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VOL. 38, NO. 46

NOVEMBER 13 - 19, 2017

Source Lunch

Akron Loss of tax credits could curtail revitalization efforts of city. Page 26

Jeff Rolf, president and CEO, Ohio Aerospace Institute Page 31


The List Largest hospitals by net patient revenue Page 24


WHAT TO EXPECT FROM JACKSON’S FOURTH TERM Crain’s illustration by David Kordalski

Cleveland mayor reflects on grooming a successor, leadership, vision and unfinished business By JAY MILLER @millerjh

Frank Jackson says campaigning for his fourth term as mayor of Cleveland this fall convinced him that he

made the right decision to run again. While Jackson believes there are capable people waiting in the wings, he said he needed to continue in the job to instill a sense of urgency in city government so that several key goals he has set for the city can be achieved. “One learning experience of the

Focus: Real Estate Businesses that cater to consumers renovating homes are thriving. Page 13 Entire contents © 2017 by Crain Communications Inc.

campaign (was that) it affirmed that we are moving in the right direction and that we have identified the right priorities,” he said as campaign workers were moving out of campaign headquarters on Prospect Avenue last Wednesday, Nov. 8, the day after voters gave him a 60%-40% victory

over councilman Zack Reed. “It also points out that the bureaucratic sense of urgency doesn’t match the public’s sense of urgency,” Jackson said. “Part of being successful is getting closer to the sense of urgency the general public has.” And while Jackson believes there

are people who could serve well as mayor, he doesn’t see it as his job to groom a successor. He remained expressionless as a reporter ticked off names of possible successors raised by civic and business leaders in the months leading up to the election. SEE JACKSON, PAGE 8


Cuts to Medicaid could run deep By LYDIA COUTRÉ @LydiaCoutre

A proposed cut to the state Medicaid reimbursement rate could mean a loss of up to 2,500 health care jobs in Northeast Ohio, advocates say. The Ohio Department of Medicaid has proposed a rate cut of 5% over the biennium for the care provided to Medicaid recipients. The Center for Health Affairs, an advocacy group representing Northeast Ohio hospi-

tals, estimates that would result in a loss of $160 million over fiscal years 2018 and 2019 for the region’s hospitals, leaving them with few options to make up those costs. The center’s members are looking at cutting services or cutting between 2,200 and 2,500 employees, said Tim Jarm, president and CEO of the center. “It makes no sense to have $80 million a year taken out of the hospitals in Northeast Ohio, which is going to have significant ramifications both on shutting down programs and service lines or having to go and de-

crease employment at the hospitals,” he said. Advocates may get what they want. Sources last Friday afternoon, Nov. 10, indicated that the rule could be withdrawn or postponed this week. According to the proposed rule, the rate reduction, which applies to both inpatient and outpatient payments, is intended to “help balance state resources among competing demands while continuing to assure access to quality hospital care to Medicaid individuals in Ohio.” SEE MEDICAID, PAGE 25

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BoxCast continues to make room for more By KEVIN KLEPS @KevinKleps

BoxCast hasn’t yet taken off, but the tech startup did need only four years to run out of a space at Burke Lakefront Airport. Next month, the company will move to 2401 West Superior Viaduct, a three-story office building within walking distance of the West Bank of the Flats. In winning the support of the Ohio Tax Credit Authority in late September, BoxCast said it expected to create 71 full-time equivalent employees by the end of 2020, and produce $4.26 million in new annual payroll. Within the last couple months, the company — which delivers high-definition streaming services to a wide array of businesses, teams and organizations — has also made a key acquisition, added another notable name to its board, brought in a prominent chief financial officer and inked a distribution deal that puts its products on the resellers market for the first time. Not coincidentally, BoxCast’s revenues have more than doubled yearover-year and are “way past seven figures,” co-founder Gordon Daily said. All of which is why Mike Marchetti, a JumpStart venture partner with extensive Silicon Valley experience, believes BoxCast could be setting itself up for a “few-hundred-million” exit in future years. At JumpStart, Marchetti, who moved to Northeast Ohio from the

Bay Area five months ago, advises high-growth, early stage startups. He has a background that includes nine years as the senior director of business solutions at Yelp and nine years in leadership positions at Yahoo. “I think they have a lot of good ideas where they can take the product, and how to get it out to market,” said Marchetti, who recently became a member of BoxCast’s five-person board of directors. “They’re testing a number of different things. Depending on which works well, they can open a broader market. That’s what I want to see.” One of its most significant developments is the BoxCaster Pro, a 4K live-streaming platform the company introduced at the National Association of Broadcasters’ four-day show in Las Vegas in late April. Around the same time, BoxCast, which has deals with a wide array of high school and college athletic departments, made its first professional sports splash.

FC Dallas enters picture FC Dallas in March became the first club to buy back its local digital rights from Major League Soccer. After reportedly committing to pay the league $100,000 annually for the rights, FC Dallas used BoxCast’s platform to stream every match that didn’t air nationally — 26 in all — for free to the Dallas/Fort Worth market. Twenty-four of the 26 livestreamed matches were simulcasted on KXTA, FC Dallas’ local TV partner. “The broadcasts were very well-re-

The BoxCaster Pro, a 4K live-streaming platform, was introduced in April. (Contributed photo)

ceived,” said Gina Miller, the soccer club’s vice president of media and communications. “They included our game broadcasters, so they were familiar faces and familiar voices. It was like getting the TV broadcast in your hand, laptop or mobile device.” Miller said the live streams didn’t produce “ground-breaking, earth-shattering numbers,” but said “it’s a platform we can develop and expand for sure.” FC Dallas didn’t monetize the local product, which BoxCast said drew a total audience of 41,000 views in the first season, but Miller said that’s something the club will look to do in coming seasons. As more pro sports teams seek to control their content, BoxCast believes its platform can be of significant value. “The world is changing,” said Daily, the company’s president. “Even if you see something on TV, a lot of people prefer to watch it on their devices. We all used to gather on one TV. Now everyone watches it on their own device.”

Always be closing As those consumption habits have changed, BoxCast is attempting to gobble up large chunks of the streaming software and hardware markets. In the first week of September, BoxCast acquired MV Designlabs, a Cleveland company that designs and builds complex technology systems. BoxCast had been outsourcing some of its hardware to MV, and Daily said he figured “we can get further with them being part of the team.” As a result, all five of MV’s employees are now under the expanding BoxCast umbrella, which Daily said removes a “layer of competition and overhead.” A month after that deal was finalized, BoxCast inked a partnership with 1SourceVideo, a New Jersey-based national distributor for specialty video products. Soon, BoxCast’s streaming products will be available for purchase on 1Source’s network of 2,000 resellers. Daily credited vice president of marketing Sam Brenner with creat-

ing a successful content marketing strategy. “Now, all of our sales team doesn’t spend time on outbound (calls). They just close deals (that come to them),” Daily said. More than 30% of those deals are coming via resellers, the BoxCast president said. Daily’s executive team also has added Mike Vantusko — who had spent the last seven years as the chief financial officer at OverDrive and, most recently, MRI Software — as an investor, adviser and part-time CFO. And Ed Cochran, a longtime-lawyer-turned-investor, has joined a board that also includes the likes of Sam Gerace, the CEO of Veritix until it was acquired by AXS in 2015. The newest board member, JumpStart’s Marchetti, said BoxCast, which has raised more than $4 million to date, is opening another investment round. The former Yelp executive said Daily has built “an incredible team” that has all the data points for sustained success. “Their churn (rate) is really low, and the long-term value with customers is very high,” Marchetti said. “Those are good metrics that are all aligned well to be successful.” Daily, who hasn’t been shy about adding big-name vets to his young team, added, “We’re in very careful conversations in choosing who we want to partner with. It’s been a really good run. We can’t wait to see who it is we end up partnering with. We’re at the stage where if we see an opportunity, we go for it.”

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Taft will start new year with co-leaders By JEREMY NOBILE

Firmwide, Taft stands at 10 offices clustered around the Midwest, with 415 attorneys. The Chicago office was the first to implement a dual partner-in-charge structure, putting Cezar “Cid” Froelich and Anthony Licata in charge following the firm’s acquisition of Shefsky & Froelich in January 2014. Not every office will lead that way, said Taft managing partner Bob Hicks. But in offices that make a compelling case to lead as a team — as Thompson and Helfman did — that dynamic is highly encouraged. It’s a way of leading by example, as the culture de-emphasizes attorneys working in silos and promotes teamwork in the delivery of services. It also should help spread out the workload of running a local office while those attorneys continue work in their respective practices. “We’re modeling teamwork for the rest of our office as well,” Helfman said. “And we think that’s important.” While many law firms increasingly promote the teamwork approach nowadays — many firms across the business are taking baby steps toward that, often beginning by renovating offices with more glass and open work areas, and the Taft office was recently renovated under Barnes — few apply that to management roles, particularly with co-partners-in-charge. “In my view of the world, the law practice itself is far stronger when we operate as teams. I’m a big proponent of team management and the team practice of law throughout our firm,” Hicks said. “This is all part of @JeremyNobile

Come 2018, Taft’s Cleveland office will be led by a duo of partners-incharge, reflecting not just a different leadership approach here but underscoring an ongoing evolution of promoting teamwork and collaboration across the large law firm. That dual leadership structure is also what Jill Helfman and Adrian Thompson — who take over as copartners-in-charge in Cleveland effective Jan. 1, succeeding Kevin Barnes — think will create the best management format for leading the local office toward their auspicious goal of nearly doubling attorney headcount here to 100 in the coming years. Barnes, who has led the office since 2013, is staying with the firm and maintaining his practice in finance, international transactions and business counseling post leadership transition. “We think the two of us have such great chemistry that we can bring more energy together and bounce ideas off each other and build on each other’s strengths,” Helfman said. “We think it’s a leadership model that works for us.” “Cleveland is a major market in the U.S. and Midwest, and we’re viewed as a very integral part of Taft,” Thompson said. “Cleveland is a comeback city, and there are many opportunities for us to serve clients not only in the city of Cleveland, but across



“We think it’s a leadership model that works for us.” — Jill Helfman

Northeast Ohio. We’re perfectly suited for growth here.” In terms of demand for legal services, Cleveland provides increasing opportunities for work as middle-market companies grow, manufacturing evolves and the region continues to draw investments in new companies and operations in fields like biotech, Thompson said. That’s part of the reason the firm, which has kept relatively steady at 55 lawyers in the Cleveland market for the past several years — with support staff included, it's about 90 total employees today — sees a need for growing to 100 lawyers. While there’s no set timeline to reach that size, Taft wants to hit that level “sooner than later,” Helfman said. “But our growth is strategic,” Thompson said. “We’re not just growing to be larger. We’re growing to serve client needs.”

that same theme.” “It’s the best way to do it if you have the right people to work together,” he added. “That will not be the case in every market.” The growth trajectory here is just one part of a firmwide goal of growing to about 750 lawyers strong in the next decade, Hicks said. The firm has been an active acquirer of smaller firms, using that strategy to add new markets, and Hicks said that strategy remains in place and could result in adding offices in the Midwest when opportunities arise. The firm declined to provide revenue figures. Beyond acquisitions of firms and practices, though, which could include a combination in the Northeast Ohio market to achieve that local growth, Hicks said the firm is putting a heavy emphasis on both lateral hires and campus hiring. “Cleveland has a lot of good law firms, and we’ll be looking at the merger market in Cleveland as well,” Hicks said, noting Cleveland may even grow to 120 lawyers, “as well as the lateral market and hiring on campus.” While Taft’s flagship office would be in Cincinnati, Hicks said the firm has decentralized management and doesn’t consider itself having a headquarters. Letting one office become overly larger than others would create the sense of one location dominating others, which is part of a culture he wants to avoid. Touching on that kind of philosophy, and tying in the firm’s concerted efforts in diversity and inclusion,

Thompson, who has been leading the firm’s D&I efforts as their first chief diversity officer, said he believes Taft attorneys are “thought leaders” in this realm, but acknowledge both the firm and the legal industry have “evolved over time.” Both in terms of diversity in legal teams and in leadership, Thompson and Helfman say the drive is not only internal, but external as clients increasingly ask about the demographics of their law firms. They’re the kinds of questions that were never brought up even 10 years ago, they say. But even the legal business, which is often behind the curve in evolving with the wider business world, is adapting to a modern, more inclusive world. And Taft wants to keep ahead of the curve. “It’s an exciting time for Taft firmwide, and Jill and I are ready to take the reins in Cleveland and make certain that we create an environment where every attorney has the real opportunity to be successful and increase upon their success they have now,” he said. “Our goal is to grow the office, make Taft a Cleveland employer of choice and to be a player in this city.”

Correction J A Nov. 6, page 18 Q&A with Kelly Tompkins of Cleveland-Cliffs Inc. incorrectly listed his title. Tompkins is currently the company’s executive vice president and chief operating officer.







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Wealth management biz is worthy venture for Key Key Private Bank hitting ‘stride,’ has millions in new investments By JEREMY NOBILE @JeremyNobile



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When Terry Jenkins became president of Key Private Bank in February 2015, he was charged with making the wealth management business a bigger part of KeyBank overall. Now, those efforts seem to be paying off. And Jenkins’ team is now continuing that push to capture new relationships, more assets and increase the business’ identity as more than a just complementary service at the Cleveland-based bank, but a true revenue driver. “Is the job over? No. But are we hitting our stride now? Yes,” Jenkins said. For banks, margins have been tough to grow in a low-interest rate environment. While that’s slowly beginning to change, many institutions — super-regional banks like Key in particular — have looked to wealth management services as one of many ways to grow revenues through fee income. “That’s when the bank said, let’s double down on this,” Jenkins said. “Let’s invest in growth.” And that’s what the bank has been doing these past few years, with the family wealth business becoming an area the bank has seen fresh opportunity to grow. There has been an ongoing focus on both technology and hiring new relationship managers and refreshing the business overall.

Following Jenkins, Gary Poth was hired as the head of Key Family Wealth in June 2015. Since then, that niche business has emerged as one of the fastest-growing lines in the bank, Jenkins said. In the last 18 months, more new family office clients have been added than the past 10 years combined. Investments in the business over that period are “north” of $10 million, Jenkins said. “When you put those three things together — building out family wealth, investing in technology and hiring great people — the private bank now has combined revenue growth and net income at the best it’s been in years,” Jenkins said. “We’re a much more material contributor to KeyBank broadly.” That’s some noteworthy development for a bank with a legacy of working with family offices for the past 160 years. Some of the bank’s families are entering their seventh generation, Poth said. According to third-quarter filings, Key Community Bank, which the private bank falls within, saw income from trust and investment services grow 28% for the year compared with the like period of 2016. Total noninterest income is up more than 38% at the third quarter, while total revenues are up more than 45%. Total assets under management have grown to $38.6 billion. It’s fair to say Key is hitting its stride in the wealth management business.

