Crain's Cleveland Business by Crain's Cleveland Business

20120820-NEWS--1-NAT-CCI-CL_--

8/17/2012

2:42 PM

Page 1

$2.00/AUGUST 20 - 26, 2012

VOL. 33, NO. 32

Cities could get uniform tax code Advocates drop controversial goal of state collecting muny revenues By JAY MILLER jmiller@crain.com

Legislation to streamline municipal tax collection in Ohio could be a reality by the end of the year. State Rep. Cheryl Grossman, a Republican from suburban Columbus, told Crain’s she is drafting for fall introduction legislation that

would create a uniform municipal income tax code that all Ohio municipalities assessing a tax would follow. Getting the more than 600 Ohio cities that levy an income tax onto a uniform system would end a situation that can be expensive and frustrating for businesses. The Kasich administration and others have

argued this complexity is keeping businesses from moving into Ohio. The legislation would create a single, statewide definition of taxable income for municipal taxes, set a uniform schedule for employers to make withholding payments and create a generic income tax form. The Kasich administration raised the issue of uniform municipal tax-

CWRU to host center focused on shale study

Damien Forshe and Keymah Durden (above) are two of many pushing for greater community involvement in rehabbing inner-city plots. Real estate, PAGE 13

Solon’s AllTech brings MRI machine home, but firm is facing established industry foes By CHUCK SODER csoder@crain.com

By TIMOTHY MAGAW tmagaw@crain.com

MARC GOLUB

Tracy Vaccaro, a software engineering support specialist at AllTech Medical Systems America Inc., shows the capabilities of the company’s MRI machine.

ure, AllTech International Group has sold about 40 of its MRI scanners in China over the past three years. But if the Solon-based company is to succeed in selling them in the United States, it will need to make its customers “ungodly happy,” according to Will Joliat, vice president and general manager of its U.S. subsidiary, AllTech Medical Systems America Inc. The parent company — which has nearly 40 employees in Solon and another 225 at a separate subsidiary in China — received regulatory approval to begin selling its MRI scanners in the United States in May. Now AllTech is hiring people to fill out its local sales and customer support teams, as well as other functions, Mr. Joliat said. With a $487,000 Job Creation Tax Credit in hand as of last month from the state of Ohio, AllTech also plans to start building more of the scanner’s subsystems at its new, 50,000-squareSee MRI Page 20

NEWSPAPER

74470 83781

See SHALE Page 12

See TAX Page 12

Repurposing vacant land

A STIFF TEST IN THE STATES

Rush’s many issues part of ‘holistic’ approach Case Western Reserve University is looking to put itself at the heart of the ongoing shale debate with the creation of a new academic center dedicated to exploring several aspects of the booming industry. Known as the Center for Shale Energy Research and Education, the idea is to band together researchers from multiple disciplines to study facets of the region’s shale rush that range from its impact on the economy to its effects on public health and the environment. “As an independent university, we feel that we have a major role to play because we are not funded by one side or another,” said Xiangwu “David” Zeng, chairman of CWRU’s department of civil engineering and one of the faculty members involved with the creation of the center. Other universities have centers related to shale gas, but they’re largely focused on certain aspects of the industry. CWRU’s center, Dr. Zeng said, will take a “more holistic approach.” At present, it involves more than 30 faculty members from the private university’s engineering,

ation when it came into office in January 2011, even suggesting that the state would act as tax collector for cities. But the issue was stalled until May of this year, when municipal tax reform advocates took off the table centralized state collection of the taxes. “This is a unified tax code — it has nothing to do with centralized collections,” Rep. Grossman said in discussing the planned legislation in

INSIDE

World

Trade Conference

see page 9

20120820-NEWS--2-NAT-CCI-CL_--

8/17/2012

2:21 PM

Page 1

20120820-NEWS--3-NAT-CCI-CL_--

8/17/2012

11:29 AM

Page 1

AUGUST 20 - 26, 2012

THE WEEK IN QUOTES

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Workers’ comp suit hinges on group cut

INSIGHT

“I view the center (at Case Western Reserve University) as a place for research, education and outreach that helps people grapple with the drilling boom.” — Beverly Saylor, CWRU associate professor of geology. Page One

Plaintiffs say substantial discount was subsidized by their high rates

“When times are good, everybody acts like they’re never going to end. And when times are bad, everybody acts like they’re never going to get good again.”

By JAY MILLER jmiller@crain.com

— Mike McHugh, owner of four regional window companies, including Caliber Glass in Solon and Integrated Automation Systems LLC in Aurora. Page 11

“The last six months is the first time we’ve seen a steady increase in inquiries (since 2006). … There’s an excitement in the industry, and it’s not just the number of students.” — Tina Lapp, president, School of Business at Hondros College, which offers real estate courses at campuses throughout Ohio. Page 13

“Green is a location where a lot of activity is taking place in Northeast Ohio. I think it’s a boom town now.” — Joe Albrecht, vice president for retail properties, Albrecht Inc. Page 16

RUGGERO FATICA

Crocker Park on a quiet afternoon last Thursday.

Analyst, Stark at odds over Crocker condition Fitch: Cash flows have ‘eroded’; developer disagrees

A class action lawsuit that, if successful, could end up paying more than $1 billion to employers who believe they overpaid for workers’ compensation insurance opens today, Aug. 20, in Cuyahoga County Common Pleas Court. In San Allen et al v. Stephen Buehrer, attorneys for the class argue that employers who qualified for membership in groups that received workers’ comp premium discounts of as much as 90% did so at the expense of employers who did not qualify for a group. The plaintiffs say “It’s a case if the high rates class members great interest paid subsidized the groupto all of us. It’s rating discount, which went to companies with no injury about a lot of claims against them, usually money.” for five years. – David McCarty, Mr. Buehrer is administradirector of workers’ tor of the Ohio Bureau of compensation Workers’ Compensation; San practice, Kegler, Allen is the corporate name Brown, Hill & Ritter of Corky & Lenny’s restaurant in Woodmere, one of seven original plaintiffs in the lawsuit filed in April 2008. The case will be tried without a jury before Cuyahoga County Common Pleas Court Judge Richard McMonagle. “It’s a case of great interest to all of us” who represent employers for workers’ compensation, said David McCarty, director of the workers’ compensation practice at Kegler, Brown, Hill & Ritter, a Columbus law firm. “It’s about a lot of money.” Because the workers’ comp bureau is financed by employers’ insurance premiums, a victory for the class could force the bureau either to raise insurance rates or to dip into its reserves to pay damages. See SUIT Page 21

By STAN BULLARD sbullard@crain.com

Crocker Park, the mixed-use development in Westlake with the Main Street feel, often is filled with droves of people at its shops, restaurants and movie theaters. With high occupancy in its office and retail space and a waiting list for suites at its 218-unit apartment component,

the project raises the question, “What’s not to like?” Fitch Ratings Service, the credit rating concern that occupies a unique perch to analyze the operation, found something. And in so doing, Fitch has indicated that Crocker Park’s financial condition may not be as robust as the crowds it draws — a depiction Crocker Park’s See CROCKER Page 9

CORRECTION Under Mayor Frank Jackson’s lakefront development plan, the city of Cleveland’s Department of Port Control would control any development that would take place in the area surrounding the East Ninth Street Pier and the city’s waterfront museums. An Aug. 6, Page One story on plans by Geis Cos. to lease for development 20 acres of lakefront land incorrectly reported that the Cleveland-Cuyahoga County Port Authority would develop the land near the pier and museums.

Jo-Ann adds to store roster, subtracts from their footprint Burdened by prior inventory, Hudson retailer right-sizes to rebound By GINGER CHRIST gchrist@crain.com

Jo-Ann Stores Inc. is stitching its future together one store at a time by adding a slew of new — albeit smaller — retail outlets across the United States and, potentially, into Canada. The Hudson-based specialty retailer of fabrics and crafts already this year has opened 47 stores to

bring its total to 580. It wants to open another 13 by year’s end and plans to launch another 60 in 2013. Jo-Ann is taking advantage of abundant retail vacancies, which have lowered rents, and a smaller store format to expand its reach. The company, which struggled with profitability in the 2000s, now is on a growth track, according to Travis Smith, who in August 2011 became CEO of Jo-Ann. The com-

pany’s sales in 2011 rose to $2.2 billion, up 5% from 2010, Mr. Smith said. He declined to give year-todate sales figures. “We’re in a nice niche,” Smith Mr. Smith said. “We’re the largest national fabric retailer in the country and we fit really well in the competitive set. We don’t have a ton of competitors.” Mr. Smith said Jo-Ann’s earlier

troubles with gross margins largely stemmed from its large-store format and high inventory levels. “What happened to the company was inventory bloomed, margins went down — we had sort of a lot of big stores that weren’t performing to where the company needed,” Mr. Smith said. “I had to spend a lot of money to get out of that inventory that wasn’t working. It just took a big hit on the gross margins side and ultimately

earnings.”

Hello, Elko Jo-Ann now is in the midst of a number of initiatives aimed at increasing market share and boosting profits, according to Mr. Smith. While opening new, smaller stores is top of mind, Jo-Ann also is ordering more products directly from the source as opposed to using middlemen, is upgrading its inventory and is investing in mobile technology to better connect with customers. See JO-ANN Page 20

20120820-NEWS--4-NAT-CCI-CL_--

8/17/2012

9:58 AM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

PUBLISHER/EDITORIAL DIRECTOR:

Brian D. Tucker (btucker@crain.com) EDITOR:

Mark Dodosh (mdodosh@crain.com) MANAGING EDITOR:

Scott Suttell (ssuttell@crain.com)

OPINION

The payoff

o one expects health care institutions that must compete for patients to play nice with each other all the time. However, with federal research money tight, there are benefits to collaboration among those institutions as they pursue their research agendas — a point proven with the Aug. 10 announcement that an alliance led by Case Western Reserve University snared the largest research grant ever awarded in Northeast Ohio. The $64.6 million grant from the National Institutes of Health is a reward to the alliance for the work it has done over the last five years to advance medical discoveries of its members, which include Cleveland Clinic, MetroHealth, University Hospitals Case Medical Center and Louis Stokes Cleveland VA Medical Center. It was back in 2007 when the nascent partnership won a $64 million grant from NIH; that grant allowed the collaborators to assist more than 1,300 individual scientists and physicians, who went on to secure more than $150 million in additional federal support. “At that time, none of us knew for sure how this attempt at cooperation actually would work in practice,” said Dr. Richard Rudick, vice chairman of the Clinic’s neurological institute and a co-author of the 2007 grant proposal with Dr. Pamela Davis, dean of CWRU’s School of Medicine. “But what we found over time was that our shared commitment to work together to advance the health of all patients in our region has driven scientists and investigators in the partner institutions to overcome barriers.” A collaborative effort of this nature and scale would have been impossible as early as 10 years before. For many of the years that Dr. Floyd Loop ran the Cleveland Clinic and Farah Walters was head of University Hospitals, administrators of Cleveland’s two largest health care providers simply did not like each other. The rivalry between UH and the Clinic was intense and bitter, so much so that each institution would carp about the amount of coverage the other was receiving in this newspaper. The tenor of their relationship began to change about a decade ago. That’s when it became apparent to both that the federal government didn’t have an infinite supply of research funds and was more likely to hand out the money it did have to research efforts where two or more entities worked together rather than did their own thing. Today, research collaboration among Cleveland’s health care giants is commonplace, which is great for Northeast Ohio as the region continues to work on establishing its reputation as a center of medical innovation. CWRU celebrated the latest payoff of those efforts in taking out a full-page newspaper ad Aug. 12 to congratulate the participants in its alliance for demonstrating the “Power of Partnership.” “We applaud the partners who joined this initiative in 2007, and look forward to even greater advances in the years to come,” the ad stated. So do we — and we seriously doubt we’ll be disappointed.

FROM THE PUBLISHER

Another blow for nasty, deadly habit

Tobacco argued that the new ban infringed poiler alert: If you’re a Libertarian, on their intellectual property rights. or an uber-free marketer, or if The court has not yet released the you’re a smoker — especially if reasoning behind the ruling, which you’re a smoker — you’re not going Australian government officials hope will to much agree with this column item. help further drive down smoking rates. It seems that Australia’s highest court Australia already has imposed some of has ruled in favor of that country’s new, the world’s highest tax rates on cigarette tough cigarette package labeling laws that makers. highlight the product’s perils. The country’s health minisThe High Court of Australia BRIAN ter and attorney general issued ruled as constitutional a pro- TUCKER a joint statement: “This is a posed new law requiring cigavictory for all those families rette packages to display graphic who have lost someone to a toimages of all sorts of health bacco-related illness. No longer hazards connected to smoking. when a smoker pulls out a packSo if you’re an Aussie, and you et of cigarettes will that packet head to the store to buy your be a mobile billboard.” cigarettes, you’ll no longer see a I lost my father — in his early brand logo, which is prohibited 60s — to a smoking-related illby the new law. ness. My wife tragically lost her father More impactful, however, will be the while he was still in his 40s. Other beloved images you’ll see on the packaging: mouth members of our family struggle with the ulcers, cancerous lungs, gangrenous limbs. addiction. As you can imagine, Big Tobacco — There is nothing good about cigarettes, concerned about the potential spread of a product that inarguably adds to our such legislation — fought this one hard. nation’s health care costs. The remains Lawyers for Philip Morris, British Amerlitter our streets and their costs drain ican Tobacco, Imperial Tobacco and Japan

money from the pockets of our citizens. Anything that can be done to eradicate cigarette smoking should be done, and as quickly as possible. **** ACACIA COUNTRY CLUB, the golf club that has been the subject of potential sales many times over the years, could have a new and quite surprising buyer. Reportedly, the Conservation Fund, a nonprofit that uses private money to preserve land or return it to its original state, has offered the club members nearly $15 million, and the offer will be put to a vote. The golfer in me mourns the potential loss of a Donald Ross-designed course, but the changing finances of the golf industry make it difficult to maintain so many fine operations in Northeast Ohio. If the Acacia members accept this bid, it will be a surprising turn of events, since so many developers and retailers have coveted the valuable spot along Chagrin Boulevard for so very many years. It will be interesting to see what happens next, given that the club has been on and off the selling block a number of times over the last few years. ■

PERSONAL VIEW

Shared services solve squeeze in support By RANDY COLE

hio’s local governments and schools, and the taxpayers who support them, face a critical dilemma that could force many to the breaking point. While public expectations for government services and education continue to grow, the alreadyhigh costs of meeting those needs are rising at an even faster pace. That’s not a new problem, but the old solutions no longer work. There is little public support for higher taxes or fees that might help cover the gap. We can’t attract businesses and young families to Ohio by cutting services. That old standby, “belt-tightening,” is just not enough. In the face of this challenge, it’s clear that our schools and local governments

Mr. Cole is State Controlling Board president and a policy adviser to Gov. John Kasich. must find new and more creative ways to reduce their costs and improve efficiency. They must become smarter about spending taxpayer dollars and recognize that the old ways of doing business simply can’t continue. Shared services — a new and better way — can provide that hope. Knowing that shared services can help resolve this dilemma, Gov. John Kasich’s administration has released a new, comprehensive plan of action: “Beyond Boundaries: A Shared Services Action Plan for Ohio Schools and Governments.” The plan, its 10 recommendations for action and numerous other resources provide local officials with a road map to

achieving the cost-saving efficiencies of shared services. Using real-life examples of successes already working in Ohio, the plan spotlights proven, positive results from collaboration that goes across traditional boundaries and jurisdictional lines. Among many examples documented in the report: ■ Several years ago, the City of Green partnered with the Green Local School District to construct and share facilities in a new, 53,671-square-foot central administration building. The city also partners with neighboring jurisdictions to save an estimated $2 million annually through contracts to share police, building inspection and public health services. ■ Regional coordination of shared See VIEW Page 6

20120820-NEWS--5-NAT-CCI-CL_--

8/17/2012

9:58 AM

Page 1

AUGUST 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

THE BIG ISSUE What do you think about Mitt Romney’s choice of Paul Ryan as his running mate? 700 W. St. Clair Ave., Suite 310, Cleveland, OH 44113-1230 Phone: (216) 522-1383 Fax: (216) 694-4264 www.crainscleveland.com

MATT MELENA

TED KREIT

SHAWN MINOR

ROBERTA OSTROWSKI

Cleveland

Willoughby

Cleveland

Wickliffe

I think it’s a smart move, just based on (Ryan’s) experience with the budget. I think he will complement Romney well. He may have hurt him in Ohio by not choosing (U.S. Sen. Rob) Portman.

If you are in favor of the president, as I am, it’s a good thing. Whatever chance Romney had before he picked Ryan, and it was slim, he has none now. With Ryan’s views on Social Security and Medicare, they’re sure to lose Florida.

I think he will be a big help for Romney. Ryan has a good reputation. He’s a good family man and he’s always thinking about what’s best for the people.

I don’t think Ryan will help him. Everyone is scared, especially older people, about cuts to Social Security and health care. ... I want to research Ryan’s views now to make up my mind, and I did not feel that way before.

July 2012

May 2012

April and January 2012

April 2012

a portfolio company of

Publisher/editorial director: Brian D. Tucker (btucker@crain.com) Editor: Mark Dodosh (mdodosh@crain.com) Managing editor: Scott Suttell (ssuttell@crain.com) Sections editor: Amy Ann Stoessel (astoessel@crain.com) Assistant editor: Joel Hammond (jmhammond@crain.com) Sports Senior reporter: Stan Bullard (sbullard@crain.com) Real estate and construction Reporters: Jay Miller (jmiller@crain.com) Government Chuck Soder (csoder@crain.com) Technology Dan Shingler (dshingler@crain.com) Energy, steel and automotive Tim Magaw (tmagaw@crain.com) Health care and education Michelle Park (mpark@crain.com) Finance Ginger Christ (gchrist@crain.com) Manufacturing, marketing and retailing Research editor: Deborah W. Hillyer (dhillyer@crain.com) Cartoonist/illustrator: Rich Williams

$763 Million

$158 Million

$93 Million

$509 Million

$293 Million

Follow-on Offering Common Stock

Initial Public Offering Common Stock

Follow-on Offerings Common Stock

Initial Public Offering Common Stock

Joint Bookrunner

Co-Manager

Joint Bookrunner

March 2012

February 2012

Marketing director: Lori Grim (lgrim@crain.com) Marketing/Events manager: Christian Hendricks (chendricks@crain.com) Assistant Events Manager: Jessica Snyder (jdsnyder@crain.com) Advertising sales manager: Nicole Mastrangelo (nmastrangelo@crain.com) Senior account executive: Adam Mandell (amandell@crain.com) Account executives: Dawn Donegan (ddonegan@crain.com) Andy Hollander (ahollander@crain.com) Lindsey Nordloh (lnordloh@crain.com) Office coordinator: Toni Coleman (tcoleman@crain.com)

a portfolio company of

$690 Million Initial Public Offering Common Stock Co-Manager

Digital strategy and development manager: Stephen Herron (sherron@crain.com)

$228 Million

$1.1 Billion

$306 Million

$75 Million

Follow-on Offering Common Stock

Web/Print production director: Craig L. Mackey (cmackey@crain.com) Production assistant/video editor: Steven Bennett (sbennett@crain.com) Graphic designer: Lauren M. Rafferty (lrafferty@crain.com)

Joint Bookrunner

Co-Manager

Joint Lead Manager

Sole Bookrunner

Delivering results We know that successful, long-term business relationships depend upon delivering results for our clients. At KeyBanc Capital Markets,® more than 500 professionals leverage extensive industry knowledge, equity and debt capital markets expertise, and a leading merger and acquisition advisory practice to deliver strategic solutions that help our clients capitalize on opportunities.

