‘RARE OPPORTUNITY’
Waterwood Estate makeover will open up one of Ohio’s most unusual lakefront properties with townhouses, condos, a restaurant and hotel
BY MICHELLE JARBOEInventor Donald Brown meticulously plotted out every detail of his Vermilion Township estate, a striking lakefront mansion that locals call “the castle.”
Now that private enclave, the subject of rumors and hyperbole for decades, is poised to become a public space. A Northeast Ohio developer plans to transform the 38,000-squarefoot home into a resort, anked by luxury townhouses and condominiums.
Larger FIT Technologies o ce brings perks, fun
IT rm has moved to full oor at Playhouse Square’s Idea Center
BY STAN BULLARDTake the amenity-rich strategy for wooing workers back to the o ce after the pandemic. Combine with the well-established penchant of tech companies to o er Ping-Pong, Foosball, Skee-ball and pinball games for sta ers. row in a need to add space for a growing sta . at mix creates the new full- oor o ce of FIT Technologies on the fth oor of the Idea Center building at Playhouse Square in downtown Cleveland. But there also is a big switch from companies putting their o ce suites on diets because so much sta seeks to work from home.
“We felt that coming out of COVID-19, everyone wants a little extra space,” said Adam Tubbs, FIT Technologies CEO, during a tour of the rm’s new o ce.
Ohio has plenty of medical marijuana, not enough buyers
BY JEREMY NOBILEOhio has plenty of medical marijuana but not enough people buying it.
An a liate of the DiGeronimo Cos. purchased the Waterwood Estate in early 2020, just over a decade after Brown and his wife died in a plane crash. Now the development arm of the Independence-based family of companies is preparing to launch an $80 million project — the rst phase of a broader reimagining of 160 acres in Erie County.
“Waterwood presents the rare opportunity to develop at a large scale on the lake in a prime location, with an existing structure
that cannot be replicated today,” the developer wrote in an email. “Anyone who steps into the estate recognizes that it’s a one-ofa-kind property.”
Construction is scheduled to start in late summer on the 60-acre lakefront portion of the site. at’s where DiGeronimo will build 26 townhouses, a short stroll west of the mansion, and a pair of roughly 30-unit condo buildings, to the east.
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Levels of marijuana ower ready for sale as well as bulk ower held by suppliers — bulk material could be sold as ower or processed into other products — have each about doubled in the year between June 2022 and June 2023, according to gures from the Ohio Department of Commerce.
Operators say they don’t need to see the exact numbers to know that there’s too much product now, because they’re experiencing the signs of an oversupplied market rsthand.
“ ere is de nitely an oversupply in the market across all categories,” said Andy
SPORTS BUSINESS
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Outgoing Cleveland schools CEO re ects on his 12-year tenure, calling it the most “important work” of his career.
Growing interest in pickleball around Greater Cleveland provides opportunities for business and networking.
Park Synagogue wins $10M in state tax credits for preservation
MICHELLE JARBOEA preservation plan for Park Synagogue in Cleveland Heights got a huge boost ursday, June 29, when local developers won $10 million in competitive state tax credits for the project.
e landmark building, designed by noted German architect Erich Mendelsohn, was the top victor in a nearly $50.6 million round of statewide awards announced by Gov. Mike DeWine and the Ohio Department of Development. ose historic tax credits will help to rehabilitate 38 properties, including 10 in Northeast Ohio.
e other local winners included the former Voss Industries complex in Cleveland’s Ohio City neighborhood, near the West Side Market; the long-su ering Variety eatre, further west; and properties in Akron, Canton, Lakewood and Willoughby.
Park Synagogue wasn’t just the biggest winner in the state. e property also landed the maximum possible award through the popular tax-credit program, which helps developers o set the often-daunting costs of restoring historic buildings and generate more equity for their projects.
“We are thrilled that the state recognizes the historic importance of Park Synagogue as an architectural and historic landmark,” Susan Ratner, president of the synagogue’s board, said in an emailed statement. “ e Jewish community’s commitment to preserve and honor its past is symbolized by this magni cent building.”
e congregation, now based in Pepper Pike, put the 28-acre Cleveland Heights property up for sale in 2021. Sustainable Community Associates, a Cleveland-based developer, has a deal to purchase the historic synagogue and has been working closely with the congregation and the broader community on mixed-use plans for repurposing the site.
ose plans blend preservation and new construction, with apartments, senior housing and educational and institutional uses, according to public records. e developers aren’t ready to identify potential tenants. ey expect to announce more details in the fall.
e property sale, at an undisclosed price, is scheduled to close within 90 days.
“ e Park congregation deserves tremendous credit for electing not to sell the building to the highest bidder,” Naomi Sabel, a co-founder of Sustainable Community Associates, or SCA, said by email. She applauded the congregants for working with the development team on a plan “that builds upon Mendelsohn’s original vision for Park and focuses on education, the arts and intergenerational connectivity.”
e domed synagogue sits on a sloping, wooded site between Mayeld Road and Euclid Heights Boulevard, on land once owned by nancier John D. Rockefeller Jr. e original building opened in 1950 and includes an assembly hall and a classroom wing. e complex also includes a 1960s event space, an expansion connected to the main building by a bridge over a ravine.
e synagogue served as the congregation’s main home until 2005.
e development project is a potential $144 million endeavor, according to documents submitted to
the state. e $10 million in historic tax credits are a critical piece of a complicated nancing puzzle. e developers also expect to tap the federal historic tax credit program. ey have secured brown eld cleanup money from the state and Cuyahoga County, $1 million from the state capital budget and $500,000 in county pandemic-recovery funds.
“We’re thrilled beyond belief,” said Josh Rosen, another SCA co-founder. “It’s a good day for people who care about landmark buildings in Northeast Ohio.”
e second-largest local winner was the former Voss property, a rambling complex that started its life as the Rauch & Lang Carriage Co. Building. Cleveland developer MRN Ltd. won $5 million in credits to assist with an anticipated $63.4 million overhaul.
MRN bought the 240,000-squarefoot property, on West 25th Street a short stroll south of Lorain Avenue, in early 2021. e developer’s plans call for converting the vacant space to 90 to 100 apartments, along with retail, dining, o ces and parking. A project summary submitted to the state mentions the prospect of co-working facilities and “assembly space for recreational uses such as pickleball and indoor golf.”
A key element of the project, called Carriage Co., is re-creating a system of alleys that cut through the block, to allow for pedestrian access and outdoor dining and shopping. MRN hopes to close on nancing and start construction in the fall, said Ari Maron, a company principal.
“It’s huge,” he said of the state tax credit award. “We’re really grateful, and we feel really lucky. We know how competitive the program is.”
e state development department announces credits twice a year, and demand always far exceeds supply. e General Assembly temporarily doubled the size of the program last year, increasing the supply of available credits from $60 million to $120 million a year and raising the maximum possible award from $5
million to $10 million.
ursday’s announcement didn’t hit the $60 million biannual threshold, though. at’s because o cials took the unusual step of awarding a bonus round in March, committing $17.5 million in credits to six projects after developers challenged aspects of the state’s revised scoring process. at correction cut into the amount of money that was available this month.
Northeast Ohio projects nabbed more than $25 million in credits this week, taking home roughly half of the available money. Developers won’t receive the credits until their projects are complete, but they can use the promise of the awards to securenancing.
ree other Cleveland projects made the cut.
WXZ Development, based in Fairview Park, won $1.4 million for the Monmouth Building in University Circle. e empty building, at 11619 Euclid Ave., will be restored as 12 apartments over ground- oor commercial spaces. WXZ plans to erect a new, 40-unit apartment building on a neighboring parking lot.
e anticipated cost of the project, including new construction, is $14.8 million.
At the old Variety eatre complex, at West 118th Street and Lorain Avenue, Kelly Flamos hopes to start construction as soon as possible. She bought the long-troubled landmark in 2022 and plans to reopen it as an entertainment venue. e $11.9 million project also will include 12 apartments and refurbished storefronts, for o ce, retail or restaurant tenants.
e property won $1.4 million in state tax credits.
“ is state tax credit will not only help us to restore this important historic structure but will help us to revitalize this proud and vibrant neighborhood,” Flamos wrote by email.
“We’ve gotten critical support — from the city, the county, and now the state — that rea rms our belief
recovering from the pandemic.
It will cost $7.7 million to renovate the former Federal Warehouse & Storage Co. Building on Furnace Street, according to documents Oriana House provided to the state.
Akron developer Tony Troppe, meanwhile, won $250,000 in credits for Temple Israel, in the city’s Highland Square neighborhood. He purchased the historic temple in late 2021 and is remaking it as a performing-arts venue, event center and apartments, in a $1.2 million project.
And in downtown Canton, a Pennsylvania-based developer won more than $1.4 million in credits to rehabilitate the Harter Bank Building, also known as the KeyBank Annex. e empty building, at 126 Central Plaza North, will become 30 apartments, with the city’s farmers market occupying the lower oors.
Nicholas Dye, managing member of D&D Realty Group, said the award makes it possible for the developer to move forward with the $7.5 million project.
“We have a track record of transforming distressed downtown buildings into new mixed-use developments in similar markets in Pennsylvania, and we are excited to bring our luxury apartment product to downtown Canton,” he wrote in an email.
that this place is worth saving. e Variety eatre is a Cleveland treasure, but this project will also create jobs and economic activity that will go beyond one city block.”
Built in 1927, the theater hosted lms and vaudeville shows, along with an eclectic mix of retail tenants. It later became a concert venue and, after that, a wrestling gym. But it has been sitting vacant, and deteriorating, for decades.
On Cleveland’s East Side, a nonpro t health care and social services organization called the Centers won $1 million in credits to renovate its headquarters building at 4400-4500 Euclid Ave. at project carries a price tag of nearly $10.8 million, according to state records.
In downtown Willoughby, the state awarded $2 million in credits to the redevelopment of a former high school building at 25 Public Square. Vacant since 2014, Willoughby Union High School will become 35 furnished apartments, with 19 townhouses on the surrounding land.
e $21.4 million project would be impossible to pull o without tax credits, since more than half of the school is shared space — wide corridors and other areas that won’t generate any rent, developer Willoughby Union Realty LLC wrote in a project summary led with the state.
In Lakewood, Liberty Development Co. secured $965,000 in credits for the second phase of its renovation of the former Lakewood Board of Education property. e $7.8 million project involves remaking part of the complex as 28 apartments, with lower-level o ce space.
Property owners in Akron notched two victories.