So where is Key drawing all this new business from? They’ve had some success in drawing new clientele. The family wealth business added 16 new clients in 2016, for example. And as part of an enhanced focus on that business, the bank hired Douglas Banbury in an expanded role as head of Key Family Wealth Investments, which includes serving as director of portfolio management. Banbury previously served as senior vice president for Hawthorn, PNC Family Wealth, a position he held since 2011 where he managed client relationships. The focus on new leadership underscores the bank’s push to serve current clients and attract new ones — particularly as execs spy opportunities to draw those people. “A lot of what we see, and you’re seeing this everyday now, is baby boomers hitting age 65. They will continue to do that for the next 1520 years,” Poth said. “A lot of these boomers are business owners. They’re looking to transfer their businesses. And you’re seeing a lot of wealth in motion.” That development poses as much risk for botching family wealth as much as it spells opportunity for attracting people, though. That’s why the bank is leading this push in the private bank with fresh leaders in expanded roles the past few years. Relationships become even more important. And relationship managers are trying even harder to connect with these millennials taking over the family finances. Poth said that in

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family wealth, there’s a 70% failure rate when money is transferred across one generation. He pointed to data showing that nine in 10 families won’t see money last past the third generation. And if it doesn’t go without saying, it doesn’t behoove the bank to lose those relationships they’re earning money off of, or see the money fade away. “There is risk there,” Poth said. “If you have a strong relationship with that second generation, but haven’t done much with the next, it can be problematic. But everything we do is really with the backdrop of building a strong relationship over time. ” Doing that means engaging additional family members at younger ages, even if they’re years away from ascending as the patriarch or matriarch. That may seem like a best practice in the management of affluent people’s finances. But Key is apparently doing something right. After all, Key Private Bank earned the Wealth Management “Family Office – Client Initiative” Industry Award by judges representing last month. In a bank brimming with various industry accolades, that recognition was a first for it. Overall, there’s been an evolution in working not just with clients who


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PA G E 5

Film distribution company Gravitas Ventures sells majority By SCOTT SUTTELL Poth


top even the ultra-high-net-worth individuals, but those in the middle market. In Key’s hometown, that’s where bankers and advisers are digging. “Those are a lot of those business in Northeast Ohio,” Poth said. “We used to be a Fortune 500 town. A lot of those companies have moved away, but were replaced in large part by these middle-market businesses.” He says people would “be surprised” by how many businesses are selling in the $50 million to $100 million range. Those selling families present new business leads. “From our standpoint, that’s a huge opportunity,” Poth said. “We feel like we are in the right position with the right people at the right time to take advantage of it. It’s fertile territory.” “What we’re doing, it’s working. It’s resonating with our clients,” Jenkins added. “And it’s what we’re really focusing on in the marketplace right now.” @ssuttell

The Red Arrow Entertainment Group conglomerate has acquired a majority stake in Gravitas Ventures, a global film distribution company co-headquartered in Cleveland and Los Angeles. Specific financial terms of the transaction were not disclosed. In a news release, the companies said that as a result of the deal, they will make “significant investments into global film and TV projects via acquisitions, co-productions and co-financings.” The acquisition “represents a significant strategic investment for Red Arrow, and will dramatically expand the group’s distribution scale, co-production and co-financing capacity, catalog breadth, and overall presence in the U.S. creative market,” according to the release. Red Arrow is based in Germany and Los Angeles. Gravitas “is one of the largest allrights film distributors in the world,” according to the release, with a particular focus on independently produced films and documentaries for global

digital, SVOD (streaming video on demand) and OTT (over-the-top) platforms. Gravitas also distributes to theaters and brick-and-mortar retailers. As part of the transaction, all 22 Gravitas employees will be retained. Founder Nolan Gallagher, Brendan Gallagher and Michael Murphy will remain minority owners and will continue to run the business with long-term employment contracts. A spokeswoman for Gravitas said in an email that Gravitas distributes about 400 movies a year. Seven of its movies were at the 2017 Cleveland International Film Festival, including the Opening Night film, the crowd-pleasing documentary “California Typewriter.” Five of the company’s employees — including the three founders — are in Cleveland, while 16 are in Los Angeles and one is in New York City. Annual sales exceed $32 million. The Cleveland group is responsible for film acquisition, international licensing, business development and legal matters. Jan Frouman, chairman and CEO of Red Arrow, said in a statement, “International distribution has been essential to our success from day one. In the future, scale in this space

will become increasingly important. Nolan, Michael, Brendan and their team at Gravitas are whip-smart, and have created a great business — one we would be hard-pressed to replicate on our own. Partnering together, we will have tremendous capabilities to package and sell films and TV to the growing list of buyers worldwide.” Nolan Gallagher, CEO of Gravitas Ventures, added, “We are excited to find a strategic partner in Red Arrow Entertainment who shares our vision to introduce compelling content to global audiences. ... We are confident their collaborative nature, track record of production success and leadership in the international distribution marketplace will be a tremendous benefit to our filmmakers in an evolving entertainment environment.” Gravitas, launched in 2006, has a library of more than 2,400 English-speaking titles. Its distribution partners include Amazon, Apple, AT&T, Comcast, Cox, DirecTV, DISH, Fandango, Google, HBO, Hulu, Microsoft, Netflix, Redbox, Showtime, Sony, Starz, Verizon, Viacom and Vimeo, among others. Red Arrow said that with the Gravitas deal, it now has 11 companies in the United States.

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N O V E M B E R 13 - 19 , 2 017 |


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When small manufacturers start embracing new technology, what happens to the community surrounding them? A Smart & Connected Communities planning grant from the National Science Foundation of close to $100,000 should help researchers at Case Western Reserve University and Cleveland State University start to answer that question. The new project grew out of Case Western Reserve and Cleveland State’s “Internet of Things” partnership, which was formalized in the spring and started from a $200,000 planning grant from the Cleveland Foundation earlier this year. In a technology-based economy, universities — and their faculty, students and graduates — play a critical role, through the research they conduct and the entrepreneurship they inspire, said Shilpa Kedar, program director for economic development for the Cleveland Foundation. The foundation wants Northeast Ohio to play a leadership role in the Internet of Things, which refers to the growing trend of traditionally lower-tech objects being connected to the internet. “It’s about funding innovation,” said Leon Wilson, chief of digital innovation and CIO for the foundation. So far, the Case Western Reserve-Cleveland State collaborative has worked on some case studies looking at the Internet of Things as it relates to industry and utilities, and it has a proposal into the Cleveland Foundation to hopefully fund the next phase of work, said Ken Loparo, Nord professor of engineering at

Case Western Reserve. Loparo is a co-principal investigator on the manufacturing-focused project. The new project will see faculty at both universities working with manufacturing economic development organization Wire-Net, as well as community group Bellaire Puritas Development Corp. The work holds benefits for all of them. It can be challenging for small and midsize manufacturers to figure out how to invest in new technologies, or to decide if it’s even worth it, said John Colm, president of Wire-Net. This project will help Wire-Net learn more about companies’ priorities and barriers in this space. Colm said he has a few ideas, like the expense of such an investment, as to what might be standing in the way of the adoption of this technology. But it’s about more than just cost. For example, one of the types of technology manufacturers could take advantage of would be sensors to help avoid machinery failure, Colm said. But companies can’t just buy the sensors and go on their way. They also need someone to analyze that data, which could mean new hires. “There’s a lot of question marks,” Colm said. And companies may not even realize that solutions for long-standing problems — like machinery failure — exist, said Ed Weston, who is overseeing Wire-Net’s portion of the program. “Well, the givens may not be givens anymore,” Weston said. “And that’s what’s exciting.” And that’s just within a plant’s walls. Small and midsize manufacturers often are deeply rooted in a community, and adopting Internet of Things technology could have an impact on activities like traffic, trash pick-up and snow removal

near the plant, Loparo said. The adoption of new technology also brings up questions of how the workforce is affected. Nigamanth Sridhar, dean of graduate studies and professor of electrical engineering and computer science at Cleveland State, will work with John Marshall High School as part of the project. The students and graduates represent the talent “pipeline” for the manufacturers, Sridhar said. The questions and topics are broad at the moment, and the planning grant will help the group narrow them. Conversations about the Internet of Things can’t happen in a vacuum. It’s not just about technology, Sridhar said. There also are considerations of law, public policy, business and more, which the larger collaboration between Cleveland State and Case Western Reserve is taking into account. “It’s really meant to be a broad, universitywide effort across both universities,” Sridhar said. The main objective of this planning grant is to create a roadmap for Internet of Things adoption for a neighborhood, encompassing research, education and policy, said Lisa Camp, associate dean for strategic initiatives at the Case School of Engineering. Wire-Net has identified three manufacturers — Martindale Electric Co., Cleveland Steel Tool Co. and Conveyor & Caster — that will host plant visits for the academic teams. Colm said the focus of the project is on the West Side of Cleveland, but not exclusive to it. Weston said the plant visits likely will happen in November, with focus groups in December. Camp said the group also hopes to host a large workshop or seminar after the focus groups to bring all these different groups together.

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Several developers are pursuing HKM building By STAN BULLARD @CrainRltywriter

Real estate developers are jostling to buy the HKM building as a potential redevelopment site near the Cleveland Shoreway, neighboring the just-completed Edison at Gordon Square Apartments and other projects. Three sources familiar with the situation say owners of HKM Direct Market Communications, a growing direct-mail provider and printer that has occupied the building at 5501 Cass Ave. for decades, have received bids from several regional developers. A high price is sought, upwards of $7 million, for the property that has a value for property tax purposes of less than $2 million. But what a view and opportunity, from a developer’s point of view, the industrial building has: its entrance overlooks the Shoreway and downtown Cleveland, and the site has lake views. It also fronts on the bike path connecting nearby Edgewater Park to downtown. HKM’s plans for relocating the business are unknown even among those in the real estate grapevine, but it’s clearly a dynamic business that could move from a site with redevelopment potential to any industrial park or development site it chose. Rob Durham, president of the family-owned business, is well-known in

“I’d describe it as a feeding frenzy in that neighborhood. But most (bidders) are surprised they can’t get property in Detroit-Shoreway for nothing anymore.” — David Hollister, a managing director at Newmark Knight Frank

Cleveland, as he served four years as chairman of the MetroHealth Foundation board of trustees and is a life member of the county hospital’s foundation. Durham returned phone calls placed to him and to his brother, co-owner Scott Durham. “We didn’t want to be rude,” Rob Durham said. “All I can say is we don’t have a comment.” He also declined to discuss where the business, which has more than 140 employees, might move if the property sells. David Hollister, a managing director at Newmark Knight Frank who has a listing for an industrial building opposite the West 58th Street side of HKM, said, “I’d describe it as a feeding frenzy in that neighborhood. But most (bidders) are surprised they can’t get property in Detroit-Shoreway for nothing anymore.” Things are so busy that when Hol-

lister listed the 46,000-square-foot industrial building at 1278 W. 58th St. in July, he had five showings immediately and had it under contract by August, though the sale has not closed. Where Hollister’s listing sits on just an acre, the 72,000-square-foot HKM building is on almost 5 acres and has three points of access. That’s according to data from the Cleveland office of Avison Young, which has the listing. Principals Chris Livingston and Rocco DiPuccio did not return a call each from Crain’s Cleveland Business. That means the site is just a little smaller than that used for the $45 million, 300-suite Edison at Gordon Square apartments that Beachwood-based NRP Group opened earlier this year. More broadly, HKM sits in the middle of an estimated $375 million in realty development projects between West 25th and 117th streets near Lake Erie, according to a Crain’s survey in May. Jeff Ramsey, executive director of the Detroit Shoreway Community Development Corp., said, “ HKM is a really important business, not only for Detroit-Shoreway, but Cleveland. We’re confident HKM will do what’s best for the community.” However, he added its property has development potential not only because of its proximity to the beach but because it has “terrific views” of downtown’s skyline.


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“There are people out there and they will do a good job,” was all Jackson would say. “As to who that person is, it can’t be a person handpicked by me. People need to emerge, and there are enough qualified people out there.” At the top of his to-do list for the next four years are: J Moving the Say Yes to Education program forward. The city has gathered business, education and civic leaders to create a program to get more Cleveland kids to finish school and go on to college. A key incentive would be scholarships to cover the cost of college. Say Yes is a New York-based program designed to help poor kids advance to college. J Pressing for the creation of jobs and new development in the neighborhoods — especially along the Opportunity Corridor — in addition to an already bustling downtown. In May, Jackson announced a $65 million program to boost both housing and commercial development in targeted city neighborhoods. J Improving public safety by hiring additional police officers, following the recommendations the city agreed to in the consent decree between the city and the U.S. Department of Justice, and by a greater focus on teen violence. Jackson believes that education and jobs are key to reducing crime in the city and making the city a better, more attractive place. “We’re not over the hump,” he said. “It gets back to this whole notion that I want Cleveland to be better off, in a better position, than where I found it.” He acknowledged, though, that people in the business community and beyond are concerned about a post-Jackson Cleveland. But he

doesn’t believe a successor can be groomed, as often happens in the corporate world. “I don’t handpick. People have to earn things, and then they will emerge,” he said. “And there are a lot of people out there, believe me.” Among those whose names have surfaced recently are the following: J Joe Cimperman: A former Catholic services worker, Cimperman represented downtown and East Side neighborhoods in council from his first election in 1997 until 2016, when he was named president of Global Cleveland, the immigrant outreach nonprofit. In 2008, Cimperman ran unsuccessfully for Congress, losing in the primary to the incumbent, former Cleveland Mayor Dennis Kucinich. J Councilman Blaine Griffin: Griffin won his first election to Cleveland City Council on Nov. 7. He was appointed in May of this year to fill out the term of retiring councilwoman Mamie Mitchell. Griffin was a close confidant of Jackson. For 11 years before his appointment, he served as executive director of the city’s Community Relations Board under Jackson. J City Council president Kevin Kelley: A lawyer, Kelley was appointed to council in 2005, succeeding Michael O’Malley, who resigned to become assistant director of the city’s utility department. Kelley became council president in 2013, after council president Martin Sweeney stepped down from the president’s job to run for the Ohio House of Representatives. Kelley is a member of the law firm Porter Wright Morris & Arthur. J State Rep. Bill Patmon: Patmon has tried twice to defeat Jackson for the mayor’s job. He didn’t survive this year’s primary runoff for mayor, and he lost the contest against Jackson in 2009. But he’s still mentioned as a candidate for mayor four years from now. Patmon served in city

council for 12 years, beginning in 1990 until he lost his seat to Sabra Pierce Scott in 2001. He has represented Cleveland’s 10th District in the Ohio House since 2011. J Chris Ronayne: The Edgewater neighborhood resident is president of University Circle Inc. and former chief of staff to Jackson’s predecessor, Jane Campbell. He also served as Campbell’s planning director and chief development officer, leading the creation of the plan, currently underway, to reinvigorate the lakefront. He also is a member of the board, and past chairman, of the Cleveland-Cuyahoga County Port Authority. J State Rep. Martin Sweeney: The former councilman is in his first term as a state representative serving Ohio’s 14th House District, which includes a large portion of Cleveland’s West Side and several western suburbs. Sweeney was elected to Cleveland City Council in 1997 and served as council president from 2005 until 2013, succeeding Jackson in the president’s chair after Jackson became mayor. J State Sen. Sandra Williams: Williams has been a member of the state legislature since 2007, serving two terms in the Ohio House before winning election to the Senate in 2015. Her 21st District includes much of Cleveland’s East Side and several inner-ring, eastern suburbs. J Councilman Matt Zone: The current president of the National League of Cities, Zone has represented the West Side neighborhood he grew up in, including the Detroit-Shoreway neighborhood, since 2001. Zone’s father and mother, Michael and Mary Zone, also served on council. To all those names, Jackson offered only this: “If I had not run, I’m pretty sure some of those people would have been viable candidates.”

