The Lumen reflecting the Keith building in its exterior. The price per square foot actually increased during that time, from $1.54 to $1.58 per square foot. Fewer people are visiting and working downtown because of Covid-19, yet there is still demand for living downtown. Marinucci said this is largely because more than 600 new units have come onto the market during that time. Downtown housing occupancy fell from 92.2% in the 2nd quarter of 2019 to 86.3% in the 2nd quarter of 2020. There are some worrying signs that the market is softening. “The question is, how do we drive up the price per square foot enough that it makes sense to invest? We still have too many surface parking lots downtown.” “One of the challenges in downtown is that Cleveland is a really inexpensive market for rentals, but it remains an expensive construction market,” he said. Marinucci hopes that the Lumen as well as other buildings like the Beacon at 515 Euclid Avenue will spark more ground-up residential development. (Disclosure: Downtown Cleveland Alliance is an underwriter of The Land.) “It helps tap into a more mature market, in terms of people considering renting downtown, like baby boomers,” he said, noting that downtown housing has been aimed at millennials and Playhouse Square may attract an older crowd. We’re selling the experience of Playhouse Square as much as a show or concert.”ĭowntown Cleveland Alliance director Joe Marinucci said The Lumen addresses the need for more high-end rental housing downtown. “If the area came back, we knew the land had value, and why shouldn’t we have a say in that? We’re providing continuity of experience that leads to engagement. Playhouse Square financed the $136 million project with the help of a $55 million construction loan, $50 million in tax exempt bonds, a $10 million loan from Cuyahoga County, a $5 million loan from the city of Cleveland, and tax increment financing (TIF) worth $5 million.ĭevelopment has always been critical to Playhouse Square’s mission, because as a nonprofit developer they can help determine the area’s success, Vernaci said. Fasenmyer Foundation that it allocated towards construction, but otherwise did not allocate any of the funds raised for its nonprofit mission to the project. Playhouse Square received a $15 million gift from the Richard J. New tenants get one month free on a 13-month lease or two months free on a 19-month lease. More than 60 percent of the renters who have leased units so far have been from out of town, despite the pandemic dampening relocation, according to Playhouse Square. The Lumen’s luxury offerings fill a gap in the downtown market by catering to high-end renters, Vernaci said. The 2-3 bedroom penthouse suites range from $4,770 per month to $7,342 per month. Priced at $2.10 to $3.82 per square foot (the average price downtown is $1.58 per square foot), The Lumen is clearly pushing the market. When Playhouse Square purchased the property, they hoped it would someday be worth developing. We knew if it was going to happen, we had to do it and own it.” Because we’re a nonprofit, we’re able to live with a lower margin. “So, we finally decided to do it ourselves. “We spoke to developers, and they all had to bow out because the economics didn’t make sense,” she said. Playhouse Square didn’t intend to develop the property. While some would question a nonprofit’s role in developing a high-rise market-rate building, just as some question the opulent chandelier on Euclid Avenue, Vernaci says real estate has been “part of the DNA of Playhouse Square since the 70s.” That’s when it first rescued the historic theaters from the wrecking ball and purchased the “pie-shaped” piece of land where the Lumen sits. “You don’t have to go to Chicago or New York City to find this kind of product, you can find it right here in Cleveland.” “Eighty-six units have been spoken for virtually, so we’re very excited by the response to the building,” she said. Will the Lumen be successful during a time of economic upheaval when several Playhouse Square restaurants remain closed and two-thirds of downtown workers are still working remotely? Gina Vernaci, CEO of Playhouse Square, the project’s nonprofit developer, argues the building is the latest example of the district’s phoenix-like ability to recover and adapt to change. The Lumen has 22,000 square feet of WFH-friendly common space.
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