Long-term trends revive development pulse on Scranton Peninsula

Crain's Cleveland Business editor Stan Bullard reports on the Scranton Pennisula's possible revitilization.

After nearly 30 years of waiting, stuck in the 1980s while downtown Cleveland and adjoining Near West Side neighborhoods became home to high-priced rentals and houses, Scranton Peninsula is poised for an overdue catch-up as a hot spot for real estate development.

The sale of 20 acres by Cleveland-based Forest City Realty Trust on the Carter Road side of the tongue-like land shaped by the curving Cuyahoga River to a new group of owners after a 29-year hold does more than put the largely vacant parcel in line for a potential big-league development.

It also liberates the other big property owner on the peninsula, the Scranton Averell Trust, to change its game plan for the other 25 acres, much of it occupied by more than a dozen buildings and a cadre of tenants lining sections of lower Scranton Avenue.

Meantime, the maturing Tremont and Ohio City markets have pointed the path of development toward the long-quiet peninsula.

Thomas Stickney, president of Scranton Averell Trust, said that the sale process released it from its plans for a joint venture with Forest City to develop their sites together that's been in place since 1988.

"We were holding everything in short-term leases because Forest City and the city have always had plans for the peninsula," Stickney said. "It will be easier to find long-term tenants that will fit into (buildings) for a longer period of time. We will have a nicer looking area because not everything is temporary."

He declined to specify how long the short-term leases were. However, other prospects already are knocking on the door about land controlled by the trust, which traces its ownership of property back more than a century, including a corporate headquarters he refused to identify.

A major asset of the peninsula, the empty former home of Ferry Cap & Set Screw Co. at 2151 Scranton Road, was on the cusp of redevelopment until plans by the Northeast Ohio Regional Sewer District to build a tunnel on part of the property tossed at least a three-year delay into a proposal to renovate it to apartments. The firm moved in 2005 to Lakewood.

WXZ Development of Fairview Park, a well-established retail and multifamily building owner and developer that's been active building apartments the past few years in University Circle, had planned to undertake the project at the early 20th-century Ferry building until the Scranton sewer plan surfaced as part of the district's vast plan to reduce sanitary sewer outflows into Lake Erie.

Jim Wymer, WXZ president, said his company was drawn to the Ferry building because of its location.

"That building has great views of Lake Erie on its upper floors," Wymer said. "It's unique because of its proximity to three districts that are housing hot spots — Ohio City, Tremont and downtown. We've been following the news of the extension of the Towpath Trail and the Cleveland Metroparks Lake Link in the area. It's a gem of dynamic urban planning that will attract the millennial renter or home buyer."

The sewer district is negotiating for permanent access to a nearly 1/2-acre parcel near Ferry at 2111 Scranton Road and temporary access to nearly 3 acres abutting the building for construction equipment, according to Jennifer Elting, the district's senior public information specialist. The district's board will consider a resolution at its Thursday, Sept. 7, meeting to appropriate the property through eminent domain if the parties cannot come to terms.

Wymer said whether his firm will play the waiting game for the property and how the district's plan for a shaft on the site will shape what WXZ can do there are all factors in the negotiation.

The shaft will be part of the construction of a sewer more than 50 feet in diameter in a $160 million project to redirect sewage to the Westerly Treatment plant before it is released into Lake Erie. Among other benefits, Elting said the plan eliminates a combined rain and sanitary sewer that empties nearby into the river during periods of heavy rainfall.

Wymer is more optimistic about staying with the project than Stickney, who fears the dispute may sink the proposal.

The other dynamic gripping Scranton Peninsula is simply demand for land and property by developers, renters and prospective homeowners. That has just started to emerge at the west end of the peninsula, which overlooks the river and downtown in the distance.

The $15 million Fairmont Creamery project by Oberlin-based Sustainable Community Associates has put 50 high-end residential rentals and retail properties into a former dairy at 2306 W. 17th St., which sits atop the hill. Two townhouse projects are in the planning stages, and custom home builders are also busy nearby.

Ted Theophylactos, president of the Ted & Co. team at Howard Hanna Real Estate Services, said, "We've run out of land (for redevelopment) in central Tremont. It's a natural progression for builders and buyers to look toward Scranton Peninsula because so much land is there."

