Harbor Bay's Intro Project: Here Comes the Neighborhood

By Kim Palmer, Crain's

It has taken nearly a decade of discussion and planning to find a suitable development for the property across from the West Side Market. Development firm Harbor Bay understands those expectations and plans to surpass them.

"There are a lot of people who have zeroed in on that site for a number of reasons," said Tom McNair, executive director of Ohio City Inc. He said the Market Plaza property, the one-story strip mall built in the early 1980s across from the West Side Market, is underused and does not match the scale of the rest of the neighborhood.

"Having this one land-use form that did not fit all the others made it an obvious conversation," he added.

In 2011, McNair's organization used grant money to hire consultants who re-evaluated the property. They suggested ways it could take greater advantage of its proximity to public transit and better fit in with the surrounding buildings, most of which were constructed before 1930.

There was a lot of interest in the nearly two-acre property, so setting expectations was key, McNair said. "Over those years, there has probably been more than $200,000 invested in the planning of what was appropriate and what the possibilities were," he said.

About five years ago, Illinois-based Harbor Bay Real Estate Advisors, led by vice president of design and development and Cleveland native Dan Whalen, approached the city with a plan to develop the site.

The project, recently named Intro, finally will break ground in mid-March. It will be a nine-story mixed-use building with about 36,000 square feet of retail and 300 apartments "priced near the top of the market," according to Whalen.

"They are going to have a lot of studio apartments, a large chunk of one-bedroom, some three-bedroom units. We are marketed to young millennials and empty-nesters," Whalen said.

The $140 million-plus project, when completed, will be the largest mass timber frame building in the United States, according to Whalen.

Framing a different approach

Mass timber is an engineered wood product with the structural rigidity and integrity of steel and concrete. It has been widely used in Europe and Australia, but has been rare in the United States, though its use is rising in response to climate change. The product combines layers of lumber, eliminating the waste of traditional timber processing, according to Harbor Bay CEO Mark Bell.

The mass timber is used to frame out the building and is then left exposed, so interior spaces do not require drywall or particle board, Bell said.

"We are not just using this material for its sustainable nature; it is beautiful, and we worked hard to expose as much of the wood as possible," he said.

The engineered wood is more fire-resistant and has thermodynamic properties that require less energy to heat and cool. It's so new that the company had to work with Cleveland for 15 months to update city building codes.

Union construction workers also had to travel out of state to learn how to work with the material. The nature of mass timber means a faster build timeline than reinforced concrete, which needs time to dry and set.

The mass timber used for Intro will be prefabricated with the plumbing and wiring specs included, which means the approximately 500,000-square-foot building is expected to be completed in 12 to 18 months, saving money.

The mass timber will come directly from the Austrian-based company Binderholz GmbH to Ohio City through the Port of Cleveland. Shipping the building materials directly reduces the carbon footprint and opens a possible new trade relationship for the port.

Financing and tax incentives

Issues with general building costs almost derailed the project when the city pushed back on a possible Ohio sustainable tax credit from the state agency that provides financial aid for air-quality projects. Harbor Bay eventually dropped that request for a 30-year tax abatement, and the Port of Cleveland, city and state worked to create a new capital stack in its place.

The Port will provide up to $130 million in taxable lease bonds for construction, a loan to be repaid by the revenue from apartment and retail rents.

The project will also receive a $2 million deferred loan from the city of Cleveland and a $10.8 million loan from the state through the Ohio Development Services Agency.

The developers are contributing more than $30 million, and Intro will receive a 15-year tax abatement and a tax-increment financing that applies to new taxes, but not to taxes for Cleveland schools.

Beyond use of sustainable building materials and economic development potential for the Port of Cleveland, Intro is an example of the trend toward walkable neighborhoods and development around public transportation.

The project has underground parking — a requirement in Cleveland — but because of Intro's proximity to the West 25th Street Greater Cleveland Rapid Transit Authority stop and multiple bus lines (including two that run 24 hours a day), Bell said he hopes residents might consider ditching their cars altogether.

"We are really going to emphasize in our design to educate a consumer base to really think urban, to encourage them to say, 'Why have a car?' " he said. "The RTA gets you to the airport in 20 minutes, you can be downtown in five minutes — what is the purpose for a car?"

Harbor Bay paid $10.5 million and worked on relocating the Market Plaza strips's businesses, providing construction and financing services to assist in rehabbing abandoned buildings for them in the Ohio City area.

"Most developers are focused on getting the site cleared as quickly as possible," Whalen said. "But, for me, having lived in the area before, it was important to work with everyone to achieve a sustainable solution for the neighborhood."