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RECENTER YOUR LIFE AT TRINITY

Urban Living For Those 55 And Over

PDD610 Urban Development Process

For Robert Simons, Ph.D.

Gregory SJ Soltis



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OUTLINE

EXECUTIVE SUMMARY…………………………………………………………….……3

CONCEPT………………………………………………………………………………….…4-7

SITE……………………………………………………………………………………………8-11

PRIMARY MARKET AREA…………………………………………………………12-13

DEMOGRAPHICS………………………………………………………………………14-15

CURRENT SUPPLY……………………………………………………………………16-18

NICHE ANALYSIS……………………………………………………………………………19

NICHE ANALYSIS CONCLUSIONS…………………………………..……………….20

CAVEATS………………………………………………………………………………………20

FINANCIAL ANALYSIS……………………………………………………………….21-23

RECOMMENDATIONS FOR PROCEEDING………………………………………24

LIST OF TABLES

HIGHEST AND BEST USE……………………………………………………………..…11

HIGHEST AND BEST USE……………………………………………………….…….…11

DEMOGRAPHIC SUMMARY….………………………………………..………….…14

HOSEHOLDS BY INCOME AND AGE OF HOUSEHOLDER 55+………….. 14

DOWNTOWN CLEVELAND HOUSING MARKET NUMBERS..…..…….…16

DOWNTOWN CLEVELAND CONDO TRANSFERS FROM ’08-’11…….…17

50+ DOWNTOWN CLEVELAND RESIDENTIAL NICHE ANALYSIS…….…18

RESIDENTIAL FRONT DOOR BACK DOOR ANALYSIS…….…………………22

FRONT DOOR…………………………………………………………….…………………22

BACK DOOR……………………………………………………………….…………………22

PARCEL INDEX FOR REFERENCE……………..………………….……….……23-24

LIST OF FIGURES

TRINITY IN DOWNTOWN CLEVELAND………………..………COVER SHEET

MATURE COUPLE WALKING ERIEVIEW CEMETARY…………...…..…..…3

TRINITY IN DOWNTOWN CLEVELAND MAP…………...……….…………..…4

TRINITY TOWERS RENDERING…………...……….……………………………….…5

TRINITY’S NEIGHBORHOOD MAP……………..…………...……….…………..…7

THE SITE MAP……………..…………...……….………………………………………..…9

SANBORN MAP……………..…………...……….………………………………………10

TRAFFIC COUNT MAP……………..…………….………………………………………10

THE HEART OF THE METRO REGION……………..…………….………………12 MID 20

TH CENTURY COMMUTERS…..……………..…………….………………12

PERCAPITA INCOME FOR ALL POPULATION………………………………….15

WHERE THOSE 55+ LIVE…………………………………………………………….….15

PERCENT CHANGE IN HOUSING UNITS 2000-2010……………………..….18



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EXECUTIVE SUMMARY

55+ Demographic Characteristics

• The 50+ demographic is expected to be the only demographic to

grow in Greater Cleveland by 2015 according to Census Bureau

projections.

•There will be an additional 48,481 people 55 and older in GreaterCleveland in the year 2015, even considering that the overall

population is projected to shrink by over 30,000 in that same time

period.

• Cleveland-Akron MSA Median Age: 37.1 (2000) 39.7 (2010)

40.1 (2015)

• There are 86,728 households, 55 plus with incomes over $75,000

per year, putting them in the income bracket of Trinity.

Downtown Cleveland’s Housing Market

• Vacancy rates are at all-time lows downtown. The total residential

vacancy rate downtown was reported to be 5.4% in a recent report in

the Plain Dealer.

• There are waiting lists at most buildings. Over 250 people are on a

list for East 4th Street apartments according to Tammy Oliver at MRN

Ltd.

• Downtown Cleveland Alliance CEO, Joe Marinucci stated in the Plain

Dealer he wouldn’t even blink at putting 500 new units of housing

online in a year downtown.

• The primary target demographic for downtown living are young

urban professionals with some empty nesters. This suggests older

adults may be an underserved market.

The Trinity Concept

• The location is where three unique downtown districts meet. Each

district has something to offer the 55 plus set.

• The largest demographic for live theater are those 55 and older.

They make up 27% of an average audience.

• Trinity would be the urban equivalent of a 55 plus community found

in the suburbs or in the Sunbelt with the added advantage of all the

amenities of the city. This would be a vertical country club.

• Trinity would not be advertised as a 55+ community, just advertised

to the 55+ community.

• There is no urban equivalent currently so this would be a new

product.



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CONCEPT

An urban lifestyle community for those 55 and older in the heart of

downtown Cleveland

The proposed site of the project is at the confluence of three

downtown districts; the Gateway District, the Theater District, and

the Campus District, thus christening the complex with the name

Trinity. Trinity is a mixed-use, vertical community for the Urban Go-

Go in the center of downtown Cleveland’s tight residential market.

