Marc Lefkowitz | 11/07/07 @ 6:29pm
Last week we asked: What's the story behind The Coral Company pulling out of one of the most promising urban in-fill developments (Domain on Lee) for the region?
This week, we interview Lee Chilcote III, a real estate agent and marketing director for Progressive Urban Real Estate - the Cleveland company hired by Coral to sell the Domain condos - about what happened and what, if anything, does this mean for the urban in-fill housing market in Greater Cleveland.
GCBL: It seemed as though Coral wanted Domain to be a real high-end development, can you explain how price is determined in new residential construction and how did this fit in or not?
Lee Chilcote: Basic construction costs have gone up because of Katrina, but so much depends on the land cost and what you’re building. If you're doing single-family framed in wood, it could cost $100 sq. ft. But if you're doing what Peter Rubin wanted with Domain on Lee (five stories) then you get into steel frame construction which costs more. It was high-end. Exterior brick building, a cool piece of architecture. Granite countertops standard and beautiful bathrooms.
The guess factor is the land because I don’t know what the agreement was with Cleveland Heights (which owns the land). But the units were starting at $250 sq ft. That’s what (luxury Warehouse District condominium) The Pinnacle was getting. The (Domain) penthouses were going for $350 sq ft.
GCBL: What happened, what caused the deal to go south?
LC: You need to have all the information together, such as, when is it going to be built? Coral’s development agreement with the city was expiring and the product was unrealistic. They tried to go back to the city and offer a project that wouldn’t be quite as grand, but...I don’t know how realistic the city’s architectural review board was either.
GCBL: Do you think the Domain deal falling apart represents a bellweather in terms of how many more of these town homes will be built in Cleveland or Cleveland Heights?LC: I don’t think it’s a bellweather as much as it had to do with the Coral Company and City of Cleveland Heights. Other people are making money in Cleveland Heights; Coral is successful in Courtyards at Severance. The city essentially cut a deal with Coral, it didn’t do an RFP, and didn’t shop it around and it got burned. But, I just talked to someone yesterday who’s interested in the (Domain) site.
GCBL: To whom are high-end town homes being marketed?
LC: Our buyers are singles, young professionals without kids, empty nesters, gay couples. We did a back of the envelope research recently. For new construction, 20 percent of sales are people coming from outside the area. People coming from Chicago and New York who are more willing to accept these prices and who seek an urban lifestyle – it’s low maintenance. Or empty nesters looking for something that’s a lateral step.
In Cleveland Heights, if (empty nesters) want to buy something new, they want it comparable size or two secure parking spaces and nice, quality finishes. Downtown there was nothing new until Stonebridge and The Pinnacle. Now those are enticing people like (developer) John Ferchel to take a second look at Cleveland.
GCBL: So, what's the range a developer should be in when building town homes in Cleveland Heights in order for it to sell?
LC: If you're doing a loft building (Domain was a loft-style building), it should start at $180 sq. ft. with $250 sq ft for the penthouse units.
GCBL: Could you envision doing something like a four story mixed-use development on Coventry where the vacated Medic building is?LC: I think it's screaming for mixed-use. I think that Coventry site - it’s a crappy one story building. You could buy the old Big Fun building and have a new development with retail in front and living units above and underground parking.
GCBL: Final thoughts on lessons from Domain on Lee?
LC: I think that some people perceive it as a failure in the market, but it’s going to adjust developer expectations. But then, most developers already knew that.