Building On Tradition

The $60 million conversion of the Old Arcade downtown into the Hyatt Regency Cleveland is a shining example of the value of rehabilitating and renovating historic buildings. The landmark 1890 structure, which now houses a 293-room hotel and retail establishments, has regained its original luster.

But The Arcade is just one in a long list of renovated historic buildings in Cleveland and inner-ring suburbs that add to the city's appeal, says John Kastellic, senior vice president and national manager for community development lending for KeyCorp.

'These are architecturally significant structures, and they add to the fabric of the community because of their historic nature,' Kastellic says. 'There are a lot of good examples of adaptive reuse of historic buildings, especially in the Warehouse District, or taking older loft manufacturing buildings and converting them into residential uses and ground-floor retail.'

The restoration push throughout Cleveland has spurred residential, office and commercial space gains in otherwise obsolete buildings.

'It's the reuse of shuttered buildings that have little hope of being resurrected for their original use,' says Mark Jablonski, principal of GreatLakesCB. 'You can board these buildings up and let them be, but that generally leads to vandalism, and they can be centers for crime or arson.'

And the central location of such structures makes them attractive for reuse, Jablonski says. They were well-built in their day, and they were the focal point of the neighborhood for their prior use. So there is no reason why they can't be the focal point again.'

Craig S. Miller, a partner at Ulmer & Berne LLP, says these projects — both in the city of Cleveland proper and in the inner-ring suburbs — are occurring now partly because there is a wealth of older, historical properties viewed as a resource to developers.

'First of all, because they can be purchased relatively inexpensively, they have some historic and aesthetic architectural qualities that you don't find with the standardized new construction,' Miller says.

When developers look at renovating a historical building, they focus on the highest use and what will work in the marketplace, Kastellic says.

'Retail is still very tough because we've got all these malls,' he says. 'You're taking a building that was at one time probably a manufacturing [facility] and, of course, that's not going to come back into that space. Or in one case, it was actually a department store years ago, and that's not going to go back into that space.' So housing becomes a viable option, because more and more people are moving downtown to live in a historical building that has character.

Developers now enjoy innovative financing tools that work as incentives to rehab and renovate historical buildings, tools that weren't available 20 years ago, Miller says.

'The whole array of financial incentives has become much more sophisticated and much more useful to developers. It makes the projects more complex,' he says, adding that many incentives exist in the form of local, county, regional and state governments, as well as other federal and private contributions.

The work to revitalize Cleveland and its buildings is part of an effort to reverse 80 years of gradual decline, Kastellic says.

'Let's face it, Cleveland's peak economic era was 1920,' he says. 'It's a constant struggle to try to continue to reinvest in and reinvent cities. You have to do it neighborhood by neighborhood and almost block by block in a neighborhood, so it's just a long-term process.