2
EXECUTIVE SUMMARY
INTRODUCTION
Holliday Fenoglio Fowler, L.P. (‘HFF”) is pleased to present 1111 Superior (the “Property”), a 559,299 RSF office tower strategically located
at “Main and Main” of Cleveland, Ohio’s central business district. The Property’s efficient floor plates, superior amenities and prime views
of Lake Erie within an urban environment combine to present a rare opportunity for investors. Expertly managed and environmentally
conscious, 1111 Superior is one of the few office buildings in downtown Cleveland to achieve the LEED Silver Certification.
Anchored by the Cleveland Metropolitan School District (“CMSD,” S&P: AA; 92,358 RSF or 15.7% of the Property), 1111 Superior is 83.4%
leased overall to a highly diverse tenant base with no single industry representing more than 24% of the leased square footage. The second
largest tenant, Asurint, moved to the Property in 2016 and has recently expanded their leased footprint to 70,364 RSF or 11.7% of the
Property. Asurint’s lease and subsequent expansions are indicative of the Property’s recent leasing activity, as over 220,000 RSF of new
and expansion leases have been executed since 2015. An investor is well positioned to capitalize on this leasing momentum in order to lease
the 41,780 RSF of contiguous high-rise vacancy on the 23rd through 25th floors, and backfill the top three (3) floors of the Property totaling
41,999 RSF once IBM gives back this space, anticipated to occur as early as 2019.
KEY PROPERTY STATISITICSProperty Address: 1111 Superior Avenue East,
Cleveland, OH 44114
Submarket: Cleveland CBD; Nine-Twelve District
Stories: 28 Stories, 350' Tall
Rentable Square Feet: 599,299 RSF
Year Built/Renovated: 1983/1995/2014
Total Percent Leased: 83.4%
Remaining W.A.L.T.: 5.3 years
Slab to Slab Ceiling Height: 10'6"
Finished Ceiling Height: 8'6"
Architect: Skidmore, Owings, & Merrill / Hatfield
Building Engineering: Jaros, Baum, and Bolles
Parking: 509 Covered Spaces (0.85 / 1,000)
Typical Floor Plate: 23,454
Walk Score: 96
Transit Score: 86
Real Estate Tax Parcel: 101-35-038
Site Area (SF): 55,665
Site Area (Acres): 1.278
Zoning: G-R-E5; General Retail Business
FAR: 11
Environmental Certification: LEED Silver
Contemporary Iconic Office Tower
Diverse Tenancy
High-Yield, Value-Add Returns
State-of-the-Art Tenant Amenities
Sought After High Rise Vacancy
Diminishing CBD Office Supply
Mark-to-Market Opportunity
Tenant Migration to the CBD
PREVIOUS TENANT LOCATIONS
INVESTMENT HIGHLIGHTS
62% 19% 14% 5%DOWNTOWN NEW
ENTRANTSUBURBS ANOTHER
METRO
SUMMARY OF PRIMARY TENANTS
TENANT INDUSTRY FLOORS RSF%
SHARE COMMENCE. EXP.CURRENT
BY RENT ESCALAT. REMAINING TERM (YRS)
Cleveland Metropolitan School District (1) Education 17-19 92,358 15.4% Aug-13 Jul-23 $16.75 $0.50 5.1
Asurint (2) Technology 20-22 70,364 11.7% Feb-16 Jan-27 $16.50 Varies 8.6
MetLife Services & Solutions Legal Services 8-9 47,529 7.9% Nov-99 Nov-28 $15.76 Varies 10.4
IBM Corporation (3) Technology 26-28 41,999 7.0% Jul-16 Sep-21 $16.50 $0.50 3.3
Plante & Moran, PLLC Accounting 12 23,781 4.0% Oct-05 Dec-22 $16.50 $0.30 4.5
Weighted Average / Total 276,031 46.1% $16.46 6.6
(1) CMSD currently pays $16.75/RSF on 76,763 RSF (1st, 14th, 17th through 19th floors) and $15.75/RSF on 12,973 RSF located on the 2nd Floor. All office space escalates $0.50/RSF annually. Tenant also leases 2,622 RSF of storage space (included in the above total RSF) at $10/RSF through LXD.
(2) Asurint will expand into 16,000 RSF effective 5/1/18; and 7,454 RSF effective 2/1/19. Tenant’s rent shall increase to $18.00/RSF on 2/1/22 with no further escalations.(3) IBM’s contractual LXD is 9/30/21, but analysis assumes Tenant exercises their termination option effective 9/30/19, which requires 9 months notice and Termination Fee of $780,775.29.
