensation appeared in my bank account. Along with an extra payment of $1,620 in federal assistance for six weeks in August and September — when I was working full-time and, at the call center’s direction, submitting weekly records to

the state showing that I no longer qualified for aid.

I told Betti about the baffling payment, which I notified the department about immediately. He said it sounded like an error in the system.

“You have a unique situation going into it and a unique situation going

of 30%. For the Cleveland Indians, that would mean a maximum attendance of about 10,500 at Progressive Field. The tally would be about 1,500 fewer than the 12,000 limit that was in place for the Browns’ final six home games of 2020. Even a 10,500fan limit would help the Indians, who, like all MLB teams, have taken a hit financially after a 2020 season in which game-day revenues were wiped out. The Tribe’s home opener is slated for Monday, April 5.

LEGAL TROUBLE: Cleveland City Councilman Ken Johnson, 74, was arrested Feb. 23 by federal agents. The arrest coincided with a multi-count indictment in which Johnson is alS Eleged P T E M Bto E R have 3 - 9 , taken 2 018 more | PA Gthan E 21 $127,000 by submitting inaccurate expense reports for several years.

Charges include conspiracy to commit theft from a federal program, aiding and assisting in the preparation of false tax returns, tampering with a witness, and falsification of records during a federal investigation. out of it,” he said of my unemployment saga.

I spent most of a year seeking money from the state. Now, I’m trying to give it back.

Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe

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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

BANKING

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KeyBank

McCarthy, Lebit, Crystal & Liffman

Thompson Hine LLP

Care Alliance Health Center Diana Rosa joined Care Alliance as the Chief Operating Officer. She has more than 30 years of non-profit experience Rosa in behavioral health care, early learning, intellectual and developmental disabilities, and community services. She received an MS in Healthcare Administration from the University of Cincinnati and a BA in health science from Lake Erie College.

Lisa Wheeler-Cooper joined Care Alliance as the VP of Marketing and Development. She has more than 25 years of marketing and Wheelercommunications Cooper experience. Lisa is a graduate of Kent State University and completed the Diversity and Inclusion Certificate program at Cornell University. She is currently pursuing an M.Ed in Health Education and Promotion from Kent State University. Visit www.carealliance.org.

Thompson Hine congratulates John C. Allerding on his promotion to partner.

John represents clients around the country on a wide variety of creditors’ rights, bankruptcy, restructuring, and litigation matters, including distressed and special asset workouts, large commercial bankruptcies, DIP financing transactions, preferential and fraudulent transfer litigation, and Uniform Commercial Code disputes. John is Chair of the Firm’s Cleveland Pro Bono Committee and on the board of Towards Employment.

LAW

Taft Law Former Ohio appellate court judge Ray Headen has joined Taft as of counsel. A trusted advisor and advocate to public and private clients and communities throughout Ohio, Headen provides counsel on bond and economic development options and incentives to local government leaders, city councils, law directors, school executives, and private sector development and finance professionals. He advises private equity firms and portfolio companies. He has extraordinary insight into the procedures of Ohio appellate courts and the Ohio Supreme Court. He previously served as special counsel to the Ohio Attorney General in the first publishing of the Ohio Economic Development Manual. He is listed in The Bond Buyer’s Municipal Marketplace, the Redbook.

RECOGNIZE INDUSTRY ACHIEVERS IN CRAIN’S

Listing opportunities: Debora Stein at dstein@crain.com or submit directly to CRAINSCLEVELAND.COM/PEOPLEMOVES 22 | CRAIN’S CLEVELAND BUSINESS | MARCH 1, 2021

Thompson Hine LLP

Conservancy for Cuyahoga Valley National Park

Thompson Hine congratulates Kevin R. Tabor on his promotion to partner.

Kevin focuses his practice on federal income tax law and Ohio tax law and advises on both transactional and tax controversy matters. He counsels clients on all aspects of corporate and partnership taxation, including ITC, and represents clients before the IRS and the Ohio Department of Taxation in audits, litigation and investigations. Kevin earned his J.D. from The Ohio State University Moritz College of Law.

The Conservancy for CVNP is thrilled to welcome Donté Gibbs as the Senior Director of Community Partnerships. Gibbs will represent the Conservancy in establishing strategic partnerships and collaborating with external organizations and individuals in the Cleveland and Akron areas to advance the mission of the Conservancy. His work will focus on promoting CVNP, environmental preservation, social justice, health and wellness, and diversity, equity, and inclusion.