Billing: Susan Jaranowski, 313-446-6024 (sjaranowski@crain.com) Credit: Todd Masura, 313-446-6097 (tmasura@crain.com)

Crain Communications Inc. Keith E. Crain: Chairman Rance Crain: President Merrilee Crain: Secretary Mary Kay Crain: Treasurer William A. Morrow: Executive vice president/operations Brian D. Tucker: Vice president Robert C. Adams: Group vice president technology, circulation, manufacturing Paul Dalpiaz: Chief Information Officer Dave Kamis: Vice president/production & manufacturing G.D. Crain Jr. Founder (1885-1973) Mrs. G.D. Crain Jr. Chairman (1911-1996)

To learn more visit key.com/ecm. Offices in Atlanta, Boston, Charlotte, Chicago, Cleveland, Dallas, Houston, Los Angeles, New York, San Francisco and Seattle

Subscriptions: In Ohio: 1 year - $64, 2 year - $110. Outside Ohio: 1 year - $110, 2 year - $195. Single copy, $2.00. Allow 4 weeks for change of address. For subscription information and delivery concerns send correspondence to Audience Development Department, Crain’s Cleveland Business, 1155 Gratiot Avenue, Detroit, Michigan, 48207-2912, or email to customerservice@crainscleveland.com, or call 877-812-1588 (in the U.S. and Canada) or (313) 446-0450 (all other locations), or fax 313-446-6777. Reprints: Call 1-800-290-5460 Ext. 125 Audit Bureau of Circulation

KeyBanc Capital Markets is a trade name under which corporate and investment banking products and services of KeyCorp and its subsidiaries, KeyBanc Capital Markets Inc., Member NYSE/ FINRA/SIPC, and KeyBank National Association (“KeyBank N.A.”), are marketed. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives, who may also be employees of KeyBank N.A. Banking products and services are offered by KeyBank N.A. Key.com is a federally registered service mark of KeyCorp. ©2012 KeyCorp ADL5386

20120820-NEWS--6-NAT-CCI-CL_--

8/17/2012

CRAIN’S CLEVELAND BUSINESS

3:41 PM

Page 1

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

mberto P. Fedeli’s Italian heritage and love of entertaining are prominent influences inside his Gates Mills home, which he opened this summer for a tour by Crain’s House Calls. The biggest example: Mr. Fedeli, president and CEO of The Fedeli Group, an insurance brokerage firm in Independence, had an Italian bistro built into his lower level, complete with a pizza oven. European imports, ranging from light fixtures to a large gazebo out back, abound. And wait until you hear who he’s entertained there. Watch now: www.crainscleveland.com/ho usecalls.

STEPHEN HERRON PHOTOS

View: Leaders must make difficult choices continued from PAGE 4

technology services, along with development of regional data centers and shared “cloud services,” could yield at least $91 million in savings, with a potential savings of more than $150 million annually. ■ Utilizing MARCS (the state’s Multi-Agency Radio Communication System) at a statewide level through coordination of a “system of systems” in areas of high communication demand could yield more than $500 million in savings to ongoing capital and operating expenses for public entities between 2012 and 2020. Based on an in-depth survey of existing efforts and attitudes in Ohio, Beyond Boundaries is the work of numerous education and local government professionals from across the state, including valuable input from the Ohio Municipal League. Drawing on lessons learned from that survey, the plan presents a comprehensive study of public policy recommendations, potential collaborations and needed changes both in the law and in public attitudes that can transform the way of doing business in Ohio’s public sector. Three important steps are neces-

sary for the shared services solution to take hold. First, the governor and Legislature must continue making the statutory and policy changes needed to expedite the use of shared services across Ohio. Gov. Kasich and engaged legislators already have made important progress in that direction. Provisions in the Kasich Jobs Budget, passed and signed in June 2011, removed legal road blocks to shared services and added financial incentives to spur local government innovation. A number of other improvements in state law were made in June 2012, a result of the governor’s MidBiennium Budget Review. Beyond Boundaries is not a report sitting on a shelf; it is a road map whose recommendations are being put into immediate action. A second crucial step is to provide information and tools that will be needed by local leaders to realize the shared services opportunities available to them and to act when those opportunities make sense. Beyond Boundaries is one great tool in that role. Local leaders are encouraged to

visit the SkinnyOhio.org website and the Shared Services Idea Center for more information. Following the Beyond Boundaries recommendations, the Auditor of State is expanding the information contained in SkinnyOhio.org and the Ohio Department of Administrative Services is creating a joint purchasing portal that creates a one-stop resource for local governments and to pursue the savings offered through existing joint purchasing programs across the state. Finally, as step three, local leaders must truly be leaders, willing to take immediate, broad action. These are hard steps to take, no doubt, but they’re all necessary to ensure the continued well-being of communities where we live, raise our families and hope to see local business thrive. Local government leaders interested in the shared services solution, as well as citizens who want to encourage those leaders to succeed, should read “Beyond Boundaries” and take its lessons to heart. The full report and related materials are available at www.beyondboundaries .ohio.gov. ■

20120820-NEWS--7-NAT-CCI-CL_--

8/17/2012

3:25 PM

Page 1

AUGUST 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Alliance to boost area’s stem cell researchers Leaders see coordinated effort helping young biotech companies seize ‘billion-dollar’ market By TIMOTHY MAGAW tmagaw@crain.com

In the hope that Ohio can make a splash in a potentially multibilliondollar market for stem cell therapies, a group of local business leaders and scientists are piecing together a vehicle to help young biotech companies commercialize their research. Dubbed OH-Alive, the so-called “manufacturing platform” will provide equipment, facilities and staffing to assist researchers and small biotech startups with the often-expensive task of growing stem cells and eventually bringing their ideas to market. “Stem cell therapy is emerging now into, to put it frankly, the future of medicine,” said Michael Gilkey, OH-Alive’s director and the marketing and operations manager for the National Center for Regenerative Medicine at Case Western Reserve University. “It’s not like this is science fiction,” Mr. Gilkey said. “It’s in patients right now. We’re looking at a billiondollar market in the near term.” Officials involved in the project said its facilities — the sites for

which haven’t been determined — are expected to help researchers grow stem cells more quickly and on a larger scale. Current processes used to grow stem cells only produce enough material for early stage clinical trials, whereas the new facilities — thanks to the equipment and manpower of OH-Alive — are expected to produce enough material for larger clinical trials. Simply put, stem cell therapy is the process of introducing living stem cells in the body so they’ll regenerate or restore damaged tissues. Potential uses include the treatment of diabetes or multiple sclerosis, according to Jan Jensen, OH-Alive’s technical director and the Eddie J. Brandon Chair of Diabetes Research at the Cleveland Clinic. “Cell therapy is knocking on the door and would allow these people to live a normal life,” Dr. Jensen said. The OH-Alive project received a boost this summer when the Ohio Third Frontier Commission awarded the project $2.4 million to get it off the ground. The funds were matched by CWRU’s National Center for Regenerative Medicine, bringing

“This initiative gives us an anchor point in one of the most exciting parts of therapeutics.” – Baiju Shah, outgoing CEO, BioEnterprise Corp. the total investment to $4.8 million. Other local collaborators on the project include the Cleveland Clinic; BioEnterprise, a nonprofit that assists local health care startups; Athersys Inc., a Cleveland-based developer of stem cell technology; and Renovo Neural, a Cleveland Clinic spinout company that develops and tests multiple sclerosis drugs.

Potential accelerator B.J. Lehmann, president and chief operating officer of Athersys, said his company likely would employ some of OH-Alive’s services in the future as it develops products. He called the initiative an “important next step in the bigger picture of developing a strong manufacturing and process development infrastructure for cell therapies in Cleveland.” In addition to the technology offered through OH-Alive, researchers will have access to Case Western Reserve experts who have experience navigating the regulatory hurdles required to bring a product to the bedside.

BioEnterprise’s outgoing CEO Baiju Shah likened the OH-Alive project to a “regenerative medicine accelerator” that has the potential to lure other early-stage companies to the region. “I look at OH-Alive as a potential flywheel for a new generation of medical companies but also as being able to attract those types of technologies from other parts of the country or world,” said Mr. Shah, who plans to leave the nonprofit organization once his successor is named to steer the for-profit component of University Hospitals’ $250 million drug development initiative. Mr. Shah noted that Cleveland is deeply entrenched in the medical device and health information technology arenas, and the OHAlive investment will broaden the region’s strength in therapeutic technologies. “This initiative gives us an anchor point in one of the most exciting parts of therapeutics,” Mr. Shah said. ■

ON THE WEB

Story from www.CrainsCleveland.com.

Reminger moves into Indiana Cleveland law firm Reminger Co. LPA is opening its 11th office — and its first in Indiana — in early September. Driven there by client demand, Reminger is opening the fullservice office in Indianapolis at Two River Crossing near the city’s north-side business districts. “We have expanded into Indiana because our existing clients believe that our style of delivering legal services can make an impact in the state,” said Stephen E. Walters, managing partner. “This expansion will also enhance our regional presence, allowing for our clients to have consistency of legal services in Indiana, Ohio and Kentucky.” The office will be staffed with seven attorneys whom Reminger is relocating to Indianapolis; among them is partner Rick L. Weil, who will oversee it. — Michelle Park

BRIGHT SPOTS Bright Spots is a periodic feature in Crain’s highlighting positive business developments. To submit information, email managing editor Scott Suttell at ssuttell@crain.com. ■ Law firm Buckingham, Doolittle & Burroughs LLP announced that John F. Hill will join the firm’s Akron office in October as a partner in the Litigation Practice Group. He joins Buckingham from Hill Hardman LLC, where he was one of the principals. “John has developed an extremely successful practice and he ranks as one of the best litigation attorneys in Ohio,” said John P. Slagter, Buckingham’s managing partner, in a statement. “He will help us expand our market-leading position in litigation, which continues to be among our core strengths in Akron and throughout the region.” Buckingham said Mr. Hill brings a wide range of clients in complex commercial cases. His work has ranged from contract litigation to shareholder disputes, including national class action litigation. Mr. Hill’s business litigation practice has recently emphasized service to physicians and other health care providers, as well as attorneys, accountants and other professionals, the law firm said. Mr. Hill earned his bachelor’s degree from Gannon University in 1984 and his law degree from Case Western Reserve University Law School in 1987. ■ CardinalCommerce, a Mentor company that enables Internet and mobile commerce, said it has launched CustomerConnect, a selfservice, web-based mobile marketing and commerce platform “aimed at turning passive consumers into active customers.”

The new product “facilitates text message deal generation, opt-in mobile alert databases and targeted marketing campaigns while being integrated to Cardinal’s payment platform,” the company said. CustomerConnect is a new addition to CardinalCommerce’s Cardinal MAX mobile transaction platform. “CustomerConnect enables our merchants and merchant service providers to realize the revenue potential of mobile commerce,” said Tim Sherwin, executive vice president and chief marketing officer, in a statement. ■ Western Reserve Partners of Cleveland said it served as exclusive investment banker to CWS Industries (Mfg) Corp. in its sale to International Equipment Solutions LLC, a portfolio company of KPS Capital Partners LP. CWS Industries, headquartered in Surrey, British Columbia, makes attachments, cabs and conversions for heavy equipment used in highgrowth end markets such as mining, oil and gas, forestry, agriculture and construction. International Equipment Solutions, formed in September 2011, is a global engineered equipment platform serving the construction, agriculture, landscaping, infrastructure, recycling, demolition, mining and energy markets. Its operating units are manufacturers of engineered attachment tools and cab enclosures for operator driven equipment as well as locomotive sub-assemblies and electronic enclosures. Terms were not disclosed. Leading the transaction for Western Reserve was managing director Joe Carson, supported by vice president Becky White and analyst Courtney Downs.

ERC is Northeast Ohio’s leading provider of compensation and beneﬁts data. Salary, wage and beneﬁts data for thousands of positions locally, regionally and nationally.

#6 7 Join today and receive free access to all current ERC survey data. www.ercnet.org/comp | 440/684-9700

20120820-NEWS--8-NAT-CCI-CL_--

8/17/2012

2:46 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

D G ER 3 ANIN EMB

GS N

N PT G R E SE 5 % OPEND E 1 V SA

VI SA

Engineer looks to market as data show CSU turbines’ effectiveness Accelerator mounted at Progressive Field exceeds estimates By CHUCK SODER csoder@crain.com

NEW STORE NOW OPEN AT

ETON-CHAGRIN SHOPPING CENTER 28699 CHAGRIN BOULEVARD

Hours: Mon-Wed & Fri 10-7, Thu 10-8, Sat 10-6 and Sun 12-5 Telephone: 216-591-0344

We are pleased to welcome distinguished former federal prosecutor Richard H. Blake, Co-Chair, White Collar and Government Compliance Practice Group. Richard served as a federal prosecutor with both the Department of Justice and Department of Treasury for nearly 20 years. Richard H. Blake 216.348.5839 rblake@mcdonaldhopkins.com

A sturdy breeze is all it takes to push the wind turbines at Progressive Field to their limits. That’s a good sign for Majid Rashidi, who invented the wind accelerator — the big white corkscrew just beyond the right field foul pole at the ballpark in downtown Cleveland. “It’s good for the demonstration concept, but we have to be careful not to burn them,” said Dr. Rashidi, referring to the wind turbines that the accelerator helps power. The turbines in the wind accelerator produced between three and six times more electricity than unaided turbines typically do at wind speed of 11, 15 and 18 mph, according to data Cleveland State University collected in April, May and June. The wind accelerator was installed in March. Dr. Rashidi, a mechanical engineering professor at Cleveland State, said the accelerator must be redesigned if the concept is to become an affordable product. However, he believes the experiment confirms the idea that wind turbines can generate more power if they are attached to structures that channel wind into their blades. “We have shown that the physics of it works,” he said. Cleveland State is working to fix glitches that have caused the turbines to shut down on several occasions. But when they worked, they worked well, according to Dr. Rashidi’s data. The four Swift-brand turbines in the wind accelerator on multiple occasions produced a total of more than 1,250 watts of electricity when facing 11-mph winds. At that wind speed, the four turbines normally would be expected to generate a total of just 200 watts, according to data from the manufacturer. Likewise, the Progressive Field turbines produced more than 2,600 watts under 15-mph winds, compared to the 800 watts predicted by the manufacturer. At 18 mph, instead of generating the expected 1,412 watts, they produced 6,100 watts. That’s 1,525 watts per turbine, which is roughly equal to the maximum amount of power that the manufacturer says they can generate. “I have actually maxed the turbines,” Dr. Rashidi said. The figures he recorded were the best results generated on a single day at the given speed. Similar results were repeated on other days, he said. The increases were sharp because electricity generated by wind grows exponentially as wind accelerates, he noted.

Path to market McDonald Hopkins LLC 600 Superior Avenue East, Suite 2100, Cleveland, OH 44114 • 216.348.5400

Carl J. Grassi

Shawn M. Riley

President

Cleveland Managing Member

Chicago • Cleveland • Columbus • Detroit • Miami • West Palm Beach mcdonaldhopkins.com

Cleveland State collected similar numbers for another wind accelerator it built a few years ago atop the school’s Plant Services Building north of Chester Avenue, near Interstate 90. That accelerator has four turbines attached to a cylinder designed to resemble a water tower. When wind hits the cylinder, it flows around it, hitting the turbines on each side.

PHOTO PROVIDED

A wind accelerator developed by a Cleveland State University engineering professor was installed at Progressive Field in March. Now the university aims to find entrepreneurs and companies interested in developing commercial versions of the patented designs. The two accelerators were designed and built with a $1.1 million grant from the U.S. Department of Energy. Additional accelerators would be less expensive to make, Dr. Rashidi said, noting that the university incurred several one-time costs when producing the first two towers and learned several lessons in the process. In late July, Dr. Rashidi met with two people he would not identify who are thinking about forming a startup to develop a smaller version of the Progressive Field accelerator that would attach to telecommunications towers. Shrinking the accelerator’s size should make it easier to build, Dr. Rashidi said. “The smaller we get in size, the easier it is to resolve those issues,” he said. The university has received a few other inquiries about the Progressive Field accelerator but has yet to engage in any serious conversations with any party about commercializing it, said Leonard Young, who as director of technology transfer at Cleveland State is tasked with commercializing the university’s inventions. Mr. Young also is associate general counsel at the university. Both Mr. Young and Dr. Rashidi said they knew of no other accelerators that are similar to the one at Progressive Field. A company called Optiwind of Torrington, Conn., sells a system that resembles the one on Cleveland State’s campus, but Dr. Rashidi noted that it is not patented.