EXECUTIVE SUMMARY
3
The Property has attracted office users from a
multitude of sources including competitive and
non-competitive CBD properties (approximately
62% of recent new tenants), new businesses
(19%), adjacent suburbs and submarkets (14%),
and even other states who considered the entire
downtown office market before selecting 1111
Superior (5%). Many of these companies seek
efficient space, which positions 1111 Superior as
the office building of choice with its 20’6” column
spacing, optimum bay depth and 10 potential
corner offices per floor. The upsurge of adaptive
reuse activity has also displaced Class B and C
office tenants into Class A space. 1111 Superior
provides upside for an investor through the lease
up of the 99,747 RSF (16.6% of the Property) of
existing vacancy, and the ability to mark leases
to market upon renewal, thereby enhancing NOI
over the hold period.
EXECUTIVE SUMMARY
4
P R O P E R T Y
599,299 RSF, 28-Story Class A trophy office tower
One of the few LEED Silver certified buildings in downtown Cleveland
Designed by world-renowned Architect Skidmore, Owings and Merrill
L O C A T I O N
“Main & Main”, epicenter of downtown Cleveland
Central location in the Nine-Twelve Financial District
Gateway to the Theater District and Playhouse Square Center
A M E N I T I E S & F E A T U R E SVibrant, recently renovated lobby with modern floor-to-ceiling LED illuminated wall
The lobby also features marble floors, marble columns, and 18’ ceilings
Unimpeded views of Lake Erie, City of Cleveland, and surrounding parks
Brand-new conferencing facilities with multiple video screens, break-out rooms, and lounge
Brand-new, state-of-the-art fitness facility features weights, cardio equipment, showers, exposed ceilings, and Lake Erie views
Separate yoga room that is adjacent to the fitness facility
T E N A N C YOver 220,000 RSF of new/expansion leases have been executed since 2015; occupancy increased from 50% in 2014 to 83.4% today
30.3% of the Property is leased to Investment Grade tenancy
Diverse tenant base with no one industry representing more than 24% of building
Attracts tenants from the CBD, suburbs, and out-of-state
M A R K E TOver 5 million SF in adaptive reuse projects drastically improved Cleveland office fundamentals
New multi-housing supply supports the live-work-play lifestyle downtown
M A R K T O M A R K E T O P P O R T U N I T Y W I T H B E L O W M A R K E T R E N T S1111 Superior presents an ideal opportunity to increase rents, bridging the gap between in-place rents and the current market rents for
the Property, which are currently $17.50/RSF for the low-rise floors (Floors 1-15) and $19.00/RSF for the high-rise floors (Floors 16-28). The
weighted average in-place rental rate at the Property is currently $16.41/RSF which is $1.00 to $2.50 less than the Property’s market rents.
Significant opportunity lies within the 23 tenants, totaling 181,209 RSF or 30.2% of the Property, that roll between 2018 and 2022. These
tenants together have an in-place rental rate of $16.31/RSF and upon expiration will be 12.3% below market. This includes IBM who leases the
top three floors of the building totaling 41,999 RSF, which represents a prime mark to market opportunity as Tenant’s rent will be more than
13% below market, whether they exercise their termination option (effective 9/30/19) or hold the space through lease maturity (9/30/21). 1111
Superior’s rollover profile and current vacancy will allow an investor to increase future revenues by marking leases to market upon renewal,
thereby substantially enhancing the Property’s revenues and value throughout the investment period.
