The Artcraft Building, 2530-2570 Superior Avenue, which is beloved amongst the art set for its gritty appeal and inexpensive urban studio space, is about to undergo a major facelift. The building changed hands last year from the Roy Group to Global X as part of a larger real estate portfolio deal.
The renovations will include the installation of all new windows and a complete overhaul of the HVAC system, which is currently powered by steam heat.
"It must be the most energy inefficient building in northeast Ohio," says Global X's chief investment officer Timm Judson, "so we're going to change all that."
Other upgrades will include façade work (cleaning and tuck pointing), new exterior lighting, interior structural changes, restoration of the water tower, which is still used for the building's sprinkler system, a new security system, a yet-to-be-determined parking expansion and a refresh of all the common areas including the 26 bathrooms, which will be stripped down to the studs and completely redone.
"They are in desperate need," says Judson. "The tenants are pretty excited about that."
Whether or not they'll be around to enjoy the new bathrooms, however, is another matter.
"We're trying to keep a lid on rental increases," says Judson, "but there will be rental increases. We've spoken to the tenants about that. Some will stay; some will go." Judson was short on specifics, saying that the financial model is still in the planning stage, but he does see rents moving up in phases, "so everyone's not sticker shocked." Currently, approximately two-thirds of the 265,000-square-foot building is occupied.
One thing that will not change is the hand-operated elevators.
"That was one of the truly charming features of the building that the tenants seem to love," says Judson, adding that the elevator operators will continue "being a part of the fabric of the building."
Global X has budgeted $16 to $18 million for the project. "We'll be using federal historic tax credits, applying for state credits, and then we'll be using a mix of traditional and incentive based financing." Sandvick Architects are the historical advisors on the project with Vocon as the primary architect. The contractor is Marous Brothers. Judson hopes to begin work by early December. After that, milestone dates are tentative.
"We just don't know what our timeline looks like right now," says Judson, adding that some "fairly large space users" have expressed interest in the refurbished class B+ offices. "We can't make any promises on delivering space, but we're getting close."
Global X will be moving its own offices from 1303 Prospect Avenue into a 20,000-square-foot space in the Artcraft in the summer of 2016—depending on how things go with the Republican National Convention.
"We don't know how complicated that will be," says Judson. "So it may be that we wait until that event has passed."
With residential development the reigning king in metropolitan Cleveland, the Artcraft project begs the question, why office space?
"We've gone through a couple of different plans and iterations," says Judson, which included everything from gutting the building down to the columns to a residential build-out, but Global X eventually settled on offices.
"Our thinking was, with all of these office buildings being converted to residential, all those displaced tenants and businesses need some place to go and there's not a whole lot downtown in quality B+ space."
While the Artcraft project will be Global X's first foray into the once-derided and now booming section of Superior Avenue, it will not be its last. The organization has amassed a number of properties in the Campus District, plans for which are still highly tentative.
"There are a couple of other buildings on (Superior) Avenue that we have our eye on," says Judson. "You don't want to get into an area after it's become really hot because then you're going to pay through the nose," he adds. "We just need to get our arms around what we're doing to do with these buildings. We're taking them one at a time."