Breaking wind The university hasn’t recorded data showing how much electricity the Progressive Field accelerator

generated over the course of the three-month period but plans to collect cumulative data in the future, he said. The total figure probably wouldn’t have been as impressive as the moment-to-moment data Dr. Rashidi collected because of two glitches that caused the turbines to shut down on several occasions: ■ Unshielded wires connected to the system that turns the turbines to face the wind were mistakenly strapped to the cables that carry electricity generated by the turbines. Electromagnetism from the cables had been disrupting the control system, so the turbines often weren’t turned toward the wind. The wires have been separated from the cables and shielded. ■ Cleveland State also plans to replace the wind accelerator’s anemometer, which measures the speed of the wind. The anemometer was placed only a short distance in front of the accelerator, which ends up blocking some wind from reaching the device. The glitches aren’t a big deal to the Cleveland Indians, said Brad Mohr, assistant director of ballpark operations for the team. Though the Indians want to generate between 30,000 and 50,000 kilowatt-hours per year using its wind accelerator and the solar panels it installed in 2007, the team is more interested in helping Cleveland State improve its technology and in generating interest in renewable energy, Mr. Mohr said. For instance, the Indians are planning to create exhibits on the main concourse intended to teach visitors about the wind accelerator, the solar panels and the team’s other sustainability efforts. “It’s really here to inspire,” Mr. Mohr said. ■

20120820-NEWS--9-NAT-CCI-CL_--

8/16/2012

4:04 PM

Page 1

AUGUST 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

TAX LIENS The Internal Revenue Service filed tax liens against the following businesses in the Cuyahoga County Recorder’s Office. The IRS files a tax lien to protect the interests of the federal government. The lien is a public notice to creditors that the government has a claim against a company’s property. Liens reported here are $5,000 and higher. Dates listed are the dates the documents were filed in the Recorder’s Office.

LIENS FILED RUGGERO FATICA

Fitch Ratings Service recently downgraded the credit rating on a bond issue for Crocker Park’s four parking garages, from investment grade to speculative.

Crocker: Expansion likely won’t be affected continued from PAGE 3

developer maintains is erroneous. Fitch recently downgraded to BB, or speculative, from BBB+, which is investment grade, the credit rating on a $69 million bond issue that the Toledo-Lucas County Port Authority authorized to finance the four parking garages at Crocker Park. The bonds were issued by the port authority on behalf of Crocker Park LLC, the company led by Stark Enterprises of Cleveland that was formed to develop Crocker Park. In a news release it issued July 19 on the downgrade, Fitch cited a factor separate from the bond payments themselves for the action. Fitch said Crocker Park’s cash flows despite high occupancy rates “have eroded from already very weak levels and in fiscal 2011 covered only about onehalf of the substantial mortgage payment.” Noting “the developer is current on mortgage payments through the use of other resources,” Fitch said it’s concerned about Crocker Park LLC’s willingness to continue repaying the port authority bonds, which are also current. Fitch does not identify the mortgage lender by name or disclose Crocker Park’s cash flow figures.

Developer responds The developer disagrees with Fitch’s view of the financial health of the mixed-use complex, which encompasses 700,000 square feet of retail, office and apartment space. Steve Rubin, Stark’s chief operating officer, said in an interview that Fitch is basing its decision on outof-date, inaccurate information. “We are a privately held company. Our financial results are typically not made public,” Mr. Rubin said. “They ask for specific information and we have no reason to give it.” Mr. Rubin said Crocker Park LLC made its intention not to disclose such information clear at the time the port authority bonds were issued. Asked how Crocker Park fares financially today, Mr. Rubin said, “The property is currently meeting expectations. We are very pleased. Apartments are full with a waiting list. There’s 2,500 square feet of office space to fill and a small retail vacancy. The property is performing.” However, he refused to disclose statistics on the actual performance of the property. Arlene Bohner, a Fitch director who was the primary analyst behind the change in the parking garage bond rating, emphasized in an interview with Crain’s that Crocker Park LLC is current on its mortgage

“We are a privately held company. Our financial results are typically not made public. They ask for specific information and we have no reason to give it.” – Steve Rubin, chief operating officer, Stark Enterprises and bond payments. But if the developer decided to quit subsidizing mortgage payments and the property went into foreclosure, she said, there would be less incentive to repay the parking garage bonds. Ms. Bohner said Fitch obtains its data for determining the credit rating on the bonds from the servicer of the mortgage on Crocker Park. “As far as the information being out of date, our information is from as late as 2011,” she said.

38 W. Bridge St., Berea ID: 34-1943631 Date filed: May 8, 2012 Type: Partnership income Amount: $6,129 Kidsmobile Inc. 26314 Center Ridge Road, Westlake ID: 34-1709825 Date filed: May 10, 2012 Type: Employer’s withholding Amount: $5,734

LIENS RELEASED

Lakeside Building Services Inc. P.O. Box 470433, Broadview Heights ID: 51-0585756 Date filed: May 24, 2012 Type: Employer’s withholding Amount: $8,243 Onevue LLC 46 Shopping Plaza, Suite 218, Chagrin Falls ID: 20-5828493 Date filed: May 8, 2012 Type: Employer’s withholding Amount: $7,059

Alliance of Transylvania Saxons of US 1 Branch 9005 Memphis Villas Blvd., Brooklyn ID: 23-7516941 Date filed: March 23, 2012 Date released: May 1, 2012 Type: Employer’s withholding, unemployment Amount: $21,860 Charlestown Sand & Gravel 9304 Highland Drive, Brecksville ID: 20-4271853 Date filed: Nov. 22, 2011 Date released: May 8, 2012 Type: Employer’s withholding, unemployment Amount: $22,862

Zincon Inc. 888 E. 222nd St., Euclid ID: 81-0563873 Date filed: May 3, 2012 Type: Employer’s withholding, unemployment Amount: $6,295

Cleveland Officers Protective Services Inc. 1303 W. 58th St., Cleveland ID: 20-8717875

Terra Serra LLC Café Ah-Roma

Date filed: April 10, 2012 Date released: May 22, 2012 Type: Unemployment, failure to file complete return Amount: $7,554 Communications Cabling Concepts Inc. 18849 Pearl Road, Strongsville ID: 34-1657759 Date filed: Nov. 14, 2002 Date released: May 10, 2012 Type: Employer’s withholding Amount: $12,869 Ensign Products Co. P.O. Box 27167, Cleveland ID: 34-1105142 Date filed: Jan. 4, 2012 Date released: May 1, 2012 Type: Employer’s withholding, unemployment Amount: $15,212 Friar Enterprises Inc. 3435 Brookpark Road, Parma ID: 34-1242259 Date filed: Sept. 5, 2002 Date released: May 18, 2012 Type: Employer’s withholding Amount: $124,738 H T V Industries Inc. Zook Enterprises 30195 Chagrin Blvd., Suite 310, Pepper Pike ID: 34-1355054 Date filed: April 10, 2012 Date released: May 22, 2012 Type: Employer’s withholding Amount: $10,240

Thursday, Sept. 27, noon - 6PM

World

Executive Caterers at Landerhaven

Trade d C Conference PRESENTED BY

Happy mayor While financial types may be wary over a credit downgrade, it is unlikely to derail a near-doubling of Crocker Park’s size with the planned headquarters of American Greetings Corp. and about 50,000 square feet of additional retail space. Westlake Mayor Dennis Clough said based on his understanding, the credit downgrade will not affect financing for the expansion of Crocker Park as American Greetings moves its headquarters to Westlake from Brooklyn. Mayor Clough noted that the developer has missed no payments on its obligations. Crocker Park’s performance should not be an issue for the next phase of the project’s financing, the mayor said, as a planned $60 million bond issue for parking garages to support the expansion will be rated separately by all the ratings agencies. Bonds for the next phase will be significantly different from the first go-round. They will be supported by tax increment financing from the real estate taxes paid by the additional development, the mayor said. He said the next bond issue likely will be readied in about six weeks. Separate and apart from financial performance, Mayor Clough said he has been “very pleased with the way Crocker Park has performed.” “The community supports Crocker Park much more than I ever expected because there was opposition to Crocker at the beginning,” he said. “It’s become a destination location. It’s serving the public. I’m excited and enthused about it as I think everyone should be.” ■

Track Sessions: t (PWFSONFOU 4VQQPSU GPS &YQPSUFST t )FMQJOH .FEJDBM .BOVGBDUVSFST "DDFTT 'PSFJHO .BSLFUT t (MPCBM 'JOBODJBM 0VUMPPL t &VSP[POF *NQBDU PO /&0 $PNQBOJFT

Luncheon Keynote: Robert Sinche Global Head of Foreign Exchange Strategy, RBS Securities Inc., who directs the bank’s strategy and forecasting efforts of the currencies of developed market (G10) countries.

Concluding Keynote: Amy Liu, Co-Director and Senior Fellow Metropolitan Policy Program, Brookings Institution

Nicole Mastrangelo at 216-771-5158 or nmastrangelo@crain.com

20120820-NEWS--10-NAT-CCI-CL_--

8/17/2012

2:22 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

Grant Thornton to move into One Cleveland Center Accounting firm exiting space in Halle Building By STAN BULLARD sbullard@crain.com

The Cleveland office of the Grant Thornton LLP accounting firm plans to move to a full-floor office at One Cleveland Center from the Halle Building. Dan Zittnan, Cleveland managing partner, said in an email that Grant Thornton “is moving towards a more open configuration for their office spaces in order to promote productivity and communication.” “The firm considered several locations around Cleveland and ultimately selected a space we believe is best suited for our future needs,” Mr. Zittnan stated. Mr. Zittnan said the audit, tax and advisory firm plans to have its 100 employees in the new office, on the building’s 15th floor, Dec. 17. He said Grant Thornton will occupy about the same amount of space at One Cleveland Center as at the Halle Building,

1228 Euclid Ave. A full floor at One Cleveland Center consists of 21,000 square feet of space, according to CoStar, an online realty data supplier. Grant Thornton declined to comment on its reasons for moving or on the rent it will pay at the new building, 1375 E. Ninth St. Jeff Linton, spokesman for the Halle Building’s owner, Forest City Enterprises Inc. of Cleveland, declined comment on the tenant’s planned departure. Chaim Schochet, the investment executive who operates One Cleveland Center for Optima Management Inc. of Miami, Fla., did not return three calls to discuss the deal. Grant Thornton said its Cleveland office serves companies in Northeast Ohio, western Pennsylvania and upstate New York. With the move, Grant Thornton will exit a former department store converted to offices in the 1980s in the city’s Theater District. Its destination is a chisel-shaped contemporary office tower dating from 1982 in downtown’s NineTwelve District, the current name of the city’s onetime finance district. ■

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

GOING PLACES JOB CHANGES EDUCATION CLEVELAND INSTITUTE OF MUSIC: Char Rapoport Nance to development officer for alumni and parent relations.

HOSPITAL: Vince Allen to senior application support analyst.

INSURANCE WILLIS OF OHIO INC.: Joni Alexander to client service specialist.

CLEVELAND STATE UNIVERSITY: Joseph Han to assistant vice president, facilities and safety; Kathleen Murphy to controller and assistant vice president.

LEGAL

ENGINEERING

ASW GLOBAL: Bryan Steel to lead business development, Midwest region.

CIVIL & ENVIRONMENTAL CONSULTANTS INC.: Brett A. Blevins to consultant.

FINANCIAL SERVICE CEDAR BROOK FINANCIAL PARTNERS LLC: Jennifer Falb to chief experience officer.

Blevins

Vasu

Allen

Wallach

Steel

Hare

Weisman

Waxman

Stella

THACKER MARTINSEK: Mark I. Wallach to of counsel.

MANUFACTURING

EATON CORP.: David Keifer to director, Eaton University. WEATHERCHEM: Kristin Springer to product application engineer.

MARKETING

LANDING POINT FINANCIAL GROUP: Susan S. Vasu to financial adviser.

FAHLGREN MORTINE: Christy Bykowski to managing director, Cleveland.

PEASE & ASSOCIATES INC.: Nicholas J. Mazzone to director of business development; Elizabeth Kroll to supervisor, CFO Services Department.

LESIC & CAMPER COMMUNICATIONS CLEVELAND: Meagan Mulloy to senior account executive.

HEALTH CARE

MEDIA

SUMMA WESTERN RESERVE

SMART BUSINESS NETWORK INC.: David W. Fazekas to vice president, digital marketing.

MELAMED RILEY: Lisa Holmgren to media planner.

NONPROFIT CLEVELAND HEIGHTS-UNIVERSITY HEIGHTS PUBLIC LIBRARY: Brian C. Hare to youth services manager. COMMUNITY PARTNERSHIP FOR ARTS AND CULTURE: Megan Van Voorhis to chief operating officer. GIRL SCOUTS OF NORTH EAST OHIO: Jackie Ford to chief operating officer.

PHARMACEUTICAL RICERCA BIOSCIENCES: Dr. G. Lynn Miesel to technical director.

REAL ESTATE FOREST CITY ENTERPRISES INC.: Geralyn M. Presti to executive vice president, general counsel and secretary. GLOBAL REAL ESTATE ADVISORS INC.: Richard Senn to vice president.

SERVICE W.F. HANN & SONS: Chuck Piazza to residential and commercial sales consultant.

SPORTS DIETZ TROTT SPORTS & ENTERTAINMENT MANAGEMENT: Rick Chryst to senior vice president, of counsel.

STAFFING AREA TEMPS INC.: Lonni Hendershott, Cynthia Fenton and Patricia

Crowley to sales representatives.

BOARDS CITY CLUB OF CLEVELAND: Hewitt Shaw (Baker Hostetler) to president; Robert Littman to vice president and treasurer; Barbara Danforth to secretary. CONNECTIONS HEALTH WELLNESS ADVOCACY: Ethel Robitson to chair; Jeanette Brzoska to vice chair; Rochelle Lipson to treasurer; Giovanni DiLalla to secretary. MANDEL JEWISH COMMUNITY CENTER OF CLEVELAND: Arthur A. Weisman (Wells Fargo Advisors) to president. YOUNG AUDIENCES: Katie Solender to chairperson; Andrew Koonce to vice chairperson; Frederick Ramsey and Art Ward to co-treasurers; Drew Odum to secretary.

AWARDS SOCIETY OF FINANCIAL SERVICE PROFESSIONALS CLEVELAND CHAPTER: Neil R. Waxman (Capital Advisors Ltd.) received the Financial Service Professional of the Year Award. SOCIETY FOR VASCULAR SURGERY: Roy Greenberg, M.D., (Cleveland Clinic) received the Medal for Innovation in Vascular Surgery. UNIVERSITY OF PHOENIX CLEVELAND CAMPUS: Phil Stella (Effective Training & Communication Inc.) received the Distinguished Scholar Award.

RETIREMENT CLEVELAND HEIGHTS-UNIVERSITY HEIGHTS PUBLIC LIBRARY: Susan Black, after 34 years of service.

Send information for Going Places to dhillyer@crain.com.

SALT • SALT • SALT • Water Softener • Industrial • Ice Melt • Food Call For Pricing!! Minimum Delivery: 1Pallet

1-800-547-1538 Salt Distributors Since 1966

20120820-NEWS--11-NAT-CCI-CL_--

8/16/2012

4:15 PM

Page 1

AUGUST 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Innovation essential to surviving window industry’s pain By GINGER CHRIST gchrist@crain.com

Window makers and retailers nationwide are feeling the draft of a still-sluggish housing market, but a few local companies tied to the business are insulating themselves by offering new products and expanding into new markets. For instance, Mike McHugh said each of the four regional window companies he owns is experiencing year-over-year revenue growth. Two of his companies — both of which are involved in the process of making R-5 windows, a more energy-efficient window than Energy Star windows — were started after 2008 in the wake of the recession. “Recessions are hard, but winters are hard,” Mr. McHugh said. “But what recessions do is thin out weak competitors.” The key to growth as the industry consolidates is in developing a product for the future, industry officials say. Companies that can introduce a new product, innovation, method of delivery or an improved process are the ones proving to have staying power, said Jeff Lowinski, vice president of technical services for the Window and Door Manufacturers Association, a Chicago-based trade association. “We’re in the mode now that companies are positioning and altering for when the market turns,” Mr. Lowinski said. Mr. McHugh started Caliber Glass in Solon, a fabricator of insulated glass for the residential housing market, and Integrated Automation Systems LLC in Aurora, a manufacturer of production equipment for insulated glass fabricators, because he saw a future in energy-efficient products. “When times are good, everybody acts like they’re never going to end. And when times are bad, everybody acts like they’re never going to get good again. … We’re not building many new houses right now, but eventually we’re going to have to,” Mr. McHugh said. “It’s the chicken and the egg. People aren’t going to buy better insulated windows if someone else isn’t making them.” Caliber Glass and Integrated Automation, both of which use a new proprietary gas-filling process for insulated windows, are on track to boost sales by 300% this year from 2011 levels, Mr. McHugh said, though he would not disclose sales figures. Caliber Glass has doubled its work force to 12 in the last six months. Mr. McHugh said he believes companies that are doing well now “tend to be companies that are well capitalized and will continue to spend money to make their products better.” They’re also buoyed by rising home sales statewide. Home sales in Ohio were up 12.8% during the first six months of the year from the first half of 2011, while average sale prices rose 4%, according to the Ohio Association of Realtors. Northeast Ohio did even better, with home sales climbing nearly 17% in the first half of the year.

their efficiency and introduced new classes, or thicknesses, of insulated windows to earn higher thermal ratings, or R-values, on its windows. Dave Cicozi, systems manager at Polaris, called the upgrade a “major investment,” but wouldn’t share figures about the cost of the undertaking. He did say, however, that the last time Polaris completed such an upgrade to the line and invested in new equipment was more than 10 years ago. Mr. Cicozi said Polaris made the investment because of a growing demand for insulated windows. Ancillary companies, too, are benefiting from strength of the local window industry. Even as its customers — window

and door manufacturers and glass fabrication companies — closed or consolidated, FeneTech, a company in Aurora that provides automation software for makers of replacement windows, has managed to grow its sales at least 30% each year, including through the recession. The secret, FeneTech CEO Ron Crowl said, is innovation. FeneTech, which produces an enterprise resource planning software to track orders and inventory and manage production, in June rolled out a big software overhaul, FeneVision NEO, and regularly offers a few minor software upgrades per year. Continuing to provide new product for its clients has enabled the company this year to hire six

people, bringing its staff to 45. Mr. Crowl expects FeneTech’s sales this year to grow 35% to 40% from levels of 2011, though he wouldn’t disclose sales figures. Driven by strong sales, FeneTech is about to expand the role of its 2-year-old Luxembourg office. Mr. Crowl said the company this year will begin selling its products in Germany and will continue to boost the role of its European office.