0%
2%
4%
6%
8%
10%
12%
$13.00
$14.00
$15.00
$16.00
$17.00
$18.00
$19.00
$20.00
$21.00
$22.00
2018 2019* 2020 2021 2022%
RSF
Exp
iring
Rent
/ RS
F
$16.10$16.10
$17.55$17.55
$14.79$14.79
$17.47$17.47 $17.52$17.52
$18.25$18.80
$19.36
$19.94
$20.54
% RSF Expiring Weighted Average Rent/RSF Upon LXD Average Market Rent/RSF
CONTRACT RENTS UPON EXPIRATION VS. MARKET RENT GROWTH (2018-2022)
* Includes IBM
EXECUTIVE SUMMARY
5
LOCAL AMENITIES
RESTAURANTS RETAIL➊ Oasis Café ➊ PNC Bank
➋ Urban Farmer ➋ CVS Pharmacy
➌ Pho Thang Café ➌ Rocket Fizz
➍ Captain Tony's Pizza ➍ The Tea Lab
➎ Tomaydo Tomahhdo ➎ The Restock CLE
➏ Guys Pizza Co. ➏ Surroundings Home Décor
➐ Porcelli's Bistro ➐ Nick's Sports Corner
➑ Tea House Noodles ➑ Peterson Nut
➒ Potbelly Sandwich Shop ➒ U.S. Bank
➓ Anna in the Raw ➓ Budget Car Rental
⓫ Winking Lizard ⓫ West Marine
⓬ Asia Kitchen ⓬ Heinen's
⓭ 45h Street Bar and Grill ⓭ FedEx Office
⓮ Pickwick & Frolic ⓮ Victoria's Secret & PINK
⓯ Butcher and the Brewer ⓯ Brooks Brothers
⓰ Zocalo Mexican Grill & Tequileria ⓰ Payless ShoeSource
⓱ Society Lounge ⓱ Claire's
⓲ Red, the Steakhouse ⓲ GameStop
⓳ Chinato ⓳ The Children's Place
⓴ Barrio ⓴ Papyrus
21 Sushi 86 21 Bath & Body Works
22 Helio Terra Vegan Café 22 FirstMerit Bank
23 Flannery's Pub
24 Lola ATTRACTIONS25 Pizzafire ➊ Convention Center of Cleveland
26 Noodlecat ➋ Cleveland City Hall
27 Pura Vida by Brandt Evans ➌ First Energy Standium
28 Mirch Masala ➍ Great Lakes Science Center
29 Tilted Kilt ➎ Rock and Roll Hall of Fame and Museum
30 Lincoln Tap House ➏ Voinovich Bicentennial Park
31 Hyde Park Prime Steakhouse ➐ The Cathedral of St. John the Evangelist
32 Hard Rock Café ➑ Cleveland Public Library
33 Morton's The Steakhouse ➒ House Blues Cleveland
34 Muse Restaurant ➓ Hilarities
35 Take 5 Rhythm and Jazz Tapas ⓫ Quicken Loans Arena
36 Johnny's Little Bar ⓬ Progressive Field
37 Johnny's Downtown ⓭ Cleveland Grays Armory Museum
38 Taza Lebanese Grill ⓮ Hanna Theatre
39 Drop Bar ⓯ Connor Palace
40 Nauti Mermaid ⓰ State Theatre
41 Bar Louie ⓱ Ohio Theater
42 Blue Point Grille ⓲ Allen Theatre
43 Cleveland Chop ⓳ Ambassador Bowling Lanes
44 Panini's Bar & Grill ⓴ FBI
45 Harry Buffalo 21 JACK Casino
46 City Tap Cleveland 22 The Bonfoey Gallery
47 The Clevelander Bar & Grill 23 Tower City Cinemas
48 Brickstone 24 Dive Bar
49 HotSpot Café 25 Tequila Ranch
50 Becky's
51 Barristers Delit Restaurant HOTELS52 Otto Moser's Restaurant ➊ The Westin Cleveland
53 Cibreo Cleveland ➋ Hampton Inn
54 Green Rooster Farms ➌ Hyatt Regency
55 Dunkin' Donuts ➍ Marriott Downtown
56 Barley House ➎ Hilton Cleveland
57 XO Prime Steaks ➏ Holiday Inn Express
58 Inn of the Barristers ➐ the Kimpton Schofield Hotel
➑ Metrpolitan Hotel
COFFEE ➒ Wyndam Cleveland
➊ Starbucks ➓ Radisson Hotel
➋ Rising Star Coffee Roasters ⓫ Renaissance Hotel
➌ Erie Island Coffee Co. ⓬ The Ritz-Carlton
➍ Ontario Street Café ⓭ Hilton Garden Inn
➎ Phoenix Coffee Co. ⓮ Residence Inn
EXECUTIVE SUMMARY
6
A C O N T E M P O R A R Y, I C O N I C O F F I C E T O W E R1111 Superior has been successfully repositioned as a top-tier office tower
amidst a Cleveland office market in which over 5 million square feet of office
space has been redeveloped into residential and hospitality uses over the last
six years. At 28 stories and 599,299 RSF, the Property offers an encyclopedic
amenity package in an irreplaceable live-work-play location. Tremendous
leasing success followed the 2014 renovation, evidenced by over 220,000
RSF of positive absorption in the last 3 years. 1111 Superior’s unmistakable
curtain reflective glass design is a product of the world-class architect
Skidmore, Owings, & Merrill, whose other notable projects include the Willis
Tower, the One World Trade Center, and the Burj Khalifa. The Property was
completed in 1983 as the headquarters for Eaton Corporation, extensively
renovated in 1995 and 2014, and remains one of the most iconic properties in
the Midwest region.
