Public Square accounts for 35% of the Downtown office market, according to CB Richard Ellis' Cleveland Downtown Office Market Review for First Quarter 2006. This renewal is reported to be the largest office transaction completed downtown so far this year, according to firm Studley, which represented the tenant in the transaction.
"This deal extends a relationship that began in 1930 when the firm was founded by several local attorneys," explains Joe Lerner, Studley EVP, who along with fellow EVP Andrew Lechter, negotiated the deal. "Though Benesch, Friedlander had four more years until its lease expires, Cleveland's soft office market coupled with a change in ownership at BP Tower led us to act quickly," Lerner tells GlobeSt.com. "We began discussions when Equity Office still owned the building."
According to Lerner, this tenant's position as the largest user within the building motivated Harbor Group to retain the law firm by offering a competitive lease restructure package. "It's really important to make it work for both parties."
"In addition to a reduction in rent, Benesch, Friedlander will benefit from a tenant improvement allowance that will cover an office renovation" Lerner says. He says that the current office market has been stagnant in Cleveland, with little absorption.
BP Tower had been the North American headquarters for BP America prior to its 1999 merger with Amoco. Most of BP's staff relocated to Chicago, according to Lerner. This prompted a major vacancy in the building as well, according to Lerner. The office building includes a 757-space parking garage, several restaurants, a fitness center, conference facility and an eight-story atrium.
Alex Jelepis, an SVP from Grubb & Ellis represented Harbor Group International in the transaction. Value of the transaction was not disclosed. The First Quarter 2006 Office Market Trends Report for Cleveland from Grubb & Ellis lists the average asking price for class A office space in downtown Cleveland at $23.83 per sf.
Chandler Converse, a SVP in the Cleveland office for Trammell Crow Co., tells GlobeSt.com that "the market has begun to pick up. Although this is one of the last markets in the US to recover, demand has been up this year." He adds that there has been no new multi-tenant or speculative office space built in the city for almost a decade. "Mergers, relocations and corporate downsizings have slowed, so demand has started to pick up. However, if you're a larger user needing 100,000 sf or more, you have few options but Downtown."
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