Residential rental rates are at all-time highs, making the timing right

for new development. The specific locations of Trinity’s three,

residential towers at the intersections of Euclid Ave. & East 17th, and

Prospect Ave. & East 14th allow the buildings to act as physical

gateways into the Theater District; something the Playhouse Square

Foundation has been seeking to develop.1 It also gels with the local

development corporation’s desire to build 58 stories of residential

living.2

In addition, the target demographic fits with the TheaterDistrict’s most common patron; those aged 55 and older make up

nearly 27% of a typical live theater audience, a larger share than any

other age group.3

The product will provide the mature set all the services of suburban,

and Sunbelt, 55 plus communities, with the added convenience of

easy access to all the city has to offer. Theater, professional sports,

galleries; Cleveland State University, which through the state, offers

free classes to those 65 and older; various cathedrals, the city’s finest

dining establishments, chic lounges, jazz clubs, the West Side Market

& numerous farmer’s markets, urban boutique shopping and ethnic

1Steve Citerin, Marketing and Public Relations Manager, interview, Cleveland,

Ohio, April 2011.2

Joel Henning, In Cleveland, A Model of Economic Viability in the Arts,

http://online.wsj.com/article/SB10001424052748703712504576236683591903882

.html (May 2011).3

Tom Bradshaw and Bonnie Nichols, " 2002 Survey of Public Participation in the

Arts, V. Series. VI. Research Division report (National Endowment for the Arts.

Research Division); 45.NX220.A164 2004 " Library of Congress Cataloging-in-Publication Data, Washington, D.C

neighborhoods are all within a minutes drive or rapid ride. Many of

these amenities will be within a short walk of the front door of one of

Trinity’s three towers and many horizontal townhouses. Due to its

central location downtown and proximity to I-90, I-77, and I-71;

resident’s friends, children and grandchildren in the suburbs will be

but a short drive whether they live eastside, westside or to the south.

In addition, for those who are still enjoying a vibrant career, Trinity

puts residents in the middle of the state’s two largest employment

centers; downtown Cleveland and University Circle.



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Services and amenities at Trinity will include: unlimited access to the

main tower’s Health and Wellness Center, including classes, personal

training and dietician services geared to older adults; programmed

events, a private restaurant and dining room for residents daily use

and available for events, 24 hour security in the form of a street level

doorman and manned, gated parking; two indoor, climate controlled

parking spaces per unit; valet and driving services, grounds keeping;

and personalized concierge service, similar to any found in the finest

hotels and designed to assist residents in taking advantage of the

city’s many amenities. The ground floor of each tower will feature a

mix of street focused restaurant and retail, tailored for residents, the

daytime office worker and evening theater patrons.

Trinity’s target audience is a subset of the 55 and over set known as

“Go-gos”. They are empty nesters, retirees and snow birds who value

an active engagement in life. All units at Trinity will have two to three

bedrooms and two bathrooms, so as to accommodate visitingchildren and grandchildren, friends staying in the city for the night

after a show, or the occasional boomerang child. Apartments, condos

and horizontal townhouses will be designed with older adults in mind.

An average of 1400 square feet will all be located on one level of

living space. Horizontal row houses will be designed to have a vertical

presence on the street with elements of the typical row house that

was once common on Prospect Avenue nearby. Street entry to the

building will be in a common, vertical section of the building which

then will lead to private residences that flank it horizontally.

Elevators will serve units on upper floors. Garage space, directly

under each townhouse unit will be accessible after entering the gated

neighborhood from Prospect Avenue, and traversing the revived alley

streets of Caton Court and East 16th Place. For snow birds who spend

their winters in the Sunbelt, services will be available to assist them in

renting their spaces to visiting foreign graduate student families

studying at Cleveland State University and other area higher

education institutions.



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The current, typical downtown resident fits one of two descriptions,

“predominantly 25-45 y/o single professionals with some empty

nesters” according to Mark Pugacz, a consultant with the Downtown

Cleveland Alliance. Marketing efforts for downtown residential units

are geared heavily towards the younger demographic. The presence

of older adults downtown despite the marketing trends suggest that

more empty nesters would live downtown if the right product was

made available and marketed with them in mind. Adding to this

assumption, the Cleveland metro region is home to one of the highest

percentages of those 55 and over in the country. Greater Cleveland is

the 5th oldest of the 54 metro areas with populations of 1 million or

more people. That segment is expected to grow by nearly 50,000

from 2010 to 2015 according to the Census Bureau, while the region’s

overall population is projected to shrink by close to 31,000. 4

Trinity is a completely new product to the Cleveland market.