Oriana House Inc., a nonpro t that provides reentry services, substance abuse help and mental health counseling, won nearly $1.9 million in credits to turn a historic warehouse into 36 apartments. A shuttered theater on the rst oor will be revived as low-cost performance space for emerging artists and organizations
A handful of Northeast Ohio projects missed out on credits and will have to reapply in future rounds or pursue other funding sources.
e developer of the Fidelity Hotel project in downtown Cleveland, for example, fell short in a quest for a larger award. at deal, to restore the Baker Building or Fidelity Building on East Sixth Street, won $2 million in credits in a previous round. But the developer, Denver-based NuovoRE, was seeking $2 million in additional funding due to escalating costs. Work at the site has stalled.
e K&D Group, a major apartment developer, also failed to land credits for an o ce-to-housing conversion of 700 Prospect Ave., the former headquarters of the United Church of Christ in downtown Cleveland. e company has applied twice, and lost twice, in a bid for $4 million.
“We were pretty shocked,” said Doug Price, the company’s CEO, who was ready to close on nancing and start construction in November.
Interior demolition and asbestos abatement at the building are well underway, funded by a state browneld grant that K&D won last year. Price had hoped to transition quickly into construction. Without the tax credits, though, K&D will temporarily put the project on hold.
“We’ll keep everything sort of status-quo and then reapply and hopefully get it the next time, and then have everything ready to go the rst of the year,” Price said.
e next round of state tax-credit applications is due in early October, and the awards will be announced in late December. Developers and civic groups, including Downtown Cleveland Inc., have been urging the General Assembly to further expand the program. Despite support from DeWine, though, a possible expansion got scrapped as part of state budget deliberations.
Michelle Jarboe: michelle.jarboe@ crain.com, (216) 771-5437, @mjarboe
Empowering the local workforce
We’ve invested nearly $100 million in workforce development. Alongside hundreds of other employers and community partners, we’re increasing the talent pipeline by helping our neighbors get the skills and experience to build careers that support families and fuel our economy.
Jeneen Marziani President, Bank of America Cleveland
Cleveland schools CEO re ects on 12-year tenure
Eric Gordon thinks the work he’s done leading the Cleveland schools has been the most “important work” of his career. And, regardless of what he accomplishes in the future, he suspects that will continue to be the case.
Gordon was the CEO of the Cleveland Metropolitan School District from June 2011 until his last day on Friday, June 30. In his 12 years leading the district, Gordon helped implement the district’s Cleveland Plan to improve academic performance; bring Say Yes to Education, which o ers scholarships and wraparound services, to the city; and launch the Planning and Career Exploration program.
Re ecting on his time as CEO, Gordon said he was “thankful” for the chance to lead the district for so long, and for the people he’s worked with and served in the community.
“I’m just so lled with gratitude as I’m wrapping up these last few days,” he said. is conversation has been condensed and lightly edited for style and clarity.
What are your thoughts as you wrap up your nal week with the district?
This has been more than half of my career in Cleveland. I’ve been here almost 16 years. And it’s the most important work that I’ve ever done. And, even though I’m excited to be moving over to Tri-C and do that work there, I think it’s probably going to be the most important work I will have ever done. And so, I’m leaving with a sense of satisfaction that the professional work I’ve done has made a di erence.
What are some of the accomplishments you’re most proud of in your time as CEO of the Cleveland schools?
You know, when I took the job, I made three personal goals, and I feel like, in some way, I’ve met each. The rst was to prove that we could improve the state’s worst-performing school district. And while we’re certainly not where we want to be, we went from being dead last to being the fastestimproving urban, both before and after the pandemic. Then, the second was to make it matter. It doesn’t matter if I get a whole bunch more kids their diploma if it doesn’t get them into college and good careers. And so, Say Yes and the scholarship program and PACE, which is kind of the last big thing I got to do, really mattered. And then the third was to attempt to remove the barriers that make it so hard in the rst place. And that’s where the wraparound supports, the out-of-school-time e orts we’ve put in, the community and college and career work that we’ve been putting in to just try to remove all of those barriers. Integrated health. To get those barriers out of the way. The one-toone technology, so kids are digitally connected and our graduates leave with a computer now. Once we proved we could make it better, and once we proved that it could matter when we do, the last thing was to prove that we could actually make it easier in the rst place.
they think of when they think of a large urban school system that serves poor and minority children. And, instead, take the time to get to know the incredible young men and women that actually walk inside of our schools everyday, who are just joyful, wonderful people that deserve the very best education we can give them.
You are headed to Tri-C now as your next step. What are you looking forward to about that, and what will your new role entail?
— Rachel Abbey McCa erty It really sounds like that continues a lot of the work you’ve been doing. Is that fair to say?
If somebody had said to me, write the job you want and we’ll give it to you, I could not have dreamed this opportunity. It’s going to let me leverage so much of what I’ve learned here in Cleveland, and I get to be a whole new kind of learner, because I’ve never worked in higher ed before.
“IF SOMEBODY HAD SAID TO ME, WRITE THE JOB YOU WANT AND WE’LL GIVE IT TO YOU, I COULD NOT HAVE DREAMED THIS OPPORTUNITY. “
As you’re leaving the Cleveland schools, what are some of the top challenges that you see that the next leader’s going to need to take on?
What is something you would want people to know about the Cleveland schools and the students you’ve been serving?
What I would want people to do is challenge their perceptions of what
It’s basically two parts. In one way, I get to really examine the system to see what makes it either easy or hard to get into the college, what makes it easy or hard to get through the college and what makes it either easy or hard to get out successfully. And then I get to nd and remove those barriers and micro-barriers: very much stu I love to do, advocating for students and improving systems. And then, the educational pipeline side, the president has challenged me to create a vision of what the college’s role is in preschool, in K-12, in baccalaureate and post-baccalaureate education, and have a point of view of the college’s role in the entire spectrum.
I think we made the gains we made with an education reform agenda, which was the right thing to do. But I think if we’re going to go the next step, we really need a youth agenda, which Mayor (Justin) Bibb has really positioned himself to lead. And we’ve got to remove all of the barriers that make it hard to be a kid in Cleveland. And that’s what’s going to make school easier. We’re going to face real challenges as the ARPA dollars expire. We have intentionally provided a much-improved student experience, but at some point, the community’s going to have to decide whether that will continue and whether they can support it. It’s going to be important to watch the financial picture. We have to continue recovering from the pandemic, K-3 literacy, in particular, and grad rates rebounding. The good news is our progress and gap-closing scores are some of the best in the state, but that doesn’t mean that we don’t have a lot to progress and close gaps. And so, staying focused really tightly on a rigorous, highquality academic experience. And then, maintaining the public trust. We’ve worked really hard to earn trust back for the system and taking care of that and making sure that the organization remains trusted by the public in how we’re getting results.
Rachel Abbey McCa erty:
(216) 7715379,
rmcca erty@crain.com
“IT DOESN’T MATTER IF I GET A WHOLE BUNCH MORE KIDS THEIR DIPLOMA IF IT DOESN’T GET THEM INTO COLLEGE AND GOOD CAREERS.”BY JOE SCALZO
e Cleveland-sized city of Tampere, Finland, is known as the “Sauna Capital of the World,” owing to the fact that it has more than 30 public saunas open throughout the year.
But on Monday, June 26, David Gilbert was looking for a di erent way to sweat.
Gilbert — the president and CEO of the Greater Cleveland Sports Commission (GCSC) — was in town for the European Masters Games (EMG), a precursor to next summer’s Pan-American Games in Cleveland. e 10-day festival is expected to draw 7,500 athletes to the city to compete in events such as basketball, golf, track and eld, and America’s fastest-growing sport, pickleball.
Finding a court in Cleveland? No problem.
Finding a court in Finland? at’s a di erent story.
But Gilbert got hooked on the game six months ago and was traveling with a fellow pickleball fan in Sean Richardson, a GCSC board member and president of Huntington Bank’s Northeast Ohio region.
ey were determined to nd a game, come Helsinki or high water.
“I just sent him a text saying I found courts 30 minutes away,” Gilbert said, laughing.
While Finland hasn’t yet caught the pickleball bug — the EMG’s closest equivalent is Padel, which is more like platform tennis — Cleveland has in a big way. Cleveland and Cincinnati both rank seventh among U.S. cities with the highest-growing pickleball interest year-over-year (89%), according to a recent study from Solitaire Bliss. Columbus was second at 138% and Ohio was tied for second among states, with an 83% increase.
Cleveland and Cincinnati also tied for No. 7 among the most pickleball-obsessed cities in the U.S., the study said.
Six pickleball projects underway in Cleveland
Pickleball serves up business, networking opportunities
A pickleball court in Cleveland is like a baseball eld in Iowa: If you build it, they will come. And if you don’t? ey will call.
Just ask Shawn Leininger, Lakewood’s director of planning and development.
Even before Lakewood announced plans to build four new pickleball courts in Lakewood Park, the city got at least one phone call or email a week from someone in the community asking, “When are you going to have more pickleball?”
e answer? Aug. 1, if not sooner. Lakewood is nearing the end of a $150,00 project that will resurface, re-line and stripe the north tennis court to create four pickleball courts. e park will still o er three tennis courts.
Lakewood’s Merl Bunts Park has a single tennis court lined for both pickleball and tennis, but the Lakewood Park courts will be the rst dedicated speci cally to pickleball.
“We’re always evaluating our parks and the amenities in them, and over the last couple of years, a number of residents asked about pickleball,” Leininger said. “Naturally, we needed to do a little education on pickleball ourselves before we decided the location most suitable for four courts.
“Pickleball is a noisy sport, so we chose Lakewood Park, because while there is some residential development nearby, it’s somewhat removed from that, so it was a good opportunity to expand for pickleball.”
e Lakewood Park renovation is one of several pickleball-related projects happening around Greater Cleveland, with the sport seeing an explosion in interest in recent years.
“I’m obsessed with it,” said Jean Gianfagna, the president of Gianfagna Strategic Marketing. “I think it’s more approachable than golf. Almost anyone can play pickleball, whether it’s elementary school kids or teens or adults,
and everyone can have a good time.
“You can learn the basics of pickleball in 20 minutes and be a halfway decent player in about an hour.”
Gianfagna was introduced to the game two years ago by one of her friends — ”I was a bit wary because I had never heard of it,” she said — and spent much of the rst night laughing, which is a common sentiment among players. You don’t have to be serious to take pickleball seriously.
“It’s just tremendously social,” said Gianfagna, who now plays two or three times a week, either at the Westlake recreation center or at Clague Park. “I usually play in the evening, but I’ve occasionally been known to be in a quote-unquote meeting in the morning.”
She laughed, then added, “Don’t tell my clients.”
Speaking of clients, Gianfagna believes pickleball has a lot of potential for business engagement. One of her friends works at a company that has scheduled a corporate retreat this summer in Boston. One of the team-building exercises? Pickleball.
Gilbert isn’t surprised, since most pickleball games take 15-20 minutes, which allows for quick turnover on courts.
