In real estate as in gambling, there is a time to hold and a time to fold. For Cumberland Development LLC, it’s time to test the market to sell its North Coast Harbor apartments and restaurant with an asking price of $19 million.
Cumberland CEO Dick Pace said in a telephone interview that he believes the time is right to offer the 16-suite Harbor Verandas apartments and the 8,630-square-foot retail building containing Nuevo Modern Mexican Restaurant & Tequila Bar.
“These are trophy properties,” Pace said of the restaurant building and three-story apartment building with sweeping views of Lake Erie from the north end of downtown East Ninth Street. . Besides the ever-changing views of Lake Erie, there are views of the city’s working harbor and immediate neighbors such as the Rock & Roll Hall of Fame.
“Right now the market is so hot for multifamily homes and mortgage rates so low, we thought it would be an opportune time to sell,” Pace said. “The (Federal Reserve) has forecast rates to rise. I love the properties. They’re doing well. We have no pressure to sell. If this window doesn’t work out, we’ll return to our long-term hold position. .”
Pace said the Port Verandas are fully rented and have a waiting list, and the restaurant has handled the pandemic well.
Originally, the two structures were the first phase of a much larger project for which Pace obtained the rights from the City of Cleveland to install them on the lakefront. However, the city changed course and began supporting the plans of the Haslam family, owners of the Cleveland Browns, to undertake related development near FirstEnergy Stadium. The Browns are pushing a lakeside development plan that emphasizes public infrastructure, improving its connections to downtown via the Shoreway and railroad tracks.
The pact the city had with Cumberland was terminated in March 2020. Cleveland Mayor Frank Jackson’s administration did not provide comment to the media on the change in development teams.
For his part, Pace said the proposed sale had nothing to do with the outcome of the plan. Indeed, he said he recently saw Jackson, who is nearing the end of his term, and thanked him for the opportunity to expand on what he has been doing.
“Life is too short and my goal is to see the waterfront grow,” Pace said. He noted that if he had been able to proceed with his plans, there might now be two buildings in the harbor parking lots.
Ironically, the properties Pace owns in the Newmark market include the rights to develop an additional 16,000 square feet of land for lease and development. The plot is currently the site of the Cleveland Pier volleyball courts. It is located between the Voinovich Bicentennial Park and the lake.
Although the two properties are being marketed together, Pace said they could also be sold separately. Newmark’s listing for the property on CoStar, the online real estate data provider, lists a request for $14 million for the apartment building and $5 million for the restaurant.
A two-bedroom apartment in Harbor Verandas rents for more than $4,000 a month, according to Apartments.com.
Gary Cooper, apartment investment specialist and senior vice president of Colliers’ Cleveland office, said in a phone interview, “Pace is getting premium rents there. Is that believable today? I think so. Any relatively new apartment building in downtown Cleveland will command upwards of $300,000 per key, and most will have lower average rents. Keep in mind that in other coastal or Sun Belt markets , properties with premium rents cost $700,000 per key. We’ve also seen 10% rent growth in Cleveland this year.”
Richard Sheehan, managing director of Newmark’s Cleveland office, and Terry Coyne, Newmark’s Cleveland-based vice president, market Pace’s list. Details of the list are also on Coyne’s website.