Peter Baszuk has been involved with the Globe Sewing Machine Company for 42 years. Fourteen years ago, he moved the business to Maurice Avenue in Slavic Village, where he occupies a few thousand square feet of a large warehouse building. He leases the rest to small manufacturing tenants, although much of the property is presently vacant.

Baszuk is the owner and sole full-time employee of his company, which repairs and sells refurbished sewing machines. There were 50,000 people working in Cleveland’s sewing industry when he started, yet today only a few hundred remain. It’s still the largest industry in the world, but today most of those jobs are in countries such as China. 

Globe is located just south of the proposed $331-million Opportunity Corridor, on a residential street with several missing teeth punched out by the foreclosure crisis. Baszuk loves his location, which is two turns off E. 55th Street. “If Cleveland was a wheel, this would be the hub of the wheel,” he says. “Everything splays out from here.”

However, he’s skeptical of the Opportunity Corridor. He says the $331 million roadway, which could begin construction late next year, has been oversold to the community. Commuting to University Circle is not an issue, he says. “When I go to the orchestra, I’m in my seat in 25 minutes."

And he certainly doesn’t see much demand for new industrial space.

“I’ve heard dozens of reasons why it’s vacant, but the least likely of them is location,” he says of the Forgotten Triangle area, which is populated by vacant brownfields. Instead, he believes the area is a victim of larger economic trends. “Whatever you read about manufacturing coming back, it’s not even a shadow of what it was.”

Tracy Nichols, Director of Economic Development for the City of Cleveland, disagrees. “Manufacturing is definitely in resurgence,” she says. “This is an anti-sprawl strategy. I don’t want businesses moving out of Cleveland to suburban areas. I want to keep jobs close to where we have transit, and opportunity for residents to have access to them.”

The Opportunity Corridor strategy would reposition land along the road for development. According to a brownfields study completed by the city earlier this year, it would open up 10- to 50-acre “superblocks” of developable land in the central and western portions. Along E. 105th Street, the strategy would be to attract tech/medical companies.

To understand the area’s potential, Fresh Water spoke with several individuals close to the real estate market. The Corridor’s success, which originally was conceived as a way to better connect I-490 with University Circle but is now touted as an economic development engine, will depend in part on how successful it is at bringing jobs to the city.   

Opportunity for job creation

According to a study produced by Allegro Realty in 2011, the Opportunity Corridor has the potential to create 2,300 permanent jobs that would generate about $1.1 billion in economic impact. Additionally, it could create over 3,000 temporary construction jobs.

From 2016-2040, the Corridor also could spur development of 250,000 square feet of new multi-tenant office space. It could also result in the creation of one million square feet of light manufacturing and distribution space in the western and central sections.  

Deb Janik, Vice President of Real Estate Development with the Greater Cleveland Partnership, which is spearheading the project, puts those numbers in perspective.

“That would be the equivalent of four new Orlando Bakeries or five to six Miceli Cheese Companies,” she says, citing two companies adjacent to the Opportunity Corridor that currently are expanding. “When you think about putting those jobs in Cleveland, you have to think about the domino effect. It creates more demand for existing services.”

Nichols cites the low industrial vacancy rate (about 6.5 percent, down from 10 percent a few years ago) and paucity of new space as reasons the area could see a wave of development. 

“We have a lot of products that are older manufacturing facilities, with multiple stories, and there’s not a lot of demand for that type of facility,” she says. “Growing companies are looking for a certain ceiling height; they’re looking for efficiency in newer buildings. To keep growing here, we need to make sure we have well-located product available.”

Although the city currently has several large tracts of land available for development – including the former Midland Steel site on Madison Avenue, the Trinity Building site on Detroit Avenue and the Cuyahoga Valley Industrial Center off I-77 – Nichols claims that development interest is increasing and that the city is now close to signing deals. 

In advance of the demand curve

Although Nichols says that the Opportunity Corridor gives Cleveland a chance to “get in front of the demand curve” for new industrial and office space, one prominent developer says he’s holding back until the project is further along. That’s because demand on the Health-Tech Corridor has slowed down, and he wants to wait for the market to pick back up.