Currently there exists no residential complex that caters specificallyto the healthy, independent, Urban Go-Go. The choices available to

people 55 and over, looking for a residential complex designed to

complement their lifestyle are all suburban country club style

developments, subsidized low income apartments, or exist as

retirement communities with various levels of assisted living services.

The closest equivalent to Trinity is Judson Manor5 in University Circle;

a retirement community that offers independent living, various levels

of assisted living, and nursing care, packaged with services and

amenities for older adults.

4Rich Exner, Census shows Cleveland-Akron has near the highest median age in the

U.S.: Statistical Snapshot,

http://www.cleveland.com/datacentral/index.ssf/2011/06/census_2010_shows_cle

veland-ak.html (June 2011).

5 http://www.judsonsmartliving.org/our-communities/university-circle/judson-manor/care-levels.aspx



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THE SITE

At the confluence of three downtown districts

Trinity’s three sites lie on the edges of the Theater District in

downtown Cleveland. All three act as gateways into the theater

district and are currently underutilized; all three serving as surface

parking for commuters, theater patrons, and fans going to events in

the Gateway District. Due to the dense location of all three blocks in

the urban core, all are actually comprised of many smaller parcels of

land, each with its own set of governmental records. Most parcels

that are located near each other in block one and two are 2.08 and

1.08 acres, in that order. They seem to be owned by one person who

has them under different names and run by a law firm on Public

Square. They are operated as parking lots by Mr. Frangos. The owner

owes the city a substantial amount of back taxes for the properties he

owns. Block three’s parcels along Euclid Avenue are .73 acres,

making the total for all three 3.89 acres. Block three is ownedprimarily by Playhouse Square Foundation, with one parcel (#103 01

026) between the rest that has Ohio Realty -Euclid LLC & Barbara T.

Candler listed as its owners. In interviews with Mr. Einhouse; Vice

president of Facilities and Capital with the Real Estate division of

Playhouse Square Foundation, he indicated that Playhouse Square

has purchased all the properties from East 17 th to the Hannah

Building.

The site’s parcel numbers are as follows:

Block 1 (Phase 1)

103 01 024

103 01 025

103 01 026

103 01 027

103 01 028

Block 2 (Phase 2)

10311 001

103 11 002

103 11 003

103 11 004

103 11 005103 11 006

103 11 056

103 11 057

103 11 058

103 11 059

103 11 060

103 11 061

103 11 062

Block 3 (Phase 3)

10138 020

101 38 021

101 38 022

101 38 023

101 38 024

101 38 025



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SANBORN MAPS

In reviewing the Sanborn maps, an issue was found with block 2.

While it is currently a parking lot, it was at one time a gas station. It is

most likely that remediation will have to occur here.

TRAFFIC COUNTS

Traffic counts for the area are restricted primarily to Federal

Highways and Federal Routes. Of concern to the chosen sites are the

Innerbelt, which near the East 14 th Street exit has a count of 103,340

vehicles below the I-77 merge and 131,230 above it. The traffic

counts vary greatly within short distances along the Innerbelt due to

heavy traffic both exiting and entering the freeway. Euclid Avenue,

designated as Federal Route 20 has a count of 11,090 vehicles near

site three. Many vehicles along this route are public transport BRT

vehicles as the Siler Line runs this route. In addition, a small portion

of Prospect Avenue between Ontario and East 4th Street has been

included and recorded an average of over 6,100 vehicles per day.

This number is a good guess at what counts would be higher up the

avenue near sites one and two.



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PropertySupermarke

t

Convenienc

e Store

Entertainment/B

ar/Rest. Retail

Rental

HousingCondo

Warehouse/Light

industrial

Public

SpaceOffice

Parking (Open

Lot)Hotel Trinity

Block 1, Part A 8 9 18 13 10 -8 7 6 8 14 23

Block 1, Part B 2 6 14 11 11 -7 1 3 6 11 15

Block 2 0 4 13 11 8 -10 -1 0 8 7 20

Block 3 3 9 18 14 13 -12 1 6 8 9 19

AVERAGE 3 7 16 12 11 -9 2 4 8 10 19

HIGHEST AND BEST USE STUDY

A highest and best use study, found at the end of this section

determined that Trinity was a top choice with entertainment,

restaurant and retail close behind. The Theater District and Gateway

District already act as centers of entertainment so this conclusion

makes sense. Playhouse Square itself attracts more than one million

visitors a year, and that is set to only increase with the addition of theCleveland Playhouse Square to the complex.6 Combined with the

demand for housing downtown, the large daytime working

population of close to 110,000 and these conclusions make perfect

sense

6

Thomas Einhouse, Vice President of Facilities and Capital for the PlayhouseSquare Foundation, personal email, 06 December 2011



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THE PRIMARY MARKET AREA

Metropolitan Cleveland

The Cleveland-Akron MSA is Trinity’s primary market area for a

number of reasons. First and foremost, the populations of Cuyahoga,

Lake, Geauga, Ashtabula, Portage, Summit, Medina and Lorain

counties all have ties to the central city of Cleveland. The people in

this region get their news from Cleveland outlets, they root for thecity’s professional sports teams, attend shows, concerts and other

events in the city, and often also commute to the city for work. In

addition, a high percentage of people in all eight counties can trace

their roots back to a specific neighborhood in Cleveland. Either they

once lived there, or their parents and grandparents did. Even as early

as 1970, nearly one third of our metropolitan area’s population lived

in the central city, today, only one sixth does and takes up six times

the land.