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Opinion From the Editor

Think before you tweet


Four for four Regardless of what you think of the job Cleveland Mayor Frank Jackson has done in his nearly 12 years in office, respect is due for what he pulled off last week: winning the support of voters for an unprecedented fourth term, and doing it convincingly. Jackson took 59% of the vote in his race against Zack Reed, a longtime councilman from the city’s southeast side who ran an energetic campaign but was unable to erase doubts about his leadership capabilities. In his four successful bids for mayor, Jackson has never received less than 55% of the vote. In other words, he has won four landslides. That’s especially impressive given the economically turbulent times in which Jackson has served, and that he can’t rely on a dazzling personality to attract votes. Those who cast ballots for the mayor in 2017 — and 2013, and 2009, and 2005 — chose substance over style. Veteran mayors in Beachwood, Brook Park and University Heights all lost last week, so it’s hardly a given that experience will be rewarded. Jackson earned his place in Cleveland political history by offering stable leadership and careful fiscal management. We endorsed Jackson on this page on Oct. 23, so we’re pleased with the outcome. But given that in January the 71-yearold Jackson will enter what is likely to be his final term in office, we implore the mayor to avoid complacency and act with vigor in addressing the city’s problems, and we hope that a city council with as many as five new members is an aggressive partner in doing so. It would help, too, if Jackson made a serious effort to groom a viable successor to present to voters in 2021. After his election last Tuesday evening, Jackson sent the right signals. “People are suffering in many respects ... and they want bureaucracy to respond quicker to their needs,” he said. At another point, Jackson noted, “It’s our responsibility to relieve (residents’) pain and suffering and to create an environment where they and their families can have prosperity and quality of life and just plain peace. The work is not done.”

Indeed, it’s not. Some city neighborhoods, especially on the West Side, are doing well economically, but others have seen little improvement. Jackson earlier this year announced the $65 million Neighborhood Transformation Initiative, a public/private partnership to bolster development throughout the city, and its efficient implementation must be a top priority for 2018. Equally high on the agenda: careful oversight of money raised from an income tax hike voters approved in November 2016 that will bolster city services and pay for additional police reforms. Reed’s campaign gained its limited traction by calling attention to the way crime reduces both the quality of life and economic opportunity in the city. Away from the heat of yet another election, we trust Jackson will, as he has done for the last 12 years, continue to work methodically to make Cleveland a better place for all its residents.

A prudent delay

It’s never pleasant to watch the sausage being made in Washington, D.C., but we were encouraged by some developments last week as the Republicans tackle tax reform. The Washington Post reported that the Senate GOP tax plan would propose delaying until 2019 a cut in the corporate tax rate to 20% from 35%, a departure from President Donald Trump’s stated desire for the change to take effect immediately. Delaying the corporate rate cut could lower the tax plan’s cost by more than $100 billion, a significant figure, since House and Senate Republicans must keep the keep the cost of their plans within a $1.5 trillion limit set by the parameters of budget reconciliation. If the delay and subsequent savings offers a greater opportunity to shift tax reform more in the direction of the middle class, and to preserve the Federal Historic Tax Credit program and other policies that aid development in cities, it’s a move in the right direction.

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Last week, Twitter rolled out its expanded character limit. No longer must users restrain themselves to 140 characters. Their thumbs are now free to tap out 280 characters about the weather, today’s lunch plans or how the Cavs are going to work out their rotation problems and get back on the winning track. Reaction to the change, predictably, has been mixed. Some (likely the kind who keep talking even when the elevator door opens and it’s your floor) embraced the extra space, while others longed for the efficiency of the 140-character limit. Twitter offers reassurance that once the novelty wears off, most users will return to their normal tweeting habits. Twitter product manager Aliza Rosen wrote in a blog post that in the initial test of the expansion, Elizabeth only 5% of tweets were longer than 140 charMcIntyre acters, and just 2% were over 190 characters. I’m seeing a lot more than that, and I’m hoping this temporary infatuation lifts soon. My feed filled up with folks experimenting with extra spacing, quoting novels and repeating words. It clogged my timeline and rendered Twitter far less useful. The wonder of Twitter is its brevity. How many times have you been on a call with a salesperson or a client and thought, “Please, can you just get to the point?” If only there was a character limit for phone calls, or for marathon meetings in the conference room. It’s not just about brevity for the sake of efficiency, though. More words means more chances for users of social media to use the platform inappropriately, and that can lead to all kinds of trouble at work. Twitter’s change is a good time to remind users of all kinds of social media that with freedom comes responsibility. Just because you can expand your thoughts doesn’t mean you should. That extra space on Twitter just might be just enough rope to figuratively hang yourself professionally. What you post reflects not only on you, but potentially your employer. And once it’s out there, you can’t ever really make it go away. Most companies these days have social media policies or guidelines. They shouldn’t be treated as afterthoughts by employees. Read them closely. Yes, you have a right to your individuality and to use social media. But you may not have the right to keep your job while saying or doing whatever you like in such a public forum. The internet is full of stories of famous and not-so-famous people who have been suspended or lost their jobs or reputations for posting inappropriately on social media. Take the recent case of Juli Briskman. The Virginia woman was fired last month after posting on Twitter and Facebook a photograph of herself giving the middle finger to President Donald Trump’s motorcade during a Saturday bike ride. The photo, snapped by a press photographer, went viral. When Briskman returned to work, she informed human resources that she was the cyclist in the photo. The next day, Briskman was fired. Not necessarily for her “salute” of the president’s motorcade, but because she had used the photo as her profile picture on Facebook and Twitter. It was, her employer said, a violation of the private company’s social media policy regarding obscenity. Being Virginia is an employment-at-will state, meaning an employee can be dismissed for any reason, Briskman doesn’t have a legal leg to stand on. But it doesn’t have to be a viral media sensation. Using your 280 characters to blast your boss, trash your coworker or share unenlightened opinions isn’t just bad for your career, it’s bad for your personal brand. Here’s an old saying, updated for today’s age, that might help: “Better to remain silent and be thought a fool than to post and to remove all doubt.”

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



N O V E M B E R 13 - 19 , 2 017


PA G E 11

Web Talk Re: Uncertainty on Wolstein Center’s future

Re: Fate of Federal Historic Tax Credit program

This is another taxpayer-funded ripoff that lost its utility after a short period of time. — Dino

In a Nov. 6 editorial, Crain’s wrote about the “potential elimination of the Federal Historic Tax Credit program, which has been a key element of the revitalization of downtown Cleveland and other big American cities.� This is a heavily subsidized activity that we concede must occur to spur the rehab of out-of-fashion commercial buildings. Beneficiaries include developers and consultants, who play this area like a violin. Is this, however, true economic and community development? What is the cost-benefit ratio that prevails with commercial real estate projects involving historic tax credits? — Richard Green

Re: Supreme Court hears labor, employment cases As Max Rieker of Walter | Haverfield pointed out in a Nov. 7 blog post, every worker in America should watch to see what happens with the upcoming Janus vs. AFSCME case, as it will certainly impact millions of workers and our families. Needless to say, this case is the best chance we have to finally outlaw the anti-worker labor practice known as forced unionism, even though this case only involves the public sector. — Richard Graham This is Trump helping out working Americans. Union workers who voted for him should be ashamed. Also, they should contact the White House and their federal legislators to complain. — Lex Luthor

Re: Ferro Corp.’s $74M purchase About a year-and-a-half ago, Ferro was “exploring strategic alternatives.� The recent deal for Spain’s Endeka Group is its second acquisition since then. They decided to be a buyer rather than a seller. Good for them. — Robert Salmon

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A booming business is on display

Medina’s Architectural Justice recently opened a gallery and café in Strongsville . (Contributed photo)

An energized real estate market has retailers, suppliers sizing up their expansion plans By BETH THOMAS HERTZ

As the real estate market shows increased signs of vitality, businesses that sell products to renovate or build homes are thriving as well, with at least two locally owned home supply companies adding locations this year and another reporting growing sales from out-of-town investors. For Ryan King, president of the family-run National Design Mart on state Route 18 near Medina, opening a 150,000-square-foot facility in May was born of a desire to provide its growing customer base with onestop shopping. The company, which started with a flooring store in Wooster opened by his father in 1968, was operating three locations in Medina — a flooring store, a granite countertop division and a warehouse facility.

The new showroom, King said, is “kind of a living, breathing Pinterest.” “People are upgrading their homes. They are getting a little bit more money in their pocket, and they are wanting to make their surroundings look better, whether that is building a new house, selling their house or remodeling,” said King, whose company also operates the National Carpet Mill Outlet in Wooster. “It a fun time to be in the trade right now, because we are busy.” The market for new homes is especially strong. The Commerce Department reported last month that sales for new homes jumped 18.9% in September to a seasonally adjusted annual rate of 667,000 — the most in a decade. Some experts have suggested a supply shortage for existing homes has prompted some customers look to buying, and ultimately furnishing, new homes. SEE DESIGN, PAGE 16

National Design Mart opened a new showroom in May. (Contributed photo)

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After a five-year rebuilding process, the once-troubled Parmatown Mall is entering its first holiday shopping season as the completely overhauled Shoppes at Parma, an open-air shopping center. (Contributed photo)

Breathing life into ailing malls isnâ&#x20AC;&#x2122;t easy â&#x20AC;&#x201D; or cheap By STAN BULLARD @CrainRltywriter

Repurposing ailing malls is not impossible. It just takes millions of dollars and even more vision and tenacity to do so. That is the picture that emerges as enclosed malls in Euclid and North Randall meet the wrecking ball this year to be resurrected as massive warehouse distribution centers for Amazon, the Seattle-based e-commerce giant. And the site of once-troubled Parmatown Mall enters its first holiday shopping season as the fully repurposed Shoppes at Parma, an open-air shopping center after a five-year rebuilding process. But thereâ&#x20AC;&#x2122;s a world of difference between the two outcomes that relies partially on the strength of local demographics but also on location, what has happened to the property over the years and that most fickle of outcome shapers for real estate, fate. Just ask Chris Semarjian, the Solon-based partner of California-based Industrial Realty Group who recently sold most of the mall property to Amazon. â&#x20AC;&#x153;We got lucky,â&#x20AC;? Semarjian said. â&#x20AC;&#x153;When we bought the mall four years ago, we had no idea Amazon would surface as a prospect for it.â&#x20AC;? However, what made Amazon a fit for the North Randall monolith is also what attracted Semarjian and Stuart Lichter, who operate, respectively, Ohio Commercial Properties and Industrial Realty Group. â&#x20AC;&#x153;The location has great highway access and its location works for industry. Itâ&#x20AC;&#x2122;s just five minutes from Solon,â&#x20AC;? Semarjian said. The other factor is that the mall, attached department stores often owned by the retailers themselves and other properties were generally available in about the same time frame. Buying the core of the mall â&#x20AC;&#x201D; the key small shop space that was between the department stores â&#x20AC;&#x201D; came from buying certificates for unpaid property taxes and foreclosing on it. That was the first of eight real estate transactions over four years which made the repurposing of the long-troubled mall possible. Even so, Semarjian and Lichter have another 20 acres still available they plan to use for a proposed 300,000-square-foot multitenant ware-

house. Some retail will remain; two small parcels are going to be recast as service-oriented retail such as fast food operations to serve the estimated 2,000 workers on the site. At the other end of the ailing mall remaking spectrum, the redos of Parmatown as Shoppes of Parma and the 2006 redo of Westgate Mall in Fairview Park were, respectively, $90 million and $75 million projects. Strong demographics in both cases made them the targets for such remakes even though they do not have the highway proximity of the regionâ&#x20AC;&#x2122;s dominant malls, Beachwood Place in Beachwood, SouthPark in Strongsville and Great Northern in North Olmsted. They are considered likely survivors and are continuing to expand, to boot. David Browning, managing director of CBREâ&#x20AC;&#x2122;s Cleveland office, said beyond bucks it took vision to remake the properties. The court-appointed property manager when Parmatown went into receivership, Browning said it took concerted efforts of the lender selling the center and the city of Parma to position the property so that the 50-year-old property could be repurposed. â&#x20AC;&#x153;We relied heavily on the fact that Parma may be a suburb but itâ&#x20AC;&#x2122;s the seventh largest city in the state,â&#x20AC;? Browning said, and a market area in itself. Even so, he added, when the predecessor of whatâ&#x20AC;&#x2122;s now Cincinnati-based PECO Real Estate Partners outbid bottom fishers for the property, â&#x20AC;&#x153;We were ecstatic. Other malls going through disposition have not been so lucky.â&#x20AC;? Other malls, such as Midway Mall in Elyria, Richmond Town Square in Richmond Heights and Chapel Hill Mall in Akron, went to buyers with a different game plan: use a low purchase price to allow rents to keep the malls afloat and remake them as much as adding new tenants will allow. Neither Namdar Real Estate, which owns Midway, nor Kohan Real Estate, which owns Richmond Town Square and Chapel Hill, responded to an email and two phone calls to discuss their properties. When Tony Visconsi, a retail-focused broker at Hanna Commercial who is representing Macyâ&#x20AC;&#x2122;s in the sale of closed department stores in the region, sizes up mall prospects, he simply counts how many department-store anchors are left. While Amazon may not be the an-

swer for all the sick malls, growing industrial demand from other e-commerce companies may help to repurpose at least parts of them to warehouse use, according to Terry Coyne, a vice chairman at Newmark Knight Frankâ&#x20AC;&#x2122;s Cleveland office. Some large-scale office uses, such as for call centers, have helped older malls in other places around the country, but the oversupply of older office space in the region and the diminished appetite of businesses for office space make such a prospect unlikely in Northeast Ohio. In some cases, the greatest opportunity is in the ground itself beneath those aircraft carrier-sized enclosed malls. Emerick Corsi, a partner at Fairmount Properties of Cleveland, spent more than 30 years overseeing retail operations at Forest City Realty Trust when it had a massive retail portfolio â&#x20AC;&#x201D; itâ&#x20AC;&#x2122;s currently divesting itself of its last 10 enclosed malls â&#x20AC;&#x201D; sees it that way. â&#x20AC;&#x153;Many malls should have gone bye bye years ago,â&#x20AC;? Corsi said. â&#x20AC;&#x153;They are pushing 50 years of age. The deferred maintenance cost alone is enormous.â&#x20AC;? Corsi argues the best course is for suburbs with enclosed malls to try to buy and demolish them for new or yet-to-develop uses. â&#x20AC;&#x153;Donâ&#x20AC;&#x2122;t try to do what real estate developers have already been unsuccessful at,â&#x20AC;? Corsi said. â&#x20AC;&#x153;End the insanity of trying to get in more retail. There is opportunity in the properties because they are often the size of small cities.â&#x20AC;? The city of Akron has embarked on such a course at Rolling Acres Mall. However, not all observers favor such draconian measures. Tori Nook, founding principal of the Beachwood-based Anchor Cleveland retail brokerage, said she has faith the real estate community will find the next solution, beginning with how to interject new uses into department stores. Others point to the ability of old malls to serve as community meeting places or new residential development opportunities in established areas, the hot button in current residential development. Mark Rantala, a former retail broker who is now executive director of the Lake County Ohio Port and Economic Development Authority, argues the ailing malls with redevelopment opportunities are likely now being developed. â&#x20AC;&#x153;The others,â&#x20AC;? he said, â&#x20AC;&#x153;are likely to sit.â&#x20AC;?

