Garfield Building.JPG

The Garfield Building, at left, could become 172 apartments over ground-floor restaurants and stores under a plan being floated by the Millennia Companies of Valley View. Millennia has a deal to buy the downtown Cleveland building in December and is seeking state historic-preservation tax credits to help finance the redevelopment project.

(Michelle Jarboe McFee, The Plain Dealer)

CLEVELAND, Ohio -- A growing apartment business based in Cleveland's suburbs will establish a downtown foothold this year, starting with the purchase of the historic Garfield Building at Euclid Avenue and East Sixth Street.

The Millennia Companies recently signed a purchase agreement on the Garfield Building, a largely empty office building set for conversion into housing. Built in the late 1800s by two of President James Garfield's sons, the longtime bank building could become 172 apartments above ground-floor restaurants or stores.

Frank Sinito, Millennia's chief executive officer, agreed to discuss the deal after the Garfield Building popped up on a list of properties vying for state historic-preservation tax credits. In an interview last week, he said the purchase won't be Millennia's only investment in the center city.

Sinito also hopes to move his growing business and roughly 200 employees from Valley View to the central business district, where he sees increased vitality and the types of amenities that will help him hire, and keep, workers.

"We're in the market for a building that could be a mixed-use building with both offices and apartments," he said, declining to identify specific properties. "That's how excited the Millennia Companies is about downtown."

Millennia owns more than 12,000 apartments and employs 625 people in eight states. The business consists of four companies, spanning development, financing, construction and property management. Sinito, who prefers to avoid publicity, won't delve into financial details or discuss his expansion plans. But Millennia's portfolio has been growing by 2,000-plus units each year, largely through acquisitions of existing apartments.

Affordable Housing Finance, a trade publication, ranks Millennia among the nation's top acquirers and rehabbers of affordable apartments, based on the number of units purchased or renovated. By Sinito's rough estimate, the company's portfolio is 75 percent affordable - for lower-income renters - and 25 percent full-priced.

The Garfield Building renovation would fall into the second category, with one-bedroom apartments renting for $600 to $850 a month, on average. Millennia's plans call for 150 one-bedroom units and 22 two-bedroom units. Penthouse tenants might pay $2,000 to $2,500 a month.

Historic National City Bank signs adorn the East Sixth Street entrance to the Garfield Building. Peter Ketter of Sandvick Architects, which is working on the project with Millennia, said the building originally housed the Cleveland Trust Co. but was home to National City starting in 1921.

Originally home to the Cleveland Trust Co., the Garfield Building housed National City Bank starting in 1921. Now dormant, the northeast corner of East Sixth and Euclid used to be a prime retail destination, where tenants including a jewelry store and a drug store catered to office workers and passersby.

Now the only reminders of that history are the historic National City signs flanking the doors and an ornate bank lobby that stretches into a neighboring building.

PNC Financial Services Group Inc. acquired National City during the 2008 financial crisis and gradually consolidated workers into the bank's office tower at East Ninth Street and Euclid. That left the upper floors of the 11-story Garfield Building empty, though PNC is paying rent under a lease that ends in December.

Facing that lease expiration, Westcore Properties put the building up for sale early this year. The company, based in California, paid $8 million for the property in March 2008, just months before major investment banks failed and the nation slid into a financial morass. Six years ago, collecting rent on the PNC lease was attractive. In 2014, trying to re-lease the building in a soft office market was not.

"The downtown office market is dead," said Don Ankeny, Westcore's president and chief executive. "The resale market for empty office buildings in downtown Cleveland is more than dead."

Apartments, on the other hand, are 95 percent full, according to market research from the Downtown Cleveland Alliance. And the Garfield Building, thanks to its age and history, is eligible for valuable preservation tax credits that make complicated building-conversion projects more attractive to developers.

Millennia had been eying the building for two years. Rico Pietro of Cushman & Wakefield/Cresco Real Estate, the Independence brokerage that marketed the building, said other downtown apartment players also showed interest.

"It's a very unique and special property in a dynamite location," said Pietro, who shared the listing with Cresco's Eliot Kijewski. "The big names in town were all very interested in the property."

The building sale is set to close in December, allowing Westcore to collect the remaining rent from PNC and giving Millennia time to pull its project together. The buyer and seller wouldn't disclose the price, though Sinito said he's paying cash.

Though nondescript at street level at East Sixth Street and Euclid Avenue, the Garfield Building's facade is covered with ornate details as it runs north along East Sixth and stretches skyward. A glimpse of the building's western face through the nearby 515 Euclid parking garage shows some of those details.

Millennia is seeking $5 million in state tax credits for its project, which carries an estimated price tag of $36 million. The state expects to announce the next crop of winners before July. The building also qualifies for federal preservation credits.

Depending on the tax-credit awards and other financing, the renovation could be finished anytime between January 2016 and mid-2018.

A new use for the Garfield Building could spur reinvestment along East Sixth, a quiet corridor that once teemed with stores. The Historic Gateway Neighborhood Corp. wants to fill gaps and create more seamless north-south pedestrian paths - streets and historic arcades - between the new Cleveland Convention Center, Quicken Loans Arena and Progressive Field.

"We've discussed it with Frank and his development team," Tom Yablonsky, the neighborhood group's executive director, said of prospects for reviving East Sixth. "If [the Garfield Building project] was achieved, that's one thing we would take a look at. That's the kind of planning we would do at a neighborhood level with a developer, proactively."

As for Millennia's other potential downtown projects, Sinito isn't dropping many hints. He said his business needs 30,000 square feet for its headquarters - up from the 21,000 square feet the companies occupy at Sinito's Thornburg Station development on Rockside Road. He wants to buy, not lease. And he's looking at buildings that could accommodate several uses, including more apartments.

There is vacant land next to Thornburg Station, where Sinito originally planned to build a new headquarters complex as his company grew.

But his plans, and the market, have changed.

"When we think about recruiting and we think about really good employees, I think that there's a lot of excitement downtown," Sinito said. "People that are younger than me, they want to work down there."