BURKE LAKEFRONTAIRPORT
322
322
66 20
20
422
422
20
2
14
1010
14
2
P O R T O FC L E V E L A N D
C L E V E L A N DS T A T E
U N I V E R S I T Y
C S UC O N V O C A T I O N
C E N T E R
P R O G R E S S I V EF I E L D
Q U I C K E NL O A N SA R E N A
C L E V E L A N DB R O W N SS T A D I U M
CUYAHOGA RIVER
NorthCoast
Harbor
RTA Rapid
W 3rd Street Station 9th Street
Station
AmtrakStation
South Harbor Terminal
Donald Gray Gardens
Huntington Park
PublicSquare
Mall B
Park Plaza
WillardPark
VoinovichPark
Mall C
Mall A
East 9th Street
Huron Road
Bolivar Road
West Lakeside Avenue
W 3
rd Street
East 13th Street
Hamilton Avenue
St. Clair Avenue
Johnson Court
Superior Avenue
Walnut Avenue
Rockwell AvenueRockwell Avenue
Payne Avenue
Chester Avenue
North Marginal Road
Ontario Avenue
Chester Avenue
Frankfort Avenue
Superior Avenue
Euclid Avenue
Euclid Avenue
Prospect Avenue
Huron Road
Ontario Avenue
Carnegie Avenue
Eagle RoadErie Avenue
Sumner Avenue
East 14th Street
St. Clair Avenue
Eagle Avenue
W 6
th Street
W 3
rd S
treet
Vincent Avenue
Erieside Avenue
East 12th Street
East 17 th Street
East 6th Street
East Lakeside Avenue
E 16th St
Davenport Ave
Rock & Roll Boulevard
Huron Road
Walnut Avenue
E 4t
h Stre
et
East
18th S
treet
Canal Road
East 9th Street
East 9th Street
East 9th Street
Huron RoadHuron RoadHuron Road
Bolivar RoadBolivar RoadBolivar Road
West Lakeside Avenue West Lakeside Avenue West Lakeside Avenue
W 3
rd StreetW
3rd Street
W 3
rd Street
East 13th Street
East 13th Street
East 13th Street
Hamilton AvenueHamilton AvenueHamilton Avenue
St. Clair AvenueSt. Clair AvenueSt. Clair Avenue
Johnson CourtJohnson CourtJohnson Court
Superior AvenueSuperior AvenueSuperior Avenue
Walnut AvenueWalnut AvenueWalnut Avenue
Rockwell AvenueRockwell AvenueRockwell AvenueRockwell AvenueRockwell AvenueRockwell Avenue
Payne AvenuePayne AvenuePayne Avenue
Chester Avenue
Chester Avenue
Chester Avenue
North Marginal RoadNorth Marginal RoadNorth Marginal Road
Ontario AvenueOntario AvenueOntario Avenue
Chester AvenueChester AvenueChester Avenue
Frankfort AvenueFrankfort AvenueFrankfort Avenue
Superior AvenueSuperior AvenueSuperior Avenue
Euclid Avenue
Euclid Avenue
Euclid Avenue
Euclid Avenue
Euclid Avenue
Euclid Avenue
Prospect Avenue
Prospect Avenue
Prospect Avenue
Huron Road
Huron Road
Huron Road
Ontario Avenue
Ontario Avenue
Ontario Avenue
Carnegie AvenueCarnegie AvenueCarnegie Avenue
Eagle RoadEagle RoadEagle RoadErie AvenueErie AvenueErie Avenue
Sumner AvenueSumner AvenueSumner Avenue
East 14th Street
East 14th Street
East 14th Street
St. Clair AvenueSt. Clair AvenueSt. Clair Avenue
Eagle AvenueEagle AvenueEagle Avenue
W 6
th StreetW
6th Street
W 6
th Street
W 3
rd S
treet
W 3
rd S
treet
W 3
rd S
treet
Vincent Avenue
Vincent Avenue
Vincent Avenue
Erieside AvenueErieside AvenueErieside Avenue
East 12th Street
East 12th Street
East 12th Street
East 17 th StreetEast 17 th StreetEast 17 th Street
East 6th Street
East 6th Street
East 6th Street
East Lakeside Avenue East Lakeside Avenue East Lakeside Avenue
E 16th St
E 16th St
E 16th St
