MRN plans first new downtown Cleveland condos in more than a decade

Bucking the apartment trend, a local developer is planning the first new condominium project in downtown Cleveland in more than a decade.

MRN Ltd. is preparing to convert two lofty office floors at 629 Euclid Ave., a mixed-use property near East Fourth Street, into for-sale housing.

At 14 units, the development is modest in size. But it could serve as a proving ground for a product that’s scarce in the central business district.

“When I look at other cities, this, to me, is the missing piece,” said Ari Maron, a partner with MRN. “Even as close as Columbus, they have much more robust homeownership in the urban core than we do.”

Condos and townhouses make up only 5% of the center-city residential market, according to the Downtown Cleveland Alliance. The nonprofit group, which represents property owners, has been advocating for more for-sale housing for years.

But financing challenges and developers’ antipathy toward condos — which busted hard during the Great Recession — have hampered progress. The last new condo project downtown, a redevelopment of the historic Park Building on Public Square, opened in 2009. The Avenue District, a ground-up condo tower completed around that same time, went through a foreclosure battle and receivership and became apartments, instead.

“I look at this as a very important pilot project,” Michael Deemer, the alliance’s president and CEO, said of MRN’s proposal. “I think we’ve felt for a long time at the alliance that there is a lot of demand for homeownership downtown. But for a variety of reasons, it’s been very challenging to develop new for-sale product.”

At 629 Euclid, MRN is reimagining the 15th and 17th floors of a historic building that already is home to apartments, offices and a Holiday Inn Express hotel. The 15th floor is part of the original structure, while the 17th floor is a modern office penthouse. (Most of the 16th floor is mechanical space, sandwiched in between.)

Floor plans show that the units will range from 1,300 to 3,000 square feet, though MRN is planning one 690-square-foot condo. All but two of the homes will provide single-story living, something Maron believes is necessary for downtown to attract more empty-nesters and baby boomers looking to shed their suburban homes.

Preliminary pricing for two-bedroom units starts in the $400,000s and stretches up to roughly $1.1 million. The smallest condo will be priced in the mid-$200,000s, said Kristin Rogers and Ted Theophylactos of Howard Hanna Real Estate Services, who are marketing the project.

The agents expect the listings to go live within the next month.

Rogers, who lives in a condo downtown, said that buyers have few options today. Many existing condo properties are former apartments, in old buildings that don’t offer updated finishes, high-rise addresses or sweeping city views.

“Aside from the Pinnacle,” she said, referring to a glassy project completed in 2006, “there’s no luxury, elevated condo product.”

The condos at 629 Euclid will replace offices built for Rosetta, a digital marketing agency that established an 80,000-square-foot presence downtown in 2010. The company, now called Publicis Sapient, slashed its footprint in the building even before the pandemic upended the office market, Maron said.

MRN backfilled some of that space and has shifted offices around to make way for new features, including a fitness center and a movie room on the second floor.

But the upper reaches of the building had a higher calling

“I believe that the development playbook that we’ve been using for the past couple of decades that I’ve been around needs to mature,” Maron said. “Fewer people are working in the office, and I don’t think we know yet what that means. … The idea of living downtown just to walk to work is not enough anymore. People are looking for bigger spaces where they can work from home, and people are looking for the amenities that create a vibrant urban lifestyle.”

MRN aims to start construction soon and to complete the condos by early 2024. On that schedule, buyers will qualify for 15 years of 100% tax abatement, despite looming changes to the city’s longstanding residential tax-break policy.

The developer will not have to wait for pre-sale commitments, thanks to unusual financing. The Cleveland International Fund, a private-equity fund based in Cleveland Heights, agreed to provide a $4 million loan for the project.

A federally approved EB-5 regional center, the fund lends money amassed from foreigner investors who are seeking U.S. residency. The EB-5 visa program offers green cards to individuals and families whose investments create jobs in America.

The loan for the 629 Euclid condos involves cash from another Cleveland project where the fund was repaid. Eight investors needed to redeploy their money for about two years to meet the federal program’s requirements for permanent residency.

“We like the project,” said Steve Strnisha, the fund’s CEO.

“The fallback is that, obviously, it’s in a building that already has apartments,” he added. “So we underwrote it both ways.”

Maron hopes that sales at 629 Euclid will make traditional banks feel more open to considering condo projects downtown, and in close-lying neighborhoods.

“In the future, if we do larger-scale projects, then we’ll probably have to go back to the baklava capital-stack stuff that we normally do,” he said. “But for a project of this scale, it didn’t make sense to go that route.”

While showing off the space during a recent broker open house, Theophylactos said he’s confident that there will be ample interest from homeowners looking for a change — and from renters who are paying escalating prices for new apartments.

“One-floor living, that they can buy, and be vested in the neighborhood, is something we have been dying for,” he said.

It will be worth watching to see whether MRN’s experiment does, indeed, spawn similar projects, said David Sharkey, the president of Cleveland-based Progressive Urban Real Estate.

“We’re sitting around, twiddling our thumbs, with no condos to sell,” he said. “Just recently, over the past few months, the market just dried up. There’s nothing for sale.”

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