..

The target demographic most likely still retains fond memories of life

in the city, especially those older than 60 years of age. Along with

those memories come negative emotions about the city and the

events that followed Cleveland’s heyday in the 1950’s. Urban

Renewal, court ordered busing and racial riots sped up the shift to thesuburbs, that seems to be continuing to this day. The most recent

population data from the 2010 Census show that the newest group to

leave the city are the black lower and middle classes. Most white

residents began their exodus decades ago.7

7Robert L. Smith, Census data reveals new migration pattern as black families leave

Cleveland ,

http://blog.cleveland.com/metro/2011/03/census_data_reveals_new_migrat.html(May 2011).



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Downtown is different. Downtown is one of the only “neighborhoods

to grow in size over the past decade. In fact, downtown grew by 21%

from 1990 to 20008, and continued to grow by more than 20 % from

2000 to 20109. Also, until the past few decades, not many people

lived downtown. Downtown was for working, shopping, government

services, or for entertainment. Therefore, no one group of people

ever laid claim to downtown, it was always everyone’s place. It still is.

Even if some older adults have negative connotations lingering, a

good marketing strategy can reignite the fond memories that are sure

to remain.

■Cleveland's unemployment rate fell from 9.1% in September 2010 to 7.6%

in September 2011.

■In the third quarter of 2011, the median single-family home sale price in

Cleveland was $113,600, down 0.8% from the $114,500 recorded one year

prior. Statewide, home sales volume increased by 14.4% from a year prior.

■Year-to-date apartment absorption totaled 946 units as of September

2011, down from 1068 net move-ins during the same period in 2010. This is

on pace to be the second consecutive year of positive apartment demand

following two years of negative demand in 2008 and 2009.

■Through the first nine months of 2011, no new apartment units were

completed, whereas during the same time last year, 236 apartment units

were completed. This marks the sixth consecutive quarter in which no new

units have come on-line.

■Multifamily permits for apartments and condos of 5+ units were issued

for 77 units in the first nine months of 2011, surpassing last year's year end

total of 75 permits issued.■Cleveland's overall average vacancy rate tightened to 4.8% in the third

quarter of 2011 from 6.2% a year earlier. This is the lowest vacancy rate

recorded since 2000.

■Average apartment rent rose 1.7% over the 12-month period ended

September 2011, with the average market rent increasing from $730 to

8Alan Achkar, More people are making downtown home, April 2001

9Robert L. Smith, Despite Cleveland's population plunge, civic leaders see

encouraging,

signshttp://blog.cleveland.com/metro/2011/03/despite_clevelands_population.html, March 2011

$742. This marks the fourth consecutive quarter of positive rent growth and

the highest recorded market rent over the past decade.



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DEMOGRAPHICS

Metropolitan Cleveland

The Cleveland region has experienced an overall population loss of

29,454 people from the 2000 census to the 2010 census. The decline

in population is expected to continue according to Census Bureauprojections. 30,955 more people are expected to exit the

metropolitan area by the year 2015. In contrast to this population

loss, is a population gain in persons 50 and over. There was a gain of

146,804 people in this age demographic from 2000 to 2010 and the

rise in those 50 and older is expected to continue to climb. 48,481

more people will join this age bracket by 2015. The 50 plus set

currently number just over one million in the Cleveland Akron MSA,

and will be approaching 1.1 million in 2015.10

Looking to downsize from the single family homes where they raisedtheir children, empty nester and retiree households typically consist

of 1 to 2 persons and half have incomes of $45,000 or more.11

Incomes are often augmented by equity, allowing households to

purchase homes for $250,000 and up or rent for $1250 to $2250 a

month, especially if amenities and services came as a part of their

monthly rent. Those in higher income brackets that currently reside in

the wealthier suburbs that follow 1-271 and the western shore

suburbs can afford significantly more for monthly rent, but prefer to

own. Survey results indicate that persons age 65 and up interested in

living in downtown Cleveland largely favor owning two-bedroom,two-bath condominiums or townhouses.12 However, a significant

number of snow birds are open to renting. Like other age groups,

the desired parking and windows/natural light but also listed storage

space, security and views as important housing features. While

10US Census Bureau

11

Us Census Bureau12Survey conducted by author

affordability was still cited as important, it did not top the list of

desired housing features as it did for younger age groups. 13

13

Interviews conducted by the author, Cleveland, Ohio November 11 to December11, 2011

Total Households: 1,158,090

Households 55+: 318,853

55+ Households with Incomes $75K and up: 86,728

According to Census Bureau estimates, the Cleveland-Akron CSA

is expected to lose over 30,000 people by 2015. In that same

timeframe, the region will gain 48,481 people in the 50 and over

demographic.