More carnage likely Mr. Lowinski said the consolidation of the industry has not yet run its course, and midsize companies likely are the most vulnerable. Early on in the housing slowdown, a number of small window compa-

nies with weaker services or financial situations closed their doors, unable to endure the loss of business, while some midsize companies were able to weather the initial storm by reducing staff or relying on reserves or secondary business. “At this point here, that strategy is starting to wear thin. If they were surviving, they can only survive so long,” Mr. Lowinski said. “They have all of the challenges and issues large companies face and they aren’t seeing the resources. It’s harder for them to diversify and harder to put capital investments in.” He predicts there will be more acquisitions within the industry as companies look to diversify products or expand geographic reach. ■

IS THIS HOW YOUR BANK SEES YOU? We don’t. We see you as an individual. With the guts to run a business. Which makes us curious how you do it. And how we, as your bank, can help you do it better. What makes your business special? What is its true potential? How do you actually get paid? It’s how we can generate ideas that work for you. Like integrated payables and receivables solutions that may help you improve cash ﬂow. Or, perhaps, ﬁnancing options you never knew existed. We don’t think a bank can do that without being curious. Learn more at 53.com/BusinessIdeas We’re Fifth Third Bank.

The curious bank.

So, what’s new? Bringing new products to market is helping Polaris Technologies in Austintown, a maker of windows and doors for the remodeling industry. The company in April updated its top window line, an insulated window line called Thermalweld. Polaris redesigned the vinyl profiles of its insulated windows to improve

Deposit and credit products provided through Fifth Third Bank. Member FDIC. Equal Housing Lender.

Lending is subject to credit review and approval. © Fifth Third Bank 2012.

20120820-NEWS--12-NAT-CCI-CL_--

8/16/2012

3:32 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

Tax: Business attraction plays role Shale: Private companies continued from PAGE 1

an interview. “We are in the process of working through parts that we can all agree on and support, and there are a couple of areas left for further discussion. “It is my goal to start drafting legislation soon,” with the hope of passing the measure by the end of the year, Rep. Grossman said. The Grove City Republican said she recently spoke with a site selector who brought an unidentified company to Ohio. Rep. Grossman said the site selector told her the company would not have come to the state had it known in advance about the confusing municipal tax situation.

Achieving a balance Among the business organizations that are part of a coalition pushing to streamline municipal tax collections are the National Federation of Independent Business/Ohio, the Ohio Society of CPAs, the Ohio Chamber of Commerce, the Ohio State Bar Association and the Ohio Manufacturers’ Association. “Our hope is that we can achieve consensus on the issues,” said Amy Mignogna, director of tax policy for the CPA group. “Ultimately, the coalition would like everything to

be uniform for predictability and simplicity’s sake so it mitigates the revenue impact for everyone involved, businesses and local governments.” Cities have been represented in the hubbub over uniform taxation by the Ohio Municipal League. They balked at the early proposals because those measures turned collection of the taxes over to the state. Cities were concerned about cash flow, fearing that adding the state to the collection process would slow down getting tax collections into their own bank accounts. “There are business issues and there are (local) home rule issues and we’re trying to balance it as best we can,” said Bay Village Mayor Debbie Sutherland, who has been involved in some of the discussions about uniform taxation. Mayor Sutherland said she believes the state backed off on the centralized collection issue when it realized the state tax department was not prepared to handle the monthly, rather than quarterly, distributions of withholding payments to the communities that cities now handle on their own.

Art of compromise With that issue off the table, three

key issues remain — occasional entry, net operating loss carryforwards and taxation on S corporations and limited liability companies. Cities at present may tax any worker who works more than 12 days a year in their communities; they even use different definitions of how many hours constitute a day’s work. That occasional entry standard could be changed to 30 days. Also unresolved is how communities treat prior-year net operating losses of sole proprietors. Some cities follow the federal tax code and allow the loss to be deducted from the current year’s income; others do not. Communities also vary in the way they tax income on limited corporations such as S corporations and LLCs. Some tax the corporate entity and others do not. All parties appear to understand the value of streamlining the process. The big concern for cities is to maintain current levels of income tax revenue. “It’s good for all of us to have good economic conditions in our state, but not to the detriment to the operations of communities,” Mayor Sutherland said. “There’s going to have to be some compromise.” ■

may be part of new center continued from PAGE 1

medical, business, law and science programs. Youngstown State University was the first regional university to make a splash in the shale arena, with the launch late last year of its Natural Gas and Water Resources Institute, which focuses on the study of the water used in the shale gas extraction process. Also, faculty members at Cleveland State University’s Maxine Goodman Levin College of Urban Affairs have studied the economic impact of the shale gas rush. CWRU’s center perhaps will be structured similarly to Ohio State University’s Subsurface Energy Resource Center, which launched last September as a multidisciplinary effort among faculty to advance research into the pros and cons of the shale boom. “I view the center (at CWRU) as a place for research, education and outreach that helps people grapple with the drilling boom,” said Beverly Saylor, an associate professor of geology at CWRU involved with the initiative.

Finding a balance Case Western Reserve is in talks with several companies entrenched in the shale industry about working with the center, but those involved in the project said it was too early to disclose any by name. Dr. Saylor noted that the center’s leadership still is grappling with how it best can interact with businesses in the industry, especially if the center is to maintain its independence. “How do you balance being a source of information, an honest broker and work with industry?” she

YOUR BUSINESS IS MOVING FAST. CAN YOUR PHONE AND INTERNET KEEP UP? Get award-recognized service and 24/7 support with feature-rich Cox Business InternetSM and Cox Business VoiceManagerSM to keep your business running smoothly. We’re the only service that’s at your service.

Limited-Time

SPECIAL OFFER

COX BUSINESS BUNDLE

ADD BUSINESS INTERNET AND PHONE FOR ONLY $69.99 PER MONTH, PLUS FREE INSTALLATION.* “Highest Customer Satisfaction among Data Service Providers for Small/Midsize Businesses”

1.866.791.2688 | coxbusiness.com/save *Offer valid until 9/30/2012 to new commercial subscribers of Cox Business InternetSM and Cox Business VoiceManagerSM in Cox Ohio serviceable locations. Minimum 2-year service contract required. Offer includes monthly service fees for 24 months of Cox Business Internet with download/upload speeds of up to 10.0Mbps/2.0Mbps and 1 Voice Manager Anywhere Line. Phone offer may be extended on up to 7 additional VoiceManager Anywhere lines. Offer includes Free Standard Installation. Offer does not include non-standard installation, construction, inside wiring, usage, equipment, applicable taxes, surcharges or fees. Telephone modem equipment is required. Modem uses electrical power to operate and has backup battery power provided by Cox if electricity is interrupted. Telephone service, including access to e911 service, will not be available during an extended power outage or if modem is moved or inoperable. Telephone services are provided by Cox Ohio Telcom, LLC. Cox cannot guarantee uninterrupted or error-free Internet service or the speed of your service. Actual speeds vary. Rates and bandwidth options vary and are subject to change. Discounts are not valid in combination with or in addition to other promotions and cannot be applied to any other Cox account. Services not available in all areas. Other restrictions apply. ©2012 CoxCom, LLC., d/b/a Cox Communications Ohio. All rights reserved. Cox Business received the highest numerical score among small/midsize business data service providers in the proprietary J.D. Power and Associates 2012 Major Provider Business Telecommunications Data Services Study.SM Study based on 5,143 total responses measuring eight providers and measures opinions of small/midsize businesses (companies with two to 499 employees). Proprietary study results are based on experiences and perceptions of businesses surveyed in October 2011 and February 2012. Your experiencesmay vary. Visit jdpower.com.

“We want to ... make a big impact on some of the major challenges.” – Xiangwu “David” Zeng, chairman, CWRU department of civil engineering said. “We’re still trying to work out that balance.” However, Dr. Zeng said there are aspects of the center where its researchers could collaborate with industry. For example, he said CWRU’s researchers are interested in developing better protective coatings for pipes used in shale gas exploration to prevent corrosion. “We want to use the expertise of our faculty to make a big impact on some of the major challenges,” he said. Drs. Zeng and Saylor said the approach of CWRU’s center could make it an attractive investment for grant-making agencies that in recent years have preferred to fund projects steered by multidisciplinary research teams. Dr. Zeng said the center, which now is wholly financed by the university, plans to seek additional dollars from the U.S. Department of Energy and the Ohio Third Frontier technology program. Dr. Zeng said the educational component of the center initially will involve a new course this fall exploring issues related to hydraulic fracturing, or fracking — the oftencontroversial process by which millions of gallons of water, sand and chemicals are used to extract natural gas from shale deposits deep beneath the earth’s surface. Ultimately, he said the educational component of the center could evolve into a full concentration or degree program. ■

20120820-NEWS--13-NAT-CCI-CL_--

8/16/2012

1:49 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

AUGUST 20 - 26, 2012

INSIDE

REAL ESTATE

19 A RUN ON BARGAINS BEFORE RENTS GO UP

Agencies carefully hiring new salespeople Improving traffic, older work force combine to boost interest in field By JENNIFER KEIRN clbfreelancer@crain.com

“W MCKINLEY WILEY

Damien Forshe (left) and Keymah Durden are co-founders of the Rid-All Green Partnership in Cleveland’s Kinsman neighborhood. Not pictured is fellow co-founder Randell McShepard.

GROWTH SPURTS ‘Agripuncture’ backers push for community involvement in rehabbing inner-city land By KATHY AMES CARR clbfreelancer@crain.com

or decades, the Forgotten Triangle in Cleveland’s Kinsman neighborhood was an illegal landfill, an open-air Dumpster littered with tires and trash. Now the triangle is taking on a new shape after a massive cleanup and shaving of the land cleared the way for a farming project that looks as if it could be part of a reservation in the Metroparks. There are greenhouses where vegetables and even tilapia are growing. Orange trees dot the manicured grounds. Nearby, crates of waste from restaurants and food banks meet mounds of wood chips and other earthly derivatives to be composted into rich soil that feeds this urban food system. The operation at East 81st Street and Otter Avenue is one of dozens of projects throughout Cleveland that are turning vacant swaths of land into food reservoirs while linking city dwellers — many of them poor — to fresh, local produce. But the real key to planting sustainable urban agriculture projects lies in developers’ ability to empower people in the surrounding communities to become a part of the rehabilitation.

The architecture website ArchDaily refers to the phenomenon as “urban agripuncture,” or the use of pinpointed, productive landscapes to revitalize abandoned communities and connect them to healthy foods. Kimberley Hodgson, who last year co-authored a report, “Urban Agriculture: Growing Healthy, Sustainable Places,” examined how local governments are weaving social, environmental and economic aspects of agriculture into the urban fabric. The report categorized cities’ initiatives by noncommercial (social purposes such as education), commercial (sales) and a hybrid model, which incorporates both. “Cleveland has a strong hybrid model,” said Ms. Hodgson, who noted other cities such as Philadelphia, Seattle and Milwaukee share the hybrid model designation. “These local governments are really attentive by reaching out to local food systems, farmers, low-income groups, coalitions” and reusing vacant land with commercial, social and environmental considerations in mind.

Seeds of change At the 1½-acre agriculture incubator in Kinsman — known as the Rid-All Green See GROWTH Page 14

“I believe we are a transformative forest in this neighborhood ...” – Timothy Smith, founder and executive director, Community Greenhouse Partners

anted: One Good Real Estate Agent.” So read the headline of an email blast sent last month by David Sharkey, president of Progressive Urban Real Estate, his cautious first step into agent recruitment after seven brutal years in the real estate business. “That’s literally what we’re looking for. One good agent,” he said. “I’ve grown quickly in the past. That’s not what I’m looking to do now. I’m looking to grow slowly and make sure we have the right people in place.” Grow. It’s a word not heard much in real estate in recent years, but improvements in the real estate market and a steady increase in new talent entering the business have local agencies carefully looking to grow their staffs again. “The last six months is the first time we’ve seen a steady increase in inquiries (since 2006),” says Tina Lapp, president of the School of Business at Hondros College, which offers real estate courses at campuses throughout Ohio. “There’s an excitement in the industry, and it’s not just the number of students. It’s a difference in the enthusiasm.”

The media effect In Northeast Ohio, the number of houses sold in the first six months of the year was up nearly 17% over the same period last year, with dollar volume up more than 20%. It’s the kind of good news that’s been proclaimed across media outlets, and it’s tracked nearly exactly with Hondros’ increased enrollment. At the college’s Northeast Ohio location alone, YTD enrollment is up 17% over year-to-date 2011. “It is absolutely influenced by the news,” Ms. Lapp said. “It’s consumer confidence. They are more confident in their personal lives, and that makes it easier to make a career change.” At Howard Hanna Ohio, president Hoby Hanna said he expects 300 new associates in his 2,000-strong Cleveland/Akron/Canton work force in 2012 — besting a projected 250 — a continuation of a three-year hiring upswing. Yet Mr. Hanna also said that See AGENCIES Page 14

20120820-NEWS--14-NAT-CCI-CL_--

8/16/2012

1:49 PM

Page 1

14 CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

REAL ESTATE

Growth: Vacant land plentiful in city continued from PAGE 13

Partnership â&#x20AC;&#x201D; volunteers compost soil and harvest the produce, which is supplied to Cleveland produce distributor Sirna & Sons, St. Vincent Charity Medical Center, farmers markets and restaurants, including Pure & Supreme Cuisine in Cleveland and Sandwich King in Bedford. â&#x20AC;&#x153;Weâ&#x20AC;&#x2122;re also talking to a restaurant in Chinatown,â&#x20AC;? said Randell McShepard, who founded Rid-All Green Partnership with childhood friends Damien Forshe and Keymah Durden. The Rid-All Green Partnership is an arm of Milwaukee-based nonprofit Growing Power; the latter groupâ&#x20AC;&#x2122;s CEO is former NBA player Will Allen, who was named in 2010 as one of Time magazineâ&#x20AC;&#x2122;s most influential people in the world. To facilitate its mission of education, outreach and local food production, Rid-All plans to break ground this fall on a $650,000, 6,000-square-foot greenhouse that will shelter a farmers market and commercial kitchen for local residents and other food enthusiasts. The Rid-All campus anchors the larger, 26-acre Urban Agriculture Innovation Zone between East 79th and East 84th streets off Kinsman Road. Ohio State University Extension is using six acres there for demonstration purposes and farms.

Landing land a key Down the road at Kinsman, Ensign and Grand avenues in the cityâ&#x20AC;&#x2122;s Central neighborhood, Green City Growers Cooperative is developing a $17 million hydroponic greenhouse on 10 acres that is scheduled to come online in November. The project will use shallow

pools of nutrient-rich water, rather than soil, to annually produce 5 million heads of lettuce and leafy greens and 300,000 pounds of herbs; the produce will be distributeD to grocers and food service companies within a 150-mile radius. The city of Cleveland assembled the land and cobbled together $10 million in federal loans and grants to support the initiative. Green City Growers plans to employ about 35 residents, who will be allowed to assume an ownership stake in the business and share any profits. Neighborhood development organization Burten, Bell, Carr Development Inc. is helping to bring online both the Green City Growers Cooperative and the Urban Agriculture Innovation Zone, the latter of which required 18 months of private land acquisitions and working with city officials to assemble land bank parcels for development. The nonprofit that serves most of Clevelandâ&#x20AC;&#x2122;s Ward 5 still is looking to acquire about 70 more parcels at the site. â&#x20AC;&#x153;There are various degrees of interest (from 32 different landowners) in selling their property,â&#x20AC;? executive director Timothy Tramble said. â&#x20AC;&#x153;Some were adamantly opposed, but we were ultimately able to inspire them with our vision.â&#x20AC;? The city of Cleveland has roughly 20,000 vacant lots, with about 10,000 in its land bank. The city in 2007 began revamping policies and codes to make urban farming easier; the changes included the introduction of an urban garden zoning district and chicken and bee zoning, and allowing for agriculture in residential districts. Pending adoption is an urban

agriculture overlay district that would allow large-scale farming activities.

Making a statement Over on East 67th Street and Superior Avenue, in the cityâ&#x20AC;&#x2122;s St. Clair-Superior neighborhood, four hoop houses rise from the shadows of a vacant church, which nonprofit Community Greenhouse Partners bought â&#x20AC;&#x153;for a songâ&#x20AC;? in December 2010 from the Catholic Diocese of Cleveland, said the nonprofitâ&#x20AC;&#x2122;s founder and executive director, Timothy Smith. The operation so far has garnered about $40,000 in private grant money to advance its vision of hiring locally and enriching the community with inexpensive organic goods. Carrots, kale and other greens share the earth with weeds and brush on the nearly 3-acre property, which Mr. Smith continues to clear as his urban agriculture project gains ground. â&#x20AC;&#x153;This is our statement garden,â&#x20AC;? he said. Mr. Smith is providing microgreens â&#x20AC;&#x201D; small, young shoots of a plant used as salad greens â&#x20AC;&#x201D; to Cleveland eateries such as Noodlecat and Flying Fig, and Hawken School, and he is in talks with charter school operator Breakthrough Schools about introducing microgreens or other produce to students at Citizens Leadership Academy in the cityâ&#x20AC;&#x2122;s Hough neighborhood. Meanwhile, Mr. Smith plans to transform the former St. George church into a grocery store, coffee shop and market, which he said would sell on-site produce and

other goods cheaper than what residents pay at the convenience store. The basement of this estimated $5 million project would function as a commercial kitchen that would educate residents on food utilization. â&#x20AC;&#x153;I believe we are a transformative forest in this neighborhood, and people are starting to figure it out,â&#x20AC;? Mr. Smith said. â&#x20AC;&#x153;The residents are waiting and watching.â&#x20AC;? An area resident of the Kinsman farm has moved beyond observa-

tion and has been volunteering at the Rid-All Green Partnership. Aaron El-Amin said he previously knew nothing of agriculture. He since has taken on-site farming workshops and enjoys helping with the composting. â&#x20AC;&#x153;Itâ&#x20AC;&#x2122;s the hardest work Iâ&#x20AC;&#x2122;ve ever loved,â&#x20AC;? he said. As to whether the exposure has changed his habits and approach to local food, Mr. El-Amin said: â&#x20AC;&#x153;Iâ&#x20AC;&#x2122;m learning a lot about nutrition. Theyâ&#x20AC;&#x2122;re winning me over slowly.â&#x20AC;? â&#x2013;

Agencies: Joining fray no easy task for newcomers continued from PAGE 13

those numbers reflect an expected net increase of about 100 agents. Thatâ&#x20AC;&#x2122;s because while the real estate job market is recovering, itâ&#x20AC;&#x2122;s also changing significantly. According to the Ohio Division of Real Estate & Professional Licensing, more than 30% of Ohioâ&#x20AC;&#x2122;s real estate licensees are 61 to 70 years old, and another 27% are 71 or older. Nationally, the average real estate agent is a 57-year-old female. â&#x20AC;&#x153;A lot of our agents are retiring who have been at it a long time,â&#x20AC;? said Ed Dolinsky, of Coldwell Banker Hunter Realty. â&#x20AC;&#x153;They thought it was going to rebound. â&#x20AC;Ś Itâ&#x20AC;&#x2122;s better now, but itâ&#x20AC;&#x2122;s not 2004 or 2005.â&#x20AC;? Six of Mr. Dolinskyâ&#x20AC;&#x2122;s 340 agents have died over the last year. Others are snowbirds who retain their Ohio licenses but sell only a few houses a year. Itâ&#x20AC;&#x2122;s not just demographics; the business approaches of agents who slogged through the tough years are also different. â&#x20AC;&#x153;Part-timers have disappeared from the industry,â&#x20AC;? Mr. Hanna said. â&#x20AC;&#x153;The clients are much more sophisticated now. â&#x20AC;Ś I tell agents itâ&#x20AC;&#x2122;s going to take three years to build the foundations of your business.â&#x20AC;?