“While you don’t necessarily talk while you’re playing, I could absolutely see it become a sport that relates to business,” he said.
“People can play and have a beer afterward.”
While many pickleball courts around Cleveland are free, the sport can be big business for rec centers, tness centers, country clubs and even entrepreneurs, which explains why there are plans for two indoor facilities to open in Greater Cleveland later this year, one in Beachwood and another in Westlake.
“I do think it’s a tremendous business opportunity,” Gianfagna said. “I’m very happy to pay for access to a court in a nice place, especially if there is food and drink involved. If I can reserve a court with my friends to play after work, to play for a couple hours and have a drink, I’m happy to pay for that kind of access because of the social aspect of the game. It’s a big business opportunity, and I can see why everyone’s jumping into it.”
Bernie Moreno, a former auto dealer who is running for Ohio’s U.S. Senate seat in 2024, sees pickleball’s potential in one other area: politics. Moreno was introduced to the game a decade ago by his mom, and every year his siblings get together for a “family Olympics,” which includes pickleball. He’s used pickleball to do everything from humbling a trash-talking 25-year-old in the political world — “I schooled him pretty well,” he said, chuckling — to connecting with donors.
“I just met a great person in Wayne County at a political event who has a pickleball court at his house,” said Moreno, who usually plays at the Westlake recreation center. “So I’ll be making a trip down there.”
He’s hoping to someday play pickleball in Washington, D.C., with plans to host a Senate pickleball tournament as a way to end partisan gridlock.
“It’ll be Bernie (Moreno) vs. Bernie (Sanders),” he said. “We can get stu done in D.C. when people know each other and trust each other.”
Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo0
Here are ve other projects to note:
Mentor Community Recreation Center
e rec center — and its four pickleball courts — planned to reopen at the former Heisley Racquet & Fitness Club on Saturday, July 1. e facility will also include a tennis court that can be used as two pickleball courts. e courts are located in the soccer facility, with plans to eventually add air conditioning.
Once opened, the courts could alleviate a bit of the tra c at Civic Center Park, which has 15 outdoor courts, the most of any site in Greater Cleveland. e Civic Center courts are often full by 6:30 a.m. on nice days and can carry a twoto three-hour wait time during peak hours. ere have been rumors on social media that Mentor will add pickleball courts to Springbrook Gardens Park and Donald E. Krueger Park, but those are “100% false,” said Kenn Kaminsky, Mentor’s director of parks and recreation.
Tri-City Park
Tri-City, which had six pickleball courts, was probably the busiest site on the West Side before closing this spring for a $900,000 renovation. e park will add six more pickleball courts (for a total of 12) to go with four tennis courts. at project is expected be completed in late summer.
The Cleveland Pickleball Club
Chris Haas, the president and CEO of All Pro Freight Systems Inc., recently purchased a warehouse in Westlake and plans to open the indoor Cleveland Pickleball Club in late 2023. e facility will eventually include 12 indoor courts and, potentially, four outdoor courts.
Pin Oak Parkway
Haas said pickleball demand has gotten so overwhelming that he’s considering putting 20 courts in a new 200,000-square-foot building that his company broke ground on last month. e building is on 10 acres on Pin Oak Parkway in Avon Lake that is behind an existing 150,000-square-foot building that All Pro Freight Systems already owns and operates.
Pickle and Chill
Columbus-based Pickle and Chill will open an indoor/outdoor pickleball facility in October at the former Stein Mart building at the Pavilion Shopping Center in Beachwood. Once it opens, Pickle and Chill will house 12 indoor and six outdoor courts, along with a bar and lounge and multiple event spaces.
“I THINK IT’S MORE APPROACHABLE THAN GOLF. ALMOST ANYONE CAN PLAY PICKLEBALL, WHETHER IT’S ELEMENTARY SCHOOL KIDS OR TEENS OR ADULTS, AND EVERYONE CAN HAVE A GOOD TIME.”
—Jean Gianfagna, president of Gianfagna Strategic MarketingGianfagna says she is ‘obsessed’ with pickleball.
Unplugged
The ameout of Lordstown Motors Corp. might have been telegraphed back in January 2021, when a developmental version of the electric-vehicle maker’s Endurance truck caught re, and was destroyed, on its rst road test in suburban Detroit. e metaphor extended into this year, when in May an Endurance test vehicle went up in ames at the Lordstown plant operated by the company’s production partner, Foxconn Technology Group. ose have been far from the only problems at Lordstown Motors, which since its launch has been beset by production delays, executive turnover and, most recently, legal disputes with Foxconn. None of it has been conducive to meeting the goal of creating a top-quality electric pickup truck, and Lordstown Motors last Tuesday, June 27, led for Chapter 11 bankruptcy protection.
Lordstown Motors remains operational, though its primary aim in a strategic restructuring process announced last week is to “commence a comprehensive marketing and sale process” to “realize the full value” of Endurance vehicle technology and related assets.
On a parallel track, Lordstown Motors is suing Foxconn, which it said “had no intention of living up to its commitments, particularly with respect to the new vehicle development platform” and instead “used its variety of contractual arrangements with the company as a tool to maliciously and in bad faith destroy Lordstown’s business.”
is is not, to put it mildly, how things were supposed to go.
e company launched with great expectations in a shuttered General Motors factory, with the hopes of becoming something like Tesla. ere was bipartisan enthusiasm that Lordstown Motors would pick up the economic slack in the Mahoning Valley and, if it hit, produce jobs across the supply chain in Northeast Ohio. e GM plant might no longer have been viable, the thinking went, but EVs were the future, and Lordstown Motors would lead the region into a new era of manufacturing. But at its peak in 2021, Lordstown Motors employed only about 600 people, fewer than half of what GM employed when it halted production of the Chevy Cruze in Lordstown in 2019.
It turns out EVs are a hard business, with a lot of competition and no room for error. Rivian, most prominently, and other EV makers have struggled with production issues, too. It was wishful thinking that a hard transition in the auto business would be
easy, and it underscores the risks in the government subsidizing new industries. (Sometimes you win, and sometimes you lose.)
e Lordstown Motors bankruptcy came during a week when the state of Ohio announced that Amazon will make a $7.8 billion investment in more data centers in central Ohio — the second-largest private-sector investment in state history, behind only Intel, which is putting $20 billion into chip-fabrication operations near Columbus. Intel’s deal comes with more than $2 billion in state subsidies; Amazon’s package is still to be determined.
Amazon is a much surer bet than Lordstown Motors, of course, but there are no guarantees when politicians and the government allocate capital, whether it’s in EVs, data centers or semiconductors. Go into these kinds of deals with eyes wide open; they won’t all work out. ere might yet be a way for some other business to make something of the Lordstown Motors assets, but this was a bet that didn’t work.
What’s fair
The state Senate’s top Democrat, Nickie J. Antonio of Lakewood, last week reintroduced the Ohio Fairness Act, a bill that would provide important state-level protections for LGBTQ citizens in employment, housing and public accommodations. is has become an annual event for Antonio, who has introduced the measure in every General Assembly since she was elected to the Ohio House of Representatives in 2011. e bill hasn’t moved beyond rst hearings in that time, and it probably won’t this year, either, even though there are Republican co-sponsors: Sens. George Lang of West Chester and Nathan Manning of North Ridgeville.
But there’s value in the persistence in pursuing a measure that is just as a matter of basic equality and in helping Ohio create an environment in which recruiting and retaining talent — all talent — is easier. Business groups in the state, motivated by workforce concerns, traditionally have supported the Ohio Fairness Act. Antonio says more than 1,300 businesses have signed on to this latest version.
Fundamental protections for citizens shouldn’t be a Democratic or Republican issue. We hope at some point state legislators recognize this.
Executive Editor: Elizabeth McIntyre (emcintyre@crain.com)
Managing Editor: Scott Suttell (ssuttell@crain.com)
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PERSONAL VIEWFed’s move to keep interest rates unchanged isn’t full story
DAVID MCCLOUGHWhen Jerome Powell stepped to the podium to speak for 10 minutes last month, the main takeaway was that the policy committee was leaving key interest rates unchanged. is pronouncement was not a surprise to Fed watchers, but it is not really true.
Let me clarify. I am fully aware that the word really is inappropriate in the previous sentence, but I include it because many folks are familiar with the turn of phrase. Terrible grammar (or is it diction?) serves a purpose here because the emphasis of this note is the distinction between the terms real and nominal
When Powell stated that rates would remain unchanged, he was speaking of the nominal interest rates posted at the bank, for those who still visit banks, and online. Nominal rates are the rates paid on loans and received for savings.
What matters, of course, is what one can buy with the interest income. If savings rates are 5%, then a person earns $5 on each $100 saved over the course of the year. If, however, in ation is rising by, say, 4%, then, we can expect that an individual must pay $104 to buy what was purchased for $100 a year prior. It is clear that the $105 commands only $1 more of goods than the $100 secured the previous year. e $1 re ects the real interest income, or 1% of the $100. e real rate of interest is the di erence between the nominal rate and the in ation rate. And, yes, real rates can, indeed, be negative.
e Fed’s policy committee does not hesitate to impose negative real rates on the economy when the desire is to stimulate consumption. e Federal Open Market Committee, the policy committee, reasons that (rational) households prefer to spend the savings in exchange for actual goods and services rather than have the purchasing power of the savings decay. Less purchasing power means that the balance of savings buys fewer goods and services.
For years with nominal interest rates approaching 0.01%, saving was a very expensive proposition even with in ation below the Fed’s 2% target. Savers were losing 1-2% of their savings each year. is is why in ation is referred to as a tax. Like taxes, in ation reduces the quantity of goods and services an individual can buy.
For nearly a year and a half, the situation has been the opposite. e FOMC wants to curtail spending to mitigate ination well above the 2% goal. To do so, the FOMC has increased key interest rates to make borrowing more expensive and to make saving more rewarding. Frankly, it ain’t rocket surgery. Or maybe it is quite di cult, given that the FOMC cannot force households and rms to borrow more or less or to spend more or less.
Herein lies the artistry required of the FOMC. Despite in ation still above the target rate, the FOMC is pausing rate hikes to see how the string of interest rate hikes is playing out because the e ect of monetary policy lags the policy announcement.
But, and here is the kicker, with in ation actually declining, the real interest rate is higher! at’s right, by maintaining the current policy, the Fed is still increasing interest rates. Retirees and savers rejoice!
is is just chapter one. In the months or year ahead, the Fed will likely lower key rates despite persistent disin ation, but we will reserve comment until it happens, but it will happen.
McClough is a professor of economics at Ohio Northern University.