Source: US Census Bureau American Community Survey 2009



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CURRENT SUPPLY

The market is tight

Housing in downtown Cleveland is in short supply. Currently, the

average vacancy rate is 5.4%, with some buildings at 98% or higher.

The region's occupancy rate hit a recent low of 93 percent during the

first quarter of 2010. Now it's 95.2 percent - better than the nationalrate of 94.4 percent in the third quarter. Back downtown, there are

waiting lists to get into many buildings. Tammy Oliver, an associate at

MRN limited has over 250 people on a waiting list for residential units

in the East 4th Street District.14 An historic rehab that used tax

credits from the state of Ohio; 668, on Euclid Avenue and East 8 th

Street, and run by K&D Group Inc., filled up prior to opening and still

maintains a waiting list greater than 200. A combination of tight

lending from banks due to the economic meltdown of 2007 and 2008,

plus an increase in the popularity of urban living has caused there to

be a limited supply combined with high demand.

Ralph McGreevy, executive vice president of the Northeast Ohio

Apartment Association stated in a recent Plain Dealer article that

“Downtown needs more apartments, It’s just that simple”. Joe

Marinucci, the Downtown Cleveland Alliance’s Chief Executive, has

publicly stated that he “wouldn’t blink at bringing 500 new

apartments onto the market in a year”. The alliance's quarterlyapartment surveys, which don't include student housing, show 4,171

apartments downtown.15

14Tammy Oliver, Associate at MRN Ltd., Interview, Cleveland October 2011

15

Michelle Jarboe McFee, With apartments full, developers look for new rental opportunities in downtown Cleveland, December 2011

16

Downtown for sale units, which number at 936 total, are also in

demand. Even after the foreclosure crisis, those with the means

often choose to buy downtown. The Avenue District‘s condominium

tower was sent into foreclosure last year, but their townhome sales

have remained strong. The townhomes in the Avenue District are the

only new product on the market of its type downtown.17

16Mark Pugacz, Consultant to the DCA, personal email, 08 December 2011

17

Julie Iselin, Commercial Real Estate Broker, Allegro Reality Advisors, Interviewwith author, Cleveland December 2011



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DOWNTOWN CLEVELAND CONDO TRANSFERS FROM 2008 TO 2011

Source: Julie Iselin, Commercial Real Estate Broker, Allegro Realty Advisors,

Ltd.

Building Name Building Address 2008 2009 2010 2011 YTD Total Avg Sale Price Avg SF Avg Per SF

Park Building 140 Public Square 0 7 4 0 11 342,617.45$ 1,299 262.05$

Fries & Schuele 1951 W 26th Street 13 4 3 2 22 200,876.84$ 1,199 178.41$

Sincere Building 2077 E 4th Street 2 1 2 1 6 293,846.67$ 1,700 173.18$

Grand Arcade 408 W St. Clair Avenue 5 6 8 1 20 112,515.67$ 903 137.54$

Cloak Factory 635 W Lakeside Avenue 2 4 0 0 6 266,166.67$ 1,607 167.35$

Pinnacle Condominiums 701 W Lakeside Avenue 8 5 11 1 25 474,761.41$ 2,055 251.66$

Perry Payne 740 W Superior Avenue 0 1 1 0 2 160,250.00$ 888 182.24$

Pointe At Gateway 750 Prospect Avenue 5 2 2 1 10 161,515.00$ 986 158.96$

Water Street 1133 W 9th Street 7 5 3 0 15 149,710.08$ 861 180.24$

Avenue District St. Clair Avenue 0 5 0 0 5 397,527.80$ N/A N/A

Joshua Hall 1148 Prospect Avenue 2 1 1 0 4 320,248.50$ 1,811 177.31$

Stonebridge Plaza 1237 Washington Avenue 11 10 3 2 26 250,502.19$ 1,052 233.24$

Stonebridge Condos 2222 Detroit Avenue 5 5 8 1 19 168,368.33$ 1,251 135.89$Erie Building 1260 W 4th Street 5 0 0 0 5 330,785.00$ 1,520 218.39$

