gateway-district-parking-lot

This Gateway District parking lot, bordered by East Fourth Street, Prospect Avenue and Huron Road, is part of a portfolio that Stark Enterprises and J-Dek Investments Ltd. expect to buy from a California parking-lot operator. Stark is assembling a 3-acre site near Quicken Loans Arena and Progressive Field for a development that could include street-level retail, apartments, structured parking and, possibly, offices.

(Gus Chan, Plain Dealer file)

CLEVELAND, Ohio -- Nearly six years after developer Bob Stark dropped plans for a large project in the Warehouse District, he's chasing another opportunity to replace downtown Cleveland parking lots with stores, apartments and offices.

Stark Enterprises and J-Dek Investments Ltd. of Solon have formed a joint venture to buy three parking lots, a garage and a small building from affiliates of the L&R Group of Companies in California. The sale would put key downtown development sites in the hands of local owners and set the table for new construction on a block between East Fourth Street and Quicken Loans Arena.

A real estate broker representing L&R confirmed that a deal is in the works.

"Those two groups have the property under contract," Rico Pietro, a principal with Cushman & Wakefield/Cresco Real Estate in Independence, said of Stark and J-Dek. "It looks like the plan is to have the property transfer and close within a month to 45 days. ... I don't see any major roadblocks to the closing of this deal."

A conceptual massing study shows the potential scope of the Stark Enterprises project planned for downtown Cleveland's Gateway District. The site is located between Prospect Avenue and Huron Road, east of East Fourth Street and north of Quicken Loans Arena.

L&R put its downtown portfolio on the market in early 2012, at a list price of $29.3 million. This week, representatives for both the seller and the buyer weren't willing to disclose the purchase price for the portfolio, which includes large surface lots on Huron Road and West Ninth Street, a battered parking garage on Huron and small parking lot and condemned building on Prospect Avenue near East Fourth.

The Huron sites are Stark's first priority.

During a meeting at the Stark Enterprises offices in downtown Cleveland this week, Stark and his son Ezra described their vision for a mixed-use project that could span roughly 3 acres. That site, which will be cleared, will combine a 246-car parking lot, the garage at 611 Huron Road and a few parcels to the north that the joint venture is buying in a separate real estate deal.

"We would like to help catalyze the interest of national restaurant chains and national retailers in being on the streets of Cleveland," Stark said. "That's something I haven't seen since my childhood."

At this point, specific details about the project - which Stark is calling 'nuCLEus' - are scarce.

Stark said the development will include market-rate apartments and, possibly, some offices, with retailers lining the streets and structured parking tucked inside the block. He wouldn't talk about budgets, building heights, square footage or tenants, beyond saying that there will be a net gain in parking.

But he waxed poetic about constructing something with "the kind of architecture that lets the world know that Cleveland is back, and that Cleveland is in competition with Chicago and New York."

More information should trickle out soon, as the developer seeks financial support from the city and Cuyahoga County.

Ryan Sommers, a financial consultant working with Stark, said the developer expects to submit a request to the county late this week for a slice of casino revenues earmarked for downtown projects. The county has allocated money from that downtown development fund, in the form of low-interest loans, to private projects including the second phase of the Flats East Bank neighborhood and the conversion of an empty office tower at 1717 East 9th St. into apartments.

"From what I've heard of the project, it seems to be in line with the caliber of projects that have worked hard to enhance downtown," Nathan Kelly, the county's deputy chief of staff for economic development, said of Stark's proposal.

The developer also is likely to seek property-tax abatement, which is routinely awarded to new residential projects in Cleveland; public assistance with infrastructure costs; and money to help with site cleanup.

The city didn't respond to a request for comment about the project.

"We don't have an official request out, but anytime you have a project like this with the necessary parking and infrastructure, it will require a public-private partnership," said Sommers, director of financial services at Project Management Consultants in Cleveland.

Stark echoed that sentiment.

"I can tell you that there are tens of millions of dollars involved immediately that are coming from conventional institutions and our pockets," he said. "And there isn't an iconic or meaningful development in a city in America that doesn't require a public-private partnership."

The broad strokes of the Gateway District project might sound similar to what Stark proposed in the Warehouse District before the recession, which stymied development in Cleveland and across the country. There are a few notable differences, though.

The L&R portfolio includes the vacant Herold Building, at 310 Prospect Ave., and a small parking lot just to the east. L&R is mired in litigation over the condemned building, which the company has been trying to demolish. Developer Bob Stark says he hopes to restore the building and pursue new construction on the adjacent lot.

First, Stark never owned the Warehouse District parking lots, which run along West Third and West Sixth streets and are largely controlled by the Asher family. The developer had long-running purchase options, which the Ashers declined to renew in late 2008.

Second, the Gateway District site is smaller and is surrounded by major investments, including Cleveland's basketball arena, its major league ballpark and the restaurants and apartments that line East Fourth. It's a short hop from the Horseshoe Casino Cleveland, to the west, and the Ameritrust complex redevelopment, which includes a the new Cuyahoga County headquarters, a hotel, apartments and a Heinen's Fine Foods grocery store scheduled to open on East Ninth Street next year.

Third, downtown Cleveland has experienced a residential renaissance in the intervening years. The Downtown Cleveland Alliance reported this week that the center city's population reached an estimated 12,500 people during the second quarter. Even as new apartments opened in historic buildings, the occupancy rate at full-priced rentals surpassed 98 percent.

That growing residential population, on top of 125,000 or so office workers, is encouraging retailers to take a closer look at the central business district. Still, retail has been slow to materialize, and even Stark acknowledges that there aren't enough people downtown yet to support major stores. To be successful, a retail project would need to draw shoppers and diners from the suburbs.

Stark, the developer behind Westlake's Crocker Park and the tony Eton Chagrin Boulevard shopping center in Woodmere, says that there hasn't been a big enough, available site to accommodate a cluster of retailers in new, custom-built spaces on city streets. Until now, that is.

"We're excited to see a developer like Stark re-enter the downtown market and feel good about the environment they see here and the opportunities that exist," said Michael Deemer, who oversees business-development efforts for the Downtown Cleveland Alliance. "It really speaks to all the work that has gone into building up downtown and where we are in the market."

Stark Enterprises has no immediate plans for L&R's parking lot on West Ninth. But the company does plan to preserve and redevelop the Herold Building, the historic and condemned building at 310 Prospect Ave. L&R has been sparring with the city over the future of the structure, which is tied up in a legal fight over demolition versus restoration.

It's unclear how the sale to Stark and J-Dek will impact that litigation, which includes a Cleveland Housing Court case and an appeal in Cuyahoga County court. An attorney representing L&R declined to comment. Stark said he intends to save the Herold Building and to pursue new construction on the small parking lot next door.

Those Prospect Avenue projects would be a separate development from the new construction on the 3-acre Huron Road block.