Davenport AveDavenport AveDavenport Ave
Rock & Roll BoulevardRock & Roll BoulevardRock & Roll Boulevard
Huron RoadHuron RoadHuron Road
Walnut Avenue
Walnut Avenue
Walnut Avenue
E 4t
h Stre
etE
4th S
treet
E 4t
h Stre
et
East
18th S
treet
East
18th S
treet
East
18th S
treet
Canal Road
Canal Road
Canal Road 322
20
20
C
oonouth Harbor TSoSoouutth Ha bHaarrbboor TTeer
l BlMMaallll B
dWiWil dWillllalarardrdP kPPaPararkrk
AlMMa AMalallll Al A
99EaEast EaEEEEaEaEaEaasasasasst
ststst99999999ttttthththth Stree
SSSSStStStSttretrtrtrrererereeeeeeeeeeeee
uron RoadHHHHuuuurorrrrorororon ononon RoRRRRoRoRoRooaoaoaoadadadad
ar dr RoRRRRoRoRoRooaaaadadadad
AAe eee AAAAAvevvvveveveveenenenenuuuueeee
33EEaaasstt EaEEEEaEaEaEaasasasasst
st st st1111131313133333ttttthththth SSSS Aon AAAHaHHHHaHaHaHammmmiiiiillllltoltltlttotototoon ononon AAAAAvevvvveveveveenenenenuuuuueueueue
Ar AClair AvenCCCCClaClClCllalalalaairiiiir rrr AAAAAvevvvveveveveenenenennueuuuueueueue
or AvenueAoooor rrr AvAAAAvevvvveveveveenenenenuuuueeee
AAAAAlllll lll AAAAAvevvvveveveveenenenenuuuuueueueueAock ll ARoRRRRoRoRoRoococococckckckckkwkwkwkwweweweweelelelell lll AAAAAvevvvveveveveenenenenuuuueeee
yne Avenueayne AAvenu
PaPayPayPayPayaynayayayyneynynynne nenene AvAAAAvevevevevenveveveenuenenennueuuuueueueue
AvenueA
Chester AChChChChCheCheCheCheheshesheshesestestesteststestestesteterterterterer Aerererr AvAvAvAvAveAveAveAvevenvenvenvenenuenuenuenunuenuenuenueueueueue
AvenueA
uclid AEuEuEuEuEucEucEucEucucluclucluclclicliclicliclidlidlidlidlid Aidididd AvAvAvAvAveAveAveAvevenveveveenuenuenuenunuenuenuenueueueueue
AvenueA
uclid AEuEuEuEuEucEucEucEucucluclucluclclicliclicliclidlidlidlidlid Aidididd AvAvAvAvAveAveAveAvevenveveveenuenuenuenunuenuenuenueueueueue
pect Avenue
pect Avct Avenue
ProsProspecPrPrPrPrProProProProrosrosrosrosospospospospspespespespepecpecpecpecectectectectct Actctctt AvAvAvAvAveAveAveAvevenveveveenuenuenuenunuenuenuenueueueueue
r ASt. C...... i ASSSSSt.St.St.St.t. t.t.t. CCCCClClClCllalalalaiiiir rrr AAAAAvevvvveveveveenenenenuuuueeee
cV nccViViViViVinVinVinVinVincinininncencencencececececeenenenen
22EEaaasstt
22 EaEEEEaEaEaEaasasasasst
st st st111122222222ttttthththth SSSS
Ea117777
Eaaassst t1177777 tEaEEEEasEaEaEaasasasasst st st st 17111171717177777 ththththSSSSSt St St Sttre trtrtrrererereeeeeeeeeet et et et
66EEaaassEaEEEEaEaEaEaasasasasst
st st st66666666ttttththththS SSSSSt St St Sttre trtrtrrererereeeeeeeeeet et et et
Ae A East Laast Lakeside AEaEEEEaEaEaEaasasasasst ststst LLLLLaLaLaLakekkkkekekekeesesesessidsisisiideidididde dedede AAAAAvevvvveveveveenenenenuuuuueueueue tttt
d
k oc
RoRRRRoRoRoRoococococck ckckck
& &&&RoRRRRoRoRoRol ol ol oll lllBBBBBoBoBoBououououlllleleleleevevevevvavavavardrrrrdrdrdrd
enueAvenueA
alnut A n
WaWWWWalWaWaWaalnalnalnalnlnulnulnulnunutnutnutnutut Autututt AvAvAvAvAveAveAveAvevenveveveenuenuenuenunuenuenuenueueueueue
eeeStStStStt
retretretreree
rerereeetee
tee
tee
tetetetet
322
6
Park PaPararrk PlPlPlalazazaza
SSSSSt St St Sttre trtrtrrererereeeeeeeeeet et et et
. ..............SSSSSt.St.St.St.t. t.t.t.
