Cumberland-lakefront-rendering1

A conceptual rendering shows offices and other buildings that might rise on Cleveland's lakefront, on sites north of FirstEnergy Stadium. The city of Cleveland has picked local developer Dick Pace and national developer Trammell Crow Co. from four teams that vied to lease the lakefront property for projects.

(Cumberland Lakefront LLC; HKS)

CLEVELAND, Ohio -- The city of Cleveland has picked a developer for 28 acres of the downtown lakefront, marking a major step toward breathing life into barren space and surface parking lots at the water's edge.

A team led by Cleveland developer Dick Pace and the Trammell Crow Co. of Dallas will get a shot at leasing and building on city-owned land at North Coast Harbor and north of FirstEnergy Stadium. Their vision: A neighborhood of sorts, with more than 1,000 apartments, stores and restaurants, an office building, a public boardwalk and a downtown school.

City officials expect to announce today that Pace and Trammell Crow topped the competition, after months of proposals, interviews and negotiations. The selection indicates that Cleveland might see talk become action along the lakeshore, following decades of discussions and piles of unrealized plans.

"This is a matter of moving from the 'What do we want it to look like?' phase to 'What does it take to get it done?'" said Chris Warren, who retired as the city's regional development chief last year but stayed on as a part-time consultant focused on the lakefront.

During an interview Wednesday at his office in the 5th Street Arcades, Pace said he hopes to start construction in 2015. His team anticipates building in phases, starting with projects along the East Ninth Street pier and surrounding the Great Lakes Science Center and the Rock and Roll Hall of Fame and Museum.

Sketches of the first phase show a downtown school near the science center; a mixed-use complex with 80,000-square-feet of offices and 250 apartments; and retail arcades linking the Rock Hall and science center to a planned bridge stretching south over steep terrain to the downtown Malls.

Later phases might include 800 to 1,000 apartments in a cluster of buildings north of the stadium. Parking would be integrated -- and concealed -- in each of the larger buildings.

Warren said the team's proposal best lined up with the city's district master plan, which calls for ample public spaces, access to the water and strong connections for cyclists, pedestrians and visitors.

"In terms of having a vision that was attentive to Cleveland but that also matched the reality of the space, [Pace's plan] was really quite strong," said Kirsten Ellenbogen, a member of the mayor's lakefront advisory committee and the science center's president. "I thought this proposal had potential for fitting into that Cleveland vision, but it also wasn't ridiculous."

In the coming months, the city and the developer will hammer out finer deal points and conduct due diligence, digging into construction challenges, development costs and financing prospects. Warren hopes to get Cleveland City Council's sign-off by mid-June on the option deal, which would give Pace's Cumberland Development and Trammell Crow the site control necessary to move forward.

That option will enable the developer to enter long-term leases with the city, which cannot sell lakefront land without a public vote. The financial details aren't set, since the city needs to seek appraisals and factor in the unique costs of putting infrastructure and buildings on fill dirt stretching into the water.

"That's what we're driving to ... the ability to move beyond the theoretical planning stage into honest nuts-and-bolts analysis to complete a development of substance on our lakefront," Warren said.

Emphasis on housing, education

A heavy focus on housing dovetails with the city's push for a more residential downtown. Apartment occupancy in the center city is hovering around 95 percent, and renovation projects are filling almost as fast as they open. But there's little new construction downtown, where developers have flocked to office and warehouse conversions that qualify for preservation tax credits and other cost-cutting tools.

On the east bank of the Flats, though, the Wolstein Group and Fairmount Properties are preparing to build 243 apartments facing the Cuyahoga River. Pace, who is working with Trammell Crow's multifamily division, believes there is room for more new housing -- targeting families and not just young professionals.

"We view that as filling an important need and creating, in essence, a new market," Pace said. "From that standpoint, we don't think that we're competing with all the housing that's going on downtown. We think we actually supplement and reinforce it."

All four teams that chased the lakefront deal mentioned a medley of places to live, to work and to recreate. The school -- a public school or charter feeding into a special Cleveland high school program that starts at the science center -- was an unusual feature of Pace's plan, which comes as the Cleveland School District is looking at ways to bolster education downtown.

A conceptual rendering shows apartment buildings that developer Dick Pace and the Trammell Crow Co. imagine on land north of FirstEnergy Stadium. The developers are committed to the use -- housing -- but they caution that the building design and architecture isn't real yet. "We will end up with a lot of community involvement," Pace said Wednesday.