Newbie acceptance All of these factors demand a real estate newcomer who is dedicated full time to the job, bringing healthy doses of realism and optimism.

But how do long-time agents feel about this new wave of upstarts showing up just as the rough seas are calming? â&#x20AC;&#x153;There are probably some who are resentful,â&#x20AC;? Mr. Hanna said. â&#x20AC;&#x153;The successful veterans say, â&#x20AC;&#x2DC;Come on in, the waterâ&#x20AC;&#x2122;s warm,â&#x20AC;&#x2122; but youâ&#x20AC;&#x2122;re going to have to work.â&#x20AC;? Mr. Sharkey agreed that any potential brew of resentment will come not from the arrival of newcomers but from any lingering notions that real estate can be an easy side business. â&#x20AC;&#x153;If youâ&#x20AC;&#x2122;re not serious about it, youâ&#x20AC;&#x2122;re not going to get the business,â&#x20AC;? Mr. Sharkey said. â&#x20AC;&#x153;Things are different today. Itâ&#x20AC;&#x2122;s not as easy to get financing, deals donâ&#x20AC;&#x2122;t close on time. â&#x20AC;Ś Agents have learned how to deal with things that in 2005 might not have come up.â&#x20AC;?

Cause for optimism In 2005, Progressive Urban Real Estate had four offices and more than 70 agents. Now Mr. Sharkey has one office and 19 agents. Heâ&#x20AC;&#x2122;s seen strong response to his â&#x20AC;&#x153;Wantedâ&#x20AC;? ad, some job seekers coming from other agencies or returning to the business, but many just starting their real-estate career. Demand is up, and in some markets exceeds supply. â&#x20AC;&#x153;This yearâ&#x20AC;&#x2122;s different,â&#x20AC;? he said. â&#x20AC;&#x153;Based on the demand weâ&#x20AC;&#x2122;re seeing, it appears that things are going to be OK.â&#x20AC;? â&#x2013;

OSTENDORF-MORRIS COMPANY Real Estate Management Services Â&#x2021; 0DQDJHV SURSHUWLHV HIĂ&#x20AC;FLHQWO\ Â&#x2021; 0D[LPL]HV FXVWRPHU VHUYLFHV Â&#x2021; &RQWUROV EXLOGLQJ RSHUDWLQJ FRVWV

Working with You to Build Success At Taft, building relationships that help our clients build their businesses is our top priority. From development, finance, construction, acquisitions, dispositions, exchanges, leases, and property operations, we have the extensive toolbox of legal resources to efficiently address every need. Learn how our 126-year track record of performance can help build your business success.

Â&#x2021; (QKDQFHV \RXU DVVHWÂˇV YDOXH :H DUH 1RUWKHUQ 2KLRÂśV SUHPLHU SURYLGHU RI DVVHW SURSHUW\ DQG IDFLOLW\ PDQDJHPHQW VHUYLFHV ZLWK PRUH WKDQ \HDUV RI ORFDO H[SHULHQFH

Taft Stettinius & Hollister LLP www.taftlaw.com

200 Public Square, Suite 3500, Cleveland, OH 44114-2302 U P: (216) 241-2838 Business and Finance U Litigation U Labor and Employment U Business Restructuring, Bankruptcy and Creditor Rights i>Â?Ă&#x152;Â&#x2026;Ă&#x160;>Â&#x2DC;`Ă&#x160; Â&#x2C6;viĂ&#x160;-VÂ&#x2C6;iÂ&#x2DC;ViĂ&#x192;Ă&#x160;UĂ&#x160; Â&#x2DC;Ă&#x152;iÂ?Â?iVĂ&#x152;Ă&#x2022;>Â?Ă&#x160;*Ă&#x20AC;Â&#x153;ÂŤiĂ&#x20AC;Ă&#x152;Ă&#x17E;Ă&#x160;U Tax U Private Client U Environmental Law U Real Estate

Frank L. Pschirer, CPM, RPA 2YHU \HDUV RI FRPPHUFLDO UHDO HVWDWH H[SHULHQFH Sr. Vice President & Managing Director | )UDQN 3VFKLUHU#RPFOH FRP 0DLQ _ ZZZ RVWHQGRUI PRUULV FRP Global commercial real estate expertise

20120820-NEWS--15-NAT-CCI-CL_--

8/16/2012

1:50 PM

Page 1

AUGUST 20 - 26, 2012

WWW.CRAINSCLEVELAND.COM

CRAIN’S CLEVELAND BUSINESS 15

REAL ESTATE

Amid financing challenges, developers consider options

onstruction cranes in the sky and hard hats on the ground mean one thing: Cleveland is building — and growing — again. Specific areas of the commercial real estate market are particularly hot, especially around downtown, University Circle and Ohio City. High occupancy rates and waiting lists in the central business district are driving a frenzy of activity for still more residential and mixed-use projects, as well as creating an expanding area for planned and potential projects throughout the city. Despite the optimistic market forecasts, financing challenges still exist. While traditional lenders are making funds available, developers often must contend with conservative appraisals and restrictive loan covenants in order to access capital. Tighter lending standards do not prevent deals from getting done, but instead force developers to rely on diverse funding sources to adequately bridge the gap between needed funds and what is available through conventional lending. The Cleveland area is ripe with an array of financing assistance to support projects and add to the capital stack, including grants, tax abatements, tax credits and low interest rate loans, assuming you know where to look and how to apply. Or, conversely, you may retain experienced legal counsel with the knowledge and contacts to help you structure and weigh the many creative financing options. These options include: ■ Tax credits: A variety of both state and federal tax credit programs have been instrumental in funding some of the area’s recent revitalization developments, including East Fourth Street, MidTown Tech Center, Allen Theatre and the Cleveland Greenhouse Project. Historic tax credits have been used effectively to revitalize historically significant buildings. The renovation of Woolworth’s into the House of Blues, the conversion of the National City building on East Sixth into the Rosetta Center and the resurrection of the United Bank building into a new location for Crop Bar and Bistro are examples of projects that likely would not have launched without the developers’ abilities to leverage historic tax credits as a funding source. New Markets Tax Credits are especially valuable for encouraging development in economically challenged neighborhoods. Projects throughout Cleveland have been aided by NMTCs, as much of the city falls below the poverty level. The regeneration of the Tudor Arms/ Doubletree Hotel and the renovation of the Capitol Theater and Uptown at University Circle each relied on NMTCs to connect plans with reality and bridge what likely would have been insurmountable lending gaps. ■ Tax Increment Financing: Used throughout Cleveland and Ohio, TIFs leverage taxes from new construction to help fund the construction of infrastructure to ready a neighborhood for development through such additions as roads, lights, sidewalks, etc. East Fourth Street is an example of how TIFsupported infrastructure improvements, including street reconfigu-

ration and specialty street lighting, were integral to the success of the project. ■ Special Improvement Districts: The Downtown SID is the most noteworthy special improvement district. It funds the Downtown Cleveland Alliance, which encourages people to live, work and play downtown by making the neighborhood more inviting. Among other things, DCA is responsible for keeping the streets clean and providing an additional security presence. ■ Brownfields loan program: Operated by the county, the brown-

JOHNWALDECKJR. GEOFFREYGOSS

ADVISERS fields loan program provides funding to clean up and redevelop previously contaminated property. Much of the redevelopment of the

health-tech/MidTown Corridor benefitted from Brownfields loans. What are the challenges? Money for the right kind of commercial real estate development and redevelopment does exist! The challenge, however, is the complexity of the transaction. Many of today’s commercial real estate deals can have as many as 15 layers of financing to make the project a reality. That’s a lot of paperwork and a lot of lenders to keep happy. The job of managing such complexity typically falls on the attorney. Lenders have their own attorneys, but the developer/owner/landlord

must also be represented. Among other things, it is the attorney’s job to ensure that all parties understand the pecking order of who gets paid, how the money flows, and what happens in case of default. Getting the deal done in good measure depends largely on legal counsel’s ability to navigate the maze of options and connect the right dots to keep all parties satisfied. Do your homework and choose wisely. ■ Messrs. Waldeck and Goss are partners in the real estate practice group of Cleveland-based Walter & Haverfield.

You expect us to focus on you, your company and your industry. In that order. That’s KeyBank. Here, your success is our priority. We provide you with an experienced banker who gives you access to product and industry experts, and Key’s executive leadership. So whether it’s meeting your capital needs or advising you on strategic acquisitions through our affiliate, KeyBanc Capital Markets Inc., you’ll always feel like you’re a priority. Because you are. We’re not just the bank you deserve. We’re what you expect. To learn more, visit key.com/whatyouexpect.

KeyBanc Capital Markets Inc., Member NYSE/FINRA/SIPC and KeyBank National Association (KeyBank N.A.) are separate but afﬁliated companies. Securities products and services are offered by KeyBanc Capital Markets Inc. and its licensed securities representatives. Securities products and services: Not FDIC Insured t No Bank Guarantee t May Lose Value Banking products and services are offered by KeyBank N.A. Member FDIC and Equal Housing Lender. Key.com is a federally registered service mark of KeyCorp. ©2012 KeyCorp. ADL4779

20120820-NEWS--16-NAT-CCI-CL_--

8/16/2012

2:22 PM

Page 1

16 CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

REAL ESTATE

City of Green being groomed for another growth gusher By STAN BULLARD sbullard@crain.com

reen building is all the rage in development circles these days. It’s a term, though, that has taken on new meaning in Summit County, where growth in the city of Green looms large, especially since Diebold Inc., the automatic teller and voting machine supplier, this year announced plans for a new, multimilliondollar headquarters there. The suburb on the southern edge of the county, best known as home to bustling Akron-Canton Airport and the site of three Interstate 77 interchanges, is positioned to catch another round of highprofile business development in coming years. Indeed, the almost 34-squaremile suburb is sowing planning strategies and is growing around highway interchanges as carefully as one would cultivate a well-kept English garden. The city’s transformation is striking to Bob Raskow, vice president and business manager of the Akron-based NAI Cummins real estate brokerage. He has lived there since he was 15 and remembers when he first saw Arlington Road in 1968. “At the interchange, there was a gasoline station and a chicken house. That was before the (nowdefunct) Clarkins store,” Mr. Raskow said. “The rest was all farms.” Now, he estimates that 95% of commercial space is leased on Arlington Road, which in the 1970s and 1980s partially became a retail

and commercial area and now consists of car dealerships, a Target store and other retailers south of I-77. Arlington also became home to multiple residential developments running to the Summit County line, and more residential land remains today. That growth has set the table for the current rise of Massillon Road, the suburb’s second node of development. Work on Massillon Road was completed in 2008, converting it from two lanes to a center-lane road with two lanes in each direction, from I-77 to a traffic circle at Steese Road. Green, which became a city in 1992, is lucky enough to have raw land and the ability to capitalize on contemporary city planning standards. It’s also ready to grow at an opportune time: Green is in the path of development that’s reaching south from Akron and north from Canton.

‘Realization of a dream’ Two developers, DeHoff Development Co. of North Canton and Green-based CAM Inc., both have big sites cued for development near Massillon Road. DeHoff has been building in Green since 1969 and now is doing site preparation for its largest project yet, the 200-acre Union Square master-planned development. Union Square, which is undergoing excavation for roads and infrastructure, spans an area on the west side of I-77 from Massillon to Wise roads. The centerpiece is the planned Diebold headquarters, which is targeted for nearly 70

acres with highway visibility. Two other areas are set aside for a total of almost 20 acres of office buildings, another 15 will be the site for hotels, restaurants and offices, and eight acres closest to Massillon Road are targeted for retail or office use. The hope is to attract a drug store and other retailers that would serve future office tenants, according to Beth Borda, DeHoff senior director of commercial development. Yet another 13 acres is set aside for multifamily use, which DeHoff will develop or will sell to an apartment developer for more than 200 units, Ms. Borda said. Remaining land will be used for roads and detention basins to control rainwater runoff. “This is the realization of a dream for us,” Ms. Borda said. DeHoff assembled the property — much of it farmland — prior to 2001 by buying it from a halfdozen owners. The property received planned development zoning in 2001 and drew increasing interest until 2008, when the economic downturn started. Now, interest is piqued again, energized by the planned Diebold project. A key part of the plan is a planned four-lane road dubbed Town Park Boulevard that will open the acreage for buildings, including Diebold. That road also would set the table for Park Place, a second DeHoff land development of more than 90 acres that would be home to additional office and retail space, perhaps some big-box stores, Ms. Borda said. Plans call for the new Town Park Boulevard

Seeing potential. Building success.

to connect with existing Lauby Road to open the site for development. “The road is huge. It will allow people to drive from the (AkronCanton) airport to Diebold and other offices without going on the highway,” Ms. Borda said.

In the market Also off Massillon Road is Heritage Crossings, a 72-acre land development by CAM. Most of the site is scheduled for commercial development, but some of the Massillon Road frontage will go to a new grocery-anchored shopping center by Albrecht Inc., an Akronbased developer that includes owners of the Acme supermarket chain among its principals. Acme announced plans earlier this year to build a 70,000-squarefoot supermarket in Heritage Crossings. The plan also calls for more than 30,000 square feet of selling space for smaller neighborhood-oriented tenants in three buildings. Demand is substantial, according to Joe Albrecht, the family-owned firm’s vice president for retail properties. “My phone is ringing off the hook,” Mr. Albrecht said, as he is fielding more than five calls daily from retail prospects or their real estate agents. “Green is a location where a lot of activity is taking place in Northeast Ohio. I think it’s a boom town now,” he said. The design at Heritage Crossings will call for an extra five feet of sidewalks outside the buildings to accommodate patios of hoped-for restaurants.

that vision with the resources and expertise of our Ohio team, you get

How can we support your strategy in 2012? U.S. Investment Sales Brokerage Company Ranking 1,766

Marcus & Millichap 1,305

CB Richard Ellis 414

NAI

Jenni Roudebush, Senior Vice President, Market Manager – 513-246-2203 Jenni.Roudebush@AssociatedBank.com Ron Murphy, Senior Vice President, Relationship Manager – 513-246-2202 Ron.Murphy@AssociatedBank.com Nick Keithley, Vice President, Senior Portfolio Manager – 513-246-2201 Nick.Keithley@AssociatedBank.com

352

Colliers International Holliday Fenoglio Fowler

To move your commercial real estate project forward, call one of our Commercial Real Estate professionals today.

All this action builds on other activity in Green through the years. CAM has developed more a half-million square feet of office, office/warehouse and tech-oriented space in 18 buildings in the Akron/Canton Corporate Park off Massillon Road near I-77. Frontage of the park is devoted to the Shops of Green, a retail center. Diebold already is in the suburb, as is InfoCision Management Corp., one of the nation’s largest telecommunications marketing firms. FedEx Custom Critical is also in the mix of more than 1,200 businesses. Mr. Raskow of NAI Cummins has a counterintuitive indicator of the strength of development today on Massillon Road. “I have had people say to me, ‘Find me a site on Massillon Road,’” Mr. Raskow said. “But sometimes the (property) owners don’t want a particular user.” That selectivity is a gauge of the market’s strength, Mr. Raskow concludes. For all the commercial development, a large part of the southwest corner of Green is reserved for rural-residential zoning to keep its bucolic nature. Wayne Wiethe, Green director of planning and community development, considers it a strong combination — a city that can range from suburban homes to corporate headquarters to sites with their rural nature preserved. “That,” he said, “is housing diversity.” ■

In 2011, the Cleveland office of Marcus & Millichap closed 85 real estate and financing transactions valued at almost $200 million. We have approximately $75 million of properties under contract and over $300 million worth of investment properties exclusively listed for sale across all property types.

Cushman & Wakeﬁeld

something even more valuable: success.

Work in progress

Talk vs. Execution

Vision. As one of the top 50 financial institutions in the U.S., Associated Bank understands the importance of commercial real estate. And when you combine

Mr. Albrecht said construction should start this fall and the buildings should be in place next year.

309 264

Cassidy Turley

262

Apartment Realty Advisors

245

Grubb & Ellis

239

Coldwell Banker

235

* Includes sales of apartment, ofﬁce and retail properties of $1 million and above nationally, 12 months ending 3/31/2012; list side. Sources: Marcus & Millichap Research Services, CoStar Group, Inc.