Small businesses best hope for ethical AI development
A lot of oxygen is being spent discussing the potential existential risks of arti cial intelligence (AI) and the Promethean power of the Big Tech companies developing it.
is way of looking at AI has the peculiar e ect of focusing on the unlikely peril that lay over the horizon at the expense of critically examining the more likely harm looming around the corner. It also situates Big Tech as the only relevant actor in the AI space. e obsession with Big Tech and AI-doom needs to change.
Our perspective should expand to include the role of small businesses in shaping AI’s future, and not merely as consumers of the AI models developed on high at OpenAI or Meta. Small businesses need to lead on developing the forms and norms of AI. ey may also be our best hope for mitigating the potential negative impacts of AI.
A one-sentence statement from the Center for AI Safety recently captured media attention and is illustrative of AI doomerism: “Mitigating the risk of extinction from AI should be a global priority alongside other societal-scale risks such as pandemics and nuclear war.” e statement o ered zero substance and merely hyped AI (how tempting it must be for businesses to adopt something that powerful). Dozens of the top AI scientists signed on to the statement, only to promptly return to the work of developing AI as fast as they could.
trained on data produced by humanity with all its aws.
Politically, the ability of people to use AI to generate convincing misinformation to manipulate public opinion will do real damage to democratic institutions and our country’s politics.
Small businesses are uniquely positioned to innovate and implement AI in ways that mitigate these problems and that better align with societal needs. Compared to larger publicly owned corporations, small businesses are deeply rooted in their local communities and are motivated by a desire to improve them. eir local perspectives and the relationships they foster can guide AI applications toward solving real problems at local and regional scale.
Small businesses are also less likely to wantonly deploy inscrutable AI to manipulate consumer behavior to squeeze out every penny of pro t.
AI, in the hands of small business, could strengthen civil society and provide a bulwark against the erosion of trust in democratic politics. Many small businesses work with civil society at a local level, and some small businesses adopt social enterprise models that connect more directly to local needs. As a result, they can develop AI applications and use cases that empower individuals and communities.
e immediate dangers posed by AI are not extinction-level events, but are nevertheless very serious. Consider the economic implications.
e educational and productivity bene ts promised by AI might accrue disproportionately to the a uent while the poor are left behind. Imagine a new digital divide that ampli es already alarming levels of economic disparities.
Mirroring the economic concerns is that AI re ects the prejudices and inequities of society with the illusory authority of a “neutral” technical system. AI systems are developed in social and cultural contexts and are
As small businesses become more in uential in developing the uses and norms of AI, the center of gravity of policy in uence may shift as well. e legal and regulatory response to AI will be hotly contested. A bottom-up source of political in uence can more e ectively translate community interests related to AI upward to state and national political forums.
Let’s imagine the uptake and stewardship of AI in the hands of small businesses as a power grab that can decentralize AI development. ere are many AI models being developed that are powerful, customizable for niche applications and open source. By dispersing control and in uence over AI, small businesses can foster a more equitable distribution of its bene ts and reduce — though not eliminate — societal and political risks.
SMALL BUSINESSES ARE UNIQUELY POSITIONED TO INNOVATE AND IMPLEMENT AI IN WAYS THAT MITIGATE THESE PROBLEMS AND THAT BETTER ALIGN WITH SOCIETAL NEEDS.
GOT DRAFTED?
On ursday, June 22, the San Antonio Spurs drafted a 7-foot-5, 19-year-old French center named Victor Wembanyama, marking the 21st straight year the NBA’s No. 1 overall pick wasn’t old enough to legally buy a drink.
But after signing a four-year, $55.1 million contract, he’ll be able to buy just about anything else.
Money likely won’t be an issue for Wembanyama — unless he falls prey to injury, this should be the rst of several massive contracts he signs over the next 10 to 20 years — but it almost certainly will be for several other members of his draft class, who are healthy and wealthy, but not necessarily wise.
e average age of this year’s rst-rounders — i.e. the players with guaranteed contracts — is 20.3, with just one player (the last pick, Missouri senior guard Kobe Brown) over the age of 22.
But in one important way, they’re all much older.
“When we rst meet you, we say, ‘You’re not 22 years old; you’re 55 years old,’” said Ryan Catanese, a director at Cleveland-based MAI Capital Management. “ at’s how you have to save, like you’re going to be retiring in 10 years.”
Or sooner. e average NBA career is 4.5 years, which is less than the MLB (5.6 years) but more than the NFL (3.3). For every LeBron James, Tom Brady or Derek Jeter, there are hundreds of players whose annual
earnings are more along the lines of a successful dentist, which explains why so many professional athletes have nancial issues shortly after they retire. (More than 70%, according to the ESPN 30-for-30 documentary, “Broke.”)
Catanese is a former three-sport athlete at Gilmour Academy who later played tennis at Otterbein while getting his accounting degree. On his college bio page, he wrote that he wanted to combine his skills in business with his passion for sports, something he’s done since joining MAI’s sports and entertainment arm in 2016. He now works with professional athletes, coaches and retired athletes in areas such as taxes, insurance, estate planning,nancial planning and investment management.
That first one is especially important.
“What we try to do is make them aware from Day 1 — you’re partnered with Uncle Sam,” Catanese said. “There’s no hiding from IRS taxes, FICA taxes and state taxes, both in the state you’re drafted in and the ‘jock taxes’ for away games.”
But, if they’re smart, those athletes also partner with rms like MAI, whose roots stretch back to IMG and Mark McCormack’s handshake deal with Arnold Palmer and McCormack’s promise to handle Palmer’s business a airs so he could focus on golf.
MAI Capital’s sports and entertainment division now has $2.9 billion in sports assets under manage-
ment, representing 13 pro sports leagues, 14 Hall of Famers and more than 100 rst-round picks.
“To use a football analogy, we’re like financial left tackles,” Catanese said. “We protect your blind side.”
Here are three pieces of advice he gives to his clients:
Pick your lane
MAI gives its clients a “playbook” on how to invest their money, asking various questions to gauge their appetite for risk and what kind of short- and long-term goals they might have.
“We kind of equate it to the highway — do you want to be in the fast lane or the grandma lane?” Catanese said, chuckling. “Our advice is to move more toward the left lane. ey have such a large time horizon because they’re investing at 20 to 30 years old, so they have time to live with the ups and downs of the stock market.”
at might mean investing in an index fund tied to the S&P 500 — “Over time, that’s going to be tough to beat,” Catanese said — or it could mean choosing stocks and private equity.
“But there are other people who just want to take the 2%, 3%, 4% that’s xed income or put it in a money market account,” he said.
Regardless, MAI Capital recommends clients max out their 401(k) matching opportunities — the NBA, for example, matches up to 140% of player contributions up to a certain dollar gure — and save 40% of their gross wages, which is a hefty goal considering taxes and agent fees can cut their gross earnings in half.
“If you’re making $1 million, that’s $400,000, which is like getting an A,” he said. “A lot of guys don’t get there. Some are at 35%, some at 30% and some even lower, but we set that as a gold standard. If they can get there, they’re doing a good job and it puts them on the path to generational wealth.”
Plan your splurges
One of the fun things about being a professional athlete is the chance to buy fun things, which is ne, Catanese said. But those purchases should be planned.
“One of the biggest things we say from Day 1 is, we’re only as good at this job as you let us be,” he said. “Athletes need to communicate early and often. Don’t call us from the car dealership saying you’re going to be buying a Maserati. You need to reach out weeks before so we can prepare for the cost and loop in to help you negotiate a deal.
“We want to make sure they’re not living beyond their means. Obviously, there are expensive cars and expensive homes they can buy, and they should be rewarded. ey’re in the top 0.01% of their profession. ey need to treat themselves and spend money on nice things. ey’ve earned it. But at the end of the day, that should be the exception, not the norm.”
quick. You’ll be back to work when you’re 40 or 50 if you don’t have the right game plan.”
U-turns are OK
Some of MAI’s greatest success stories come from athletes who have run into nancial problems and were referred to the rm by either an agent or a teammate.
“We’ll immediately do a nancial X-ray,” Catanese said. “We’ll ask for old tax returns, a current list of investments and an estate plan, so we can see the entire picture. More often than that, there are some easy wins we can get right o the bat, whether that’s adding bene ciaries on accounts or making sure you’re investing in your 401(k) properly or amending a tax return that saves them tens or hundreds of thousands of dollars.”
Bottom line: Pro athletes can’t succeed without a good team around them, and that’s true on the court, on the eld and in their portfolio. Some athletes enter the professional ranks prepared, either because they got a nancial education from their parents and teachers, or because they’re already making money o name, image and likeness deals.
One more thing: Buying a nice house is OK. Buying everyone in the family a nice house is a bad idea.
“Usually when athletes run into problems, it’s because their support system is too large,” he said. “ ere are too many mouths to feed. Obviously, they want to help — whether it be parents or close friends — but you also have to look out for No. 1. We have a runway to work for 40-50 years. ese guys have maybe ve, 10, 15 years. It’s a lot of money, but when you average it out over the rest of your lives and you don’t save properly or leave yourself enough of a nest egg, you can get upside down real
But many are unprepared, and Catanese said MAI makes sure the clients know there are no dumb questions.
“We try to teach nancial literacy and discipline and we start with the basics,” Catanese said. “A lot of clients don’t know how to write a check when they’re coming out of school. Maybe they went to school to play football and it’s as simple as that.
“We tell them, ‘We’re not an expert in what you do, and you’re not an expert in what you do.’ We’re providing a service as a trusted adviser and we want to make sure they don’t end up on a 30-for-30.”
Joe Scalzo: joe.scalzo@crain.com, (216) 771-5256, @JoeScalzo0
3 ways pro athletes can make their money lastVictor Wembanyama attends the NBA Draft at The Barclays Center in Brooklyn, New York, with his family. Wembanyama was selected by the San Antonio Spurs with the rst overall pick. | ALAMY
“THAT’S HOW YOU HAVE TO SAVE, LIKE YOU’RE GOING TO BE RETIRING IN 10 YEARS.”
—Ryan Catanese, a director at MAI Capital Management
Economic impact of craft beer grew 44% between ’20 and ’22
Ohio’s craft beer sector is rebounding well after weathering a blow from the COVID-19 pandemic.
e state’s craft brewing industry represented a total economic impact of $1.27 billion in 2022, according to the Ohio Craft Brewers Association’s latest biennial economic impact report by Silverlode Consulting.
at economic contribution is up 44% from $880.7 million in 2020.
at year, breweries grappled with the gut punch of the global health crisis that shuttered taprooms for months, contributing to a decrease in economic impact of 8.9% from 2018 levels of $967.1 million.
An estimated 1.29 million barrels of beer were produced by Ohio’s craft brewers in 2022, which is up 18.7% from 2020 — in 2020, craft production was down 11% compared with 2018.
e OCBA attributes that signicant growth to increased sales at taprooms. Brewers always make their best margins on pints sold over their own counters. Simply having locations open to the public supported the industry’s rebound as patrons began to venture back out to food and drink establishments in stronger numbers.