River Bend Condos 1444 W 10th Street 5 2 6 0 13 176,845.00$ 979 178.63$

Franklin Lofts 3200 Franklin Boulevard 2 1 3 0 6 195,670.83$ 1,410 139.08$

Grove Court 1900 Grove Court 4 2 6 0 12 82,152.43$ 1,319 78.49$

Lemko Hall 2337 W 11th Street 2 0 1 1 4 187,166.67$ 2,148 109.28$

TOTAL 78 61 62 10 211 244,350.53$ 1,889 188.11$

1st Quarter Average 2008 - Present 11.75

Avg 1st Quarter % of Total Sold 18%

2011 Projection 48.92

2nd Quarter Average 2008 - Present 23.00


3rd Quarter Average 2008 - Present 20.67


4th Quarter Average 2008 - Present 10.33




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NICHE ANALYSIS

Profile of the residential market



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NICHE ANALYSIS CONCLUSIONS

An underserved and growing segment of the market

Those aged 55 plus are one of the only segments af Greater

Cleveland’s population that is growing, and they are growing by

almost 10,000 per year. This market of consumers are not given

many choices in the downtown rental market. In fact they are

mentioned more as a sidenote to the young urban professionals thatchoose to live downtown.

In the niche analysis completed for this study, it is estimated that

there are over 13,000 renters 55 and over in the Greater Cleveland

Area. Even if Trinity were to get just 5% of that market, that would be

659 new households a year. Adjustments were made in the niche

analysis to make sura a reliable number of older adults would be a

true market for downtown that could afford downtown living without

subsidies.

Absorption rates mentioned earlier and lack of supply mean that new

housing is appropriate to build at this time. In addition, the only two

markets mentioned as downtown dwellers consistently are young

urban professionals and empty nesters. The focus has been on the

young urban professionals, but the older crowd will become a larger

and larger segment of our population as the years pass and stand to

prove a substantial market for downtown living. The fact that they

are the only other demographic living downtown, even though the

city has pushed to cater to the younger crowd means that there isgreat potential in marketing to this subset.

CAVEATS

An urban lifestyle community

The main obstacles to getting Trinity constructed as planned are

financing and current thinking. Money is not readily available from

the banks, but financing can be had. One thing that would make it

difficult to prove a financially feasible project is that downtown rental

rates have had only modest increases in the past decade which makes

justifying the high rents needed to make new construction feasible

difficult. And, For the first quarter of 2011, it remains less expensive

to own a home rather than to rent in the Cleveland area, by a

difference of roughly 43% based on monthly payments. The city does

provide assistance and according to the city’s economic development

department, the project would receive tax abatement for 15 years. In

addition, Playhouse Square has been unable to get a project out of

the ground to date and may be looking for a partner.

The current Cleveland mindset is also another drawback. While many

have fond memories of the city decades ago, they also remember all

the failings, jokes, and disasters;financial or otherwise, of the late 20th

century. Crime is seen as a real problem to suburbanites who don’t

travel downtown often. An innovative marketing plan would need to

be put in place to counteract these perceptions and accentuate what

city living offers for those in their later years that the suburbs cannot

provide.

Finally, block two most certainly is contaminated from previous use as

a gas station. Mr. Frangos owns this site and many others. He owes a

large sum of money in back taxes to the city, and probably has not

remediated the site, as it currently is used for parking.



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FINANCIAL ANALYSIS

An underserved and growing segment of the market

New construction is difficult at this time, for many reasons.

Therefore, I got creativewith the concept in order to draw more

revenue from Trinity. Seeing as the towers will act as a gateway into

the Theater District, be near 25 stories tall and have incredible

visibility from all points south and east, especially those on theinnerbelt; giant digital displays will be focused outward instead of

inward like in Times Square, so as to announce to location of the

Theater District, and also provide an additional source of revenue for

Trinity. Mike Matonis, Vice President of Sales at Clear Channel

communications estimates that revenue for each digital billboard

could be upwards of $240,000 per year. That would be in addition to

over 8.5 million dollars of residential and commercial rent for Tower 1

at Trinity, an apartment tower with ground floor commercial space.

The digital displays would be at least twice as large as typicalbillboards and be oriented vertically. It will cost twice as much to

install them, but provide much greater revenue as they will become

iconic symbols with incredible visibility.

I spoke with Josh Smith at Panzica Construction and after I explained

the project to him, he quoted me $140 a square foot for construction

of the residential, $100 a square foot for unfinished commercial

space, and $1750 a parking space seeing as they would be indoors. I

assumed $160 a square foot for new residential construction after

checking some additional online sources just to be safe, andunderstanding this would be better quality than the average tower. I

also used $160 a square foot for construction of the commercial

space to really push it.