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PA G E 15


More gavels go down as market heats up By STAN BULLARD @CrainRltywriter

Less distressed real estate is not fazing auctioneers who are reaping the benefits of rising prices, demand and technology. Although auctioneers insist it’s incorrect to associate auctions with strictly fiscally ailing properties — they argue auctions are an accelerated form of realty marketing — the business has weathered the drop of court and lender-owner sales thanks to the renewed appetite for commercial and residential real estate. Michael Berland, a Cleveland-based principal and managing director in the Chartwell auctions unit of Hanna Commercial real estate, said, “We’re seeing more transactions and better values as well as a lot of adaptive reuse properties. We’re selling a lot of land and highend homes at auctions, including the $4.8 million sale of a Hunting Valley house in September, the highest price we’ve gotten for a residential property.” Acknowledging that luxury homes costing more than $600,000 are the slowest properties to move in the residential market, Berland argues they are a good match for auctions because the extensive publicity and advertising before an auction helps brokers find potential buyers in a shorter period of time than traditional listings. He’s working with owners of another four mansions valued at more than $2.5 million he hopes to auction in the next few months. “We’re also seeing the benefits of our (2013) affiliation with Howard Hanna,” Berland said, “because we are networking with about 9,000 residential agents. Auctions help because they draw buyers with the illusion of a bargain.” Sheila Rosen-Schiff, the owner and marketing manager of Beachwood-based Rosen & Co. auctioneers, said her firm is doing considerably more real estate auctions. That’s because the listing market for homes is so strong many homes get multiple offers in any case. “There’s a better opportunity to maximize the result,” she said, “rather than having set a number for the house, have someone jump on it and sell less than its true value.” While she said her firm is getting more “showcase” properties, it’s also handling auctions for more affordable homes. While that works out well for some buyers, particularly investors, other brokers point out that first-time home buyers need more assistance getting through the search, lending and purchasing process. That’s also partially due to the nature of an auction, because auctions typically require people to place a deposit to bid and be prepared to close quickly. George Kiko, an auctioneer and member of the board of directors of family-owned Kiko Realtors and Auctioneers of Canton, said the rise of home and other property values are lifting sales volumes in the auction business. “The best thing is that compared to two years ago, instead of getting $150,000 you are getting $200,000 for the same house. The commissions (or auction premiums) are greater,” said Kiko, whose firm regularly handles properties in Cuyahoga and Summit counties and does more

than 1,300 auctions annually. Most of the credit for more auction action goes to the higher employment rates, which have allowed buyers to be confident investing in real estate. Kiko and others say the rise of television programs such as “Storage Wars” and “American Pickers” have made more people familiar, and more comfortable, with auctions. Over time, he said, that has started to influence the real estate market, where people generally have to see and inspect a property to pursue it. Technology also is having an impact on the auction business, as most firms now do online auctions or stream live, call-out auctions.

Rosen-Schiff said her family-owned firm was started by Gus Rosen who used a megaphone to chant for offers in 1917 but now benefits from the internet. “This technology allows us to reach a broader, worldwide market,” Rosen-Schiff said. “Typically we see at least one buyer from every continent. It’s also getting to be a younger crowd, although we see some people we’ve known for years.” Social networking is also benefiting the auction business, which traditionally thrived on signs, snail mail and newspaper ads. Twitter and other forms of social media are such a factor, Kiko said, that the fami-

ly-owned firm with 45 auctioneers among its 150 staffers last year added a full-time social media coordinator. Howard Hanna even has a smartphone app for its auction business. While some auctions are held on site, Berland said Howard Hanna likes to combine multiple pieces of property that it will auction on the same day in a hotel ballroom. That reduces overhead costs. Moreover, it increases the psychology that’s the foundation for auctions: if you don’t buy then, if the reserve is met, a buyer may not get another chance. “The fear of loss is a motivating factor for many buyers,” Berland said. Rosen-Schiff noted that being as-

sociated with auctions benefits her firm’s traditional real estate practice. The association with an auction firm creates an added sense the property may sell soon, she said. Salon owner and luxury home builder Dino Palmieri of Solon said he has bought several properties at auction over the years, especially for his residential land development business. “Auctions create momentum and urgency. That plays on human nature,” Palmieri said. “But you have to know what you are willing to pay so that you don’t get carried away. I once paid $25,000 more for some land than I had planned.”


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NOVEMBER 23 - NOVEMBER 29, 2015 Allyson Oâ&#x20AC;&#x2122;Keefe started her legal career at Porter Wright in 2004 after completing a summer internship there as a Case Western Reserve University law student. Since then, she has worked on many significant deals across Cleveland, including Flats East Bank, The Metropolitan at the 9, Uptown in University Circle and Steelyard Commons, and has been promoted to real estateALLYSON partner. Oâ&#x20AC;&#x2122;KEEFE, 37 â&#x20AC;&#x153;Young professionals who live downtown are so excited about the city,â&#x20AC;? said Oâ&#x20AC;&#x2122;Keefe, a Partner; Porter Columbus native who lived downtown forWright 10 years before moving to Rocky River. â&#x20AC;&#x153;The ones who arenâ&#x20AC;&#x2122;t from here are often more excited about it. When you move here from somewhere else, you donâ&#x20AC;&#x2122;t for granted.â&#x20AC;? VOL. 36, NO. take 47 it Allyson NOVEMBER 23 - NOVEMBER NOVE EMBER 29, 29, 2015 201 Oâ&#x20AC;&#x2122;Keefe started her legal career at Porter Wright in 2004 after completing a sumWhen Oâ&#x20AC;&#x2122;Keefe is not working or spending time with her husband and two children, she can mer internship there as a Case Western Reserve University law student. Since then, she has be found volunteering on the boards of nonprofit organizations and watching college football. worked on many significant deals across Cleveland, including Flats East Bank, The Metropolitan at the 9, Uptown in University Circle and Steelyard Commons, and has been proWHAT INSPIRES YOU ABOUT YOUR WORK? moted to real estateALLYSON partner. Oâ&#x20AC;&#x2122;KEEFE, Just seeing what Cleveland has gone through in the time that Iâ&#x20AC;&#x2122;ve 37 been here, thereâ&#x20AC;&#x2122;s obviousâ&#x20AC;&#x153;Young professionals who live downtown are so excited about the city,â&#x20AC;? said Oâ&#x20AC;&#x2122;Keefe, a ly a lot of excitement around real estatePartner; development. I started in 2004 when we were crazy Porter Columbus native who lived downtown for Wright 10 years before moving to Rocky River. â&#x20AC;&#x153;The ones busy with development. That was sort of the boom from â&#x20AC;&#x2122;04 through â&#x20AC;&#x2122;08. I saw it go through who arenâ&#x20AC;&#x2122;t from here are often more excited about it. When you move here from somewhere the downturn, then I saw it rise again, even stronger than before locally. else, you donâ&#x20AC;&#x2122;t take it for granted.â&#x20AC;? Allyson Oâ&#x20AC;&#x2122;Keefe started her legal career eer at Porter Wright in 2004 after comple completing etin ng a sumsumWhen Oâ&#x20AC;&#x2122;Keefe is not working or spending time with her husband and two children, she can mer internship as a Case Western Reserve University law student. Since tthen, hen, she sh he has has WORKED ON there ARE MIXED-USE URBANnPROJECTS. IS MANY OF THE PROJECTS YOU be found volunteering on the boards of nonprofit organizations and watching college football. worked on many significant deals across ss Cleveland, including Flats East Bank, The The THAT AN AREA OF EXPERTISE? Metropolitan at the 9, Uptown in every University and Steelyard Commons, and rsity d has has ha s been be een proproro Yes, definitely. Real estate is extremely interesting because deal Circle is differWHAT INSPIRES YOU ABOUT YOUR WORK? moted to real estate ent. You can never get bored because thereâ&#x20AC;&#x2122;s so partner. much variety there, from tax Just seeing what Cleveland has gone through in the time that Iâ&#x20AC;&#x2122;ve been here, thereâ&#x20AC;&#x2122;s obviousown are Oâ&#x20AC;&#x2122;Keefe e, a â&#x20AC;&#x153;Young who live downtown so excited about the city,â&#x20AC;? said Oâ&#x20AC;&#x2122;Keefe, credits to historic renovations, from professionals ground-up development to rehab, from ly a lot of excitement around real estate development. I started in 2004 when we were crazy Rive er. â&#x20AC;&#x153;The â&#x20AC;&#x153;T â&#x20AC;&#x153;The ones ones mixed-use to residential. Columbus native who lived downtown for 10 years before moving to Rocky River. busy with development. That was sort of the boom from â&#x20AC;&#x2122;04 through â&#x20AC;&#x2122;08. I saw it go through who arenâ&#x20AC;&#x2122;t from here are often more excited xcited about it. When you move here from m somewhere som somew ewhere ere the downturn, then I saw it rise again, even stronger than before locally. else, you LEADERSHIP donâ&#x20AC;&#x2122;t take it for granted.â&#x20AC;? YOUR STYLE? HOW WOULD YOU DESCRIBE


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Oâ&#x20AC;&#x2122;KeefeI expect is not working or spending timeI work, children, she can with her husband and two child dre en, sh he c he an I definitely believe in leadingWhen by example. the people withding whom MANY OF THE PROJECTS YOU WORKED ON ARE MIXED-USE URBAN PROJECTS. IS be found volunteering on the very boards off nonprofit and watching college collle eg ge football. foo fo ottball. my associates, to work hard, and they see me working hard. For me, itâ&#x20AC;&#x2122;sorganizations all THAT AN AREA OF EXPERTISE? about working hard and doing good work. Yes, definitely. Real estate is extremely interesting because every deal is differWHAT INSPIRES YOU ABOUT YOUR WORK? RK? ent. You can never get bored because thereâ&#x20AC;&#x2122;s so much variety there, from tax hrough th here eâ&#x20AC;&#x2122;s obviousobviousus Just WHAT seeingWAS whatITCleveland has gone the time that Iâ&#x20AC;&#x2122;ve been here, thereâ&#x20AC;&#x2122;s LIKE TO WORK WITHthrough Oâ&#x20AC;&#x2122;KEEFEinON WHAT OTHERS ARE SAYING: credits to historic renovations, from ground-up development to rehab, from ly a lot of excitement around real estate te development. I started in 2004 when we we were were e crazy crazy THE FLATS EAST BANK PROJECT? mixed-use to residential. busy with development. of the boom from â&#x20AC;&#x2122;04 through â&#x20AC;&#x2122;08. I saw itt go go through th hrough â&#x20AC;&#x153;Allyson is extremely bright and quick witted, butThat whatwas trulysort distinguishes her the downturn, then I saw itpeople rise again, even from most successful attorneys is her exceptional skills. Shestronger has an than before locally. HOW WOULD YOU DESCRIBE YOUR LEADERSHIP STYLE? uncanny ability to encourage the â&#x20AC;&#x2DC;adversariesâ&#x20AC;&#x2122; in her negotiations to work in I definitely believe in leading by example. I expect the people with whom I work, OF THE PROJECTS YOU YOU WORKED Wsaid ORKED ON ON ARE ARE MIXED-USE MIXED-USE URBAN URBAN PROJECTS. PROJECTS. IS IS concert with her to achieve win/win MANY solutions to difficult problems,â&#x20AC;? my associates, to work hard, and they see me working very hard. For me, itâ&#x20AC;&#x2122;s all THAT AN AREA EXPERTISE? TISE?of the Scott Wolstein, CEO of Starwood Retail Partners andOF co-developer about working hard and doing good work. e is extremely interesting because every deal deal is differdifferrYes, definitely. Real estate Flats East Bank project. ent. You can never get bored there, red because thereâ&#x20AC;&#x2122;s so much variety the ere, ffrom rom m ttax ax â&#x20AC;&#x201D; Lee Chilcote WHAT OTHERS ARE SAYING: WHAT WAS IT LIKE TO WORK WITH Oâ&#x20AC;&#x2122;KEEFE ON credits to historic renovations, tions, from ground-up development to rehab, re ehab, from fro om THE FLATS EAST BANK PROJECT? mixed-use to residential. â&#x20AC;&#x153;Allyson is extremely bright and quick witted, but what truly distinguishes her

successfulInc. attorneys is reserved. her exceptional people skills. She has an Reprinted with permission from the Crain's Cleveland Business. Š 2015from Crainmost Communications All Rights YOU DESCRIBE RIBE YOUR YOUR LEADERSHIP LEADERSHIP STYLE? STYLE? HOW WOULD ability to encourage the â&#x20AC;&#x2DC;adversariesâ&#x20AC;&#x2122; in her negotiations to work in Further duplication without permission is prohibited. Visituncanny #CC15040

I definitely believe in leading ding by example. I expect the people with h whom whom m I work, rk concert with her to achieve win/win solutions to difficult problems,â&#x20AC;? said my associates, to work hard, and they see me working very hard hard. d. For For me, me e, itâ&#x20AC;&#x2122;s all a Scott Wolstein, CEO of Starwood Retail Partners and co-developer of the about working hard and doing good work. Flats East Bank project.

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skills s. She She has has an ha successfulInc. attorneys her exceptional people skills. Reprinted with permission from the Crain's Cleveland Business. Š 2015from Crainmost Communications All Rightsisreserved. ourage negotiatio ons to to work w wo orrk k in n ability to encourage the â&#x20AC;&#x2DC;adversariesâ&#x20AC;&#x2122; in her negotiations Further duplication without permission is prohibited. Visituncanny #CC15040

hieve win/win solutions to difficult probl bllem ms,â&#x20AC;? s,â&#x20AC;? said concert with her to achieve problems,â&#x20AC;? co-deve evel velo ve elo el ope pe er off the the e Scott Wolstein, CEO off Starwood Retail Partners and co-developer ct. Flats East Bank project. â&#x20AC;&#x201D; Lee Le Ch Chilcote C

Reprinted with permission from the Crain's Cleveland Business. Š 2015 Crain rain Communications nss IInc Inc. nc. nccc. All n Al Rights Rig rese reserved. rved d. Further duplication without permission is prohibited. Visit ww.crainscleveland. and.c nd d.ccom. o om. m #CC15040

As for National Design Mart, it keeps about $6.5 million in inventory on hand in the floor covering and cabinet side, and another $2 million on the countertop side. Still, that supply isnâ&#x20AC;&#x2122;t enough to keep up with demand, and the company plans to build another warehouse next year. The new space also allows for some fun extras, such as cooking demonstrations in the three fully functioning kitchens and a staffed childcare area that lets parents take their time browsing. â&#x20AC;&#x153;As much as the internet is hurting retail, we are trying to make our environment a fun, exciting place for people to come,â&#x20AC;? King said.

