VOL. 39, NO. 9
FEBRUARY 26 - MARCH 4, 2018
Akron
Source Lunch
Startups standing up for Great Lakes hope funds aren’t drained. Page 20
The List
CLEVELAND BUSINESS
NEO’s largest software developers Page 18
Tony Madalone, Fresh Brewed Tees founder and owner Page 23 FINANCE
Crypto fund gains investor attention
REAL ESTATE
Rising costs weigh on builders
By JEREMY NOBILE jnobile@crain.com @JeremyNobile
Bloomberg
Hikes in prices of materials cast cloud on resurgent housing market By STAN BULLARD sbullard@crain.com @CrainRltywriter
Jason Scott, the president of Westlake-based North Star Builders, recently opened three letters from suppliers on the same day. The first was from the company’s siding contractor, the second from its roofer and third from its concrete supplier. Each was notifying him of a 10% price increase. “It’s been a big problem for more than a year,” said Scott, president of
the Home Builders Association of Greater Cleveland trade group, of rising material and labor prices. “With pricing like this,” he added, “it’s getting hard for people to build homes.” With resurgent demand for new homes and record tight inventory of existing homes putting wind in the sails of homebuilders, rising construction costs are becoming a big worry. The only bigger worries are the continued short supply of home sites and labor. Lumber is the biggest concern, with part of the price hike due to the 20% tariff the Trump administration slapped last year on lumber from
Industry outlook: Law The #MeToo movement has companies examining their harassment protocols and stepping up training. Page 11
18% Year-over-year cost increase for 9-foot-long studs that are 2 by 4 inches wide, according to Ted Ostrander of 84 Lumber. The cost of random lengths of common 2-by-4 studs are up about 32%.
Canada, a major supplier to the United States. However, after hurricanes devastated the Florida Keys and fed floods in Houston, lumber jumped 30%. The increases were especially notable because wintry weather usu-
SEE BUILDERS, PAGE 6
SEE FUND, PAGE 19
SPORTS BUSINESS
NCAA wrestling packs punch By KEVIN KLEPS
Entire contents © 2018 by Crain Communications Inc.
ally brings some price relief. Ted Ostrander, the Columbia Station-based Northern Ohio market manager for 84 Lumber, said, “Usually prices drop in January. This year is a different scenario, and most people are shocked by the fact the lumber market is not coming off any this year.” Ostrander pointed out that 9-footlong studs that are 2 by 4 inches wide — in demand now because buyers want 9-foot ceilings instead of the old 8-footers — now cost $520 per thousand board feet, compared with $440 per thousand at this time last year.
What appears to be the only cryptocurrency investment fund in Ohio is quietly garnering investor interest from its home base in Cleveland. Twenty-three-year-old Case Western Reserve University grads Sagar Rhambia and Ari Lewis launched their fund, Grasshopper Capital, last summer. Having traded cryptocurrencies themselves for close to three years, they say the fund was seeded by turning their $18,000 investment in cryptos like bitcoin and Ethereum into $1.4 million. Both declined to talk about recent fund performance or future returns, but Lewis said returns at the end of January were well ahead of returns for bitcoin, which was up roughly 250% at the end of last month from Grasshopper’s launch last Aug. 1. They currently have more than $10 million under management and are collecting other investors, which now number at least 26, including at least eight in the Cleveland market. Minimum investments are now about $250,000. “We’re taking this a day at a time and seeing where it goes. In an ideal world, hopefully the fund does really well and this is something we can continue to do,” said Lewis, a self-described risk-taker now posted in New York who spends nearly all of his free time playing competitive poker. “At the same time, it’s hard to predict the future. But I think this is something where a lot of money can be made.”
kkleps@crain.com @KevinKleps
Hallie Yavitch’s job is to ensure that Quicken Loans Arena remains busy. She knows as well as anyone that there are very few guarantees in the events business. One that’s a slamdunk draw — the NCAA Division I Wrestling Championships — is coming to The Q next month.
“When you are bidding (to host the event), they tell you it’s basically a sellout before you’ve even sold a ticket,” said Yavitch, the Cleveland Cavaliers’ vice president of event booking. “In the events world, which is what I do, there’s never a bankable one where you’re like, ‘It’s sold out before (tickets are available).’ It doesn’t matter if you have a great show. You just never know.” With NCAA wrestling, however, you do, which is why the three-day Division I tournament is one of the NCAA’s
showcase events — and why landing the event was such a coup for the Greater Cleveland Sports Commission. Yavitch said the Cavs were given about 2,000 tickets to sell for the tournament, which will be held at The Q from March 15-17 and hosted by the sports commission, the Cavs and the Mid-American Conference. The Cleveland tickets went on sale shortly after the 2017 championships were held in St. Louis. SEE WRESTLING, PAGE 21