A Tradition of Successful Execution for Our Clients — Through Every Cycle

AssociatedBank.com

Commercial Real Estate Deposit and loan products are offered by Associated Bank, N.A. (“AB”). Member FDIC and Associated Banc-Corp (“AB-C”). Loans subject to credit approval. Equal Opportunity Lender. (8/12)

Offices Nationwide

Michael L. Glass Vice President/Regional Manager Cleveland Office (216) 264-2050 michael.glass@marcusmillichap.com

www.MarcusMillichap.com

20120820-NEWS--17-NAT-CCI-CL_--

8/17/2012

11:51 AM

Page 1

AUGUST 20 - 26, 2012

CRAIN’S CLEVELAND BUSINESS 17

WWW.CRAINSCLEVELAND.COM

REAL ESTATE

PLACESOFNOTE A look at Northeast Ohio’s interesting spaces

Cleveland Sight Center By AMY ANN STOESSEL astoessel@crain.com

imple, yet transformational. The design elements that make up the core of the $10 million makeover of the Cleveland Sight Center on East 101st Street are not full of high-tech bells and whistles. Rather, they are quite basic: Colors, textures, straight lines and acoustics are largely what are used to help guide those who have low or no vision. “We didn’t need more space,” said Steve Friedman, executive director of the Sight Center. “We just needed to use our space efficiently.” Much of the year-long renovation project, during which the Sight Center vacated its home before returning in May, was guided by suggestions from the agency’s users. “In the end, what we learned was the building needed to function the same way the outside world does,” said Vocon Inc.’s Tom Galvin, who worked on the design with Lindsay Masarik and Steve Smrdel. The Albert M. Higley Co. of Cleveland led construction. “The whole purpose of the building is to teach people to survive in the real world,” Mr. Galvin said

The project, financed by private donations raised over seven years, encompasses 75,000 square feet. It was a complete overhaul of the space, which was built in 1965 and added onto in 1973 and 1976. The changes included the addition of energy-efficiency measures. One of the key differences since the renovation is that staff offices now are housed on the second floor of the building, while client services are grouped together on the first floor, a more navigable scenario for those with vision impairments. “It was a fascinating study. … The simple things make the most difference,” said Mr. Galvin of learning what the center’s clients wanted. As part of the renovations: ■ Color is incorporated in a way that elements are easily distinguishable. For example, Dr. Friedman said, an all-white, institutionalstyle bathroom can be difficult to navigate for those with low vision. Instead, the Sight Center’s new bathrooms have black walls and white plumbing fixtures, and the men’s and women’s restrooms are marked with different colors. ■ Different textures are used along the walls and floors. In front of elevators, for one, the texture on

RUGGERO FATICA PHOTOS

ABOVE: Gathering spaces are part of the design of the new Cleveland Sight Center. Client services now are located on the first floor, and employee offices are on the second floor. RIGHT: The Sight Center features a 27-station call center, used in part for an employment partnership with Akron-based InfoCision. the floor is different to serve as a tactile clue, and architect Mr. Galvin said guide dogs even factored into flooring design decisions. Two sets of rails along the wall — one at a height that’s appropriate for preschoolers receiving services — are in place as guides. ■ A 27-station call center has been created and is used in part for an employment partnership with

Akron-based InfoCision. A new “muscle room,” or activity room where children can work on reaching physical development milestones, is located among the other children’s services housed in the building. ■ The center’s auditorium also was expanded and reworked to improve the acoustics, an important consideration for those

ON THE WEB: More photos of the Cleveland Sight Center’s $10 million upgrades. www.CrainsCleveland.com/ SightCenter who rely on their sense of hearing. Jason Gromek, whose 2-year-old son is legally blind and receives services at the Sight Center, said when he first walked into the Sight Center prior to the renovations he was “underwhelmed” by the facilities. Now, he said, the agency is up to date and prepared for the future. “The building has caught up with the people,” Mr. Gromek said.

Our strength is in our numbers. We provide the building blocks to get commercial deals done: One of the area’s largest real estate practice groups Unmatched level of experience Breadth of services Depth of resources

Charles Riehl

Kevin Murphy

Nick Catanzarite

Nathan Felker

Todd Hunt

Heather Baldwin Vlasuk

Carl Dyczek

Sophia Deseran

Geoffrey Goss

Steve Friedman, the Cleveland Sight Center’s executive director Jack Waldeck Tyler Bobes

The The The The

relationships. expertise. ﬁnancing. personal touch.

www.BellwetherEnterprise.com

The Real Estate Attorneys of The Premier Source for Commercial & Multifamily Real Estate Capital FOR MORE INFORMATION CONTACT:

Cleveland | 216.781.1212 | www.walterhav.com

Jim Doyle, Jr. | Senior Vice President | 216-820-4502 | jdoyle@BellwetherEnterprise.com VISION

KNOWLEDGE

PEOPLE

20120820-NEWS--18-NAT-CCI-CL_--

8/17/2012

10:06 AM

Page 1

18 CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

LARGEST SUBURBAN OFFICE PROPERTIES RANKED BY NET RENTABLE SQUARE FOOTAGE Net rentable square feet Name Address Rank Phone

Square feet available

Rent per square foot (in dollars)

Major tenants

Owner

Management company

Leasing agent Phone number

CBRE Inc.

Mary Izant (216) 363-6417

Summit Office Park 4700 Rockside Road, Independence 44131 (216) 642-1105

525,000 155,290

Embassy Corporate Park 4000 Embassy Pkwy., Suite 400, Akron 44333 (330) 668-4000

467,363 146,143

17.00-19.50

RJF, Hanna Campbell & Powell, Virtual Hold, Crystal Clinic

Park Center Plaza I, II & III 6100-6150-6050 Oak Tree Blvd., Independence 44131 (216) 643-6000

417,071 65,788

23.00-25.00

Jackson Lewis, IBM, Scientific Image, CBiz Inc., Ownership Advisors, Lifeline Screening, Duke Realty Ohio Farmers Insurance, Travelers

Jones Lang LaSalle

Thomas S. Fox J. R. Fairman

Landerbrook Corporate Center I, II, III 5900-5910-5920 Landerbrook Drive, Mayfield Hts. 44124 (216) 831-9330

333,157 109,200

22.50-24.50

Progressive Casualty Insurance, Linsalata Capital, Primus Venture Partners, Dinn Hochman & Potter

Gotham King

CBRE Inc.

Doug Leary, Bob Leibold, Dan Rose (216) 687-1800

Crown Centre 5005 Rockside Road, Independence 44131 (216) 447-9200

273,511 58,000

22.00-24.00

University of Phoenix, The Fedeli Group, EMS, Hewitt & Associates, GSA, Zurich, Neace Lukens

M. West, (216) Rockside 77 Properties Prestige Management Thomas 525-1475; Rico A. Pietro, LP (216) 525-1473

Great Northern Corporate Center I, II & III 24950-25000-25050 Country Club Blvd., North Olmsted 44070 (216) 643-6000

269,686 26,562

21.50

United Transportation Union, Palmer Holland, Advanstar, Cargill Inc.

PWA Great Northern Corporate Center LP

CBRE Inc.

Dan Rose Steve Ross (216) 687-1800

Lakewood Center North 14600 Detroit Road, Lakewood 44107

259,117 113,915

13.00-14.00

Kaiser Permanente, New York Life Insurance

CW Financial Services

CBRE Inc.

Dan Rose Steve Ross (216) 687-1800

Commerce Park IV & V 23240-23250 Chagrin Blvd., Beachwood 44122 (216) 504-4820

230,000 8,000

20.00

NAI Daus Inc, Howard, Wershbale & Co., Dorsky Hodgson Parrish Yue, Prime Conduit, Point to Point Marketing, University Hospitals

Commerce Park IV & V Associates LLC

Munsell Realty Advisors Inc.

Mark R. Munsell (216) 504-4820

6200 Oaktree Blvd. 6200 Oaktree Blvd., Independence 44131 (216) 453-3000

228,837 6,212

18.50

Clear Channel Communications, T Mobile, Oak Tree Holdings TransUnion, Sirva, Vox Mobile, Apple American, JDI LLC Dental One

Grubb & Ellis Co.

Terry Coyne, (216) 453-3001; David Hollister, (216) 453-3089

Freedom Square I, II & III 4401 & 4511 Rockside; 6000 Freedom Square, Independence 44131 (216) 643-6000

227,897 121,500

16.50-21.95

Independence Bank, Hurricane Labs, Zig Marketing, Hylant Group Inc., Xerox Corp., John Hancock

Jones Lang LaSalle

Thomas S Fox J.R. Fairman (216) 861-7171

One and Two Chagrin Highlands 2000-3000 Auburn Drive, Beachwood 44122 (440) 871-4800

224,000 36,533

25.00

Penske Logistics, Regus/HQ Global, Intellicorp, Chagrin Headquarters KeyBank, Ancora Advisors, RAV Financial, Venture Ltd. Inverness Investment, CapitalWorks

Jacobs Real Estate Services

John L. Klayman Cindy Greiner (440) 808-7492

Corporate Plaza I & II 6450-6480 Rockside Woods Blvd. South, Independence 44131 (216) 643-6000

220,271 58,000

19.95-21.95

Alcoa, Fleet Response, ING, Talus Brokerage Services, Ratliff & Taylor, Benefit Resource Group, Licata

Jones Lang LaSalle

Thomas S Fox J.R. Fairman (216) 861-7171

INA Building(1) 14701-14725 Detroit Ave., Lakewood 44107 (216) 514-5100

210,000 59,813

10.00-22.00

University of Akron, Panera Bread, Eliza Jennings, Jimmy John's Subs, Cleveland Clinic, 14701 Detroit LLC Neighborhood Pediatrics

Lakewood Equities LLC

Myrna Previte (216) 514-5100

South Hills Office Park-Bldgs I, II, III South Hills Blvd., Broadview Heights 44147 (216) 861-3040

200,000 NA

21.00

Millisor & Nobil, Janik LLP, Fox Sports, MetLife

Joseph Skilken Co.

Jeffrey D. Cristal (216) 453-3050

Developers Diversified Realty Building 3333 Richmond Road, Beachwood 44122

177,000 21,656

Singerman, Mills, Desberg & Kauntz, The Malrite Co., TOA Technologies, Chase Properties, Mid-America Management

DDR Corp.

Bob Leibold, (216) 363-6449; Doug Leary, (216) 363-6424

Tower East 20600 Chagrin Blvd., Shaker Heights 44122 (216) 861-7200

173,087 37,319

15.50

Equity Engineering, Joseph Mann & Creed, Dingus & Daga, Dise & Co.

Ostendorf-Morris Co.

Gregory B. West, (216) 861-5379; David R. Horowitz, (216) 861-5931

EastPoint I & II 6085 & 6095 Parkland Blvd., Mayfield Heights 44124 (216) 687-1800

168,589 93,840

Austin Building & Design Inc., NCA Financial, Danaher Power Solutions, Moreland Management

Piedmont Office Realty Trust

CBRE Inc.

Mary Izant (216) 363-6417

Euclid Office & Medical Plaza 26250-26300 Euclid Ave., Euclid 44132 (216) 289-8500

168,092 85,000

14.00-18.00

Medical and dental offices

CM Realty

Euclid Office & Medical Plaza

Rico A. Pietro, (216) 525-1473; Eric M. Schreibman, (216) 525-1471

King James Office Park Bldgs. III and IV(1) 24500-24600 Center Ridge Road, Westlake 44145

167,650 114,985

12.35

Ogle Properties

Myrna Previte (216) 514-5100

Signature Square I & II 25201 & 25101 Chagrin Blvd., Beachwood 44122 (216) 831-6100

161,196 24,168

Pro Ed Communications, Ciuni & Panichi Inc., Liberty Bank, PCC Airfoils, Cleveland Clinic Opthamology, Resilience Capital Management

Goldberg Cos.

Dennis M. Bush (216) 831-6100 x237

Rockside Square Office Park 6133-6155 Rockside Road, Independence 44131 (216) 831-9330

160,000 8,000

16.50-18.50

Wells Fargo Bank, Qwest, Berlitz International, Pinkerton Insurance

The King Group

Julie White (216) 245-0689

Metropolitan Plaza 22901 Millcreek Blvd., Highland Hills 44122 (216) 831-9330

159,741 0

23.00-25.00

Victoria Fire & Casualty, Pfizer Inc., Sedlak Management Consultants, Metlife

Gotham King

CBRE Inc.

Doug Leary, Bob Leibold, Dan Rose (216) 687-1800

Plaza South Office Park 7251-7261-7271 Engle Road, Middleburg Heights 44130 (440) 838-1400

158,151 40,275

16.25

Associated Software Consultants, Crawford & Co., McCarthy Burgess & Wolff, Dial America, Zin Technologies, Verantis Corp.

Plaza South Consolidated LP

Flair Management

Marc Braun (216) 453-3014

LA Centre Office Plaza I & II(1) 25651/25777 Detroit Road, Westlake 44115

149,401 34,364

11.75-20.00

Houlihan's, University Hospitals, Brick 4 Kidz, R.E. Warner, Premier Banquet/Catering, St. Jude

Detroit Columbia Props NA LLC

Myrna Previte (216) 514-5100

Great Northern Technology Park 25111 & 25249 Country Club Blvd., North Olmsted 44070 (216) 533-1415

138,241 21,824

17.50

Moen, Heartland Payroll Services, Star Processing/First Data

Tech Park Associates Ltd.

Kennedy Wilson of Ohio

Mike Sekerak (216) 533-1415

Genesis Building 6000 Lombardo Center Drive, Seven Hills 44131 (216) 447-0070

137,564 34,105

22.50-23.50

New York Life, Chancellor University

Genesis Building Ltd.

Dalad Realty

Jason Laver (216) 447-0070

Montrose West Properties 155, 175 & 202 Montrose West, Akron 44321

134,332 79,000

18.50

Recreation Insurance Specialists, Michigan Mutual, LiDa Corp.

Pointe Realty North Pointe Realty Inc. North Inc.

Thomas M. West, (216) 525-1475; Rico A. Pietro, (216) 525-1473

Beacon Place 6055 Rockside Woods Blvd., Independence 44131 (216) 447-0070

134,000 5,500

24.00

Air Gas Great Lakes, Wegman, Hessler, Vanderburg, Brown and Caldwell

6055 Properties Ltd.

Lloyd Mazur (216) 447-0070

Parkway Business Plaza(2) 4350-4400 Renaissance Pkwy., Cleveland 44128 (216) 453-3089

125,338 52,574

9.50

Doosan Industrial Vehicle America Corp., Business Plaza Grubb & Ellis Co. Stephen Gould Corp., DirectBuy, Max Wellness, Parkway Ltd. (I & II) Eventready TMI

Cigna, Oracle, SAI Global, Mutual of Omaha, AJ Aegon USA Realty Gallagher, Verizon Advisors LLC

Munsell Realty Advisors John Dellagnese & Inc. Associates Inc.

Duke Realty Ohio

Duke Realty Corp.

Dalad Realty

Source: Information is supplied by the companies unless footnoted. Crain's Cleveland Business does not independently verify the information and there is no guarantee these listings are complete or accurate. We welcome all responses to our lists and will include omitted information or clarifications in coming issues. The Book of Lists and enhanced versions of most lists, with more companies, are available to purchase at www.crainscleveland.com. (1) Information from CoStar Property, www.costar.com. (2) Information is from the 2011 Largest Suburban Office Properties list.

Tom Karcher (330) 668-4000

David Hollister, (216) 453-3089; Terry Coyne, (216) 453-3001

RESEARCHED BY Deborah W. Hillyer

20120820-NEWS--19-NAT-CCI-CL_--

8/17/2012

11:27 AM

Page 1

AUGUST 20 - 26, 2012

WWW.CRAINSCLEVELAND.COM

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS 19

REAL ESTATE

Anticipating rent rise, tenants grab bargains Cleveland-area office space may cost more soon By STAN BULLARD sbullard@crain.com

s businesses regain their appetite for office space amid the slowly recovering economy, some office tenants are snatching up bargains, thus beating potential rent hikes. Office rents have been beaten down during the prolonged downturn and slow recovery, though real estate brokers do not expect them to fall much lower. For the long haul, the price for office space will be headed upward. Continued scarce construction of multitenant office buildings in the suburbs and just a sliver of new space available in the under-construction Ernst & Young Tower in downtown Cleveland mean the office market is poised to absorb vacancies â&#x20AC;&#x201D; and prices will rise. Chandler Converse, a managing director at CBRE Group Inc.â&#x20AC;&#x2122;s Cleveland office, sums up the outlook: â&#x20AC;&#x153;We donâ&#x20AC;&#x2122;t see rents dropping at all from here. We see them stabilizing, and see them starting to climb.â&#x20AC;? In some respects, that trend already has emerged. Online realty data provider CoStar Inc.â&#x20AC;&#x2122;s mid-year 2012 Cleveland market survey reports that average quoted office rents for the total office market in Northeast Ohio edged up to $16.61 a square foot from $16.53 a square foot at the same time last year. The biggest shift in the office market is in downtown Cleveland due to a confluence of factors. Office brokers expect several older office buildings to become apartments in the next few years; among the buildings they believe no longer will compete for office tenants are the Hanna Annex Building and the 1717 E. Ninth St. building, formerly known as the East Ohio Gas Building. Still other older buildings may become hotel properties in response to the new Cleveland Medical Mart & Convention Center coming online. Plans by Cuyahoga County to lease space for a consolidated headquarters complex of more than 200,000 square feet also would shift office vacancy downward. In addition, many of the buildings the county hopes to sell in its drive to combine operations from disparate locations could become residential. On top of those considerations, said David Wagner, a principal of the Cleveland-based Chartwell Group real estate brokerage, the rising costs of drywall, utilities and labor have set the stage for office rents to rise.

Bargain hunters As a result, the bargains available now may be the last ones for some time. But to secure sweet deals, tenants increasingly must consider different options in terms of building age or location. Older buildings such as 1100 Superior Ave., One Cleveland Center, Tower at Erieview and, after Eaton Corp. vacates, Eaton Center, have large vacancies. Recent leases at One Cleveland Center with the

Britton-Gallagher insurance brokerage and at 1100 Superior with marketing services firm BrandMuscle Inc. show the drawing power of large volumes of empty office space in the market. Attractive deals for larger tenants will dry up first as those large empty office spaces fill up. However, that does not mean smaller businesses canâ&#x20AC;&#x2122;t continue to find attractive offers for some time. David Browning, managing director of CBREâ&#x20AC;&#x2122;s Cleveland office, said the abundance of empty smaller offices will provide opportunities, giving the typical office tenant of 5,000 to 10,000 square feet many choices. Thatâ&#x20AC;&#x2122;s especially true if a company is willing to consider a move downtown from the suburbs. Higher vacancies downtown mean rents at some buildings are below those of comparable suburban buildings. This is apparent even on a broad basis. CoStar reports that asking rents in downtownâ&#x20AC;&#x2122;s central business district are averaging $18.75 a square foot compared to $18.84 a square foot on or near Chagrin Boulevard, the heart of the office market in the eastern suburbs. Other factors besides rent come into play in space decisions. Rico Pietro, a principal at the Cresco realty brokerage in Independence, said downtown landlords often have had empty space so long they are willing to gut offices and reinvest in redecorating space to attract tenants. Conversely, owners of suburban buildings may be less inclined to redo somewhat newer space for prospective tenants. â&#x20AC;&#x153;A little flexibility can go a long way for a firm seeking to move and reduce occupancy costs,â&#x20AC;? said Rocco DiPuccio, director of office leasing at the Ostendorf-Morris Co. real estate brokerage of Cleveland. â&#x20AC;&#x153;You can find larger floors downtown, so tenants can fit on fewer floors than in the suburbs,â&#x20AC;? which trims operating costs, Mr. DiPuccio said. A tenant of 80,000 square feet can go on a couple floors downtown compared to four in the suburbs, he noted.