"We think that ours was a strong proposal because it focused on creating a great neighborhood," Pace said. "And to us, a great neighborhood was centered on a great school. We think it fits Cleveland and the approach the mayor is taking to education."

One competitor, a company formed by Beachwood real estate investor Mark Munsell and John Goodman of McDonald Partners, pitched 443 units of housing; more than 100,000 square feet of offices; retail; and a 182-room hotel. Munsell and Goodman anchored their project with a movie-studio complex, meant to build on Northeast Ohio's nascent but growing film industry.

That team focused on the parking lots north of FirstEnergy Stadium and did not pursue the North Coast Harbor sites.

"I'm disappointed. Terribly," Munsell said Wednesday. "But I'm hopeful for the city of Cleveland, and for the residents of Cleveland, that the project is a success. And I'm still hopeful that I'll have an opportunity to work with the city on another parcel or other things, or maybe to collaborate with the developer."

The third team, led by KUD International LLC, offered up a hotel, public connectors and restaurants at North Coast Harbor. North of the stadium, the developer proposed either a mixed-use district or a recreation area, with sports fields, green space and places for events.

But KUD, a subsidiary of Japan's Kajima Corp., pulled out of the process early this year. In a Jan. 9 letter to the city, a company executive in New York wrote that the decision related to "a recent decision on behalf of our parent company to change the focus of KUD International's future projects." That executive, Dennis Biggs, did not respond to a request for comment this week.

The thinnest of the four proposals came from Stuart Lichter's Industrial Realty Group, a California company known for remaking obsolete buildings, former military bases and challenging industrial complexes. In their response to the city's request for proposals, Lichter and local investor Chris Semarjian described 1 million square feet of mixed-use development, including a hotel, retail, housing and offices.

"[The city was] in a process, and I assume they made a decision that was best for everybody," Lichter said Wednesday. Laughing, he added, "I have plenty on my plate. It's certainly not going to move my meter."

No shortage of challenges

Pace, an architect and developer, has worked on notable projects, most recently the Baker Electric Building in Midtown and the retail overhaul of the 5th Street Arcades. But he's not one of the biggest names -- or loudest voices -- in Cleveland real estate. And his company, Cumberland, is small.

That's one reason he partnered with Trammell Crow, an independently run subsidiary of the CBRE Group Inc. brokerage. Trammell Crow has offices across the country and has developed or purchased more than $60 billion worth of real estate. Pace knows Cleveland. The industry knows Trammell Crow.

Conceptual renderings and site plans for the project show an open neighborhood, with public access to the water and pockets of greenery. In the coming months, the city will move toward giving developer Dick Pace's Cumberland Development and the Trammell Crow Co. an option to lease the waterfront property at the northern edge of downtown.

Even with a deep team, though, taking on the lakefront sites won't be simple. Pace said Wednesday that he doesn't expect the city to subsidize the buildings. But the project will require public investment in streets and infrastructure work. And some of the proposed buildings would connect to a pedestrian bridge that the city and its partners have been struggling to fund.

There are height restrictions, thanks to Burke Lakefront Airport and parking challenges because of the Cleveland Browns. The city must provide 450 nearby parking spaces for the Browns on game days. If the surface lots near the stadium are developed, the city will have to work out another parking plan for the team.

Then there are underlying land-lease issues between the city and the state, which asserts that it owns what's under the fill dirt -- the land that used to be the bottom of Lake Erie. The city needs to lease that submerged land from the state for a nominal amount. But those public lease deals, which are changeable, can cause complications for private developers trying to build and finance projects with long-term leases and loans.

That's one troublesome area where Pace and Trammell Crow will get a break, thanks to the work of another developer. In 2012, the city agreed to give the Geis Cos. an option to lease land near Burke for an office project. That deal has moved slowly, though, since the city had to work with the state to design a new submerged-land lease that will offer developers a better sense of security.

The city recently submitted the final documents for the new lease application. Officials expect a response by early June. If the application is approved, the new lease will act as a template for future lakefront deals.

"The Geis agreement will be trailblazing in that respect," Warren said. "It allows us to establish a form of possession for the developers, through a lease, that is workable. ... You can't do that with the state on a hypothetical. You need to have a real development to make that happen."

As far as Pace is concerned, his project is real. It won't necessarily look like the drawings. The building footprints might shift. And there's no real architecture yet. But the basic premise -- and the commitment -- won't change.

"We're past the drawing stage and the conceptual stage, and we're into the implementation stage, which is a great step," the developer said. "After 30 years of planning and discussion, we're now talking about implementation."