Architectural Justice James Justice started Medinaâ&#x20AC;&#x2122;s Architectural Justice â&#x20AC;&#x201D; which bills itself as offering an artisan approach to home remodeling, interior finishes, furniture and eclectic dĂŠcor â&#x20AC;&#x201D; right out of high school 31 years ago. Today, he operates it with his wife, Darlene. Justice opened a second location, Architectural Justice Gallery & CafĂŠ, on the commons in Strongsville about five months ago. Justice said the new store has a different focus than the Medina location, which is housed in a converted dairy barn and includes a design center as well as many services, such as a metal shop, a wood shop, a sawmill and a cast stone shop where they pour castings out of concrete. â&#x20AC;&#x153;We have so many extra materials in Medina that we thought we would start manufacturing furniture with some of our overages and reclaimed items, and the new location in Strongsville lets us showcase it,â&#x20AC;? he said. Since the Justices are also self-described â&#x20AC;&#x153;foodies,â&#x20AC;? the new location, which they built on the site of a former gas station, includes a cafĂŠ with a European-inspired menu. The cafĂŠ provides a natural segue into cross marketing with some of the companyâ&#x20AC;&#x2122;s other offerings, such as high-end Sub-Zero kitchen appliances. Cooking classes offered there have been a big hit as well, he said. â&#x20AC;&#x153;We laid out the building with all of our products and our guys did all the work on it. They created some really cool, unique stuff. We built a revolving door with a granite ceiling in it. We built a marble table that lifts up on each end automatically and a 20foot high lit marble wall,â&#x20AC;? he said. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s really getting a lot of good social media attention, which then makes people interested in what we are doing and brings them down to Medina into our design center.â&#x20AC;? Justice said his companyâ&#x20AC;&#x2122;s biggest source of revenue right now is the retail remodeling customer. These patrons are often encouraged by members of the businessâ&#x20AC;&#x2122; nine-member design team to expand their horizons. â&#x20AC;&#x153;Maybe itâ&#x20AC;&#x2122;s because thatâ&#x20AC;&#x2122;s what we specialize in, but we are seeing people spending a little more money on more eclectic things,â&#x20AC;? he said. â&#x20AC;&#x153;They are going away from the traditional looks and going toward the transitional and more urban looks.â&#x20AC;? He sees many customers doing whole house remodels â&#x20AC;&#x201D; updating the kitchen, floors, moldings and more all at the same time. â&#x20AC;&#x153;They are giving the whole house a facelift,â&#x20AC;? he said, especially in homes

Architectural Justice Gallery & CafĂŠ sits on the site of a former gas station. (Contributed photos)

Architectural Justice completed a showroom expansion at Trevarrow Inc.

National Design Martâ&#x20AC;&#x2122;s showroom is designed for one-stop shopping.



N O V E M B E R 13 - 19 , 2 017


PA G E 17

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built in the building boom of the late 1980s and early 1990s that feature now-outdated oak and brass finishings.

Cleveland Lumber Another longtime locally owned store, Cleveland Lumber on Madison Avenue just east of Lakewood, has seen its customer base expand as the housing market has improved, said Avi Selva, sales and marketing manager at the company that sells building materials for a wide variety of projects. He noted that much of the growth seems to be coming from people from outside the area investing in the local real estate market. “It appears to be investors who are looking to expand their real estate portfolio. They’ve come here to Cleveland for one reason or another. We have seen customers come from New York, from Florida, Chicago and California. The only reason why we know that is because when they call in, they call in material on behalf of somebody who is working on behalf of their project here,” he said. He said many of these customers are doing this as an investment — either to rent out or to flip the property — but doesn’t get the sense that many of them are fixing up homes to use for personal residences. “A few of them have renovated the property so that they can rent them out as Airbnb properties. Some have done it because they know that there are more conventions coming here to town, or more business people that are coming through that might need an apartment for a week or two,” he said. He said he’s noticed this uptick in the market for about two or three years. “It certainly picked up steam when the Cavs won their championship,” he said. “You also have quite a few young people who have lived in other parts of the country that are coming back for more reasonable cost of living here.”


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N O V E M B E R 13 - 19 , 2 017 |



Budding marijuana biz faces realty hurdles By JEREMY NOBILE @JeremyNobile

There’s a quiet fight raging for property right now among businesspeople aspiring for a piece of Ohio’s nascent medical marijuana industry. And that battle for real estate is acutely felt in the Northeast Ohio market, a region that will be called home by up to 18 of the state’s initial 60 dispensaries, or 30% of that business. The window to submit applications for a dispensary license opened Nov. 3, but closes on Nov. 17. The most proactive entrepreneurs — who are also the most likely to get a permit — have been searching for locations to operate a potential business for many months or more. And while it’s unclear how many will ultimately apply for a dispensary license, that business has lower barriers to entry and the most permits up for grabs versus the cultivating or processing operations, which all together comprise the three state-regulated marijuana businesses. “It’s a sprint,” said Kevin Yates, a principal with Cleveland’s Allegro

Realty Advisors. “The (draft) applications came out not that long ago. And in the intermediary period, people are trying to lock up as many locations as they want to apply for.” Like Yates, many brokers are hearing from businesspeople in this market and across the country searching for a place to do business as showing that a site is secured — and that you have support from the local government — is a small yet critical part of the system the state uses to determine which applicants gets licensed. “The best groups right now are continuing to work. They didn’t just submit and let it sit,” said Kevin Patrick Murphy, a Cleveland lawyer with Walter | Haverfield who works with aspiring and existing marijuana businesses. “They’re continuing to finalize construction plans and form relationships with real estate folks who can facilitate that.” Startup costs aside, finding a location for a dispensary presents some challenges unique from doing the same for a facility to grow or process marijuana. Businesses are statutorily required to be 500 feet away from facilities like schools, churches, libraries, daycares and parks. However,

“The best groups right now are continuing to work. They didn’t just submit and let it sit. They’re continuing to finalize construction plans and form relationships with real estate folks who can facilitate that.” — Kevin Patrick Murphy, lawyer with Walter | Haverfield

that’s less of an issue for cultivators and processors, who aren't consumer-facing and can locate in more rural areas. Up to five of the state's 11 initial Level II cultivators — the significantly smaller of the two grow operations, with Level I cultivators working in spaces with up to 25,000 square feet versus the 3,000-square-foot cap for Level II — of medical marijuana will operate in Northeast Ohio, according to the Ohio Department of Commerce. There can be up to 24 cultivators licensed in Ohio ahead of the medical program that launches next September, 12 in each level. Level I cultivation licenses will be announced in the coming weeks, but it’s worth noting that none are getting close to Cleveland proper. Akron, Canton, Oberlin and

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Ravenna each will have at least one of the Level II cultivation facilities. A second could go in Akron or Canton, depending on which site applicant Fire Rock Ltd. moves forward with (they were provisionally licensed at three sites but can only operate one). The cultivation facility slated for Ravenna is in a somewhat wooded area just south of the Portage County Airport that wouldn’t typically see much through traffic. Dispensaries, though, want to be near highways, hospitals and public transportation and in highly visible retail areas. “It’s definitely more challenging for dispensaries,” said Eric Senders, co-founder of Beachwood-based Cannabis Design Services, a consulting business spun out of iGrow Induction Lighting, which focuses on lighting for indoor cannabis grow houses. “Cultivators and processors are more like manufacturers, they lend themselves to development and industrial zones. These aren’t walk-in businesses.” On the dispensary front, aspiring businesspeople are flocking toward Northeast Ohio because it has some of the most permits to go around. Numbers are based largely on population density — Cuyahoga County, for example, is tied with Columbus’ Franklin County with the most possible dispensary licenses up for grabs at five. Cities vary widely on their own local rules dealing with marijuana businesses, though, complicating the search for real estate.

Location, location While the local rules may feel like more red tape, they’re actually somewhat helpful in streamlining the process of finding property, Murphy said. But every city is different. Cleveland recently lifted a moratorium on marijuana but added other restrictions on where businesses can locate on top of the state’s 500-feet requirements. Marijuana businesses can only operate in Cleveland proper in areas zoned for general retail or some industrial uses, and the consensus is that leaves just 5% of the city as suitable for a dispensary, consultants say. Then there’s Akron, which replaced a moratorium with a local licensing program. Local license fees are $250 for a provisional license, then $2,500 for the annual operating license. That’s on top of the nonrefundable $5,000 fee just to apply for a dispensary license from the state, $70,000 for a biennial certificate of operation and $250,000 an applicant needs to show in liquid assets. In Euclid — a city many see as a more “friendly” city to the marijuana industry — there was never a moratorium in place. In the spring, Euclid City Council created a veritable “marijuana district” by adopting zoning rules making marijuana cultivation and processing a permitted use in the city’s industrial corridor, which runs just south of Interstate 90 between Euclid Avenue and the highway. Dispensaries will be approved

on a case-by-case basis, said Euclid planning director Jonathan Holody. Effectively opening up the city for marijuana businesses was motivated by interest in having some kind of operation there. City officials didn’t add any other local rules or licensing costs beyond what the state imposes. “We saw how heavily regulated the industry would be, which gave our leaders a level of comfort,” Holody said. Lakewood, meanwhile, is less interested in landing a cultivator or processor because the densely populated city has almost nowhere they could go that meets the perimeter requirements. However, the city passed rules for dispensaries that require paying $25,000 a year for an annual license plus 1.5% of sales over $1.25 million. Those are easily the highest local costs in Northeast Ohio — and maybe even the country. Lakewood Mayor Michael Summers acknowledged this, but said aspiring dispensaries “didn’t even blink” at those costs. “I was listening carefully to the financial expectations from companies investing in these business … there is anticipation of a lot of money coming their way,” Summers said. He added that it’s unclear what might be required of the city in terms of local resources that may be needed for something like security. “We will have to put up some municipal resources to make sure everything works well,” he said. In a city that will already be tough to find real estate, and despite adding those extra costs, Summers said Lakewood has three applications from Ohio-based companies to operate retail shops: one on Detroit Avenue on the western border; one in the middle of the city near the intersection of Madison Avenue and Lewis Drive; and one near the intersection of Madison Avenue and Newman Avenue on the east side. Besides a chance to add revenue for local governments, the marijuana movement also benefits landowners. In areas where many applicants are fighting over one space, not only are costs going up for the property itself — something Murphy has dubbed the “marijuana tax” — but applicants are paying big to have those locations taken off the market, signing contracts with options to take over the property if they’re awarded a license. Many are paying as much as full rent to hold on to a property for months at a time until they know if they were awarded a permit. Asking to have those properties off the market for so long is unusual, Yates said, and is benefiting landlords who are charging a premium. “They can charge well in excess of market rent or even in some cases percentage rent to be able to rent or lease,” Murphy said, “and you’re paying for the privilege for that option on the property for up to seven months.” And then there are the challenges of financing. Banks are leery of working with any marijuana-related business because of federal laws. That means applicants typically need private financing or investors. While running a retail shop for medical marijuana may seem like the easier business to get in to compared with growing or processing the plant, the real estate factor is creating some unique hurdles. “When it comes to finding a space,” Senders said, “it’s definitely been a challenge for people.”

HOT DEALS A spotlight on some of Northeast Ohioâ&#x20AC;&#x2122;s



S2 NOVEMBER 13, 2017





he Johnson Controls Hall of Fame Village project is a nearly $800 million, multi-phased, mixed-use development surrounding the Pro Football Hall of Fame. IRG (Industrial Realty Group LLC) has partnered with the Pro Football Hall of Fame for the project and is its master developer. nce completed, it will be the first sports and entertainment smart city. The village features 10 components, including the new Tom Benson Hall of Fame tadium, a four-star Hall of Fame Hotel and Conference Center, ational Football and outh ports Complex, Center for Excellence, Center for erformance, layer Care Center, Hall of Fame Experience and aterpark, Black College Football Hall of Fame and Hall of Fame ay. WHY IS THIS A BIG DEAL? Investors believe these efforts will catapult the site, built in 1963, into an entertainment destination for sports fans and players alike, which will benefit Canton, Northeast Ohio and the state. The venture is estimated to be the largest tourism investment in Ohio’s history. In 2016, Johnson Controls announced one of the richest naming rights deals in sports at the village. The total amount of the agreement ranks in the top 20% of all sports naming rights deals and the largest ever for its market size. In 2016, Forbes named the Tom Benson Hall of Fame Stadium one of its “13 Game-Changing NFL Stadiums.” The Johnson Controls Hall of Fame Village has been featured by The New York Times, Forbes, The Wall Street Journal, Sports Illustrated, FOX Business and ESPN. WHAT WERE THE TOP CHALLENGES OR OPPORTUNITIES? The project in its entirety is particularly complex, featuring multi-phased components that are designed, constructed and managed by many different partners. They all focus on creating an unparalleled experience for visitors. A project of this magnitude will inevitably experience challenges. For example, the recently completed $83 million second phase of Tom Benson Hall


Johnson Controls Hall of Fame Village IRG — Project Master Developer Various locations throughout the U.S. Stuart Lichter or Tracy Green 330-659-7124

HKS Architects’ conceptual renderings of Johnson Controls Hall of Fame Village (above and opposite page) depict the 10 major components of the project, including Tom Benson Hall of Fame Stadium, a four-star hotel, senior care facility, retail and office space, and a state-of-the-art amusement and waterpark.

of Fame Stadium was a challenging component on several fronts. As the historic venue for the nationally televised Hall of Fame Game and Enshrinement, the stadium had a firm completion date with no margin for construction delays. The aggressive, 10-month schedule also required that all technical aspects to operate flawlessly. The team opened Tom Benson Hall of Fame Stadium on time, welcoming 23,000 fans in August to watch the Hall of Fame Game televised by NBC. Days later,

the stadium also hosted the annual Enshrinement Ceremony, televised nationally on ESPN and NFL Network, and the Concert for Legends, featuring Toby Keith and Kid Rock. WHO WERE THE KEY PLAYERS? IRG is the project’s master developer and owner. The company is a nationwide real estate development and investment firm. IRG, through its affiliated partnerships and limited liability companies, operates a portfolio containing more than 150

properties in 28 states with over 100 million square feet of space. IRG is nationally recognized for solving some of America’s most difficult real estate challenges. The Pro Football Hall of Fame, located in Canton, the birthplace of the National Football League, is a 501(c) (3) nonprofit institution with the mission to honor the heroes of the game, preserve its history, promote its values and celebrate excellence everywhere. Other partners include Johnson Controls (naming rights

sponsor), Welty (construction management), HKS (architect), TSAV (technology consulting and integration) and many more. WHAT OTHER PROJECTS ARE IN THE PIPELINE? As master developer and property owner, IRG built a modern, world headquarters building for Goodyear Tire & Rubber Co. in 2013 and redeveloped the remaining 1.4 million-square-foot campus into a live, work, play environment known as “The East End.” Components completed at the Akron development include: Hilton Garden Inn, Goodyear Theater, Residences at The East End apartments and a gymnasium. Current renovations are underway to create additional highly desirable office space.



NOVEMBER 13, 2017 S3




he Johnson Controls Hall of Fame Village in Canton represents one of this region’s larger, more highly visible real estate developments. Valued at nearly $800 million, it has come together with the support of numerous parties under the watchful eye of master developer Industrial Realty Group LLC, which has formed a joint venture with the Pro Football Hall of Fame. This complex project is being completed in phases, with a majority of the stadium renovations being completed in 2017 and the remaining portions of the village being completed over the next three to five years. Village will not only be a major destination for sporting events and entertainment, but will also include significant retail, hospitality and office space, residential housing, and facilities dedicated to research and health care. The Village will also seek to implement cutting edge “smart city” technology.