Despite the challenges wrought by the health crisis, rather few breweries closed entirely in the last couple of years. at is thanks in large part to
pandemic stimulus programs that helped small businesses bridge their nancial shortfalls. New breweries, in fact, continued to come online or laid the foundation to open as the COVID outbreak came under better control.
As such, Ohio was home to 420 craft breweries coming into 2023, following 44 new openings occurring last year.
e number of total breweries was up 18% compared with 357 at the end of 2020.
ere are also another 64 breweries in planning stages today, according to the OCBA.
Notably, there were just an estimated 45 craft breweries running in the state as of 2011.
at means 89% of all independent breweries in Ohio have come online in the last 11 years. at stat underscores the huge proliferation of breweries in the state over that time.
ere were 2,252 craft breweries across America in 2011, according to
the Brewers Association, and 9,709 in 2022.
erefore, about 77% of all craft breweries in the country have opened in the same 11-year timeframe; that shows that new breweries have opened in Ohio at a greater clip than the country overall.
e OCBA has produced these biennial economic impact reports a few times now to better promote the industry’s contributions to the state. e organization highlights that impact today amid a campaign to roll back what the industry decries as outdated franchise laws — which govern the contracts between brewers and wholesalers — that can leave small, independent beermakers locked into relationships with distributors that may be exceedingly difcult to break o .
e OCBA was ghting to carve out an exclusion for craft brewers from the state’s franchise laws through a change in statute passed with the state budget, but that is not currently expected to go through as those changes are not included in the current budget bill.
OCBA executive director Mary MacDonald has said her organization will continue to press the issue if change is not achieved with the state budgeting process.
Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile
By the numbers
The economic impact of the craft beer industry in 2022 across Ohio overall, as well as the northeast portion of the state, which covers 19 counties in and around Greater Cleveland:
OHIO
Craft breweries: 420, plus 64 in planning stages
Beer produced: Approximately 1.3 million barrels
Jobs: 12,040
Economic impact: $1.27 billion
Labor income: $389 million
NORTHEAST
Craft breweries: 142, plus 24 in planning stages
Beer produced: Approximately 260,000 barrels
Jobs: 4,103
Economic impact: $360.8 million
Labor income: $128.1 million
Source: 2022 Economic and Fiscal Impact of Ohio’s Craft Brewing Industry
Dick’s Sporting Goods changes its retail game
STAN BULLARDe Dick’s Sporting Goods chain plans to open two of its Dick’s Going Going Gone! inventory clearance stores in Northeast Ohio, one in Aurora and the other in North Olmsted.
e Going Going Gone! strategy is for the Pittsburgh-based company to mark down its own inventory until it’s sold. at allows it to retain sales from its unsold inventory rather than unloading it with an outlet company. e plan also allows it to keep the oor of its mainstream stores devoted to newer products.
In North Olmsted, an existing warehouse store on Great Northern Boulevard is undergoing remodeling as part of its conversion to the newer concept.
e company also has circulated plans among contractors and subcontractors, according to the Construction Journal online service, to build a store at Marketplace at Four Corners in Aurora.
e Going Going Gone! strategy works on several levels, he said.
“ is avoids redirecting its customers to a competitor,” Flickinger said. “And it will be smart, as we may be going into a recession as blue-collar customers will remain cost-conscious.”
e discounting strategy allows Dick’s to recoup more of its costs than it could by shedding inventory through a discounter, he said, and it reaps signi cant savings from not having to unpack and repack merchandise as the prices go down.
e discount policy also allows it to compete better with Walmart and Target as they increasingly go after the growing sports category, he added.
Macy’s similar “Back Stage” concept of discounting has worked well for it the past few years. However, the TJX Cos. discounting chain, which includes T.J. Maxx and Sierra stores, has the best model for discounting prices for products until they sell.
On a recent visit to the North Olmsted warehouse store, which has remained open during its conversion, $60 men’s workout shorts were being offered at about $25, and its shoe section was particularly busy.
Industrial developer Premier buys American Spring building for $10.5M
When the company opens the new-breed discount stores, it will retain existing agship stores at nearby locations. It has been at Marketplace since 2003 and has been in North Olmsted as part of Great Northern Mall since 2004.
Dick’s has been pursuing Going Going Gone! and other clearance concepts for the past three years. It had 15 Going Going Gone! stores open as of April 29, according to the company’s most recent nancial report. It also plans to convert 10 of its existing warehouse stores, such as the one in North Olmsted, to the Going Going Gone! concept this year.
Burt Flickinger, managing director of the Strategic Resource Group consultancy of New York City, said in a phone interview that emphasizing the discounting concept makes a lot of sense, as consumers are preoccupied with in ation and indications are that higher prices of the past few years are likely to “stick” for some time.
A Dick’s spokesperson said the company did not have time to discuss the concept and pointed to its most recent nancial reports for more information.
Dick’s management spoke about the strategy directly on its Tuesday, May 23, earnings call, according to a transcript on the company’s website.
Navdeep Gupta, Dick’s chiefnancial o cer, told an analyst that the Going Going Gone! concept “allows us to one, get much better recovery rate on the clearance margin in this value chain store itself. In addition, you are able to replace that inventory that was in the Dick’s store with more regular-priced merchandise, which is bringing up overall sales with the Dick’s store.”
Flickinger pointed out that with the strategy, Dick’s is capturing oor space being shed by other retailers.
e company as of April 29 operated 730 Dick’s Sporting Goods stores and 97 Golf Galaxy stores.
Premier Development Partners of Independence, through an a liate, has acquired the sprawling, longtime home of American Spring Wire Corp. in Bedford Heights for $10.5 million.
Spencer Pisczak, Premier president and founding partner, said in an interview that much of the building is already occupied by American Spring, but his company plans to convert it to a multitenant building and use undeveloped land on the site for an additional structure of so-far-undetermined size.
e structure was sold June 13 by American Spring Wire Corp., the prior Selhorst family owner of the wire, rope and cable ttings concern, according to Cuyahoga County land records. e property is valued at $6.8 million for tax purposes by the county.
Even with an intact tenant for most of the building, there is a lot in the property for Premier to work with.
e building was constructed between the 1950s and 1970s and has 225,000 square feet of space on a 13acre site.
Pisczak said, “We plan to give the property a more contemporary appearance. We will also do a little development on the site, 25,000 to 75,000 square feet.” e site met Premier’s parameters for being located in a strong business area with proximity to I-271, he said.
“We buy new buildings. We buy old buildings. And we buy in between,” Pisczak said. “ e most important aspect of what we do is meet the needs of our tenants and the market.” Although industrial real estate has not had the torrid pace of the last few years, he said he feels it has just “downshifted a gear.”
Bedford Heights Mayor Fletcher Berger said in a phone interview that he was excited the property had changed hands.
“ ere was unused space and not a lot of activity going on with it,” Berger said. He noted it is likely that whatever tenant or tenants Premier lands are likely to add at least $2 million in payroll to the city.
George Pofok, a principal at the Cushman & Wake eld Cresco brokerage, said in a phone interview that the scarcity of available industrial buildings for sale makes most any deal a good one.
“And here you have a crane building that’s part of the dynamic southeast suburban market,” Pofok said.
Cresco estimates there is just a 2.6% vacancy rate currently, from 2.9% at 2022’s end, in the 530 million square feet of industrial property that the company tracks from downtown Cleveland through the eastern suburbs to the northern corner of the Akron area.
move in a new direction, adding its rst Lorain County property to its holdings.
rough Premier 1500 Nagel LLC, the company acquired the former American Bearings Corp. of Avon property at 1500 Nagel Road for $5.2 million in late 2022, according to Lorain County land records.
e property sits on the northwest corner of Nagel and Chester roads.
Pisczak said Premier plans to demolish an old, empty industrial building on the immediate corner of the property and redevelop it with retail or related uses. The 6-acre site also includes a 65,000-square-foot industrial building that was constructed in 1980 and expanded in 2013 that is currently empty.
Although it is Premier’s rst Avon venture, Pisczak noted the company has years of experience in the western suburbs, especially in Strongsville.
“It’s a well-located property in the strongest market in the area,” Pofok said. “ ere are also more tenants continuing to look for space in the area.”
Bob Biggar, a vice president at Hanna Commercial Real Estate’s Cleveland o ce, handled the deal for the seller. Premier represented itself.
Premier, through Kevin Callahan, senior partner, declined to comment on the purchase price reported by county property records.
Premier also made a strategic
e Nagel side of the property faces Cleveland Clinic’s Avon hospital and health center. e Chester side faces the I-90 exit at Nagel. e are multiple retail uses on Chester west of the site, from Cabela’s to Walmart. O ce buildings, including the American headquarters of Bendix Commercial Vehicle Systems, and other industrial properties also sit nearby on Chester.
“On a scale of one to 10, this property is a 10,” Pisczak said.
Pofok said the property speaks for itself, as it had multiple bidders before Premier snapped it up.
Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
THE GOING GOING GONE! STRATEGY ALLOWS THE COMPANY TO RETAIN SALES FROM ITS UNSOLD INVENTORY RATHER THAN UNLOADING IT WITH AN OUTLET COMPANY.
“IT’S A WELL-LOCATED PROPERTY IN THE STRONGEST MARKET IN THE AREA.”—George Pofok, a principal at the Cushman & Wake eld Cresco brokerage Premier Development Partners of Independence has acquired the sprawling, longtime home of American Spring Wire Corp. in Bedford Heights for $10.5 million and plans to convert it to multiple-tenant industrial use. | GOOGLE EARTH
The Standard building is up for sale
Capstone Real Estate Investments converted the building from student housing to 236 residential units
BY DAN SHINGLERA major residential building in downtown Akron is up for sale.
e Standard, which until recently was known as 22 Exchange, has been put up for sale by Alabama’s Capstone Real Estate Investments. No price has been set for the building, which Capstone bought for $12.5 million in 2020.
Since then, the investors have redeveloped the building, converting its interior from dormitory-style student housing to residential units that it has successfully marketed to professionals working in and around downtown Akron.
Christopher Mouron, who owns Capstone and the building with his brothers, Drew and Lewis Mouron, declined to say how much was spent upgrading and converting the building. But he said he has been pleased with his rm’s success in leasing it.
“I purchased that during COVID, and we’ve had a very successful lease-out,” Mouron said of the 236unit building. “We’re all but full now. We’re approximately 95% leased.”
e redevelopment and subsequent leasing of new units had to be done in phases, because the building still had tenants, Mouron said. Capstone was able to shu e them a bit during construction in order to keep them while redoing the entire building, he added.
