State tax credits spur another big office-to-housing redo in Downtown Cleveland

State tax credits will propel another office-to-apartment conversion in Downtown Cleveland , where housing and other uses are filling buildings emptied out by the pandemic.

On Wednesday, the state awarded more than $4 million in tax credits to the Electric Building at 700 Prospect Ave.

The nine-story property was the longtime home of the United Church of Christ, which downsized and moved its headquarters in 2022.

Now the building will become 120 apartments, with retail space downstairs.

"This project is such a great story," Lydia Mihalik, the director of the Ohio Department of Development, said during a news conference at the property on Wednesday afternoon. "It's a story of commitment."

It’s one of 11 Northeast Ohio projects that won valuable state tax credits this week through a popular program designed to support historic preservation.

The other winners ranged from a bank building in Akron to a former YMCA in Warren to the Alcazar Hotel, a Cleveland Heights landmark that, in its heyday, boasted a guest list that included Cole Porter, Bob Hope and George Gershwin.

Ohio awards historic tax credits twice a year, and demand for the incentives always far exceeds supply. The credits help developers bring investors to their projects and offset the high costs of bringing old buildings back to life.

The K&D Group, which owns the Electric Building, had been trying to land an award for two years. Now, construction is likely to start in October on the $46.4 million project.

“I don’t like sitting with an empty building,” Doug Price, K&D’s CEO, said Wednesday. “So it’s exciting that we’re finally going to get this building put back to use.”

Berardi/K&D Group

Built in 1900, the Electric Building will hold modestly priced apartments. Price described them as “workforce housing,” aimed at young professionals. The average unit will be 550 square feet, with one bedroom. Most will rent for $1,200 to $1,300 a month.

The project will also include a sports bar – a national brand new to Cleveland – on the first floor, Price said.

“What’s happening in downtowns all across America, as everyone reads about, is office space is shrinking,” said Price, who has turned seven other downtown buildings into apartments since 2008. “Cleveland’s fortunate that a lot of these historic buildings do lend themselves to conversion. A lot of the modern office towers do not.”

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In Cleveland Heights, tax credits will help polish up the Alcazar, a Spanish-Moorish-style building that started its life as a hotel and later became housing. The building will go from 95 to 125 apartments through a reconfiguration and reopening of closed-off spaces.

The $16 million overhaul could start in the fall. It won $2 million from the state.

“We really want to bring it back to its original magnificence,” said Rico Pietro, a local real estate broker who bought the property with business partner Erik Loomis in 2022.

The existing apartments at the Alcazar are half-empty today. Pietro and Loomis plan to renovate them in phases, to avoid displacing tenants. Construction will take two years.

The developers plan to upgrade the building’s electrical and plumbing systems and add central air-conditioning. They’ll also remake the atrium and other shared spaces with features like a co-working library and a theater room.

Some of the revamped apartments will be smaller. The rents are likely to range from $1,200 to $3,000 a month once the project is complete.

“There are some residents who have been there 20 years,” Pietro said. “That’s kind of the vibe and the feel of the building. So we don’t want to change that.”

Michelle Jarboe/News 5

Eight of the Northeast Ohio projects won tax credits for the first time. Three had won before but reapplied for larger awards because of a temporary expansion of the program.

That expansion period – a two-year window created by the state legislature – just ended. Developers and preservationists are lobbying for a long-term increase in the size of the program, from $60 million to $250 million a year, Price said.

“It’s extremely important to keep the fabric that’s here in place, modernize it and turn it into new uses,” Price said of historic preservation. “I think that people that experienced urban renewal, that didn’t go so well – bulldozing old buildings and making parking lots. So we’re doing the right thing. We just need a little more money to keep it going.”

The new Northeast Ohio winners are:

• 1220 Old River Road in Cleveland: Restaurateur and developer Bobby George plans to remake this building, on the east bank of the Flats, as part of a larger project. The property started its life as offices for a maritime supply company and later housed the Roc Bar, an entertainment venue. It has been vacant for roughly a decade. The building will hold a restaurant, offices and storage. New construction will replace a pair of buildings next door, where George envisions a new restaurant and lounge, a small park and riverfront access for boaters and pedestrians. The project received more than $1.9 million in tax credits.
  
• 2621 Lorain Ave. in Cleveland: This small building has been a shoe store, a bank and a restaurant, with apartments upstairs. Now, it will be renovated and expanded, with new construction off the back. The finished project will include eight apartments. It won a $250,000 tax credit.
  
• The Brennan-Hogan Co. Building in Cleveland: Located on Gehring Avenue near the West Side Market, this former car dealership has been languishing for years. Owner Tom Gillespie plans to redevelop it with four apartments, two restaurants and other commercial space. The project won $410,000 in tax credits.
  
• The Peoples-Evans Savings Bank in Akron: This Main Street building will become 35 apartments with a restaurant and a conference space. It won a $1.5 million award.
  
• The YMCA Building in Warren: This nearly century-old building will be redeveloped as 42 apartments with a restored gym and basketball court. It won $2 million.
  
• The Young Women’s Christian Association in Akron: A 10-story building, the former YWCA on High Street will become 114 apartments. It was last used as office space but has been sitting vacant. The project won more than $3.1 million in credits.

The projects that reapplied and received larger awards are:

• The Heller-Keller-Kohn Buildings in Cleveland: These Superior Arts District buildings are part of a larger revitalization effort rippling out from CrossCountry Mortgage’s new headquarters on Superior Avenue. They’re set to become 134 apartments, with ground-floor commercial spaces and some parking. The project ultimately won a $5 million tax credit.
  
• Mahoning National Bank in Youngstown: This 13-story downtown building will get a makeover as 71 apartments, with commercial space on the lower floors. It won $2 million in tax credits.
  
• St. Mark’s Presbyterian Church in Cleveland: Located in Glenville, this church will be reborn as offices and space for meetings and community events. It’s being tackled by the Famicos Foundation, a nonprofit community development group. The project will include a restoration of the stained-glass windows. It won $2 million in credits.