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Renovations for 200 Public Square include gutting empty penthouse floor once used for BP executives

January 27, 2019

Renovations for 200 Public Square include gutting empty penthouse floor once used for BP executives

CLEVELAND, Ohio – For much of two decades, the top floor of downtown Cleveland’s third-tallest skyscraper has been underused, a reminder of the loss of once-titanic corporate tenants LTV Corp. and, before that, BP America.

Now new owners could gut the space, revamping a 1980s executive-dining and meeting floor at the 200 Public Square tower as modern offices with high-rise views of the city. Changes to the building’s 41st floor are among the most dramatic investments that New York-based DRA Advisors and the firm’s local partner, developer Scott Wolstein, are contemplating in the wake of their early October acquisition of the property that many Clevelanders still call the BP Tower.

During a recent tour, Wolstein said he and DRA also expect to open up the second-floor lobby area by installing turnstiles near the elevators – eliminating the need for patrons of the third-floor cafeteria to go through security before hopping on escalators.

They’ll also be able to reopen a second-to-third-floor staircase that has been unused, roped off at the bottom and bizarrely corked at the top by a sculpture, for years.

Third-floor conference rooms and, possibly, part of an adjacent, wide corridor could become offices, adding 10,000 to 15,000 square feet of leasable space to the building.

The owners are working with K2M Design, based in Cleveland, to reimagine the lower-level spaces including dated cafeteria seating that overlooks the building’s expansive atrium.

Vocon, another Cleveland-based firm, is tackling the challenge of the 41st floor, where interior demolition is imminent and renovations could involve creating outdoor access to now-unreachable balconies tucked behind parapet walls.

“Open floor plans are much more popular now,” said Bill Stevens, a vice president with the Colliers International real estate brokerage, which handles leasing at the building. “I believe opening it up will help prospects see how the open floor plan can be utilized there.”

Wolstein wouldn’t put a firm price tag on the likely improvements, though he offered some rough math that comes to $7.3 million to $12.3 million.

And he still won’t say what the DRA-led venture paid for building and its attached, 757-space garage. Property records don’t reveal the price, though they do show that the partners took out a $130 million mortgage upon closing a deal with seller Harbor Group International.

Harbor Group, based in Virginia, had owned 200 Public Square since 2005. In addition to renovating offices, the company reconfigured the building’s atrium in 2016.

A procession of owners has struggled to figure out what to do with large expanses of un-leasable space in a tower that was designed for a single tenant – Standard Oil of Ohio, or Sohio.

“It has certain inherent, maybe, inefficiencies you have to overcome,” said Alex Jelepis, a local real estate broker who handled leasing at the property for years. “I’m glad to see somebody making the investment, because it’s needed there. You can’t argue, it’s an overbuilt asset – and that’s a good thing. No one on the planet could probably develop a building of that quality and make sense of it economically.”

The 41st floor, a 17,000-square-foot space that’s broken up into dining areas, meeting rooms, a kitchen and onetime executive offices, is a prime example. The top occupiable level of the 45-story building – the space above is filled with mechanical systems – has languished.

BP, which bought Standard Oil, held meetings and events there. After the company left Cleveland in the late 1990s, moving its North American headquarters to Chicago, steel giant LTV briefly leased the space but, bankrupt, bailed out in 2001.

For a few years, the federal government used the executive-dining floor as makeshift offices, lining the space with cubicles for the General Services Administration, Jelepis recalls. But that deal was a stopgap solution for a then-growing tenant, not a long-term strategy.

“I would say they’re on the right track,” Jelepis, a first vice president at the CBRE Group, Inc., real estate brokerage, said of Wolstein and DRA’s approach. “You have to go back to 1983 or 1984, when the building was completed, to see what it was like completely gutted out.”

Colliers is marketing the space for just under $30 per square foot, pricing near the upper end of asking rates for offices in Cleveland. Overall, the tower is 88 percent leased.

At nearby Key Tower, downtown’s tallest building, the 57th floor penthouse recently hit the market at $35 per square foot after the departure of a law firm for the Pinecrest project in Orange. The Millennia Companies, a local owner that bought the Key Center complex in early 2017, recently finished livening up the building’s lobby and the surrounding plaza.

The top-floor vacancies will test tenants’ appetites in an office market where the loftiest spaces haven’t always been snapped up immediately – or commanded a premium price.

If companies don’t bite, Wolstein said, his backup plan is to market 200 Public Square’s 41st floor for banquets and events. “We’re always open to ideas,” Stevens said. “We’ll consider all sorts of different avenues that will help to lease space in the building.”

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