“It was a phased delivery, where we had assumed a bunch of leases and were working around inherited leases,” Mouron said. “And the renovation process itself required a critical mass of vacancies, so we had to work around that.”
Mouron said the building came out di erently than it would be if he or someone else had built it from scratch, but in ways that bene ted tenants.
“It looks great. It functions well,” he said. “Some of the stu that is unique to renovated properties is what you’re kind of left to work with,
meaning some oversized bedrooms and oversized closets — attributes that are not necessarily what would happen with new construction.”
back has been fantastic in terms of the number of people who have downloaded the underwriting materials,” Mouron said. “Within the rst eight days, we had, I believe, 200 people sign up with the con dentiality agreement. at’s a very good response, at least initially. at doesn’t indicate a whole lot yet, but it’s better than 10 people.”
the Standard, and would still like to do that, Christopher Mouron said, but it’s not a sticking point that’s causing him to want to sell.
Capstone did a nice job on the Standard, said Donzell Taylor, head of the Welty Building company and the chief developer behind downtown Akron’s Bowery Project, which includes 92 luxury apartments. “ ey saw an opportunity to convert it to market-rate housing, and they worked really hard to make that happen. ey’ve done a nice job,” Taylor said.
ere’s also a lot of demand for apartment buildings on the part of investors around the country, which could help the Standard sell, Taylor said.
“ ere’s a lot of money that’s going long on housing now,” Taylor said. “I’ve read in the last month that we’re 22 million housing units short in the U.S. Market-rate apartments are lling a big part of that.”
e building went on the market in the rst week of June and is being listed by Northmarq, a commercial real estate brokerage in Minneapolis. It’s being listed in a market that has shown strong demand for rental properties, but also one that is dealing with higher interest rates, Mouron said.
While no sale is pending, he said he’s been pleased with the response he’s seen so far.
“It’s just been two weeks and feed-
UA researchers develop tech to improve heart monitors
DAN SHINGLERA University of Akron research team says it has developed a way to make medical devices and maybe even smart watches more accurate when it comes to monitoring heart health.
Dr. Kye-Shin Lee, an associate professor of electrical and computer engineering, along with graduate doctoral student Masoud Nazari, have been working on the technology for the past two years, the university reports. In 2021, the duo received a $146,000 research grant from the National Institute of Health for the work.
Current home medical devices and some consumer wearables, such as Apple Watch, already monitor some aspects of heart health. Apple Watch, for example, has had an electrocardiogram (ECG) and an atrial brillation-detecting algorithm since 2018.
But the devices aren’t perfect, and Lee gured they could be improved if some of the “motion artifacts” a ecting the devices’ measurements were eliminated. ose artifacts come from the wearer’s movements, even slight ones, but the researchers have developed an algorithm to eliminate them.
Anyone who’s ever tried to get an ECG reading from their wearable is probably familiar with some sort of instruction telling them to remain as still as possible during the measurement. Lee’s technology could mean that the devices work even while the wearer is running or engaged in some other activity.
“Current similar technology is not the best because the quality of ambulatory ECG signals can be critically degraded by motion artifacts originating from various body movements that corrupt the ECG features; even breathing can a ect the quality of the ECG signal,” Lee said when he
e building might not sell, but Mouron said he wanted to explore the market.
While he’s happy with the building, it’s a bit out of character for Capstone, which focuses mostly on student housing projects around the country. Mouron said one reason he’s potentially selling the Standard is so he can focus more of his attention on that core business.
“It’s honestly not a great time to sell with interest rates and debt markets being what they are,” Mouron said.
“However, my primary business is student housing. I think our management team spends a disproportionate amount of time on non-student e orts, so selling o properties we’ve converted to conventional is not Akron-specific. In fact, I have another on the market now in Murfreesboro, Tennessee.”
e building might not even sell, Mouron said, and Capstone is not desperate to unload it.
“We’re exploring the market,” he said. “Being publicly listed, and particularly at this time and in this macro environment, it doesn’t guarantee anything.”
He said he’s not selling the building because of what’s being going on next door at the former Beacon Journal building. at’s owned by Mouron’s father, Michael Mouron, who recently was turned down by Akron City Council when he asked for permission to tear down the building, which has historic tax credits.
e Mourons had hoped to convert the Beacon Journal site to parking for
But Taylor hopes Capstone doesn’t leave Akron, which he said needs both local developers like him, Tony Troppe, Joel Testa and others, as well as national developers and investors. “ ere’s a place for both, and in a healthy environment, you need both,” Taylor said. “You need experts and developers who come from out of town. ... Healthy markets have outof-town investors.”
Akron, in particular, needs them now, Taylor said, because it still has numerous large downtown o ce buildings that are either empty or up for sale. ose buildings will require capital, imagination and expertise to be repurposed.
“We have the FirstEnergy building (for sale), which is 300,000 square feet of space. at’s probably going to need out-of-town investment,” Taylor said. “We have a lot of real estate downtown that needs plenty of investment to turn it into an economic engine. ... It needs someone like Capstone who has done big projects in other communities.”
ticipants ranging in age from 10 to 55 years old, according to the university. e device was used during various activities that generate motion, including walking, texting and sleeping. Measurement results showed that e ectively removes unnecessary motion artifacts and baseline wander for these activities and far exceeds commercial products.
e duo’s algorithm and accompanying chip also reduces overall battery consumption of the device, the university said.
at means it could have applications not only in consumer devices from Apple, Garmin, Fitbit and other smart watchmakers, but in more sophisticated medical devices, such as Holter monitors that are portable ECGs used to monitor heart patients when they are away from their doctor, the university stated.
won his NIH grant. “ erefore, motion artifact elimination is the key element of ambulatory ECG monitoring. e ultimate goal of our research is to bene t bio-medical device and sensors by e ectively using analog integrated circuit technology.”
e university said on June 22 that
Lee and Nazari have succeeded. e two “have developed a fully analog electrocardiogram (ECG) algorithm that can enhance and improve the functionality of health care monitoring devices,” the university reported.
e researchers fabricated a prototype device that was tested by 24 par-
Lee could not be immediately reached for further details or to discuss his potential plans to advance or commercialize the new technology.
Dan Shingler: dshingler@crain.com, (216) 771-5290r
“THEY SAW AN OPPORTUNITY TO CONVERT IT TO MARKET-RATE HOUSING, AND THEY WORKED REALLY HARD TO MAKE THAT HAPPEN. THEY’VE DONE A NICE JOB.”
—Donzell Taylor, head of the Welty Building companyCapstone Real Estate Investments bought The Standard building, then known as 22 Exchange, in downtown Akron for $12.5 million in 2020 and converted it to residential units. | DAN SHINGLER/CRAIN’S CLEVELAND BUSINESS Doctoral student Masoud Nazari, left, and Dr. Kye-Shin Lee, have developed an algorithm they say could make wearable heart monitors more accurate. CONTRIBUTED
Zoning plan for Merriman Valley unveiled
DAN SHINGLERA zoning plan for the Merriman Valley created by Akron and Cuyahoga Falls won’t prevent development the way some conservationists had hoped, but it could ensure that the look and density of the valley are more uniform and controlled.
Residents had their rst chance to provide feedback for the new zoning plan the cities have developed for the valley at a public meeting Wednesday, June 28, held by Ward 8 councilman and Akron’s presumptive next mayor, Shammas Malik, Ward 1 Councilwoman Nancy Holland and members of Preserve the Valley, a group that has been working to limit or control development in the Merriman Valley for about three years.
ing zoning regulations governing uses would remain in place but the new zoning would add design and layout requirements, said Jason Segedy, who was Akron’s director of planning and urban development before taking a job with the University of Akron on May 3, and was heavily involved in developing the plan with other o cials in Akron and Cuyahoga Falls.
“ e reason it’s called form based is it focuses much more heavily on what buildings look like and how they’re situated among one another, and less on what they’re being used for,” Segedy said.
Take, for example, the Riverwood Apartment Homes, a large, recently built apartment building built on Akron-Peninsula Road in the valley, which spurred much of the opposition to development in the region.
“ e valley’s zoning is almost all residential and retail and that isn’t really changing,” Segedy said, noting there is still an area along Akron-Peninsula Road in Cuyahoga Falls that allows some light industrial use.
e new zoning plan would divide the valley into districts with their own designations as (residential) neighborhoods, conservation neighborhoods, ex neighborhoods, mixed-use, mixed-use/shopfront, exible mixed-use and scenic bu er overlays. Each would carry their own form-based requirements for building designs and site layouts.
e two cities have yet to approve the zoning plan via their city councils, so resident input is critically important, say backers of the plan and others who have been following its development. e plan is what’s known as “formbased zoning,” and if it’s adopted, it won’t necessarily make certain activities or land-uses o limits. e exist-
at might still have been built if the proposed formbased zoning had been in place when Riverwood was approved by Akron in 2021, but it would likely look much di erent, Segedy said. For one thing, it would likely not have the large, long buildings with as many connected units as it does now, he said.
But the new zoning won’t prevent all new development from taking place, nor will it eliminate certain types of land use already allowed.
For example, the largest amount of land would be designated as conservation neighborhoods. Developments in those areas would be limited to single-unit homes, duplexes and townhomes, with a maximum height of 2.5 stories and 70% of the site preserved as open space, city documents show.
Land in areas zoned as regular neighborhoods could be used to build single-lot homes, townhomes and small apartment buildings up to three stories tall and with a maximum building width of 120 feet.
Flex neighborhoods would not have single-unit homes, but would be the site of townhomes, midsize apartment buildings and some commercial use, with buildings limited to a width of 150 feet.
Civic leaders got plenty of input from landowners, advocates for green
A proposed “form-based” zoning plan would divide the Merriman Valley into neighborhoods, conservation neighborhoods, ex neighborhoods and accompanying mixed-use districts, each with their own design and land-use requirements.
space such as Preserve the Valley, and others, Segedy said. Ultimately, they had to walk a ne line between protecting the valley and violating people’s property rights, and the current plan re ects those e orts.
It might not be perfect, but some of those who have been leading the ght to limit or control development in the valley say the proposed new zoning plan is an improvement and one they welcome with an open mind — if not quite open arms just yet.
“It’s a 180-page document, and I’m not all the way through it, but I’m cautiously optimistic,” said Andrew Holland, a founding member of Preserve the Valley.
Holland said he and others in his group still have questions. Will, for
instance, the new zoning mean that new construction will be more oriented toward the river and less toward the street?
But, overall, Holland said the cooperation by the two cities and their willingness to work with groups like his represent “a great step forward.” Citizens now feel like they’ve had some input, he said.
And any increase in the standards seems like it will help advance the group’s goals.
“Developers will develop to the minimum speci cations, so if we raise the minimum speci cations, that’s a good thing,” Holland said.