Johnson Controls Hall of Fame Village Walter | Haverfield Cleveland Jack Waldeck and Nick Catanzarite 216-781-1212

WHY IS THIS A BIG DEAL? The Johnson Controls Hall of Fame Village has been described as a lifechanger for Canton, as it’s the largest development to take place in the city’s history. With nearly 300,000 visitors annually, the Pro Football Hall of Fame ranks as one of the more highly visited tourist attractions in this region. Its redevelopment will help to keep Northeast Ohio in the national spotlight. WHAT WERE THE TOP CHALLENGES OR OPPORTUNITIES? There are many factors that make the Johnson Controls Hall of Fame Village one of the most complex real estate developments in the region in recent history. Those considerations include the large number of parties involved, the

structuring of the public-private partnership, the involvement of two school districts, the City of Canton and the Stark County Port Authority, the procurement of 75-plus parcels of land and the sheer size of the project. However, the promise that the project holds for the region in helping to elevate its national stature overshadows any challenges.

WHO WERE THE KEY PLAYERS? Walter | Haverfield started providing the behind-the-scenes legal work long before the first shovel went into the ground. Due to the complex nature of the financing and tax structure, the project required the collective bench strength of the firm’s real estate, public law, structured finance and tax practice

groups to help its client, IRG, move the project forward, despite numerous obstacles. At times, Walter | Haverfield had a team of 10-plus lawyers working on this massive project. OTHER NOTABLES When the project is complete, the Johnson Controls Hall of Fame

WHAT OTHER PROJECTS ARE IN THE PIPELINE? Walter | Haverfield is involved in a number of high-visibility real estate development projects throughout Northeast Ohio. One of the more recent projects includes Pinecrest, a $230 million upscale mixed-use development in Orange Village. The project is the result of a joint venture between Walter | Haverfield client Fairmount Properties and DiGeronimo Cos., as well as other companies. Projected for completion in spring 2018, Pinecrest will include nearly 400,000 square feet of retail space, 150,000 square feet of office space, 87 luxury apartments and a boutique AC Marriott hotel. Major tenants already announced include Whole Foods, REI, Silverspot Cinema, Pinstripes, West Elm, Red the Steakhouse and Shake Shack. For this project Walter | Haverfield attorneys are serving as lead counsel for all phases of the project, including land aggregation, financing, leasing and development.

Proud to be part of the Hall of Fame Village and Pinecrest Success Stories We’ve provided the behind-the-scenes legal work to make some of this region’s largest deals a reality. The Real Estate Attorneys of

Cleveland | 216.781.1212

Team attorneys handling these projects include: Josh Hurtuk, Megan Zaidan, Kevin Murphy, Tyler Bobes, Jack Waldeck, Nick Catanzarite, Irene MacDougall, Nate Felker


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K&D Management LLC is in the midst of a bold revitalization of the iconic Halle Building in Playhouse Square. Built in 1908 as an upscale department store, the Halle Building had been reconfigured into 392,000 square feet of office space when K&D in 2014 acquired it from Forest City Enterprises Inc. for $15 million. The developer’s initial intent was to renovate the bulk of the 11-story property into roomy one-, two- and three-bedroom apartment homes to cater to an untapped market of empty-nesters and families looking for larger rental units in downtown Cleveland. After several existing commercial tenants expressed a desire to remain, K&D pursued a more evenly split mixed-use development. The lower level comprises five floors of office space that are already 100% leased, while 123 apartments will make up the upper six floors. WHY IS THIS A BIG DEAL? The Halle Building was about 50% occupied with commercial office tenants when K&D bought it. Very little had been done, inside or out, to preserve its heritage or maximize its potential, especially given the building’s inviting downtown location. K&D seized on the opportunity to reimagine the Halle as a vessel through which to deliver a much-needed product — larger downtown apartments — while also giving the structure an interior and exterior facelift. The one-bedroom apartments will average 1,200 square feet, compared to the 750-square-foot average among all downtown Cleveland apartments. Two- and three-bedroom apartments range from 1,600 to 3,000 square feet. WHAT WERE THE TOP CHALLENGES OR OPPORTUNITIES? As with any major development, financing was one of the biggest challenges. K&D did a condominium


1228 Euclid Ave Cleveland, OH 44115


Halle Building Renovation K&D Management LLC Willoughby Doug Price 440-946-3600 split of the property that allowed the company to obtain separate commercial and residential loans for the office segment on the first six floors and the residential segment on floors six through 11. That multiplied the paperwork, complexity and fees. Dividing the building, however, provided an opportunity for K&D to utilize Federal New Markets Tax Credit loans for the office portion of the project because of


1621 Euclid Ave. Cleveland, OH 44115-2114

its job-creation aspect. Meanwhile, it made use of state and federal historic tax credits on both portions. Another challenge was managing the building’s existing tenants, which required K&D to obtain agreements from those companies to move them from the upper floors and rebuild their space out on the lower levels. The developer offered new, updated offices in exchange for long-term lease agreements. WHO WERE THE KEY PLAYERS? Huntington National Bank is the lead lender on the project. U.S. Bancorp Community Development Corp. of St. Louis bought the federal historic tax credit. Berardi+Partners in Columbus provided architectural and design services. Mentor-based Cleveland Construction Inc. is K&D’s contractor. OTHER NOTABLES Along with existing tenants, The NRP Group, an apartment developer and owner, signed a leasing agreement to move its corporate headquarters


526 Superior Ave. Cleveland, OH 44114

K&D Management LLC is in the midst of an exciting transformation of the historic Halle Building in Playhouse Square. The mixed-use development satisfies residential demand for roomier downtown Cleveland apartments, while both retaining and attracting new commercial tenants to the lower floors.

from Garfield Heights into the newly renovated fourth floor of the Halle Building. Encompassing the entire floor, the 42,000-square-foot office will bring 150 new jobs into the city of Cleveland. WHAT OTHER PROJECTS ARE IN THE PIPELINE? Once the finishing touches are put


1500 W. 3rd St. Cleveland, OH 44113


1701 E. 12th St. Cleveland, OH 44114

on the Halle development, K&D will turn its attention to the Terminal Tower project. In June 2018, the company expects to begin converting the lower 14 floors of the 52-story office tower into 300 residences. K&D is pursuing state historic-preservation tax credits for the $100 million project. The upper floors will remain offices.


50 Public Square Cleveland, OH 44113

FO R C O M M E R C I A L R E A L E S TAT E & L E A S I N G I N FO R M AT I O N , C O N TAC T: DYANN DAVISON | 216.861.0600 | |

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Largest Hospitals

Ranked by 2016 Net Patient Revenue (1) NET PATIENT REVENUE ($ MILLIONS) THIS YEAR HOSPITAL (2)










Cleveland Clinic 9500 Euclid Ave., Cleveland 44195 (216) 444-2200/







Cleveland Clinic Health System

Toby Cosgrove president, CEO


University Hospitals Cleveland Medical Center 11100 Euclid Ave., Cleveland 44106 (216) 844-1000/







University Hospitals

Daniel I. Simon president


Northeast Ohio VA Healthcare System (2) 10701 East Blvd., Cleveland 44106 (216) 791-3800/

1,029.7 (3)

1,017.2 (3)





Department of Veterans Affairs

Susan M. Fuehrer director, CEO


The MetroHealth System 2500 MetroHealth Drive, Cleveland 44109 (216) 778-7800/







The MetroHealth System

Akram Boutros president, CEO


Akron Children's Hospital One Perkins Square, Akron 44308 (330) 543-1000/







Children's Hospital Medical Center of Akron

William H. Considine CEO


Summa Health System Ñ Akron and St. Thomas Campuses 525 E. Market St., Akron 44309 (330) 375-3000/






1892 and 1922

Summa Health System

Cliff Deveny, MD interim president, CEO


Cleveland Clinic Akron General Hospital One Akron General Ave., Akron 44307 (330) 344-6000/







Cleveland Clinic Health System

Brian Harte president


Fairview Hospital 18101 Lorain Ave., Cleveland 44111 (216) 476-7000/







Cleveland Clinic Health System

Neil P. Smith president


Hillcrest Hospital 6780 Mayfield Road, Mayfield Heights 44124 (440) 312-4500/







Cleveland Clinic Health System

Richard Parker president

Aultman Hospital







Aultman Health Foundation

Christopher E. Remark CEO

Sixth St. S.W., Canton 44710 10 2600 452-9911/ THE(330) LIST

Largest Hospitals Kohler Generator Distributor in Ohio & Indiana na Ranked by 2016 Net Patient Revenue BUCKEYE BU CKEYE YE POWER SALES CO., C CO INC. INC C.. C (1)

Providing g Critical al Power forNETYour Residents for Over 70 Years rs PATIENTFacility’s REVENUE FTE ($ MILLIONS)


EMPLOYEES 330 33 303 0 0--42 422 222 2 2-4520 -4 45 4 520 0 ● b uckeyepowersales com %● 84 8465 465STAFFED Tower Dr. Dr Twinsburg, Twinsburg O OH HHEALTH CARE AS OF 9/1/ YEAR 2016









Southwest General 18697 Bagley Road, Middleburg Heights 44130 (440) 816-8000/







partnering with University Hospitals

William A. Young Jr. president, CEO


Mercy Health Ñ St. Elizabeth Youngstown Hospital 1044 Belmont Ave., Youngstown 44501 (330) 746-7211/







Mercy Health Youngstown; Mercy Health

Donald Koenig president


Mercy Medical Center (3) 1320 Mercy Drive N.W., Canton 44708 (330) 489-1000/







Sisters of Charity Health System

Paul C. Hiltz interim CEO


Firelands Regional Medical Center 1111 Hayes Ave., Sandusky 44870 (419) 557-7400/







Firelands Regional Health System

Martin E. Tursky president, CEO


University Hospitals Elyria Medical Center 630 E. River St., Elyria 44035 (440) 329-7500/







University Hospitals

Kristi Sink president


University Hospitals Ahuja Medical Center 3999 Richmond Road, Beachwood 44122 (216) 593-5500/







University Hospitals

Susan V. Juris president


Mercy Health- Lorain Hospital 3700 Kolbe Road, Lorain 44053 (440) 960-4000/







Mercy Health

Edwin M. Oley CEO


University Hospitals Parma Medical Center 7007 Powers Blvd., Parma 44129 (440) 743-3000/







University Hospitals

Peter U. Bergmann president


Mercy Health Ñ St. Elizabeth Boardman Hospital 8401 Market St., Boardman 44512 (330) 729-2929/







Mercy Health Youngstown; Mercy Health

Eugenia (Genie) Aubel president


West Medical Center (2) 36000 Euclid Ave., Willoughby 44094 (440) 953-9600/





2,150 (4)


Lake Health

Cynthia Moore-Hardy president, CEO


University Hospitals St. John Medical Center 29000 Center Ridge Road, Westlake 44145 (440) 835-8000/







University Hospitals

Robert G. David president


TriPoint Medical Center (2) 7590 Auburn Road, Concord Township 44077 (440) 375-8100/





2,150 (4)


Lake Health

Cynthia Moore-Hardy president, CEO


Mercy Health Ñ St. Joseph Warren Hospital 667 Eastland Ave. SW, Warren 44484 (330) 841-4000/







Mercy Health Youngstown; Mercy Health

Kathy Cook president


Want the Excel version of this list Ñ and every other Crain's list? Become a Data Member:

The full length version of this list includes 50 hospitals and is available for purchase at Information is submitted by the hospitals unless otherwise noted. Crain's does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all feedback and will include omitted information or clarifications in coming issues. (1) Revenue and employment numbers often include outpatient clinics and other offsite locations affiliated with the hospital. (2) Revenue and employment numbers for some hospitals, including Northeast Ohio VA and hospitals run by Lake Health, include outpatient clinics and other offsite locations affiliated with the hospital. (3) Information is from the American Hospital Directory, Employee numbers represent total employees, not FTEs, and are calculated at the end of fiscal year 2016. Staffed beds equals the number of total complex beds. (4) This number includes all Lake Health employees.



Hospital net patient revenue keeps rising By LYDIA COUTRÉ @LydiaCoutre

Most Northeast Ohio hospitals saw their net patient revenue grow last year, continuing an upward trend that’s been going on for several years. Combined, the 51 hospitals on the full digital version of the Crain’s Largest Hospitals list saw net patient revenue climb by 4.2% from 2015 to 2016. Of the 34 hospitals who have consistently submitted data to Crain’s since 2007, their cumulative net patient revenue rose by 54% between 2007 and 2016. Hospitals small and large posted similar revenue gains this year, but over the 10-year period larger hospitals have generally grown faster. The main campuses for Cleveland Clinic and University Hospitals, as well as the MetroHealth System, reported 2016 as their highest net patient revenue in the past decade, with each seeing fairly steady growth yearover-year in that time. Of the top 10 largest hospitals, three saw double-digit growth in their net patient revenue last year: MetroHealth, Cleveland Clinic Fairview Hospital and Cleveland Clinic Akron General Hospital. MetroHealth’s grew by 10.8%, which Craig Richmond, senior vice president and chief financial officer at MetroHealth, attributes to higher patient volumes from new sites and expanded access to medical services. In 2016, MetroHealth integrated several former HealthSpan facilities into the system, converting two former urgent care centers into emer-

gency departments and opening clinical facilities in Bedford, Parma, Cleveland Heights and Rocky River. Also in 2016, the system opened its Brecksville Health and Surgery Center. Between 2015 and 2016, MetroHealth saw a 20% increase in its overall patient base, Richmond said. “We’ve just been laser focused on improving our community health, enhancing access, creating value for our customers and being the lowcost provider, which really fueled our year over year growth,” he said. Cleveland Clinic Fairview Hospital grew its net patient revenue by 11.1% between 2015 and 2016, and Cleveland Clinic Akron General grew its by 11.5% in that time. In Fairview, a lot of the growth was in medical/surgical, obstetrics and the ICU, said Steve Glass, the Clinic’s chief financial officer. That hospital has been running close to capacity for years, so the Clinic has worked to add beds in recent years. Glass attributes the growth in Akron largely to the Clinic’s late-2015 takeover of Akron General. The Clinic brought a lot of added financial resources, as well as a strong brand. “I think overall, the Clinic’s relationship with Akron has created a very, I guess, positive impression in the marketplace, and we see more patients selecting to go to the Akron facility now that it’s part of the Cleveland Clinic health network,” he said. Summa Health system has publicly discussed struggles related to its 2017 financials, but the system’s Akron and St. Thomas campuses posted flat net patient revenue figures in 2016. Its Barberton campus, however, posted a 13.9% drop.