Downtown bound The narrowing of rents between historically pricier downtown space and the suburbs also allows downtown landlords and tenants to capitalize on the attractiveness of downtown as a place to live among younger employees. As a result, a variety of companies that historically would not have considered downtown just five years ago will do so, Mr. Pietro said. Chartwellâ&#x20AC;&#x2122;s Mr. Wagner agrees, especially when it comes to downtown loft space. â&#x20AC;&#x153;Two years ago I would hear one inquiry a year about how to get funky space. Now I hear four a week,â&#x20AC;? Mr. Wagner said. â&#x20AC;&#x153;I hear tenants say, â&#x20AC;&#x2DC;Letâ&#x20AC;&#x2122;s get rid of the carpet and grind out the concrete. Get rid of the drop ceilings so I can see rafters. I want it to look funky.â&#x20AC;&#x2122;â&#x20AC;? The shift to more favorable rents downtown still is key, though. â&#x20AC;&#x153;Price is what gets a deal done,â&#x20AC;? Mr. Pietro said. â&#x2013;

Low Maintenance Flooring for High Traffic Areas. ÂŠ ÂŠ ÂŠ ÂŠ

See how affordable a Nature Stone ďŹ&#x201A;oor really is!

6FKHGXOH <RXU )5(( 3UHVHQWDWLRQ DQG &RVW $QDO\VLV 7RGD\ 1RZ IRU <RXU &RQYHQLHQFH 6FKHGXOH 2QOLQH DW 1DWXUH6WRQH FRP RU &DOO

FFL MEANS BUSINESS Our Commercial Team is fully equipped to handle all of your borrowing and depository needs. t $PNNFSDJBM 3FBM &TUBUF t #VTJOFTT -JOFT PG $SFEJU t 5FSN -PBOT t $BTI .BOBHFNFOU t 1VCMJD 'VOET

For details call (216) 529-2994

20120820-NEWS--20-NAT-CCI-CL_--

8/17/2012

1:07 PM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

MRI: Employees boast vast experience Jo-Ann: Retail vacancies help company find space continued from PAGE 1

foot headquarters on Fountain Parkway in Solon. It moved from a 13,000-square-foot building on Cochran Road because it needed more space for manufacturing and testing operations — a necessity given that each of its magnetic resonance imaging machines takes up about as much space as a large U-Haul trailer. By the time AllTech officially registers as a medical device manufacturer with the U.S. Food and Drug Administration, it will need to be “100% perfect,” Mr. Joliat said. It also will need to meet a high standard to win over U.S. customers who long have been comfortable buying MRI scanners from huge conglomerates such as General Electric, Siemens, Hitachi, Toshiba and Philips, which used to build MRI machines in Highland Heights and still has a large medical imaging operation there. “We’ve got to make people ungodly happy. They’ve got to be ecstatic,” said Mr. Joliat, who was hired last summer to move AllTech from a development phase to an operational phase. AllTech’s big advantage is price, according to Mr. Joliat and Larry Kasuboski, director of sales and marketing. When compared to larger competitors, they say, the company spends 20% to 30% less to build its MRI scanners. Lower prices should help the company sell its EchoStar 1.5 Tesla scanner to independent imaging centers and smaller health care providers that may not need high-end machines.

Extended family Though AllTech assembles some pieces of its MRI system in the United States, the magnet that forms the

heart of the system is built in China, as are several of its components, keeping labor costs low. Plus, AllTech believes it has removed some costs through design. Though the firm is small, its staff is experienced, Dr. Kasuboski said. For instance, founder and CEO Mark X. Zou worked for Picker International, which eventually morphed into Philips’ Highland Heights operations, before leaving in 1993 to start USA Instruments Inc. The Aurora-based company was bought in 2002 by GE Healthcare, which continues to make MRI coils at the plant. Plus, 13 of AllTech’s first 15 U.S. employees at some point worked for Picker or one of its predecessors. The other two spent time at USA Instruments, as did some of their colleagues. The group had expertise in “about every subsystem you needed to create an MRI machine,” Dr. Kasuboski said. They had experience working together, too. “This is probably the fourth MRI system that we’ve designed together,” Dr. Kasuboski said. With a total of $50 million in capital — which included money from Dr. Zou, the venture capital arm of the Chinese government and three Chinese investment firms with U.S. ties — the company won regulatory approval to begin selling its scanner in China in 2009. There, the company in 2011 sold more MRI machines than any manufacturer other than GE and Siemens, Dr. Kasuboski said. In China, the government-owned health system is the sole buyer, purchasing slightly fewer than 100 machines each year. The broader market is far bigger, though: Dr. Kasuboski and Mr. Joliet said the largest MRI makers each sell several hundred scanners

per year. “We’re right there in China, but that’s one market,” Mr. Joliet said.

Grow, or else Selling MRI scanners in the United States might be a challenge for AllTech, said Derek Archila, who is head of medical device coverage for business intelligence firm GlobalData of London. Many U.S. hospitals are moving to implement more expensive MRI systems powered by stronger magnets, said Mr. Archila, who works in Boston. AllTech might have a hard time winning budget-conscious customers given how competitive the U.S. market is, he said, noting that the company likely will find more opportunity in developing countries. “The big players and even the midsize players have good market coverage” in the United States, he said. There still is room for new imaging equipment makers to target smaller health care providers and other segments that are not a high priority for the major MRI manufacturers, said Baiju Shah, president and CEO of BioEnterprise Corp., which assists health care companies in Northeast Ohio and often promotes the region’s biomedical industry. Still, scaling up sales and service operations could be a challenge for AllTech, especially because its rivals already have people ready to deliver their services all over the world, said Hiroyuki Fujita, president and CEO of MRI coil maker Quality Electrodynamics LLC of Mayfield Village. AllTech is a QED customer. AllTech knows it must grow. That’s why the company hired Mr. Joliet. “We have to grow in the next 18 months. We’ll have to, or we’re not doing what we set out to do,” he said. ■

the Boler School of Business at John Carroll University and The Consulate General of the Kingdom of the Netherlands proudly Present:

The Netherlands: Gateway to the Great Lakes Monday, September 10, 2012 8 a.m. - 4:15 p.m. Discover how developing new waterborne commerce between the Netherlands and Great Lakes ports can be an engine for job creation and give manufacturers and shippers a competitive advantage in our global economy. Donahue Auditorium of the Dolan Center for Science and Technology, John Carroll University

For more information or to register for this event visit, go.jcu.edu/greatlakes

continued from PAGE 3

The company’s stores used to boast an average of 35,000 square feet of floor space, but now typically take up only 20,000 square feet. Smaller stores cost less to open and run, so the smaller stores have increased Jo-Ann’s operating margins, Mr. Smith said. The reduced opening costs also have allowed the company to open more of the smaller stores, including some in smaller communities such as Elko, Nev., which has a population of about 18,300, he said. “We open the size of the store that fits for the market,” Mr. Smith said. Jo-Ann isn’t alone in reducing its stores’ sizes. Retail giants such Best Buy Co., Kohl’s Corp. and Gap Inc. are among a handful of national chains deciding smaller is better. “I think that’s in the blueprints for a lot of large retailers,” said Gordon Gough, executive vice president and chief financial officer of the Ohio Council of Retail Merchants, a state trade association. Retailers hit hard by the shift to online shopping are opting to open smaller stores with smaller inventories to remain profitable, Mr. Gough said.

Big on filling voids As some retail chains have closed or filed for bankruptcy, the market has been flush with vacant commercial space. That situation has allowed Jo-Ann to find some bargains, Mr. Smith said. Utilizing vacant stores that once boasted names such as Circuit City, Borders and Sears, Jo-Ann is opening all its stores in second- and thirdgeneration retail spaces at a lower cost than it would pay in new buildings, Mr. Smith said. The strategy also works, he said, because the sites of the departed retail stores largely are in shopping centers and high traffic areas. Jo-Ann in July started shipping product to online consumers in Canada and now is considering the northern neighbor of the United States as its next frontier for new stores. “We feel like we have a lot of runway to open new stores in the United States, so that’s our first goal, to continue growing in the U.S., but we absolutely are open to looking,” Mr. Smith said about potentially expanding outside the United States. Other English-speaking countries, namely England and Australia, also are potential targets for international shopping, Mr. Smith said. In 2011, Jo-Ann primarily expanded into the Southeast, where it had less market penetration, and this year it’s opening stores across the country in communities where other craft store chains have closed or where Jo-Ann doesn’t yet have a presence, Mr. Smith said.

So long, middlemen While smaller stores have helped reduce overhead, one of the biggest savings has been through the com-

pany’s switch to direct-to-source ordering, Mr. Smith said. Jo-Ann now has its own artists, imports its own fabrics and has an in-house product development team. The retailer also adjusted its inventory, dumping items that weren’t in demand or that had low margins in favor of higher-quality, more profitable items, Mr. Smith said. For example, where Jo-Ann’s quilting fabric offerings used to fall within the range of $3.99 to $5.99 per yard, now they are $11.99 to $13.99 per yard. “We’ve really taken an aggressive stance against the independent quilt shops,” Mr. Smith said. “A lot of the growth has been in the better goods.” The chain also has benefited from a general spike in interest in sewing and crafting that stems from the weak economy, according to Joyce Perhac, president of the Sewing and Craft Alliance, a Monroeville, Pa.-based educational venture that runs www.sewing.org. “Anytime the economy starts to affect your ability to buy either readyto-wear or gift items, it always makes people think, ‘I can make this less expensively. I can make it more personalized,’” Ms. Perhac said. And, because a number of independent retailers couldn’t survive the recession or are unable to compete with expanding chain retail stores, crafters are driven to the big box stores, Ms. Perhac said.

Going mobile While Jo-Ann caters to do-ityourselfers, it isn’t afraid to infuse technology into its growth plans. Mobile checkouts, such as those made popular by Apple Inc. stores, are undergoing tests in Hudson and could be incorporated companywide as soon as this winter. Such checkouts would allow customers to avoid standing in line twice, which often is the case at Jo-Ann, where customers need to wait in line at the fabric counter as well as the store checkout. Jo-Ann also just launched a realtime inventory service on its website, which allows online customers to see what’s in stock at each store. Jo-Ann is owned by Leonard Green & Partners, a Los Angelesbased private equity firm that in March 2011 bought the then-public company for $1.6 billion. Leonard Green also holds stakes in David’s Bridal Inc., J. Crew Group Inc. and Neiman Marcus Group Inc. In the year since Jo-Ann’s ticker symbol has disappeared from the New York Stock Exchange, the company has seen little change in the way it’s managed, according to Mr. Smith. “In terms of where the company’s going, our strategic plan, nothing has changed,” he said. The company remains focused on upping store activity and store growth, improving the customer shopping experience he said. Jo-Ann has 2,500 employees in Ohio, 1,200 of whom work in Hudson, and 23,000 companywide. ■

Volume 33, Number 32 Crain’s Cleveland Business (ISSN 0197-2375) is published weekly, except for com-

The Standard Products Dr. James S. Reid Chair in Management

bined issues on the third week of May and fourth week of May, the fourth week of June and first week of July, the third week of December and fourth week of December at 700 West St. Clair Ave., Suite 310, Cleveland, OH 44113-1230. Copyright © 2012 by Crain Communications Inc. Periodicals postage paid at Cleveland, Ohio, and at additional mailing offices. Price per copy: $2.00. POSTMASTER: Send address changes to Crain’s Cleveland Business, Circulation Department, 1155 Gratiot Avenue, Detroit, Michigan 48207-2912. 1-877824-9373. REPRINT INFORMATION: 800-290-5460 Ext. 136

20120820-NEWS--21-NAT-CCI-CL_--

8/17/2012

11:28 AM

Page 1

AUGUST 20 - 26, 2012

CRAINâ&#x20AC;&#x2122;S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

Suit: Plaintiffs seeking restitution stretching eight-year span 2008, the plaintiffsâ&#x20AC;&#x2122; attorneys sought an injunction to force the bureau to adjust its rates immediately to better reflect the cost of actual claims made against employers; they contended that the actuarial technique the bureau was using to set the rates violates the Ohio Constitution. They also sought to turn the case into a class action suit. Among the evidence presented by the plaintiffs to Judge McMonagle was a 2007 investigation by the Ohio inspector general that found the premiums paid by the groups that received discounts were not high enough to cover the losses they generated. A 2009 study done for the bu-

continued from PAGE 3

Attorneys James DeRoche and Stuart Garson, who represent the plaintiffs, said they believe more than 100,000 employers may be eligible for $1.27 billion in restitution. The bureau has argued in filings that its rate structure was not unfair to employers who were not group members. A bureau spokesperson last week declined to comment on the coming trial. Ohio, unlike most states, operates a state-run workersâ&#x20AC;&#x2122; compensation insurance pool. Many other states allow companies to buy private insurance. When they filed their lawsuit in

reau by the Deloitte Touche LLC consulting firm came to the same conclusion. In addition, the judge heard from several plaintiffs, including Aladdin Baking Co. of Cleveland. In July 2006, after two of its 48 employees were injured on the job, Aladdin saw its premiums rise to $55,000 a year from $12,000 after it was dropped from its group.

Legislature steps in Judge McMonagle granted that injunction in November 2008, ordering the bureau to change its rate structure by July 2009. Judge McMonagle also agreed to turn the

lawsuit into a class action. The bureau unsuccessfully challenged both those decisions in appeals court. However, a month after the November 2008 court decision, the Ohio General Assembly changed the workersâ&#x20AC;&#x2122; compensation law to make the existing rating system legal and postponed the rate changes ordered by Judge McMonagle. The bureau since has reworked its premium structure to reduce the discount to group-rated employers. Because of the change in the law, the class action lawsuit is seeking restitution only for premiums charged from 2001 until 2009. The history of the last five years

suggests to Kegler Brownâ&#x20AC;&#x2122;s Mr. McCarty that the class action will succeed and that the fight is over how much will be paid out. He cited in particular Judge McMonagleâ&#x20AC;&#x2122;s opinion calling the bureauâ&#x20AC;&#x2122;s group rating program illegal. â&#x20AC;&#x153;The plaintiffs here are seeking restitution for those years, 2001 to 2009, when non-group rated employers were overcharged premiums to the benefit of group-rated employers,â&#x20AC;? Mr. McCarty said. â&#x20AC;&#x153;So there are 100,000 or more employers who are not in group.â&#x20AC;? Mr. McCarty said the outcome of the case likely will be appealed to the Ohio Supreme Court. â&#x2013;

REAL ESTATE CLASSIFIED Phone: (216) 522-1383 Fax: (216) 694-4264 Contact: Toni Coleman E-mail: tcoleman@crain.com INDUSTRIAL SPACE For Sale 15,350 SF fully A/C Craned building. Cuyahoga Falls. $750,000.

Call Tom Fox NAI Cummins 330-730-1047

List your Industrial, commercial or Retail Space Here! Crainâ&#x20AC;&#x2122;s Cleveland Businessâ&#x20AC;&#x2122; classifieds will help you fill that space.

Contact Toni Coleman at 216.522-1383 TColeman@Crain.com

REALTORS: Now is a great time to promote your Luxury Properties to high-end prospects AND receive reduced rates on your advertising.

Call 216.522.1383 for more details.

Copy Deadline: Wednesdays @ 2:00 p.m. All Ads Pre-Paid: Check or Credit Card BUSINESS OPPORTUNITY

SPORTS & ENTERTAINMENT

Seeking to Acquire Businesses

Local company looking to share floor seats with another company for upcoming Cavs season.

Local business group seeks businesses for sale in Northeast Ohio area with revenues between $100,000 and $5,000,000. Ready to pay between $500,000 and $2,000,000 cash. Present management invited to stay if they desire. All discussions will remain strictly confidential. Brokers welcome. Please contact us at 440-356-5997.

Haul-My-Mess.com

Four seats are available. They are located in Section 8, Row 3, Seats 1-4, directly across from Cavs bench. Food & Beverage Included. One Parking Pass Included. Cost is $1250 per game.

Commercial Clean-Out and Junk Removal Services.