Dan Shingler: dshingler@crain.com, (216) 771-5290
“THE REASON IT’S CALLED FORM BASED IS IT FOCUSES MUCH MORE HEAVILY ON WHAT BUILDINGS LOOK LIKE ... ”—Jason Segedy, Akron’s former director of planning and urban development
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Howard Hanna Real Estate Services began marketing the project in late May, and nearly a quarter of the units already are under contract. Condo prices start at $650,000. Townhouses begin at $995,000. e developer expects the rst new homes to be nished in late 2024.
e mansion, meanwhile, will become a six-suite hotel and resort, with a lakefront pool deck and indoor tness facilities. e house also will hold a restaurant operated by the Salerno Group, the Cleveland-based company behind Lago East Bank and Sora downtown.
“Salerno Group has already begun activating the Waterwood property with intimate, experiential events and will fully integrate the Waterwood Resort into their hospitality portfolio as the project continues to develop,” a company representative wrote in an email.
Eventually, DiGeronimo hopes to add a spa to the lower level of the mansion. And additional homes could rise on the cloistered lakefront land, at 5605 W. Lake Road.
Public records show that DiGeronimo paid $4.4 million for Brown’s former property, which also includes 100 acres across the street. e developer isn’t divulging any plans for that part of the site yet. It’s a mix of farmland, residential lots and Waterwood maintenance buildings.
“We’re not known for acreage here on the West Side, especially,” said Kim Crane, whose Rocky River-based real estate team at Howard Hanna is marketing the new homes. “ is is just a very special opportunity to take advantage of our lakefront.”
Tucked between a Christian camp called Beulah Beach and the private Heidelberg Beach neighborhood, the Waterwood Estate is hidden from view. It would be easy to drive past, if not for a large sign advertising what Crane describes as a waterfront wellness community.
Designed by Modernist architect Hugh Newell Jacobsen, the mansion consists of a series of white pods linked by glassy corridors and topped by pyramid-like slate roofs. Each pod serves a single purpose, as quarters for sleeping, working, dining, lounging or relaxing in a sun-drenched soaking tub.
And every room has a unique feature. ere’s a table that sits on a revolving section of oor, ensuring that everyone seated gets a glimpse of the lake. ere’s the garage, where the oor also rotates so that nobody needs to back a car out. ere’s the
glassy great room — the future restaurant — where the walls open and four replaces hold up the ceiling.
Construction on the mansion started in 1987, the year after USG Corp. bought Brown’s Westlake-based company, Donn Inc., in a deal valued at more than $160 million. But the Browns didn’t move into the house until 1993. It took years to regrade the site, creating a ridge near the road and sculpting rolling terrain by shifting soil south from the shoreline.
Brown, who made his fortune selling a patented suspension system for ceiling tiles, was an exacting customer. He considered each curve of the land to ensure ideal views of the water.
He parted ways with Jacobsen partway into the project. e famed architect, who died in 2021, didn’t step inside the mansion until after Brown’s death.
“ ey just didn’t see eye to eye,” said Terry Pabon, Brown’s longtime o ce manager and personal assistant,
during a recent tour of the property.
e house includes workspaces once used by Brown’s research and development team. It features only one drop ceiling, in a catering kitchen area just o the inventor’s old workshop.
Pabon said Brown worked in his home o ce every day, coming up with fresh ideas and to-do lists. He also prepared for any eventuality.
e mansion’s hallways are wide enough to accommodate a threewheeled mobility scooter. ere’s a barber shop, with a vintage chair, and spaces that Brown set aside for an on-site doctor and eventual live-in caretakers.
e inventor was 89 in January 2010, when he and his wife, Shirley, died in a plane crash in Lorain County. ey were returning home from Gainesville, Florida.
Brown’s family put Waterwood up for sale the following year, at an asking price of $19.5 million. e listing generated national headlines — and
lots of misinformation.
Contrary to online reports, Pabon said there isn’t a system of underground tunnels beneath the estate. And though the Browns did own two Dobermans, they weren’t attack dogs tasked with patrolling the grounds.
Despite the media hubbub, the mansion failed to attract an outside buyer.
In 2014, one of Brown’s sons, Ken, bought the property for $3.8 million. He added a sixth bedroom, in place of his mother’s yoga room, and made other modest changes to the house. He split time between Ohio and Florida until 2018, when he died at age 61. e mansion, Pabon said, doesn’t lay out well for a family with children. It’s too much for any one person. And it’s speci c to the Browns, who incorporated a helicopter hangar, 17 bathrooms, nine replaces, two indoor pools, a jacuzzi, a safe room and a snowmobile room.
e estate, which cost an estimated $30 million to $40 million to build,
once required a sta of 27 people. Now Waterwood is managed by a cast of seven, plus a few high school students who are helping during the summer. It takes one mower eight hours a day, ve days a week to keep the lawn in check.
“It was built before its time,” Crane said of the house, with its automatic doors, movement-sensing lights and an irrigation system that pulls water from Lake Erie and sends it through sand lters. “ e rst time I toured it, it took three hours.”
e DiGeronimo team is still re ning its plans for the house and wrapping up a nancing package for the redevelopment project. e company views the resort as a long-term investment, one that will broaden access to Lake Erie while safeguarding Brown’s legacy.
“ e Browns created such an incredibly unique space in Waterwood that we have little interest in fundamentally changing it,” the developer wrote in an emailed statement. “Our goal is to preserve the existing design as much as possible while making the necessary upgrades and updates to accommodate a functioning resort.”
Last year, Vermilion Township’s trustees agreed to rezone the waterfront land, allowing for a mixed-use redevelopment. Renderings of the site show an expanded beach, a walking path and a recon gured marina with 40 boat slips.
e townhouses, in two rows, will all have patios or roof decks. ey’re being advertised as two- or three-bedroom homes, but some of the oor plans are exible. ey can be tweaked to accommodate up to ve bedrooms, Crane said. Condos will range in width from 28 feet to 50 feet. Each of the condo buildings will be ve stories tall, with a rooftop deck, balconies and lower-level parking.
e monthly association and resort membership fee will start at $900.
So far, the buyers are a mix of fulltime residents and vacation homeowners, Crane said. ey’re putting down $20,000 deposits to reserve their units — and their lakefront views.
“It’s East Side, West Side, people who have had cottages up there,” Crane said. “A lot of boaters, but also people downsizing and wanting easy living, and turnkey and maintenance-free. at’s hard to come by, and we just don’t have enough inventory, period, in Northeast Ohio for residential. People want new construction, and there’s just not enough of it.”
Michelle
Rayburn, CEO of Buckeye Relief, an Eastlake marijuana company with cultivation, processing and retail operations. “ ere are suppliers unloading product at deep discounts to avoid expiration dates and to cut inventory levels. As a result, cultivation and processor license holders are moving substantially more product through their companies for substantially lower sales levels.”
Wholesale prices on cannabis sold from cultivators to independent processors in Ohio plummeted 78% from an average of about $769 per pound in the rst quarter of 2021 to $168 per pound in the fourth quarter of 2022, according to data tracked by the state.
e legal marijuana industry across the U.S. has been grappling with a downturn amid economic turmoil and surging in ation. Several markets are oversupplied, particularly those that — unlike Ohio — haven’t placed a cap on cultivator licenses. Plunging prices, re sales, employee layo s and company failures have been occurring in past months in states across the country, including nearby Michigan.
And while lower prices are good for consumers, they portend greater issues for marijuana companies, some of which are being forced to sell products at a loss.
“ ere are producers lowering prices in some states to that point where they’re taking less than it costs to make the cannabis they’re selling,” said Jeremy Unruh, senior vice president of public and regulatory a airs for PharmaCann Inc., a Chicago-based multistate operator with cultivation, processing and three dispensaries in Ohio. “If it costs eight, and they need 10, they’re selling at eight, seven or six now because it’s better than zero.”
Ohio’s marijuana program is one of the most tightly regulated in the country. While this degree of regulation can be obnoxious to companies — which are effectively prohibited from advertising, using product images online or engaging in patient education or outreach — the state’s limited-license dynamic is a key reason why this market hasn’t been adversely impacted as much as others where nascent marijuana industries have expanded quickly without the same caps.
But challenges have been mounting in the Ohio market as economic factors couple together with underwhelming consumer demand.
“We know that processors have already cut production lines, and some cultivators have shut down some of their grow rooms to slow production and reduce overhead, all due to this stagnant patient population,” said Matt Close, executive director for the Ohio Medical Cannabis Industry Association.
Buckeye Relief has paused on expanding grow space at its facility. And Rayburn said that while he hasn’t laid anyone o , his company is reducing some headcount through attrition by not lling some jobs when people leave.
He said the company was prepared for price contractions, but it has been happening “more aggressively” than was anticipated.
“We are also noticing a slowdown in payment time by many of our dispensary customers because things are tougher on them right now,” Rayburn said. “A lot of them are
brand new and in a very costly startup space.”
PharmaCann has had eyes on acquiring a couple other dispensaries, but it’s holding o on that or other growth plans. It’s also not operating at full capacity.
“We are being somewhat cautious in terms of expansion activities because we don’t think the market requires that right now,” Unruh said.
While Ohio’s marijuana companies are at less risk of outright failure right now, sustainability is a concern.
“Seeing the state numbers in terms of capacity levels, atlining patient numbers, prices dropping, this is a critical time for the industry and patients in Ohio,” Close said. “I have heard concerns from members of the industry about the ability to stay a oat as a con uence of these factors.”
State of oversupply
ere are more than 14,500 pounds of ower on hand for sale at dispensaries across the state, an increase of 125% compared with midyear 2022.
Another 53,000 pounds of bulk ower and 40,000 pounds of plant shake/trim are being held in inventory by suppliers. at amounts to increases of 91% and 41%, respectively, compared with this time last year.
About 168,000 pounds of ower alone have been purchased by consumers since retail sales rst began in January 2019.
Ohio regulators are monitoring the growing cannabis supply, but they’re not overly concerned about the buildup at this time.
State o cials point to the swath of new retail shops coming online following the awarding of dozens of new dispensary licenses last year, which will grow the number of medical marijuana stores in the state from fewer than 60 to about 130. At least 87 of those are operational today.
“ e (Medical Marijuana Control Program) consistently reviews key program metrics, including product pricing, product inventory and cultivation capacity,” said Jennifer Jarrell, spokesperson for the Ohio Department of Commerce. “Several additional dispensaries have become operational recently with more on track to open in the next couple of months. Additional dispensaries could increase demand for medical marijuana as the new dispensaries will provide patients with greater access to products.”
While more stores have been needed to improve access, there’s sort of an “if you build it, they will come” mentality here in terms of
for the medical program if they have one of a list of 25 approved conditions.