Rental rates downtown average at $1.05, although Tammy Oliver

over at MRN Ltd. told me that I could get $1.25 per square foot for

new construction, so I assumed the top of what the market can

charge. In addition, I assumed a $15 a square foot rental rate for my

commercial space. Julie Iselin from Allegro suggested that I couldeven get $20 a square foot for new. However, in speaking with

restaurant and business owners around the Theater District, $13 a

square foot was mentioned often. So, I assumed $15 a square foot

would be reasonable for new construction in this part of downtown.

My land values were calculated by conducting copious research into

city and county records. I also received assistance from Ms. Iselin

who has access to professional real estate software and databases.

I assumed I would receive a tax abatement from the city of Cleveland,

as new construction is eligible for such abatements.

With all the assumptions I mentioned and an assumed 6.0% annual

interest rate in these times of near zero federal interest rates, and

potential interest free loans from the city of Cleveland for a project

this size, my calculations put me $ 3,136,211 in the black every year.

My net operating income should be enough to ensure a decent rate

of return to investors, especially with incentives and loans from thecity. I did inquire as to whether the Playhouse Square Foundation

would be a partner in the venture and was told from Mr. Einhouse

that “In most cases we would prefer to attract a good developer and

stay out of the deal unless there is a compelling reason such as

control of the use or a creative funding opportunity. We would be

mostly interested in ensuring that the outcome was in line with our

mission/vision and we are perfectly fine with that occurring without

our financial participation.”



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RESIDENTIAL FRONT DOOR BACK DOOR ANALYSIS

ASSUMPTIONS monthly yearly Site Size (31,277 sf) 235 unit (329,000 sf)

Total Residential Units 220

Total Residential (sqft) 329,000

Residentia l Rent (per sqft) 1.35

Amenities (sqft) 46,500

Parking Deck (# of spaces) 330

Price Per Parking Space 15,000Total Parking (sqft) 124,000

Commercial Space (total sqft) 15,000

Commercial Rent (per sqft) 18

Service & Circulation (sqft) 85,542

REVENUES

Digital Bi llboard 40,000$ 480,000$

Residential Rent 444,150$ 5,329,800$ 5,329,800$

Commercial Rent (triple net) 270,000$ 3,240,000$ 3,240,000$

Total Revenues 9,049,800$

EXPENSES

Property Tax 2.9% -$ 45,326$

Operating Expenses (per foot) 6$ 3,321,252$

Vacancy 5% 266,490$

Disc ount Rate (ROR) = annual

cas h flow to developer14%

Land Value 1,590,400$

Initial Electronic Bil lboard Cost 400,000$

Hard Cost Com. & BOH (per foot) 100$ 10,054,200$

Hard Cost Res. & FOH (per foot) 160$ 60,080,000$

Hard Cost Parking 4,950,000$

Soft Cost 20% 12,016,000$

Total Cost 89,090,600$

LOAN INFORMATION

Capitalization Rate 0.1

Loan to Value Ratio 75%

Mortgage Constant 9.64%

Length of Mortgage (years) 30

Debt to Coverage Ratio 1.25Interest Rate (annual) 6.00%



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BACKDOORcost-driven approach

Site Cost 1,590,400$

Hard Cost 60,080,000$

Soft Cost 12,016,000$

Total Capital Budget 73,686,400$ sum of cost

Required Equity (0.25) 18,421,600$ total capital budget *equity

Required Annual Cash Flow 2,579,024$ ROR*Equity

Mortgage Amount 55,264,800$ total budget *LTV

Annual Debt Service 5,328,752$mortgage amount *constant

NOI 7,907,776$annual cash f low+debt service

Operating Expenses 3,321,252$

Property Tax 45,326$

Effective Gross Income 11,274,354$

Vacancy 266,490$

Gross Annual Potenti al I ncome 11,540,844$

convert to monthly rent /120/12Required Revenues to Justify Costs 8,014$ income/unit(month)

Actual Monthly Rent 444,150$ actual monthly rent

Rent Gap (436,136)$

Justified Project Investment 52,679,982$ <==from rents

Total Capital Budget 73,686,400$ <==from costs

GAP (21,006,418)$ NO GO

FRONT DOORmarket driven approach

Gross Annual Potenti al Income 9,049,800$ sum of rents

Vacancy 266,490$

Effective Gross Income 8,783,310$ net revenues

Property Tax 45,326$

Operating Expenses 3,321,252$ less expenses =

NOI 5,416,732$ net operating income

Annual Debt Service 4,333,385$ NOI/1.25 DSC

Before Tax Annual Cash Flow 1,083,346$ BTCF=NOI-Debt service

Equity Investment 7,738,188$ annual cash flow/ROR

Annual Debt Service 4,333,385$ NOI/1.25 DSC

Debt Service Constant 9.64%

Mortage Amount 44,941,794$ debt se rvice/constant

Justified Project Investment 52,679,982$ equity + mortgage

Actual Project Cost 73,686,400$

Gap (21,006,418)$ NO GO



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Design ReviewDistrict Current Zoning 2020 Land-Use Plan Last Transfer Date Last TransferSale Price L ast Ow ne r M ar ke t V al ue Size of Parcel(Sq. Ft) Size ofParcel (acres) $ per sq ft ofland Taxes Paid2010 Condition ofParcel Frontage(linear feet) Brownfield Daily TrafficCounts* Tax protest $ DeliquintTax