pSuperioSSSSSuSuSuSupppppepepepeererererrioriririioooo
AAAAWaWWWWaWaWaWallllnnnnuuuuut ututut AAAAAvevvvveveveveenenenenuuuueeee
ckRoRRRRoRoRoRoococococckckckckkwekwkwkwwewewewe
PPPP
Chester AACCCCChChChCheheheheesesesesststststteteteteer ererer AAAAAvevvvveveveveenenenenuuuueeee
AvvenuevAt At Antnnnnt ntntntt AvAAAAvevevevevenveveveenuenenennueuuuueueueue
SSSSStSt St Sttre trtrtrrererereeeeeeeeeet et et et
WWWW
5MinuteWalk
10MinuteWalk
1
1012
11
1146
48
54 53
52
50
49
47
51
453
678
9
24
2526
2728
29
313332
5534
30
35
4443
4523
13-22
36-41
242 57
58
56
1
1
2
13
10
12
9
8
3
225
7
4
6
16-23
1
8
910
11
12
1314
22
151617
18
19
20
21
23
24 25
7
2
3
4
5
6
1
2
3
6
7
8
910
14
11
12
13
4
5
3
4
1
1
1
2
5
EXECUTIVE SUMMARY
7
EXECUTIVE SUMMARY
8
S T R A T E G I C L O C A T I O N W I T H S U P E R I O R A M E N I T Y S E TPositioned at the core of downtown Cleveland, 1111 Superior is universally accepted as being located at the “Main & Main” in the CBD
along Superior Avenue, effectively the main thoroughfare of the CBD. In addition to its prominent street address, 1111 Superior overlooks
Cleveland’s greatest asset, Lake Erie, and provides tenants with access to the recently redesigned Ralph J. Perk Plaza Park, as well as the
Theater District, bike share system and the metro light rail system. The recent park renovations include raised grassy hills, a metal pergola
with a translucent red canopy, and an acre of open space frequently used for lunch breaks, food trucks and free concerts.
In addition to its strategic location, 1111 Superior’s comprehensive amenity package includes the on-site David’s Deli, which supplies tenants
with a variety of fresh foods throughout the day including breakfast options, salads, sandwiches, homemade soups and more, along with
catering services. Furthermore, recent capital expenditures totaling $1.6 million include extensive improvements to the lobby, fitness center
and conference facilities, which have collectively repositioned 1111 Superior as one of the most desirable office towers downtown. All of these
amenities are provided to tenants at no cost, and have been instrumental in securing high quality tenancy such as Asurint, Plante Moran and
IBM. An investor may also consider the potential for a roof-top terrace on the 26th floor, which would further separate the Property from its
competitive set.
EXECUTIVE SUMMARY
9
E S T A B L I S H E D I N S T I T U T I O N A L T E N A N C Y A N D T E N A N T D I V E R S I T YThe anchor tenants at the 1111 Superior are some of the most established firms in both Cleveland and the country. MetLife Services & Solutions,
under its prior Hyatt Legal Plans arm is the country’s largest provider of legal voluntary benefits with a client base of over 3 million people in
2,000 organizations. Plante & Moran was named the “Best Accounting Firm to Work For” by Vault Guide to the Top 50 Accounting Firms for
quality of life, business outlook, culture, and worklife balance. Cleveland Metropolitan School District serves almost all of the City of Cleveland,
and represents the second largest PreK-12 district in the state of Ohio with enrollment of 38,949 students. Finally, International Business
Machines has generated the most patents of any business in the last 25 years and operates in over 170 countries.