All these things could have a net bene t for an industry clamoring for more customers.
On the other hand, SB 9 could make additional cultivation licenses available for standalone processors and enable smaller Level 2 cultivators to expand cultivation space to 15,000 square feet. Under current laws, Level 2 cultivators begin with 3,000 square feet of growing space but may apply to scale up to 6,000 and 9,000 square feet.
Even if those measures were passed into law, the bill would require any new cultivators to hold o on growing anything for a couple years.
space permitted under current regulations unused.
“You have 60% of the lawful canopy not even being used. And all of a sudden with SB9, we are going to quadruple canopy size? at just doesn’t make sense,” Unruh said. “If you have an imbalance between supply and demand, you could reduce or increase supply, but why not go after the other side of the equation and increase the number of patients materially to make up the imbalance? We need to improve the consumer side rst.”
the hope that having more shops will result in more customers and greater sales. Whether that trend actually plays out is to be seen. More retail shops have come online in the past several months, yet the medical marijuana patient/consumer pool is not growing to levels that industry players have anticipated.
is is likely due not just to access, but to a host of other issues.
Product a ordability and the lack of employment protections for medical consumers were among patients’ top areas of dissatisfaction with the state’s medical marijuana program in 2022, according to surveys conducted by Ohio State University’s Drug Enforcement Policy and Research Center. ere also are concerns with the annual costs of being a registered patient.
Poor access and high costs were highlighted as issues with Ohio’s marijuana program in a report earlier this year by Americans for Safe Access (ASA), a Washington, D.C., nonpro t that advocates for the therapeutic use and research of medical marijuana.
ese consumer concerns seem to point to some of the reasons why Ohio’s medical patient count has leveled o around 172,000 active participants. at pool as grown by just 6% compared with the roughly 162,000 active patients reported last fall.
e active patient count also represents just 50% of the more than 338,000 residents who have purchased medical marijuana at an Ohio dispensary at least once.
In other words, half of the people who joined the medical program at some point in its relatively short life so far have already dropped out. at stagnating patient count is what worries Ohio’s marijuana suppliers. More stores may improve access. But customers can only buy so much. And there simply needs to be more of them.
“Until patient numbers grow we will not see much impact on the current state of oversupply,” Close said.
Senate Bill 9
ese dynamics also underscore issues that some industry players have with Ohio Senate Bill 9, a piece of legislation intended to reform the state’s medical program in a wide variety of ways.
On one hand, that bill could reduce the number of regulatory agencies marijuana companies deal with from two to one, loosen some advertising restrictions and clear physicians to recommend medical marijuana at their discretion for any debilitating condition. Under current laws, patients can only qualify
But o cials at large companies such as Buckeye Relief and PharmaCann bristle at the idea of bringing more cultivation online when the market is feeling oversupplied.
Furthermore, existing license holders are using only a fraction of the grow space they’re permitted to use, and the market already is grappling with a mismatch in supply and demand.
According to state records, just 25% of a maximum 1.85 million square feet of combined marijuana cultivation space permitted by current law is in use. Another 15% of that has been authorized for use but is not operational.
at leaves somewhere between 60% to 75% of total industry cultivation
At this time, many marijuana companies are just circling the wagons and trying to get by until business conditions improve. at could play out in a number of ways, including passing the SAFE Banking Act, eliminating federal marijuana prohibitions and the 280E tax penalty, expanding the medical marijuana patient pool or legalizing recreational marijuana — which Ohioans are likely to vote on this November.
“I do think a lot of us are hunkering down right now,” Unruh said. “I think those of us that are still growing know that this is a long, hot summer we’re in. It’s going to drive a lot of operators out of business. And nobody wants to be on that list.”
Jeremy Nobile: jnobile@crain.com, (216) 771-5362, @JeremyNobile
PEOPLE ON THE MOVE
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ACCOUNTING
Bober Markey Fedorovich
BMF proudly announces the appointment of Melissa G. Dunham, CPA, MTax, MBA, and James B. Skakun, CPA, as the rm’s newest partners.
Melissa specializes in corporate tax returns and comprehensive tax planning strategies for various entities. She is also a subject matter expert in Employer Retention Credit program reimbursements and optimizing bene ts for clients.
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EDUCATION
Northeast Ohio Medical University
Northeast Ohio Medical University has appointed Katherine Tromp, Pharm.D., as interim dean of its College of Pharmacy. Dr. Tromp joined NEOMED in March 2021 as senior associate dean for the College of Pharmacy. Previously, she served as the associate dean of the Florida Pathway and associate professor for the Lake Erie College of Osteopathic Medicine School of Pharmacy in Bradenton, Florida. She earned her Doctor of Pharmacy degree at the Massachusetts College of Pharmacy and Health Sciences.
LAW
Frantz Ward LLP
Frantz Ward is pleased to announce that George S. Coakley has joined the rm. George is an experienced trial lawyer and appellate advocate with extensive jury trial experience in the state and federal courts in Ohio. He has considerable appellate experience including appearances before the Ohio Supreme Court, Sixth Circuit Court of Appeals and the US Supreme Court. In addition, George is perennially recognized as a “super lawyer” or “leading lawyer” by various professional groups.
Although the o ce has cubicles and spaces for visiting sta ers in hoteling sections, they are still a generous size. Where it has private o ces for senior leaders, they are noticeably larger than most new, private o ces at companies. Like old-time CEO size, big enough for a couch or extra table besides a desk. Associates of major law rms in new o ces in skyscrapers would be jealous of the allocations for these sta ers.
e same feel resonates throughout the place. ere is substantial elbow room for players in the gaming area. Couches and chairs in a soft-seating casual area have loads of room around them. e design includes a 20-seat training area for sta ers and clients. It is next to a lunchroom for sta ers able to host events that rivals the size of a small quick-service restaurant, with views of Lake Erie to boot.
Moreover, it is all to a purpose.
FIT Technologies has grown dramatically during the pandemic. Tubbs said its gross revenues in 2022 were double those of 2020, although he declined to provide speci c numbers. Its sta nationally grew to 165 as it added 80 sta ers over that period. While some of its sta is located at client locations, most work from the o ce. ere is no stated work-fromhome or in-o ce policy at FIT. Allowing an associate to work from home is strictly a decision of their supervisor, said Fred Franks, FIT’s chief strategy ocer.
So FIT needed to grow ofce-wise.
e company doubled the size of its o ce footprint. It leased 37,802 for 10 years and moved to Idea Center’s fth oor from 16,300 square feet on the building’s third oor.
land from Lorain County. Now about 40% of its revenues are from education clients. e remainder is from businesses and nonpro ts, Tubbs said.
One enclosed o ce serves as a hardware workshop at FIT. at is where it adapts new computers for clients or updates them. It is striking to see such a space in an o ce suite rather than a exible, lower-cost space such as an o ce/warehouse building. e suite includes a secure location to store client computers.
Another suite is a virtual warehouse. It is lled with shelves full of cables, computers and a colorful potpourri of barcodes that FIT puts on client computers.
Michelle Tomallo, chief people ofcer and a co-founder of FIT, said having the equipment in one location saves the sta time from going to di erent storage areas to put together a package for a client. It also allows all the sta to be in more pleasant surroundings in one part of the building.
Bright colors also distinguish the FIT space. It is done in orange (on sections of its carpet), kiwi green and fuchsia. e move allowed the rm to double its number of conference rooms to 12 from six. In one conference room, four in-o ce sta ers worked virtually with a remote sta er who appeared on a big-screen monitor.
“ is makes it more like working in the same room together,” Tomallo said. e big screen likely makes the advice to avoid eye-rolls in Zoom meetings even better advice. While the design is structured to attract and retain employees, it has another angle for FIT. Since 2018, the company has been totally employee-owned. Being an ESOP means those associates also become shareholders in the business.
CONSULTING
inSITE Advisory Group
Catey Breck
recently joined inSITE Advisory Group as the Director of Economic Development. Catey comes to inSITE with nearly 15 years of diverse public sector experience and is ready to build upon her exceptional track record to help municipalities achieve their economic and community development objectives. Catey will work side by side with inSITE’s municipal clients to strategize and leverage resources to best position themselves for success.
LAW
Benesch
Joel Varner has joined Benesch as an Associate in the rm’s Corporate & Securities Practice Group. Joel advises private equity sponsors and their portfolio companies and publicly and privately held companies on complex transactions, including mergers & acquisitions, divestitures, leveraged buyouts and other strategic transactions. He also counsels clients on a broad range of general corporate matters, including governance and executive compensation.
LAW
Frantz Ward LLP
Frantz Ward is pleased to announce that Cynthia A. Lammert has joined the rm. Cindy’s practice focuses on real estate professional liability representation and defense. She represents residential and commercial real estate brokerages, real estate trade associations, inspectors, appraisers, and title and escrow companies throughout Ohio in real estate and professional liability defense litigation. Cindy earned her J.D. from Case Western Reserve University School of Law.
However, there was some sacri ce. Before sta ers looked out the Euclid Avenue windows on the landmark street chandelier at Playhouse Square. Now they have to peek down to view it.
Although FIT prides itself on customer service, trends in IT are aiding its growth.
Franks said more midsize companies (FIT’s client sweet spot) are outsourcing their IT functions rather than ful lling them in-house, and they require more strategies for risk-mitigation due to increasing cybersecurity threats. e company provides services ranging from consulting to adapting software to their clients’ needs, providing fully rmequipped laptops and hard drives, as well as help-desk services.
A long-term switch has helped the rm grow since moving to Playhouse Square from Elyria in 2006, in part to expose itself to more businesses and to attract talent from a more central location.
Originally its sole focus was IT services for school systems, particularly charter schools. But it has cultivated more business clients the past few years in order to grow, and that was part of its reason for moving to Cleve-
In years past, commercial real estate agents typically would boast about landing a big lease with an expanding tenant. However, Connor Redman, a Cushman & Wakeeld|Cresco realty brokerage vice president who worked on the deal, speaks of it in a di erent tone.
“In today’s climate when you see many o ce tenants downsizing their space, it’s great to see a client like FIT double down on its space. It’s encouraging,” Redman said.
Tubbs, Franks and Tomallo all stressed that the company did not look outside Idea Center for its next suite. In part, the full- oor space was available. Moreover, many long-tenured executives have worked at the building for more than a decade.
“We’ve watched the neighborhood grow and this feels like home,” Tubbs said.
Taking a full oor also means there is a band of windows around most of the suite.
Chris Anastasi, a member of FIT’s data service team lead, said he liked the new o ce because “you don’t feel trapped here.”
Stan Bullard: sbullard@crain.com, (216) 771-5228, @CrainRltywriter
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Volume 44, Number 25 Crain’s