“There was a certain pent-up demand over the past couple years, but we’ve seen deal flow dry up,” says Fred Geis, who has developed three buildings along Euclid Avenue. “We’re still satisfied, but we’ve had some trouble filling space. The Cleveland Clinic is holding onto every deal, and we don’t feel a lot of tech transfer or growth happening.”

Although Geis is supportive of the Opportunity Corridor, he believes it will take years to get new development going there. The first project will probably have to be speculative development, and that’s tough for any developer to pull off in the current environment, partially because state funding that was previously available has recently been cut.  

Geis says it’s difficult to complete new office construction in Cleveland without subsidy. “The suburbs are still offering space for $10 per square foot with free parking,” he says.

Industrial development is an “unproven market,” he adds. “I do think that young, agile companies want to be in the urban core. But if there’s an industrial market, then it’s highly specialized and mostly associated with the University Circle institutions.”

Geis notes that many growing industrial companies still feel a hangover from the Great Recession. They’re expanding into space they already have, rather than building new.

Repopulating the area

Most developers and brokers seem to agree with Geis that the Opportunity Corridor is far from a slam dunk, yet opinions vary widely as to how successful it might be.

Terry Coyne, Executive Managing Director with office broker Newmark Grubb Knight Frank, says he does not believe demand is high for land along the Opportunity Corridor.

“I think there are better opportunities in Cleveland than the Opportunity Corridor,” says Coyne, citing vacant land on Euclid Avenue and a 21-percent vacancy rate in downtown Cleveland. “If you’re trying to justify the Opportunity Corridor by what will come, I don’t know if you can do it. It’s a roadway project, and that’s how it should be framed.”

Not everyone agrees. Brandon Isner, a researcher with C. B. Richard Ellis, says the demand curve is changing. “The market statistics show there is demand for industrial space,” he says. “It’s not necessarily a huge demand, but if a company is looking for a 300,000-square-foot space in good condition, then it doesn’t really exist in Cleveland.”

“With the Opportunity Corridor, we have an opportunity to repopulate the area,” he says.

Jay Foran, Senior Vice President of Business Attraction for Team NEO, a nonprofit business attraction and growth organization, says that having developable sites in Cleveland could be key as industrial development starts to ramp up in the future.

“We hosted a number of real estate executives here in Cleveland last week, and they commented on how industrial sites are limited here and there’s not a lot of capacity,” says Foran. “Pretty soon, industrial developers are going to have to start building.”

Fairfax primed for growth

Vicky Johnson, Executive Director of Fairfax Renaissance Development Corporation, says her organization has planned for the Opportunity Corridor for well over 10 years.

“We asked ourselves, ‘How would we leverage such a major project investment?’” she says. “We knew that there was a higher and better use than housing in the area. With University Circle institutions such as the Cleveland Clinic expanding, we knew there was an opportunity to help them grow in Cleveland instead of going to the suburbs.”

Johnson points to the businesses that have spun off from the Global Cardiovascular Innovation Center as one example -- they need office space by the Clinic, she says.

“When those businesses are birthed out, we need to help them find a place in Fairfax,” she says. “The Opportunity Corridor creates a new front door for our neighborhood -- there will be tens of thousands of cars coming through each day, providing us with an opportunity to showcase the neighborhood and create more attractive addresses.”

Johnson admits that the New Economy Neighborhood, the brand for E. 105th Street between Cedar and Quincy, could likely have been developed without the Opportunity Corridor. But she says that the roadway will accelerate and enhance the entire project, fueling development within Fairfax and providing economic opportunities for residents.

“Developers tell us, ‘You guys are in a sweet spot’ because of the Clinic’s commitment to the area,” Johnson says. “We’re in a unique position. When the largest employer in Cleveland says they’re looking to expand, you do what you can to accommodate them.”

Photos Bob Perkoski

Interested in learning more? Community meetings on the Opportunity Corridor will be held Dec. 14th-15th. More info here.