The tenant mix is also well-diversified representing a range of industries including legal services, technology, education, F.I.R.E., business
services and more, with no single sector accounting for more than 24% of the total tenant base. Tenants range from start-ups to well-
established firms, international and locally based law firms, financial and insurance companies, and two (2) major Fortune 500 companies
(MetLife and IBM).
CREDIT QUALITY INSTITUTIONAL TENANCYMOODY'S S&P FITCH RSF % FLOORS COMMENCEMENT EXPIRATION TOTAL TERM
Cleveland Metropolitan School District A2 AA A- 92,358 15.4% LL, 1-2; 17-19 Aug-13 Jul-23 10.0 YrsMetLife A3 A- A 47,529 7.9% 8-9 Oct-99 Nov-28 29.2 YrsIBM (1) A1 A+ A+ 41,999 7.0% 26-28 Jul-16 Sep-21 5.3 YrsChicago Title Insurance A3 A A 12,382 2.1% 6 Jul-13 Feb-19 5.7 YrsTotal / Weighted Average 194,268 32.4% 13.4 Yrs
(1) IBM's contractual LXD is 9/30/21, however analysis assumes tenant exercises their termination option effective 9/30/19, which requires 9 months notice and termination fee of $780,755.29.
EXECUTIVE SUMMARY
10
A D A P T I V E R E U S E C A T A LY Z E S C L E V E L A N D ’ S R E N A I S S A N C EOver 5 million square feet has been redeveloped from office to
residential and hospitality over the last six years in Cleveland.
This trend has improved overall office fundamentals by reducing
the existing supply and simultaneously increasing the demand
and occupancy of CBD office. The apartment unit conversions
accommodated the burgeoning downtown population that
has grown 79% since 2000 (which includes a 77% increase
in millennial residents), as the residential occupancy stayed
consistent at 95% year over year. A larger downtown population
was met with an increase of homegrown and new to market
retailers. The hospitality sector also added 1,000 rooms, further
displacing more office product. The ongoing adaptive reuse
activity that Cleveland is experiencing will continue to improve
the ongoing desirability of 1111 Superior.
The surge in apartment construction has also made the
downtown area a more vibrant and livable employment hub. In
2016, a total of $2.3 billion was invested into re-purposing and
developing office, hotel, residential, and public infrastructure
in downtown Cleveland, which has activated the CBD as a live-
work-play destination. The Cleveland labor market is seeing
improvement as May 2017 experienced an increase in 6,300
jobs in business services and government employment sectors
among others. As companies continue to grow, the office
market is expected to continue to experience positive trends.
This healthy employment market has forced employers to pay
more attention to their real estate decisions in order to attract
and retain talent. This is driving the migration trend to urban,
amenity-rich locations. Companies are also targeting more
centrally located buildings that offer creative and collaborative
work environments. The Cleveland office market is poised to
benefit significantly from this broader trend of urbanization
since companies no longer view office space as a commodity
but as an amenity critical to talent attraction.
C O R P O R A T E M I G R A T I O N T O T H E C B DSeeking to tap a broader talent pool and immerse themselves
in Downtown Cleveland’s renaissance, suburban tenants have
continued their unprecedented migration into the CBD, collectively
leasing over 469,000 RSF since 2015. Businesses have often cited
non-financial factors as being the driving factor behind relocating to
the CBD. The paramount contributing factor is the ability to recruit
and retain top talent from the young, growing workforce living within
the city. Downtown Cleveland’s public infrastructure, unparalleled
amenity base, vast cultural institutions and recreational activities,
and recent population growth combine to create the ideal live-work-
play environment, further contributing to the downtown migration.
Recent significant corporate relocations include Fox Sports (30,789
RSF), New York Life Insurance (107,296 RSF), Council for Economic
Opportunities (44,801 RSF), The Millennia Companies (45,072 RSF),
Fisher Phillips (16,690 RSF), Electronic Merchant Systems (45,000
RSF) and the NRP Group (41,307 RSF).
EXECUTIVE SUMMARY
11
U N S U R P A S S E D V I E W S A N D F U N C T I O N A L I T Y1111 Superior has unimpeded views of Lake Erie and 360° views of downtown Cleveland on the higher floors. The curtain glass exterior
provides an abundance of windows and natural light for its tenants. Its saw-toothed floorplate can function either as separate tenant bays or
provide up to 10 potential corner offices for a single tenant floor. This efficient floor plate design offers expansive interior space and optimum
bay depth for office planning flexibility. Additionally, future ownership has the unique opportunity to add value by creating a roof-top deck
on the 26th floor.