He should know. One of his clients, Gustave Development of Cleveland, is constructing Eleven Scranton at 2321 Scranton Ave. Theophylactos said six of the 10 townhouses planned at the site are under reservations for sale. That's staggering. The units won't be available until fall of next year.

The three-story contemporary townhouses, which will have top-floor decks featuring downtown views, carry asking prices upward of $400,000 each.

"It's really exciting," Theophylactos said. "Our buyers are from Manhattan, Los Angeles and Cleveland."
Opportunity at the core

While the site may be edgy, it's no longer pioneering the way virtually every urban project was two decades ago. Cleveland's property tax abatements for housing ignited the city market and it flared anew in the years since the Great Recession ebbed.

Six homes within a half-mile of Eleven Scranton have sold for an average price of $385,000 since March, according to Howard Hanna research. Of the 248 properties on the market Thursday, Aug. 31, in the Near West Side and part of downtown Cleveland zip code 44113, the average asking price is $258,000, Howard Hanna reports.

On the north side of the peninsula, the Irishtown Bend townhouses at Columbus Road and Carter are now 15 years old, and were undeniably pioneers.

Keith Brown, president of Progressive Urban Real Estate and a partner in the Irishtown townhouse development, said even then the attraction of the peninsula was its location "at the center of the city." New homes now line the northern side of Columbus as it climbs upward from the river valley.

Scranton Peninsula is also the beneficiary of place making, which typically follows real estate redevelopment in Cleveland rather than leading it.

Irishtown Bend overlooks the just-completed $2.5 million Lake Link Trail of Cleveland Metroparks, which skirts the upper, western, reaches of the peninsula. The southern side of the peninsula by Scranton is the home of Scranton Flats, a $9 million urban park at the river's edge with a fishing pier and a bike path that will by 2020 connect downtown with Zoar, Ohio, along the one-time route of the Ohio Canal.

Tim Donovan, executive director of the Ohio Canal Corridor nonprofit, said the city of Cleveland's rebuilding of the pavement on Carter and Scranton have kept his group from tracking how many people are actually using Scranton Flats, but he knows it's popular. He argues the nearby sites have for decades been ready for development and just needed to be recognized by the property owners.
The potential scale

For Forest City's part, its 1988 plan to do a major development on Scranton Peninsula was put in motion while it was involved in the multi-million-dollar renovation of the city's rail terminal complex into Tower City Center. In the years since as it grew it became focused on larger metropolitan markets from New York to San Francisco. This year marked the sale of its last pieces of the languishing urban mall, Terminal Tower and other parts of Tower City as the company undergoes a transformation process to become narrowly focused on mixed-use office, residential and amenity retail properties in the nation's major cities.

Shedding the Scranton Peninsula site was almost coincidental in its effort to recast its $8 billion portfolio.

The Irishtown Bend condos are at the western end of Carter. They are near the vast, largely empty weed-covered land that Forest City sold in August to EWAT Holdings LLC, a joint venture formed by Tremont townhouse developer Jesse Grant, ubiquitous suburban-turned-urban developer Fred Geis and Matthew Weiner, a Savannah, Ga.,-based attorney with real estate development experience.

Weiner, who serves as the trio's spokesman, said it's too early in its process to discuss its ideas in detail because its master plan is in the drafting stage.

However, in an email Weiner said the developers told their land planner, the global firm Perkins + Will, to analyze several different scenarios for a mixed-use development on the peninsula.

"We want each use to be self-evident on the site and fit within the context of our surroundings and proximities," Weiner wrote. "With a parcel this size, we've really approached it as a blank slate and are working to create the best potential plan after taking into account all considerations."

The potential scale is enormous: that property is half the size of the property that formed Progressive Field and Quicken Loans Arena downtown.

Weiner and Stickney both said separately the two parties have discussed how their properties may complement each other.

"We've been down there forever," Stickney said. "We're not selling."

Stickney said executives of the trust want to make sure its plans fit with those of the EWAT group. The vision, he added, is for separately conducted projects on both sides of the peninsula to set up a dynamic for development that could extend across the peninsula.

"Clearly," Weiner wrote, "the peninsula should be developed in a cohesive way, and we believe everyone is united in this idea. We are confident we can develop something that will fit well with our surroundings."

Although Forest City's sale of its peninsula properties did not disclose a sale price, mortgages indicate the EWAT group spent more than $5 million on the site. That's a lot of motivation for a private group of entrepreneurs who joint ventured on the investment."