Please contact Tom at 216-429-8614

BUSINESS SERVICES

FLYNN ENVIRONMENTAL For Assessments

(800) 690-9409 www.flynnenvironmental.com

216-799-9911

Crainâ&#x20AC;&#x2122;s Executive Recruiter Thursday, September 20 McKinley Grand Hotel, Canton www.CrainsCleveland.com/ShaleTax

Shale Drilling and Taxes: Whatâ&#x20AC;&#x2122;s Fair? Progam Agenda: 7:30 â&#x20AC;&#x201C; 8:15 a.m. Breakfast & Networking

1BOFM XJMM JODMVEF SFQSFTFOUBUJWFT GSPN

8:15 â&#x20AC;&#x201C; 8:45 a.m. Keynote Speaker

r (PWFSOPS ,BTJDI T PĂŽDF

9:00 â&#x20AC;&#x201C; 10:30 a.m. Panel Discussion

r 5IF 1FOOTZMWBOJB MFHJTMBUVSF JOWJUFE

Questions:

r 0IJP 0JM (BT "TTPDJBUJPO 00("

Jessica D. Snyder at 216-522-5388

r $BOUPO 3FHJPOBM $IBNCFS PG $PNNFSDF

or jdsnyder@crain.com IN PARTNERSHIP WITH:

Sales and Marketing Assistant Primary duties include: â&#x20AC;˘ Assist in executing marketing strategies and objectives for the sales team. â&#x20AC;˘ Maintain marketing information databases and reporting functions, including Marketing Calendar. â&#x20AC;˘ Provide administrative support to the sales team, including â&#x20AC;&#x201C; but not limited to â&#x20AC;&#x201C; order entry for ads, filing and maintaining insertion order files, and fulfilling media kit and information requests. â&#x20AC;˘ Assist sales reps in client outreach and support. â&#x20AC;˘ Support the Events team in planning and producing Crainâ&#x20AC;&#x2122;s business events. Duties may include â&#x20AC;&#x201C; but are not limited to â&#x20AC;&#x201C; manage database of attendees; conduct outreach campaigns to solicit ticket sales and program nominations; provide on-site support at events. â&#x20AC;˘ Track competitor activity on a regular basis and report to the ad sales team. â&#x20AC;˘ Collaborate with sales reps to plan and manage the production of sales proposals. â&#x20AC;˘ Draft marketing content for news briefs, press releases, marketing collateral, website, and social media outlets. â&#x20AC;˘ Work on select promotions, surveys, and lead generation initiatives. â&#x20AC;˘ Manage Crainâ&#x20AC;&#x2122;s Cleveland Business social media accounts and coordinate and assist with all social media marketing programs including: promotion, campaigns, live tweeting, and event management. â&#x20AC;˘ Maintain monthly reporting on web activity, email campaigns, social media channels and other relevant metrics. â&#x20AC;˘ Assist with website maintenance and online initiatives, including email marketing. Crain Communications Inc is one of the largest privately-owned business publishers in the U.S. with more than 30 leading business, trade and consumer titles in North America and Europe. As an authoritative source of vital news and information to industry leaders and consumers worldwide, each of the company's newspapers, magazines and electronic news sites have become required reading in their respective sector of business and consumer market. Providing unmatched value and award-winning editorial excellence, the company is respected for its dependable journalism which readers have relied upon for over 90 years.

To apply for this position please visit our website at www.crain.com and search under the Careers section.

SEEKING Retired Executive with Mechanical and Creative Aptitude Learn/Become Involved/Take Over

Growing, High-End Restoration and Repair Lamp & Antiques Business Reply with resume Lampsbycharlie@gmail.com

EMPLOYERS: Reach the most qualified workforce. Advertise your open positions here.

Call Toni Coleman 216-522-1383

JOB SEEKERS: We now post POSITIONS WANTED in the Classified section of CrainsCleveland.com at NO CHARGE.

E-Mail info to cmackey@crain.com

20120820-NEWS--22-NAT-CCI-CL_--

8/17/2012

11:26 AM

Page 1

CRAIN’S CLEVELAND BUSINESS

WWW.CRAINSCLEVELAND.COM

AUGUST 20 - 26, 2012

THEINSIDER

THEWEEK AUGUST 13 - 19 Heart of the matter: A Korean private equity group has invested $30 million in Cleveland Heart Inc. — a Cleveland Clinic spinoff formed in 2008 — to further the development of the local company’s artificial heart, coined SmartHeart. The investment from Power Heart Consortium is the largest a Cleveland Clinic spinoff has ever received from a lone investor; it is expected to allow Cleveland Heart to continue its international clinical trials, expand its laboratory research and tweak the design of the artificial heart. Dramatic entrance: As part of an estimated $30 million investment for the 2013 season, the operator of Cedar Point Amusement Park plans to create a new thrill ride that come next May will be part of the entrance to the park in Sandusky. Cedar Fair L.P. said the new winged roller coaster, named GateKeeper, will fly above the main entrance to the park, passing over arriving guests with rolling flyover maneuvers. GateKeeper will be the longest winged roller coaster in the world and will boast the longest drop of any winged coaster on the planet, according to Cedar Point officials. A ride along the 4,164 feet of steel tubular track on GateKeeper will take about 2 minutes and 40 seconds.

Attention, motorheads: The I-X Center has bought the Cleveland Auto-Rama car show and will combine it with the I-X Center’s own Power Piston event, which won’t be held as scheduled this October. Instead, it will be combined with Auto-Rama at Auto-Rama’s already scheduled show, set for next March. Ron Heitman of South Euclid, the man who owned Auto-Rama and had been putting on the show since 1964, said that at age 72 and with the show becoming harder to make a success each year, it was time to sell.

REPORTERS’ NOTEBOOK BEHIND THE NEWS WITH CRAIN’S WRITERS

How I spent my summer vacation

■ A summer urban farming experience in Cleveland has been quite a trip for eight individuals who hail from locales that range from Pennsylvania to Japan. The nonprofit Neighborhood Progress Inc. arranged for eight gardeners to learn more about urban agriculture by working on farms and gardens that are part of the city’s ReImagining Cleveland vacant land reuse initiative. The visitors spent their summer break weeding, planting and helping with ■ Three recent additions to The Reserves construction projects on 10 agriculture sites Network staffing firm should have quite the in exchange for a hands-on edulongevity, given that this species cational experience through an of tortoise typically lives for otherwise-rural volunteer initiaseveral decades. tive. Purchased and introduced to The international volunteer the company’s Fairview Park project is based on the World headquarters in mid-May by chief Wide Opportunities on Organic financial officer Nick Stallard, the Farms, or WWOOF model, that tortoises are named Te, Ar and originated in 1971 in England. En, after the company’s abbreviSimilar programs now are operated name. The pet store owner ating in more than 50 countries, who sold Mr. Stallard his first according to a statement issued reptile (an iguana) located the by Neighborhood Progress. Sulcata tortoises for him, Mr. “We have people from all over The Reserves Net- Stallard said. coming to Cleveland to learn work’s new office “It occurred to me, why not have about farming, of all things,” Joel companions them in the office versus home so Ratner, president and CEO of more people could see them?” he Neighborhood Progress, said in the statesaid. ment. “This is truly a testament to how far Though palm-size when young, adult we’ve come in our efforts to put vacant land Sulcata easily can weigh 70 to 100 pounds, back into productive use in the city.” according to www.sulcata-station.org. When Volunteer Tom Coulton, a photographer Te, Ar and En outgrow their office surroundfrom Tokyo, said he was encouraged by ings, Mr. Stallard said he probably will move Cleveland’s efforts to become a more sustainthem to an outdoor pen he builds for them

What’s wrong with the name Shelly?

WHAT’S NEW

New at Dots: Women’s fashion retailer Dots has a new CEO; she’s Lisa Rhodes, former senior vice president of the U.S. apparel merchandising division of Wal-Mart Stores Inc. The Glenwillow-based retailer also plans to create a Dots merchandise center in New York City, all part of what it calls the “next steps of its plan to grow into a 1,000-store, national fashion retailer.” It now operates more Rhodes than 400 stores. Former CEO Rick Bunka remains president of Dots and will oversee the balance of corporate support functions in Glenwillow.

On a roll:

The Cleveland convention center and medical mart has bagged another event. The 2014 CleanMed Conference & Exposition will be held at the under-construction trade show complex in downtown Cleveland May 1216, 2014. The conference on environmental sustainability in the health care field is expected to attract 1,000 hospital administrators, physicians and other hospital staff and 100 exhibitors. Conference attendees are expected to use 1,500 room nights in downtown hotels, and Positively Cleveland, the region’s convention and visitors bureau, expects the conference to have a direct economic impact of more than $1 million.

Amusement parks cater to adults, too

THE COMPANY: Oasis Consumer Healthcare, Cleveland THE PRODUCT: Halo Oral Antiseptic With its Halo Oral Antiseptic, Cleveland-based Oasis Consumer Healthcare wants to help fight off the dangerous germs that cause many common afflictions. Oasis says Halo is the first antiseptic spray to kill 99.9% of infectious airborne germs, including those that cause the common cold, influenza and H1N1. The spray coats a user’s oral cavity and blocks any airborne germs breathed in through the nose or mouth, the latter being the largest entry point for germs. Trials on Halo were performed at University Hospitals Case Medical Center, and the drug is manufactured in Cleveland. The findings of the UH trials will be published by two leading medical societies. “Unlike other products that support the immune system or protect from germs on surfaces or hands, Halo is the first and only product of its kind to offer protection from airborne germs,” said Dr. Mahmoud Ghannoum, director for the Center for Medical Mycology and the Mycology Reference Laboratory at University Hospitals Case Medical Center and Case Western Reserve University. The drug can be found in CVS stores currently, with a rollout in Walmart, Target and Rite Aid in the coming weeks. For more information, visit http://www.halogermdefense .com/.

at his home. Until then, he said, they make great office pets. “They’re clean, very easy to maintain, (and) they’re easy to handle,” Mr. Stallard said. “People like them, and they’re going to be around a long, long time. I think it’s neat to have a pet that long. It’ll outlive me, and hopefully the company will be around.” — Michelle Park

Firm grows by its focus on CFOs ■ A Columbus-based company that contracts out part-time chief financial officers and interim CFOs to other companies has watched its own balance sheet improve as it’s grown its clients and revenues in Northeast Ohio. The local practice of FocusCFO will bill this year about 10 times what it billed last year, said Tom Gentile, a Cleveland partner, though he wouldn’t disclose specific figures. FocusCFO opened its Beachwood office with three partners in August 2010; today, the office employs seven and aims to reach 10 by year-end, Mr. Gentile said. An office in Canton also opened in June, staffed by one partner. In addition, the Beachwood team has begun developing leads in Akron, where Mr. Gentile anticipates FocusCFO will open an office within the next 12 months. Mr. Gentile attributes the company’s growth to its business development efforts and to the recession, which he said revealed to business leaders that they have a need for a financial executive to better track their finances. — Michelle Park

BEST OF THE BLOGS Excerpts from recent blog entries on CrainsCleveland.com.

You say goodbye, and I say hello: Leadership changes are on the horizon at the Akron Art Museum. After 26 years as director, Mitchell D. Kahan has told the museum’s board of trustees that he will leave next Jan. 2, when he will assume the title of director emeritus. In addition, Janice Driesbach will join the museum’s staff as chief curator today, Aug. 20, after a year-long national search to fill that key post. Ms. Driesbach is a Lakewood native who is the immediate past director and CEO of the Dayton Art Institute.

able city and felt the program contributed to the agricultural rejuvenation. “It was refreshing to see how food production doesn’t have to be limited to rural areas, but can happen even in the smallest of spaces within an urban environment and provide city dwellers with fresh, locally produced food,” Mr. Coulton said in the statement. — Kathy Ames Carr

prior to allowing them to enter. Cleveland Browns PR man Neal Gulkis said in an email that the team “will have signage at the gates informing people of the new procedures” at the team’s preseason home opener on Aug. 24, and will ask fans “to hold their phones, keys, etc. in their hands.” That process will eliminate the time necessary for previous pat-downs, but chances are the process overall will take longer. How long? Well, consider that the Oakland Raiders, in an email to season ticket holders, are advising fans to enter their stadium two hours early to allow “ample time for this new security procedure.” That could severely cut into tailgating time — or drive crazy Browns fans to head to the parking lots even earlier.

■ The Wall Street Journal notes that amusement parks nationwide — including Cedar Point in Sandusky — are stepping up their adult-friendly offerings. Their goal: to “entice grown-up fans — who don’t have an early bedtime, curfew or school year — to spend more time, and hopefully more money, at the parks.” The numbers back them up, as about half of all amusementpark visitors, ages 25 to 49, come without children, according to data compiled for The Journal by International Theme Park Services Inc., a theme park consultancy. Cedar Fair Entertainment Co. Millennium Force at this summer added Luminosity, Cedar Point an evening show, at Cedar Point. The show features drummers, acrobats, a ■ Forbes.com recently broke down new light show, pyrotechnics and a disc jockey census data on metropolitan areas that are rising from a stage. The Journal notes that enjoying the fastest growth in their collegethe park also opened a beer garden with mieducated populations, and Cleveland does crobrew beers and wine. not fare well. Park operators tell The Journal they rarely Education levels are rising fastest not in hear complaints from families with children conventional “hip” cities such as Boston or about packs of grown-ups. Some parks try San Francisco, but in places such as Charto segregate the groups. lotte, Columbus, San Antonio, Orlando and At Cedar Fair parks, “our children’s areas Nashville, demographer Joel Kotkin writes. are a park within a park,” Stacy Frole, a (Find his report at http://tinyurl.com/8ls2oac.) spokeswoman, tells The Journal. “If you are “The pattern is clear: brainpower is a thrill seeker, you’re generally in another spreading out,” Mr. Kotkin wrote. “The part of the park.” notion that companies seeking skilled labor have to go to one of the ‘hip’ cities — an idea relentlessly marketed by the New York and D.C.-based press — appears greatly overstated. In reality, skilled, college-educated ■ The NFL has rolled out a new security people are increasingly now scattered policy that requires each team to screen throughout the country, and often not entrants with hand-held metal detectors where you’d expect them.”

College educated in CLE shrink in number

Might want to cut those tailgates short, Browns fans

20120820-NEWS--23-NAT-CCI-CL_--

8/17/2012

2:07 PM

Page 1

Presented by

The HR Community Honors Its Finest On Aug. 14, approximately 400 guests turned out to applaud the winners and finalists of the second annual Archer Awards, presented by Crain’s Cleveland Business and Howard & O’Brien . Designed to highlight Northeast Ohio’s standout human resources professionals, the awards were presented at the InterContinental Hotel in Cleveland to more than a dozen winners chosen by an independent panel of seven judges comprised of executive level HR practitioners. Recognition for those handling human capital in the region is long overdue, if you ask Tom Hopkins, who has 31 years of experience in the field and was chosen by a separate panel

2012 Archer Award Recipients Tom Hopkins The Sherwin-Williams Co. Lifetime Achievement

Jamie Herbst Menorah Park Center for Senior Living Citizenship

Daniel Serbin Parker Hannifin Corp. HR Exec of the Year – Public

Tom Tercek The Lubrizol Corporation Innovation – Public

Diane Shields Bendix Commercial Vehicle Systems LLC Knorr-Bremse Group HR Exec of the Year – Private

Cindy Torres Essell Thompson Hine LLP Innovation – Private, Organizational Development

Elise Hara Cuyahoga County HR Exec of the Year – Nonprofit/Government

Patty Hartmann Medical Mutual of Ohio Innovation – Private, Leadership & Employee Development

Charmaine Brown Forest City Enterprises Rising Star – Public

Robert Hatta JumpStart Inc. Innovation - Nonprofit, HR Consulting for Entrepreneurial Ventures

of former Archer Award recipients as this year’s Lifetime Achievement Award winner. The senior vice president of human resources for The Sherwin-Williams Co., Mr. Hopkins said he has noticed only in the last 15 to 20 years that the HR professional has become a much more integral part of company strategy as emphasis on human capital has grown. “In my opinion, this is the decade of the human resource professional,” he said. And, that’s important in a region that’s transforming itself from one focused on heavy manufacturing to one driving resources to the sciences, technology and other businesses that require very specific skills and competencies, Mr. Hopkins said. “If the HR profession did not

Jacquelyn Bell Ciuni & Panichi Rising Star – Private, Performance Management & Development

Suzanne Bloomfield United Way of Greater Cleveland Innovation – Nonprofit, HR & Mission Alignment

exist in this transformational environment, we would have to create it,” he said. Another award winner, Charmaine D. Brown, director of di-

Krista Frazier BrandMuscle Inc. Rising Star – Private, Strategic Alignment

versity and inclusion for Forest City Enterprises Inc., hopes recognition like the Archer Awards continues to elevate the visibility of the field she entered 13 years ago. “The perception of HR is still very personnel-driven,” she said. “They (people) think of HR as being payroll and the rulebook aficionado. The reality is that the roles in human resources are very strategic in nature. A lot of companies say talent is their most critical asset, (and) it’s true.”

Thank You to our Sponsors

Video Sponsor

Supported by

Event video, photos and finalist coverage: CrainsCleveland.com/archerevent

20120820-NEWS--24-NAT-CCI-CL_--

8/16/2012

1:49 PM

Page 1

The all-new BMW X1

BMWCleveland.com 440-542-0600

The Ultimate Driving Machine®

BECOME ONE WITH THE X1. The all-new BMW X1 is unique, dynamic and versatile — just like you. Explore each feature and see how it matches up with every side of your personality.

BMW EfficientDynamics Less emissions. More driving pleasure.

BMW Cleveland 6135 Kruse Dr. • Solon • 1-866-210-6710

XJ XK STRIP AWAY THE SETTING AND YOU’RE STILL LEFT WITH THE EXTRAORDINARY.

DRIVE THE EXTRAORDINARY SALES EVENT

NOT JUST PREVIOUSLY OWNED. IT’S BEEN PREVIOUSLY CHERISHED.

Seating for seven in the Land Rover LR4: because no one should miss the adventure. Drive the extraordinary with attractive offers available through August 31

It may be hard to imagine, but its first owner loved it just as much as you will. Your Jaguar is waiting. It’s been rigorously inspected, and comes with 24/7 roadside assistance and a 6-year/100,000 mile warranty. See Jaguar Cleveland for details. They would love to make a Jaguar come alive for you.

0.9

APR*

LIMITED TERM FINANCING AVAILABLE

JAGUAR CLEVELAND 6137 KRUSE DR., SOLON (440) 542-0601 www.jaguarcleveland.com

LAND ROVER SOLON 6137 KRUSE DR., SOLON 1-866-210-6707/www.landroversolon.com

699

PER MONTH FOR 36 MONTHS $0 SECURITY DEPOSIT. $995 DUE AT SIGNING. EXCLUDES TAXES, TITLE, LICENSE AND FEES. INCLUDES 7 SEAT COMFORT PACKAGE (7HS) AND CLIMATE COMFORT PACKAGE (CCP).

LAND ROVER LR4 *Rates shown only for well-qualified buyers as determined by approved lender. Taxes, title, license and fees due at signing. Retailer determines actual vehicle price. For special finance terms, take newvehicle delivery from retailer stock by 08/30/12. 0.9% APR for 36 months. See your participating authorized Jaguar Retailer for qualifications and complete details. Jaguar Retailer or approved lender may rescind or amend this offer without notice. Images ©2013 JAGUAR LAND ROVER NORTH AMERICA, LLC

Stock #L02428 *Rates shown for customers with exceptional credit approved by a participating lender. All amounts shown are estimates, retailer sets actual amounts. Lessee responsible for excess wear and excess mileage over 30,000 miles at $0.30 /mile. Lessee has the option to purchase vehicle at lease end at price negotiated with retailer at signing. For special lease terms, take new vehicle delivery from retailer stock by 08/30/12

6135 Kruse Dr. • Solon • (440) 542-0600 • www.DavisAutomotive.com