T I M E L E S S , I N S T I T U T I O N A L LY M A I N T A I N E D S T R U C T U R E1111 Superior’s design, amenities, height, floor plates, and location truly make the Property a timeless asset that is exceptionally difficult to
reproduce. Limited availability of quality development sites combined with replacement cost estimates of approximately $250 per RSF make
new construction and competition highly unlikely in the CBD submarket. The Property further benefits from the depth of past institutional
ownership that has maintained the the Property’s Class A status through required capital improvements.
Over $1.6 million of total capital improvements have been invested since 2014 to sustain the first class nature of the Property. Significant
capital improvements include fitness center and equipment purchases of $525,484 and conference center expenditures of $492,446.
Furthermore, $418,000 has been invested in extensive modernizations to the lobby and other common areas. Ownership has also enhanced
the quality of the mechanical systems through consistent improvements to both the HVAC and electrical systems. These improvements are
expected to result in significant energy and operational efficiencies.
G R O U N D L E A S E The building is subject to a ground lease owned by the Bishop of the Diocese of Cleveland, which commenced on August 1st, 1980. In 2017,
the term of the ground lease was extended to December 31, 2092, resulting in 74 years of remaining term. See pages 74 & 75 for a summary
of the ground lease.
EXECUTIVE SUMMARY
12
D Y N A M I C F A S T G R O W I N G E C O N O M YCleveland is one of the nation’s most
dynamic economies and fastest
growing cities. Cleveland’s population
grew 32% between 1990 and 2000,
outpacing every other Midwest city
over the same time period. While
most secondary markets experience
a “brain drain” in which they educate
their young people before they move
to other cities, Cleveland is undergoing
the exact opposite phenomenon.
Downtown Cleveland’s population has
grown 79% since 2000, and millennials
comprise the largest demographic,
having grown by 77% over the same
time period. These urban dwellers are
highly educated and have contributed
to a 140% increase in residents who
possess at least a bachelor degree.
L A R G E C O N C E N T R A T I O N O F F O R T U N E 5 0 0 C O M P A N I E SCleveland is home to a host of Fortune 500 companies. Major employers in the
area include:
A B U N D A N T T R A N S P O R T A T I O N A M E N I T I E S1111 Superior is located in close proximity to the RTA light rail metro station which
links the Property with Cleveland’s eastern, western, and southern suburbs.
Tenants have access to the Cleveland bike share system and the free Nine
Twelve Shuttle, which stops at the corner of Superior and 12th street, immediately
adjacent to the Property. Furthermore, the garage offers two way entrances and
exits allowing convenient ingress and egress from either direction.
1111 Superior’s location along East 12th Street places it adjacent to the cities
most abundant supply of cheap surface parking. This combination of transit and
parking options makes 1111 Superior an irreplaceable location.
EXECUTIVE SUMMARY
13
Contact InformationHFF Chicago150 North Riverside | Suite 2500Chicago, IL 60606Telephone: 312.528.3650Fax: 312.528.3651
Investment ContactsJaime M. FinkSenior Managing [email protected]
Jeffrey M. BramsonSenior Managing Director/Managing [email protected]
Bryan D. [email protected]
Patrick M. [email protected]
John MerrillSenior Managing [email protected]
Yoonjin [email protected]
Debt ContactJason A. [email protected]
Ohio ContactChristine [email protected]
©2018 Holliday Fenoglio Fowler, L.P. (“HFF”), HFF Securities L.P. and HFF Securities Limited (collectively, “HFFS”) are owned by HFF, Inc. (NYSE: HF). HFF operates out of
26 offices and is a leading provider of commercial real estate and capital markets services to the global commercial real estate industry. HFF, together with its affiliates,
offers clients a fully integrated capital markets platform including debt placement, investment advisory, equity placement, advisory services, loan sales and commercial
loan servicing. For more information, please visit hfflp.com or follow HFF on Twitter @HFF.
HFF has been engaged by the owner of the property to market it for sale. Information concerning the property described herein has been obtained from sources
other than HFF and we make no representations or warranties, express or implied, as to the accuracy or completeness of such information. Any and all references
to age, square footage, income, expenses and any other property specific information are approximate. Any opinions, assumptions, or estimates contained herein
are projections only and used for illustrative purposes and may be based on assumptions or due diligence criteria different from that used by a buyer. Buyers should
conduct their own independent investigation and rely on those results. The information contained herein is subject to change.
Top Related