In what Jarm calls a “bizarre” process, the state passed a balanced biennial budget over the summer, and then shortly after, the administration said there was an appropriations gap. The Ohio Department of Medicaid says it needs to make up a $1.1 billion appropriations gap in the fiscal year 2018-2019 operating budget. Heidi Gartland, vice president of government and community relations for University Hospitals, called the rate cut “unnecessary,” “unjustified” and “downright harmful to working Ohioans.” “We have not gotten a good explanation (for) this billion dollars of supposed cuts that the state is looking for,” Gartland said. “We can’t understand their underlying rationale.” Jarm and the state advocacy group, the Ohio Hospital Association, both point to a $1.56 billion underspend in the Medicaid Budget for fiscal year 2017. “Our concern is how they are justifying this appropriations gap, and why they continue to identify that when the Medicaid program has been underspent and we’ve been living within our means,” said John Palmer, director of public affairs for the Ohio Hospital Association. No one from the Ohio Department of Medicaid was made available for


an interview. In an email, a department spokesperson said, “We are reviewing updated projections of the Medicaid budget, and are taking underspending into account when determining if a hospital rate reduction will be necessary to keep spending within the budget’s appropriation levels.” Updated projections and a decision about the hospital rate reduction will be announced at the Joint Medicaid Oversight Committee on Thursday, Nov. 16, the spokesperson said. The entity that ultimately needs to review the proposed change is the Joint Committee on Agency Rule Review. The proposed rule would decrease expenditures for the state by $417.8 million over two years. To make up for the $1.1 billion appropriations gap, the state is also looking at achieving $273 million in savings through already-planned budget adjustments that take effect July 2017 and July 2018, as well as other moves. Throughout the budget process, the Ohio Hospital Association worked with the state legislature to avoid a rate cut and ultimately secured a rate freeze in the budget that went to the governor, who then vetoed that line item, Palmer said. The rate cut will be “painful” for community hospitals across the state, said Steve Glass, Cleveland Clinic’s chief financial officer. Already, hospitals are reimbursed less than what it costs to provide services.

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They haven’t seen an increase in years as they incur annual inflation of supplies and salaries, Glass said. “So as you can imagine it’s putting more and more financial pressure on our organization, particularly when you look at Medicaid, where hospitals across the state of Ohio lose money providing care to Medicaid patients,” he said. For the Clinic, the rate cut would mean a loss of about $25 million a year, which will force the Clinic to look at “streamlining” services, which could include consolidation of programs, Glass said. Gartland said that to have such a significant rate cut that hospitals feel is unjustified is “unprecedented.” She estimates the rate cut would cost UH $27.5 million. The system has just two places to turn to make up for that loss, she said: cutting services or cutting employment. “If this cut goes forward, there’s obviously going to be an impact on both of those,” she said. “You can’t do one without the other.” Hospitals are at the point where they can’t absorb the loss, Palmer said. “We, just like the state, need to know that we have reasonable reimbursement, predictable reimbursement and stable reimbursement if we’re going to continue to be able to invest in the health of Ohioans that are covered by Medicaid,” Gartland said.

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Tax plan could threaten city’s urban renewal By DAN SHINGLER @DanShingler

Akron’s real estate developers, agents, economic developers and neighborhood advocates say the city is facing a threat that could halt its revitalization efforts. That’s because in its current tax proposals, Congress wants to eliminate the Historic and New Markets tax credits developers say have been key to getting private capital to help turn old and historic buildings into modern apartments, offices and business spaces. “You’re going to see a return to blight,” said Tony Troppe, one of downtown Akron’s most active developers during the past 10 years who uses tax credits and is an advocate of them. Troppe’s projects in Akron include the development of much of the corner of High and Market streets downtown, including his BLU Jazz+ club, which he carved out of the 1870s Hermes Building. It couldn’t have been done without Historic Tax Credits (HTC). Troppe has also used the tax credits to convert the Selle Building, United Building, Gothic Building and the Kaiser Building from old and mostly vacant spaces into new apartments, restaurant spaces, retail spaces and other useful purposes. Last year, he opened Cascade Lofts, 24 luxury apartment units in the old Swinehart Tire and Rubber Co. at North and Howard streets. HTCs have resulted in tens of millions of investment dollars to redevelop hundreds of thousands of square feet of space, advocates say. The programs create credits against federal income tax, for qualified investments, that are awarded through a competitive process. A $5 million investment in a certified rehabilitation of an historic structure, for example, creates a 20%, or $1 million, HTC

The Bowery Project, going into the Landmark Building, likely will not be possible without tax credits, officials say. (Shane Wynn for AkronStock)

against federal income taxes. New Markets Tax Credits offer a similar incentive, even for new construction, in low-income neighborhoods. For example, when Troppe converted the Cascade Lofts into apartments, he received about $1.5 million in state and federal tax credits to help finance the $3.5 million project, with most of the incentives coming from the federal government. The rest came from state programs Troppe said were instituted in 2007 as a response and complement to the federal tax credit programs. Troppe’s next projects, the construction of his proposed Blu-tique Hotel at High and Market streets and

the renovation of the nearby Everett Building, should be safe, he said, because they’ve already been approved for tax credits. But he has three other projects in the works, which he was not ready to disclose, that will simply get abandoned if the tax credits go away, Troppe said. He and others predict that will be what happens to most projects in Akron and other cities that have not yet been approved for credits, because without them, inner-city projects that require cleanup, demolition and expensive renovations to existing structures can’t compete with greenfield projects in the suburbs.

“In the hopper right now is the Bowery Project, which is the Landmark Building and the buildings next to the (Akron) Civic Theatre. They would likely not be able to build the capital stack for that without that credits,” said Jason Segedy, Akron director of planning and urban development. According to an Akron Beacon Journal story, developers for that project — which is slated to cost $38 million — have secured $5 million in state tax credits but hope to secure even more in New Market Tax Credits to sweeten the deal for investors. That’s just the tip of the iceberg though, Segedy, Troppe and others said. Akron, like many older cities and especially those in the industrial Midwest, is awash with old buildings that need the incentives if they are to survive and be repurposed. To urbanists like Segedy, they are irreplaceable examples of great architecture and important pieces of a city’s history. To developers like Troppe, they are that and the trendy new business and residential spaces of the future. The tax credits already have done a lot to help turn Akron around, said Jerry Fiume, managing director of Akron-based SVN Summit Commercial Real Estate Advisors. An Akron native, Fiume said he’s seen how tax credits can spur development that leads to new spaces and new residents being drawn to downtown Akron. “Who’d have ever thought you could get $1,400 in rent for an apartment in downtown Akron? No one. But they are now,” Fiume said, referring to Cascade Lofts and some other luxury units that have been developed in the city in recent years. Neighborhood advocates beyond downtown are worried, too. “I am, very much so. Especially because there are so many buildings in town that only have a year or two left before they are too far gone. It really does concern me,” said Karen Starr, a

resident and owner of Hazel Tree Interiors in the West Hill neighborhood just north of downtown. She likes that the city supports preserving old buildings — including with a new tax abatement program that Akron unveiled this summer that exempts the value added to rehabilitated residential properties for 15 years. Starr hopes that drive for preservation continues when the city completes the demolition of the Innerbelt Highway, which will connect her neighborhood to downtown. “Historic preservation and adaptive reuse are important to the city’s soul, and it is directly linked to economic development,” she said. That’s certainly what folks like Segedy and Troppe think, too. Troppe said he encounters many new businesses today that prefer historic urban spaces over new construction elsewhere. Whether the tax credits will be eliminated is still uncertain. Tax reform is a complicated process, after all, and lawmakers’ initial proposals often look different than final results. Troppe and Segedy both said they hope legislators will not look at the tax credits in a vacuum, because they ultimately will generate more new tax revenue than they cost initially. After all, they said, an empty or abandoned building produces nothing in taxes while still requiring government services. Troppe said the incentives go to the investors who back urban projects, not to developers themselves. “Developers don’t put this money in their pockets. They use it to compete with the suburbs,” he said. Troppe is in the process of lobbying Ohio’s representatives and senators. What might help him is that Akron is far from alone. The tax credits affect development in just about every major city in the United States — including Cleveland, where builders and developers also have said they are a threat to revitalization.

Land bank launches commercial property program By SUE WALTON @SueWalton@Bolts

Commercial and industrial properties are getting more attention from the Summit County Land Bank, which recently launched a program that will not only help alleviate blight, but also hopefully bolster economic development. The land bank’s Building for Business program offers discounted properties to qualified purchasers. The organization has primarily dealt with turning around residential areas with its residential demolition program, funded largely by state grants. But it has worked with commercial property, and Building for Business formalizes its efforts, land bank executive director Patrick Bravo said. “This is more formal and opens it up for anyone interested in a commercial property to open a business, start a business or move a business,” he said, adding the program has been in the works for a couple of years. The program covers any property

other than residential — strip shopping centers, industrial, you name it. And buyers often can get them for a fraction of the appraised value — but there’s a little more to it. The properties are blighted, abandoned or tax delinquent and usually in disrepair. To qualify for the program, potential buyers must agree to clean them up. There are a couple of ways the program can work, Bravo said. Either the land bank already owns a blighted property that it can advertise, or someone can identify a property that will fit the program’s criteria. If the potential buyer qualifies, the land bank will acquire the property and resell it the buyer. To qualify, though, the buyer has to agree to renovate the building, at his or her expense, to basic commercial code and obtain a certificate of occupancy. The second sale scenario is far more likely, Bravo said, because of the cost involved in keeping a stockpile of properties. “The commercial industrial (program), with few exceptions here and there, will largely be demand driven,” Bravo said. “That’s because we don’t

want to hold a large inventory of commercial property more than anyone else does.” Instead, the land bank, which Bravo said has a handful of commercial projects in Akron currently in the works, will operate more like a matchmaking service. Land bank officials sit on the county’s economic development task force, so when a business meets with the panel about coming to the county or relocating, the land bank first will look for potential properties that might meet its needs, Bravo said. “It works pretty seamlessly,” said Connie Krauss, Summit County director of community and economic development, of the arrangement. Krauss said the land bank’s commercial program is a great tool in the county’s economic development approach because of its appeal to buyers looking to grow businesses in the county. No, buyers won’t be getting a move-in ready or pristine properties, by any stretch of the imagination. “These properties are going to require a little TLC,” Bravo said. But because these spots may need some serious renovations that the

buyer must pay for, they are priced well and any county tax liens wiped from the books. That second point is big, Krauss said. “Businesses aren’t going to be interested in purchasing that property if it has a huge tax lien on it,” she said. Many blighted properties will fall into foreclosure anyway, she added, so a sale through the land bank will prevent additional delinquent taxes from accruing and get those lands generating property taxes sooner. “We’re able to get these back into productive use,” she said. Prices usually end up being 12% of the appraised value, as determined by the Summit County Fiscal Office, plus acquisition costs and fees, Bravo said. So how many properties in the county are we talking? That’s hard to say, he said. “Estimating the total estimated number of abandoned, blighted and tax-delinquent commercial and industrial properties is a challenge,” he said. “We are exploring opportunities to establish some baseline data with which we can work, but the status of an individual property is a moving target that can change at any time,

due to any number of factors.” As part of that work to establish a baseline, the land bank sent a survey to Summit County communities asking them to provide examples of commercial and industrial properties that present challenges, Bravo said. Though far from complete because many communities did not respond, the survey offers some insight. For example, the city of Akron identified about 500 “challenge” commercial or industrial properties in 2014. While there seems to be plenty of properties the land bank could be working to sell, Bravo said it will measure the program’s success not just by how many sales it brokers. Metrics will look at the value of properties, the clearing of tax delinquency and how many properties are put to work bringing in taxes again. The program will measure its success by all of that, and, of course, by how much blight is eradicated. “I don’t know that one trumps the other,” Bravo said. “Because the blighted properties bring down other properties around them … (The issues are) probably equal legs to a stool.”



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Aurora Plastics settles into growth mindset By JUDY STRINGER

Darrell Hughes is a self-professed “hands-on guy.” Although he’s worked mostly at big companies — such as GE Plastics, where he managed international product lines, and most recently at Avery Dennison North American in Mentor, where he was vice president and general manager — Hughes never hesitated to roll up his sleeves and step outside of those executive roles when needed. Still, even he was a bit surprised by the intricacies of running a much smaller operation. “When you are trying to get ready for a board call and your phone is not working, for instance, sometimes you have to do something you’ve never done before, like fix the phone system,” said Hughes, now one year into his new stint as head of Aurora Plastics, a Streetsboro-based PVC compounder. “I managed quite some time without any administrative support. I’ve gotten really good at booking my own travel and keeping my own schedule.” Hughes assumed the CEO post in September 2016, one month after Wind Point Partners, a Chicago-based private equity firm, and Ontario Teachers’ Pension Plan partnered to acquire the 20-year-old company, which — surprise — started in Aurora. The new owners’ willingness to invest in Aurora Plastics, coupled with an escalating demand for PVC building materials, drew him to the opportunity. “The whole focus here is on growth,” he said. “This is not a turnaround story. This is a great compa-

ny, a great platform — as we like to say — for rapid organic growth, as well as acquisition growth.” The latter is most apparent of late. Aurora has closed two acquisitions since June, buying Reinier Plastics Inc. of Marieville, Quebec, over the summer and S&E Specialty Polymers of Lunenburg, Mass., in October. Hughes would not disclose financial terms of the deals. The acquisitions, he did say, expand the depth and reach of Aurora Plastics’ portfolio. Reinier Plastics has a strong foothold in Canada when it comes to Aurora Plastics’ core offering, rigid PVC compounds. Like Aurora Plastics, the Quebec firm is a merchant compounder, meaning it takes pure PVC resin from suppliers and mixes in any number of additives to make specialized PVC pellets or powders. It then sells those to manufacturers that mold and extrude the compounds into a wide range of plastic products. Rigid PVC blends have excellent weatherability, making them ideal for exterior building applications, such as siding, windows, fences, decks and doors, according to Matthew Kuwatch, vice president of marketing and business development at Aurora Plastics. The company’s highly engineered compounds can be manufactured in dark colors, which homeowners like these days, and don’t have to be painted — or, better yet, repainted — and don’t rot, Kuwatch said. “In short, it’s a much better product than wood for building,” Hughes said, estimating that 50% of rigid PVC compounds are used in building and construction. The recovery of the housing market and uptick in construction in general have fueled a growing demand for rigid PVC building materi-

“This is not a turnaround story. This is a great company, a great platform — as we like to say — for rapid organic growth, as well as acquisition growth.” — Darrell Hughes, Aurora Plastics CEO

als, he added. And an abundant supply of ethane — the primary feedstock for PVC and other polymers — in the U.S. means American companies like Aurora Plastics currently have access to lots of low-cost resin. “You have great cycle recovery, a great product for the application and a great (raw material) supply,” Hughes said. Industry watcher Bill Ridenour, founder and president for Polymer TransAction Advisors, said Aurora Plastics has one more advantage in the rigid PVC sector: manufacturing efficiency. “Even though they are much smaller than some of the other businesses in PVC, their plants are laid out very well to compete from a cost standpoint,” he said.