Yes - Downtown GR-E5 Mixed-Use: Downtown 28-Dec-83237,200$ 5,785 0.13 41.00$ 6,736.24$ Standard 86 N ≈65,000 N -$

Yes - Downtown GR-E5 Mixed-Use: Downtown 1-J an-75129,400$ 3,168 0.07 40.85$ 3,675.64$ Standard 320 N ≈20,000 N -$

Yes - Downtown GR-E5 Mixed-Use: Downtown 1-J an-75122,600$ 3,000 0.07 40.87$ 3,481.72$ Standard N ≈20,000 N -$

Yes - Downtown GR-E5 Mixed-Use: Downtown 1-J an-75372,000$ 9,103 0.21 40.87$ 10,565.20$ Standard N ≈20,000 N -$

Yes - Downtown GR-E5 Mixed-Use: Downtown 1-J an-87688,500$ 16,848 0.39 40.87$ 19,553.06$ Standard 573 N ≈20,000 N -$

Yes - Downtown GR-E5 Mixed-Use: Downtown 1-J an-87Standard N ≈45,000 N -$

Yes - Downtown GR-E5 Mixed-Use: Downtown 30-Aug-07350,000$ Vasilike Pasalis 350,000$ 9,900 0.23 35.35$ 9,800.00$ Standard 55 N ≈20,000 Y 24,549.37$

Yes - Downtown GR-E5 Mixed-Use: Downtown 28-Dec-83116,400$ 2,840 0.07 40.99$ 3,305.64$ Standard 42 N ≈45,000 N -$

2,016,100$ 50,644 1.16 40.11$ 57,117.50$ 1,076 ≈65,000 24,549.37$

Yes - D ow nto wn SI -E5 Mi xed -U se: D own to wn 1 -J an -7 5367,300$ 11,900 0.27 30.87$ 10,431.34$ Standard 75 N ≈45,000 N -$

Yes - Downtown SI-E5 Mixed-Use: Downtown 7-Mar-89268,700$ 8,704 0.20 30.87$ 7,631.20$ Standard 50 N ≈45,000 N -$

Yes - Downtown SI-E5 Mixed-Use: Downtown 18-Ju l-0095,000$

VoncyleBletscher,

Lois B Mill er (Trustee) 711,000$ 19,554 0.45 36.36$ 20,192.40$ Standard 99 N ≈45,000 Y 47,947.12$

1,347,000$ 40,158 0.92 32.70$ 38,254.94$ 224 ≈45,000 47,947.12$

Yes - Downtown SI-E5 Mixed-Use: Res ident ial 28-Feb-06592,700$ 14,580 0.33 40.65$ 16,832.92$ Standard 150 N ≈20,000 Y 71,400.38$

Yes - Downtown SI-E5 Mixed-Use: Res ident ial 04-Oct-941,023,000$ 20,460 0.47 50.00$ 29,053.61$ Standard 160 N ≈20,000 N 88,877.57$

Yes - Downtown GR-E5 Mixed-Use: Res ident ial 04-Oct-94609,200$ 12,184 0.28 50.00$ 17,301.52$ Standard 370 N ≈45,000 N 53,376.54$

2,224,900$ 47,224 1.08 46.88$ 63,188.05$ 680 ≈65,000 213,654.49$

Yes - Downtown GR-E5 Mixed-Use: Downtown 6-Nov -06817,766$ Hanna Buil ding LLC 231,000$ 4,560 0.10 50.66$ 6,560.16$ Standard 24 N ≈17,000 N


Yes - Downtown GR-E5 Mixed-Use: Downtown 23-Sep-09

632,800$ 12,474 0.29 50.73$ 17,971.64$ Standard 66 N ≈17,000 N



1,590,400$ 31,277 0.72 50.96$ 45,168.08$ 192 ≈19,000 -$

2,086,000$ 40,960 3.89 51.23$ -$

PARCEL DATA



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RECOMMENDATIONS FOR PROCEEDING

The time is right but financing may be difficult

If the right group of financial incentives can be put together,

the right partnerships formed with the city and perhaps the

Playhouse Square Foundation, and when rental rates increase

substantially downtown, than the time will be right to go aheadwith a project of this sort. In order for this project to work

financially, residential rental rates would need to be about

$1.95 a square foot. That price takes into consideration profits

derived from digital billboards. Without those, rates would

need to be well over $2.00 a square foot.

NO GO

recenter life at trinity

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