Stan Bullard Blog
Cleveland's resurgent downtown and industrial legacy give the city a lot to sell to businesses in search of new homes, but the region has room to improve according to a panel of experts in corporate site selection.
The NAIOP Northern Ohio real estate trade group's "All-Star Forum," held at noon the day the All-Star Game was played in Cleveland, put five out-of-town site-selection consultants onstage at the Music Box Supper Club to provide pointers for the region.
Some of the advice was brutally honest, some a surprise, all of it shared with a bevy of real estate developers, owners and staffers of multiple local economic development organizations.
Art Wegfahrt, corporate managing director at Savills North America's Philadelphia office, said he doubts the region will gain any more of the top 1,000 corporate headquarters than it already has.
"I don't know if another headquarters will move here because of your air service," Wegfahrt said, referring to Cleveland Hopkins International Airport's loss of its United hub in 2016. He noted companies typically prefer to locate in regions they can reach on a direct flight.
Wegfahrt also said the city needs to step up its marketing efforts. "I hate to put people on the spot, but will there be a commercial tonight (during the All-Star Game) about Cleveland as a business destination?" He got no answer from the audience, and cited that as a lost opportunity as the city and region were in the baseball and national TV spotlight.
While Northeast Ohio economic development organizations have spent much time creating joint economic marketing efforts such as Team NEO, Didi Caldwell, founding principal of Global Location Strategies in Greenville, S.C., asked if pushing the region rather than Cleveland makes sense.
"Cleveland has automatic name recognition," Caldwell said. "Play that up. It may be because of LeBron James. But Cleveland is a recognized name in Germany" due to its heavy machinery and tool-and-die history. She noted that people outside the region don't care if someone they meet comes from a small town outside Cleveland. They just think of it as Cleveland.
Caldwell said the mantra for most of her clients is to make decisions that are low-cost and low-risk. Providing funding for workforce development is part of lowering the risk for companies, she said, because they worry if the future workforce will be as qualified as the current one. She added that regions also have to respect the value of education as part of their infrastructure the same way they discuss electricity and transportation.
The most daunting observation was made by Chris Lloyd, senior vice president and director for infrastructure ad economic development at McGuireWoods Consulting LLC of Washington, D.C.
While Northeast Ohio has a strong cluster of fintech and insurance companies, Lloyd said the traditional finance, insurance and real estate group of companies will be "radically transformed by machine learning in the next few years."
He said the region needs to think about that and prepare for it, such as becoming a leader in blockchain and other new technologies. He said technology roiled the traditional real estate appraisal business a decade ago and the middle-class jobs that were part of it. The same kind of challenge looms for real estate and financial services.
Cuyahoga County executive Armond Budish spoke to the group. He said any manufacturing company that needs water should look at relocating here, where so much water is available, versus locating in a state such as California, "where your water could be turned off."
Ohio Gov. Mike DeWine was the opening speaker for the event. His parting line to the crowd that works with businesses and in site selection was his best: "If you need help, call me."
Pulte plants its flag
The Atlanta-based national builder has acquired the 25 acres it plans to develop in Westchester Parkway for what it said earlier this year will be a $47 million townhouse development.
PulteGroup Inc. (NYSE: PHM) paid $3 million for the parcel June 10, according to online Cuyahoga County property records.
The seller was Associated Estates Management Co., once of Richmond Heights, but now a unit of Toronto-based Brookfield Asset Management Co. (NYSE: BAM). The county valued the parcel at half the sale price, or about $1.5 million, for property tax purposes.
Some trees are already gone from the site. The future home of Parkwood Crossing, as Pulte calls it, is west of Brookfield's Westchester Woods and Westchester Townhomes, apartment communities that Associated developed in the 1970s and 1980s.
Pulte plans to construct 144 townhouses on the land, according to plans it got approved by the city of Westlake in February.
Another look at renting vs. owning
Those escalating but still low rents, thanks to all those new apartments, plus Cleveland's continued low housing costs, allowed the city to come in as the second-best location in the U.S. to own a home as opposed to renting, according to a new study by GOBankingRates.
The website, which helps consumers find competitive loan rates, identified 31 cities where it's cheaper to own than rent. Only Baltimore came in ahead of Cleveland. On average, a homeowner saves $278 a month with a monthly mortgage of $579, compared to an average monthly rent of $857. In many of the cities, it was estimated owners saved $10 or less than renters, and other figures hardly worth calculating. The stats refer only to the central city and a median home cost in Cleveland of $79,900.
Perhaps it's better to keep this set of figures in mind, however: The average monthly rent in the U.S. is $1,477, and the average mortgage payment is $1,504.
Stan Bullard reports on all forms of real estate as well as related companies. Email story tips to him at [email protected]