Along with entry into the Canadian market, the purchase of Reiner provided Aurora Plastics with a new product line: flexible PVC compounds, which are used in the soles of footwear, in gaskets and seals on appliances, in car parts and in a wide range of tubing and wiring applications. About one-third of Aurora Plastics’ rigid PVC customers also manufacture products using flexible PVC, Hughes said, making Reiner an obvious fit. The subsequent acquisition of S&E Specialty Polymers strengthened Aurora’s “scale and scope in flexible PVC,” he said, bringing more capacity to its newest product line as well as entry into thermoplastic elastomers (TPEs) and thermoplastic polyolefins (TPOs), which integrate rubber

into polymer blends and are a good alternative to flexible PVC in certain applications, such as sealing rings and wire and cable jacketing. “It allows us to be responsive to our customers,” Kutwach said of offering both flexible PVC and TPEs/ TPOs. “Some want to use one or the other because of how their manufacturing processes are set up.” With the acquisitions, Aurora now maintains four compounding sites. The company was founded in 1997 and operates production plants at its headquarters in Streetsboro, which was expanded in 2014, and in Welcome, N.C. Hughes would not share financials but said — based on new product lines, new customers via the recent purchases and the company’s growing capacity — “You can think of a significant acceleration in terms of revenues.” Employment is closing in on 200 full-time workers, Kuwatch said, four times its size just five years ago. “Aurora Plastics is one of the very good, well-run players in PVC,” Ridenour said. “Now that they are branching out, I think they will be pretty successful in the other resins as well.”

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PA G E 2 9

The Business of Holiday Giving | Second in a series

Unwrapping places to spread good cheer By JOE CREA


ffice parties can be great. But sometimes, abandoning ship for a different and more festive setting is even better. Literally hundreds of venues await to stage your holiday bash. Here are 10 (plus) places — each a bit different — that might be perfect. Capacity, prices and accommodations all vary. And most importantly at this stage of the holiday season, all have some times and dates available. But they’re booking up fast. Also check into your favorite restaurants, pubs, civic organizations and entertainment centers. Or consider delaying your event until January, after the holiday craziness settles down. Whatever you choose, call fast!

The Black Pig

JJIf you’re not familiar with chef-owner Mike Nowak’s hearty take on Euro-inspired American cuisine, you’re due for a visit. He applies those same standards to food for events held in the Pig’s two private rooms. “We like our guests to have the same kind of dining experience they’d have if they were out to dinner in our restaurant,” Nowak said.

Space: The restaurant’s window-lined back room downstairs seats 30 guests, and it’s typically available weekdays. Upstairs, an intimate private space holds 40 and can be booked weekdays or weekends. Availability: Weekday dates and some weekends are still available into the new year. More information: 2801 Bridge Ave., Cleveland; 216-862-7551;

Don’s Pomeroy House JJOne

of Ohio’s most charming restaurants, the Pomeroy House is a Strongsville landmark. It’s set around an 1847 mansion, listed on the National Register of Historic Places. Don’s is a warren of handsomely appointed rooms reflective of its era, down to a blazing hearth. Space: Manager Laura Moyer said two rooms are available for private events. The Study, on the main floor, accommodates 12 to 22 guests. The VIP Dining Room, on the top floor of the property’s “old house,” holds 12 to 24 guests. (Stairs are involved; an “elevator chair” is available.) Private dining is booked twice each afternoon for roughly two-hour increments (typically 11:30 a.m. to 1:30 p.m. and from 2 to 4 p.m.). Those rooms are again available for dinners (5 to 7:45 p.m., then 8 p.m. until closing). Availability: “December is our busiest month,” Moyer said, “and obviously weekend dates are the most limited. Best to (consider) Sundays through Thursdays through the holiday season.” More information: 13664 Pearl Road, Strongsville; 440-572-1111; Call Moyer on weekdays.

Great Lakes Science Center

JJCleveland’s lakefront science museum is a trove of gadgets, exhibits and opportunities for hands-on exploration. It’s a fascinating backdrop for events small and large.

Space: The museum can accommodate groups of 50 to 2,000. Rent a spe-


cific exhibit space or an entire floor. Rentals can include one or all of the following exhibits: NASA Glenn Visitor Center, Science Phenomena Exhibit and All Aboard. Hosts can include a hands-on science activity or a “larger than life movie experience” in the center’s DOME Theater. The center’s Promenade Level, with its 80-foot high window wall looking out onto Lake Erie, is available for cocktail receptions, dinners and live entertainment.

JJBy any measure, Nighttown is a landmark on Cleveland’s music scene. It’s also a well-located space for gatherings. There are at least six areas for private parties — “a maze of different rooms,” said owner Brendan Ring, the spirit behind Nighttown. “You’ll find people wandering through, taking in the collection of art,” he added. “It’s perfect for a scavenger hunt.”

Space: Among the variety of rooms, three have separate bars. Nighttown can stage private dining for as few as 15 or up to 150 in a single room. Groups of up to 400 can be hosted in multiple rooms.

Availability: Several weekday and weekend dates are still available for daytime or evening events, a spokesman said. Weekend slots in December are limited. More information: 601 Erieside Ave., Cleveland; 216-694-2000; greatscience. com (look under the “visit” tab).

Hale Farm & Village

JJSet in the Cuyahoga Valley National Park, Hale Farm is a living museum honoring the legacy and traditions of the historic Western Reserve. The 140-acre property provides a serene escape into 19th-century rural Americana and an opportunity to explore preserved era buildings.

Space: During the holiday season, Hale has two spaces for private events, said Catherine Sterle, director of sales and marketing. The Gate House, Hale’s Visitors Center, offers configurations for 20 to 200 guests. The space has no stairs and is fully accessible. Restrooms are on the premises. The Carriage Manufactory “is a beautiful, old red barn, circa 1800, originally used as mill,” Sterle said. Today it houses a museum of carriages on the first level and seats about 60 people on the second (accessible only by stairs; restrooms are a short walk away). Availability: Many holiday dates are available. Bookings for the Gate House are primarily open Monday through Thursday, day or evening. The Manufactory is available weekdays or weekends.

The views of Lake Erie are specactular from the Great Lakes Science Center, with its 80-foot high window wall. (Contributed photo)

JJNorthern Ohioans know Patterson as a favorite place for fall visits to pick up apples and other treats. But its nearby Orchard Hills Party Center offers a popular space for year-round gatherings. The lovely, country-style location — complete with wood rafters, wagon wheel chandeliers, a fireplace and other rustic touches — is tucked alongside the 250-acre Orchard Hills Park Reserve in Geauga County.

Space: Owner Bill Patterson said the center’s Banquet Hall offers space for up to 160 guests. Its Buckeye Conference Room can accommodate up to 40. The Carriage Manufactory at Hale Farm & Village houses a museum of carriages and is a unique setting for parties. (Contributed photo)

On JJMore

information about our 10 venue choices JJTips

to consider when booking a holiday party venue

of about 200) can be booked. Availability: Virtually no weekend dates are available through the holidays. However, some weekdays are open. “The Vault is extraordinarily popular,” Khoury said, “and some other rooms are available.” Best options: Monday through Wednesdays.

Mahall’s 20 Lanes

JJOld school bowling alley meets hipster vibe — and a whole lot of fun. With Mahall’s various spaces, including 10 lanes upstairs and 10 down, there are plenty of options for a gathering of any sort.

Availability: Prime weekend times will be the toughest to book during the holiday season, “but there are a lot of dates and times open,” Shestina said. More Information: 13200 Madison Ave., Lakewood; 216-521-3280; Visit the website, click on the “events” tab and fill out a brief questionnaire.

Marble Room

JJOne of Cleveland’s most stunning settings, Marble Room Steaks and Raw Bar is a consummate show-stopper — grand and gilded in every sense. Set in the old Garfield Building, built at the turn of the last century to honor assassinated U.S. President

More information: 12387 Cedar Road, Cleveland; 216-795-0550; Contact events coordinator Melissa Lynch, weekdays.

Patterson Fruit Farm Orchard Hills Party Center

More information: 2686 Oak Hill Road, Bath; 330-666-3711; Contact Johanna Kloostra at jkloostra@ or 330-666-3711, ext. 1712.

Space: Mahall’s various rooms can be booked for smaller parties, manager Sue Shestina said. “But the total property can accommodate up to 200 to 400 people, spread over separate rooms,” she added. “The lanes are available, but a lot of people don’t necessarily want to bowl.”

Availability: In December, weekdays Monday through Wednesday are fairly open. A few weekend dates are available, but call fast.

More information: 623 Euclid Ave., Cleveland; 216-523-7000; Call Khoury at 216-523-7001. Marble Room Steaks and Raw Bar is in the recently restored Garfield Building. (Peggy Turbett for Crain’s)

James A. Garfield, the space later became home to the former National City Bank. Refurbished by the owners of Lockkeeper’s Restaurant in Valley View, its restoration renews its luster. Space: In addition to its majestic main lounge and dining room, this warren of elegant rooms affords a variety of settings. “The smallest group, in the Gateway Salon, will be eight guests,” said Lynda Khoury, director of private dining. Intermediate capacities range from 12 seated guests to 40 in a cocktail setting. “The largest capacity venue, the Peacock Reception Room (which can also be divided into three separate spaces), can seat up to 130 people.” On Sundays only, the entire restaurant (capacity

Mitchell’s Home Made Ice Cream, Ohio City JJWho doesn’t love an ice cream party, especially when the creamy stuff is as sumptuous as Mitchell’s? The flagship Ohio City shop offers private space upstairs for gatherings.

Space: The Realto Room can accommodate 50 to 55 guests for a seated event, or 72 for a “cocktail” style gathering. The smaller Social Room holds about 15. Availability: “Because we’re open seven days a week, we have a lot to work with,” said Amanda Dempsey, events director. Times after 3 p.m. are usually more available; children’s parties are typically scheduled from early to mid-afternoon. More information: 1867 West 25th St., Cleveland; 216-861-2799; For events, call Jonny at 216-861-2687, ext. 113.

Availability: “We’re about ‘half’ booked over the winter season,” Patterson said. Call with proposed dates to determine availability. More information: 11414 Caves Road, Chesterland; pattersonfarm. com. To book an event, call Betty Goling at 440-655-5377.

Zack Bruell restaurants

JJParallax, L’Albatros, Parallax, Table 45, Chinato, Cowell & Hubbard, Alley Cat — any foodie worth their salt knows the names of the restaurants run by the most prolific restaurateur operating in Cleveland. What they may not know is that every one of Zack Bruell’s destinations (as well as Collision Bend Brewing Co., his son Julian’s spot in Flats East Bank) each have at least one private room tucked away.

Space: Chinato’s basement houses a plush hideaway. Table 45 offers a chef’s table looking onto its bustling kitchen. Two back rooms at L’Albatros afford seclusion. Parallax features a heated, all-season patio. There’s an enclosed seating area at Cowell & Hubbard, a second-floor space at Alley Cat and an expansive gathering place (with a heated covered patio looking onto the Cuyahoga River) at Collision Bend. (You can also book the entire brewery from 1 to 6 p.m.) Accommodations vary, typically with seating for 30 to 70 guests. Availability: Prime weekend dates are mostly booked, but there are still some openings. You may even be able to book an entire restaurant. “And if one place is booked, we’ll try and get you into another,” Bruell said. More information: For addresses and phone numbers, go to Call events coordinator Michaela Kehoe at 216-296-6601.

PA G E 3 0


N O V E M B E R 13 - 19 , 2 017 |





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PA G E 31

Jeff Rolf

President and CEO, Ohio Aerospace Institute About a year ago, Jeff Rolf retired after more than 30 years at Parker Hannifin Corp., where he most recently worked as part of the motion and control company’s aerospace group, and took on a new role as president and CEO of the Ohio Aerospace Institute. ¶ The Brook Park-based institute was founded nearly 30 years ago with a focus on “research, education and collaboration,” Rolf said. The goal was to bring universities and federal agencies, like NASA Glenn Research Center and Wright-Patterson Air Force Base, together with industry. ¶ “We pride ourselves, really, on being sort of the connective tissue for things aerospace,” Rolf said. ¶ One thing Rolf didn’t expect his new role to address was economic development. But a new project the institute is leading takes on just that, with goals of commercializing technology and adding jobs. — Rachel Abbey McCafferty

Five things Favorite Northeast Ohio spot As an avid boater, Lake Erie is his favorite place in the area.

Best reads He has an interest in both the spiritual and the scientific. He recently finished “Imagine Heaven.”

Words to live by “I would say at work, it’s appreciative inquiry and all of us are smarter than any of us,” Rolf said.

What he wanted to be when he grew up An engineer like his dad

His legacy He said he tries to embrace a “servant mentality” as a leader. “I’m too old to be an empire builder,” Rolf said. “I just want to help people with their charter.”

What was it that interested you in aerospace? It’s high-tech. Every engineer has an inner geek, or they should, because it’s what makes work fun. And aerospace is about as technical and geeky as you can get. You get to transport people safely at 600 miles per hour plus at 40,000 feet and really, all they have to worry about is the taste of the Caesar salad and the wine. I mean, that’s just fun. Why is aerospace such an important industry to our state? These are good, solid Ohio jobs that will last for years and years. When a company like Parker wins a product on a Boeing or Airbus aircraft, assuming that you could execute well, that program can last for a generation. So going to sleep at night, knowing that you’re helping provide jobs for hundreds of thousands of people for decades, that’s a real good feeling. What are some things you want to accomplish at OAI? What are some things you want to change? One of the things we were just asked to look at recently is to support the technology diffusion model.

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What is that? NASA realizes, I think, several things. They need technology development to achieve their extraterrestrial mission. They have a lot of technology and intellectual property that can feed the commercial community. And when you find a way to put those together, it can create the best of all worlds. ... They talked about, in order to get robust products that are usable to go to the moon or to Mars or just deep space research, to help support the development of the business model to create the technologies they need for those missions, they take some of the fundamental research they’ve done or applied research and put that into the economy. That develops jobs and products that the commercial model has built, and the product becomes more robust and then it becomes available for NASA for their needs eight or 10 years from now. ... It’s a mutually beneficial relationship with the economy. So they asked us to help on some of this technology diffusion. And for us, it’s been a

great opportunity, because if you think about it, it pulls in our key stakeholders. Universities, for basic research. NASA for the development and application of some of that research. And then pulling that back into the community for industries to create jobs and develop the technology. ... We were funded. Congresswoman Kaptur’s office announced that win from the Economic Development Administration about a month ago for us to find a way to create jobs that are technology based. Does this initiative have a name? The one that we were just awarded and that we’re going to operate under from the Economic Development Administration, we’re calling it the Midwest Innovation Exchange. Is this something that OAI has done in the past? Not formally. We’ve been part of putting together people that need technology and people that have technology, but to — it’s probably new in terms of leading a project where the objective is to create jobs in a distressed area. And distressed is EDA jargon. And we’re teaming actually on this one with Milwaukee. And the EDA asked us to demonstrate a regional collaboration so we could learn what they have, they could learn what we have, we can compare notes and come up with the best practices. Is there anything else OAI is doing that you wanted to mention? I think one of the things we’re building slowly, we’re rebuilding, is our membership. At one time, OAI membership was an elite and very expensive group. I think that the times have changed, and we looked at several different models, membership models at different kinds of organizations. And we looked at our mission versus our membership model. We found a little bit of a mismatch. We really want to be about connecting people giving value to each other. The really expensive model just limits the number of participants. You end up with fewer members and, therefore, fewer connections. So we dropped the price. We don’t make any money on membership, but it fits with the other things we want to do.

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An extra point is blocked, picked up by the defending team, and run all the way back into the kicking team’s end zone.

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Crain's Cleveland Business  

November 13 - 19, 2017 issue

Crain's Cleveland Business  

November 13 - 19, 2017 issue