NONPROFITS LAW

Thompson Hine LLP Thompson Hine is pleased to announce that Bill Thrush has been named a partner of the firm. Bill’s litigation practice includes representing clients at trial and in arbitrations, mediations and appeals involving a wide range of complex multimillion-dollar construction and real estate matters. His transactional practice includes preparing and negotiating construction contracts, design agreements, leases and other contract documents. Bill earned his J.D. from Lewis & Clark Law School.

Conservancy for Cuyahoga Valley National Park The Conservancy for CVNP is excited to announce that Marc Nathanson has officially been named the Director of the James A. Garfield Alliance, a philanthropic group committed to preserving the legacy of the 20th President by supporting the James A. Garfield National Historic Site. The Alliance, a subdivision of the Conservancy, advocates and raises funds for the historic site to support educational and community programs and other needs that enhance the Site’s public use and enjoyment.

LAW SERVICES

Thompson Hine LLP Thompson Hine is pleased to announce that Sean Ganley has been named a partner of the firm. Sean focuses his practice on representing entrepreneurs, emerging companies, early-stage investors and venture capital firms. He advises company-side clients from formation through funding to exit and has experience in complex, venturestyle corporate finance matters, mergers and acquisitions, and corporate governance matters.

Sean earned his J.D. from the Case Western Reserve University School of Law.

LAW

Renner Otto Intellectual Property Law Firm Renner Otto announces the admission of Bonnie M. Smith and Richard A. Wolf as Partner. A Smith graduate of Wayne State University Law School, Bonnie specializes in mechanical and electrical patent prosecution.

She is an avid supporter of the Women in Manufacturing – Ohio Chapter and is also a Board Member of the Cleveland Intellectual Property Law Association.

Richard graduated Wolf from CWRU Engineering and summa cum laude from Akron Law School with 10 years engineering experience. His expertise spans mechanical and materials technology, including semiconductors, composites, and fluid devices. From entrepreneurs to innovative businesses, his passion is helping clients protect ideas in the US and abroad.

Koinonia Koinonia appointed Jeanne Greene to the position of chief clinical and program officer. Greene will oversee intake, shared living, adult day services, employment services, and behavioral support for adults with intellectual and developmental disabilities. She will play an important role in expanding health services within the organization and reshaping its service model. She plans to focus her work on preventative and proactive care, behavioral and holistic health, and traumainformed care.

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C O N TA C T

HEALTH CARE

McCarthy, Lebit, Crystal & Liffman Co., LPA is pleased to welcome Rebekah A. Branham to the firm as an associate in the Family Law group. Rebekah focuses her practice on assisting clients in all areas of domestic relations law including divorce, dissolution, spousal support and child support, post-decree litigation and prenuptial agreements. Rebekah is a graduate of the University of Akron School of Law where she earned her Juris Doctor, magna cum laude.

NONPROFITS

C O N TA C T

KeyBank has named Christopher Doyle Commercial Sales Leader in Cleveland.

He will work with Matt Nipper, Key’s Head of Commercial Banking in Northeast Ohio, to support the robust commercial activity taking place in Cleveland. Doyle returned to Key in 2017 and most recently worked as a Senior Relationship Manager with the Commercial Bank. Before rejoining KeyBank, Doyle held positions at Huntington Bank, Old Oak Partners, LLC, Edw. F. Doubrava, Inc. & Affiliates and KeyBanc Capital Markets.

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MARCH 23 | 4 – 5 P.M. Join Crain’s Cleveland Business as we recognize the individuals and headlines that rose above all others during the unprecedented year that was 2020. Crain’s looks to give special recognition to those who could not stay home: essential, frontline workers.

Publisher Mike Schoenbrun (216) 771-5174 or mike.schoenbrun@crain.com Executive editor Elizabeth McIntyre (216) 771-5358 or emcintyre@crain.com Group publisher Jim Kirk (312) 397-5503 or jkirk@crain.com Managing editor Scott Suttell (216) 771-5227 or ssuttell@crain.com Assistant managing editor Sue Walton (330) 802-4615 or swalton@crain.com Creative director David Kordalski (216) 771-5169 or dkordalski@crain.com Web editor Damon Sims (216) 771-5279 or dasims@crain.com Assistant editor Kevin Kleps (216) 771-5256 or kkleps@crain.com Senior data editor Chuck Soder (216) 771-5374 or csoder@crain.com Editorial researcher William Lucey (216) 771-5243 or wlucey@crain.com Cartoonist Rich Williams REPORTERS

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