Apartments Planned for United Church of Christ Headquarters Building
Another office-to-housing conversion is under consideration in downtown Cleveland’s Gateway District, where the United Church of Christ is preparing to move out of its longtime home.
K&D Group, a busy apartment landlord and developer, has reached a deal to buy the historic building at 700 Prospect Ave.
Doug Price, CEO of the Willoughby-based company, confirmed the property is under contract. The sale is expected to close at the end of May.
Price wouldn’t say what he’s paying for the real estate, which came on the market in July at an asking price of $7 million. The Cuyahoga County tax office values the property at $4.5 million.
K&D plans to convert the nine-story building into around 130 apartments, with retail on the first floor. Most units will be modest one-bedroom apartments, around 550 square feet.
“It suits these more affordable apartments very well,” Price said, adding that tenants will have the option of parking in K&D’s garage across the street from the company’s Residences at 668 complex. .
A spokeswoman for the United Church of Christ confirmed that a sale was in progress. The church plans to open its new offices in the AECOM Center building on East Ninth Street in June.
Richard Sheehan of Newmark real estate brokerage declined to comment. He and his colleague Terry Coyne handle the sale.
Church leaders announced their move plans in September, after years of deliberation. The institution, which has more than 773,000 members across the country, expects to save hundreds of thousands of dollars a year by reducing its office footprint to 30,000 square feet. In addition to its headquarters, the church is moving its archives, two affiliated agencies and four related ministries.
“I am confident that the space that is being prepared for the United Church of Christ national framework is the right size and includes technology,” Traci Blackmon, associate general minister, said in an update. project update posted on the church’s website. Tuesday April 26. “It will allow us to be the church we need in our post-COVID reality. And it will help us continue to imagine the church we always become.”
The church is selling 700 Prospects after a 32-year run, which spanned renovations, the construction of a hotel next door, and the 2019 sale of that property, now an Indigo Hotel.
The office building, with an ornate terracotta entrance, was built by the Cuyahoga Telephone Co. It dates from 1900. Formerly called the Electrical Building, it is in a historic district listed on the National Register of Historic Places.
K&D plans to claim federal and state tax credits for the preservation of the project, which won’t begin until late 2023. State credits, awarded twice a year, are competitive. Owners often apply multiple times before winning.
And K&D is focused on renovating 55 Public Square, a downtown office tower undergoing partial residential conversion. This project is expected to be completed by June 2023, Price said. Rental has just started and the first apartments will open in September.
“It’s a few years away,” he said of the 700 Prospect. “We have to apply for the credits, and with the current construction costs and the lack of suppliers and all the other issues, we’ll probably sit on the building.”
But the price is bullish in the apartment market. K&D’s portfolio, split between downtown and suburbs, is 98% full. With rising interest rates putting homeownership out of reach for more renters, he only expects demand to grow.
“We’ve never been busier,” he said. “We literally have no units to rent.”
Originally, K&D planned to tackle the Artcraft Building, in the Upper Arts District east of downtown, past 55 Public Square. But the developer pulled out of that deal in December, after pulling out twice in the contest for historic state tax credits.
Now Cleveland-based GBX Group, owner of the Artcraft Building, is talking with another potential co-developer about filling the former garment factory with housing. The 260,000 square foot building is now largely used as artists’ studios.
K&D’s proposal called for 159 large apartments, ranging from 1,300 to 1,500 square feet. Price wasn’t sure, however, if those units would command rents high enough to make the deal work.
“After being in this area for a while and talking to other owners in the area, we just didn’t think this was going to support the product we were going to build,” he said.
Antonin Robert, president of community development for GBX, would not identify the company’s potential new partner. But he expressed confidence in the upward trajectory of the district, where Brecksville-based CrossCountry Mortgage is expected to move into a renovated headquarters complex in August or September.
“All the market data we have indicates that residential use is an attractive use in this area,” Robert said. “Those conversations are actively continuing at this time.”