YOUNGSTOWN, Ohio – The large volume of commercial space changing hands or coming on the market in downtown Youngstown doesn’t appear to be affecting lease rates and purchase prices – at least for now, say landlords and real estate professionals.
The Mahoning National Bank Building recently went on the market, listed for $3.75 million. This month, Huntington National Bank moved from the building, where the bank and its predecessor have operated for generations, into the Stambaugh Building space occupied by TCF Bank, acquired by Huntington this summer.
Like Huntington, Chase Bank moved from its legacy space on Federal Plaza, a block north of the Mahoning building, into Realty Tower. The 14-floor building that Chase vacated was purchased by Mohamed Hasan of Ashiana Homes Inc., for $918,750.
Hasan disclosed plans this summer to convert some of the building into apartments and to attract another bank or a restaurant in the ground-floor space that Chase occupied.
This comes as Lena Esmail, CEO of QuickMed Urgent Care, plans a $1.5 million renovation of the former Silver’s Vogue Shop – which she bought for $460,000 – that would create loft apartments and commercial suites.
At the same time, the city of Youngstown is proceeding with efforts to find a new owner for 20 Federal Place. Last year, the city contracted with Steadfast City Economic & Community Partners, St. Louis, to help with the sale and redevelopment of the 332,000-square-foot building, under a plan that envisioned a mix of office, retail and residential use for the building.
In September, the city entered into a new contract with Steadfast City, which is working with Desmone, a Pittsburgh architectural firm that submitted a proposal for the property.
“We’re just going through our analysis,” says Doug Rasmussen, Steadfast City CEO and president. The company is planning to update City Council in November.
Lisa Resnick, managing broker for Burgan Friedkin Commercial Group, Canfield, says she’s encouraged by Esmail’s plans for the Silver’s building. “I’ve heard wonderful things about her and I think her heart and her mind are in the right place,” she says.
Among the downtown Youngstown properties Burgan Friedkin represents is 139 E. Boardman St., formerly occupied by Eastern Gateway Community College, the children’s Museum of the Valley, Social Security Administration and IRS.
Downtown transactions Resnick has worked on over the past year include new locations for Penguin City Brewing Co. and Youngstown Flea. Resnick recently showed another downtown property to a business that would offer “a nice mix in the retail world that wouldn’t be restaurants,” she says.
The supply coming on the market isn’t affecting rates, which remain “fairly stable” downtown, according to Resnick.
Looking to sell one of its downtown Youngstown properties is Ohio One Corp., a landlord and property management company that is marketing the former IBM Building, occupied until earlier this year by Mercy Health.
Ohio One, which owns the Ohio One Building and City Centre One among other properties, is at 90% occupancy across the board, reports its president, Rich Mills.
The company charges $12 per square foot on average. In recent years, it has signed Eastgate Regional Council of Governments, Youngstown/Warren Regional Chamber and Western Reserve Port Authority to long-term leases at City Centre One.
“We are stable, well occupied and, other than losing Mercy Health to the work-at-home COVID fallout, we’re doing just fine,” Mills says. This summer, Mercy Health-Youngstown vacated IBM when it decided administrative staff should work remotely.
Ohio One has received “several credible inquiries” for the property and is working seriously with one of the prospective buyers, Mills says. Although details remain to be worked out, he is “extremely optimistic” about prospects for reaching a deal.
“It’s certainly a well-established, credible entity in the Valley that would make a nice addition to downtown,” Milld says.
Don Thomas, managing partner at Platz Realty Group, Canfield, confirms that downtown rates are stable. There is a class of business professional that wants to be downtown. They get a “value add” on top of that because of the comparably favorable rates there, which range between $8 and $12 per square foot.
“We’ve tried to counsel our landlords and we don’t think that lowering the price any further is going to drive any more volume,” Thomas says.
Challenges aren’t isolated to downtown, Resnick says. “There’s lease signs for available space everywhere, which makes it a lot more competitive,” she says. Retail is recovering more quickly than expected and the industrial and multi-family sectors are “booming,” she reports.
“Office space is the one that’s lagging a bit behind,” Resnick adds.
Platz Realty represents the Mahoning National building and serves as leasing agent for First National Bank’s adjacent downtown tower. Thomas points to a couple of factors that support the $3.75 million asking price for the Mahoning building.
“For most of the tall buildings in downtown Youngstown, you have some cap rate implications. That building is leased at about 65%,” he says.
The other factor, he continues, is the condition of the building, which has a new roof and new windows, recent renovations to many of its suites and exterior improvements. “There’s not much deferred maintenance on the exterior of the building,” he says.
The Youngstown Business Incubator, which has five buildings downtown, tries to keep its rates at the lower end of those offered by for-profit downtown landlords, or around $6 to $8.50 per square foot. CEO Barb Ewing doesn’t see occupancy or rates at the five YBI buildings affected by the downtown real estate activity.
“There are different reasons to be located here,” she says, such as the services YBI offers startup and early-stage companies.
The Taft Technology Building on West Federal Street, one of the five YBI properties, is undergoing a transition. The anchor tenant, Turning Technologies, renegotiated its lease from occupying all three of the floors in the building to just space on the second floor, Ewing says.
By the end of this year, it will vacate Taft completely, although it will retain office and warehouse space in the adjacent Semple Building, another YBI property. The move results from Turning shifting its business model away from having a large centralized location, Ewing says.
Already YBI is working to fill that space. One of the suites on the third floor will be taken up by YBI’s partnership with the University of Texas at El Paso. A North Carolina materials company has expressed interest in the building as well (See story page 1).
YBI is working on securing funding to complete renovations at Tech Block Building No. 5, where it plans to make additional space available, she says.
At the YBI main building, several tenants have downsized. But funding from the Appalachian Regional Commission will allow the incubator to make space available at a subsidized cost for clients who have gone through its minority-owned or women-owned business programs.
Like Youngstown, downtown Warren is seeing the effect of bank consolidations and departures.
Chase Bank exited its 106 E. Market St. space in 2015, a few years after the building was purchased by the owners of the Mocha House.
Midwest Ventures & Consulting, Boardman, purchased Huntington Bank’s downtown Warren building, 108 Main Ave. S.W., in 2018 and the bank purchased the three remaining banks downtown since, says Steve Lewis, Midwest president.
Lewis, a former banker, laments the loss of bank office jobs.
“We have the most relevant office space that there is [in downtown Warren],” he says of the former bank tower. Two new tenants have come into the building and two more are doubling their space, Lewis says.
Another nearby property was bought by Mark Marvin’s Downtown Development Group, which has purchased and rehabilitated several buildings in and around Courthouse Square. Most recently, Downtown Development Group acquired the former Mickey’s Army-Navy building and “almost filled” the property in a matter of months, Marvin says.
Retail and bar activity downtown is more influenced by redevelopment of the Robins Theater, another Downtown Development Group project, he adds.
Meanwhile, Burgan Friedkin now represents 106 E. Market, which has returned to the sale block, as well as other downtown Warren properties, Resnick says.
She tells of the people who have contacted her about various downtown Youngstown properties who feel some sort of connection to the city, whether through a personal relationship with the community or even from what they have seen in media reports about the progress downtown.
“They’re seeing and wanting to be part of what’s happening in Youngstown. And that’s what’s driving them,” she says.
“Downtown is starting to have a real vibrancy to it [and] sense of place,” YBI’s Ewing says. “Moving forward, it’s incumbent on everybody to think about what it will take to have a really vibrant downtown and how you can support early-stage companies so they are moving into other space downtown.”
Still, the migration of the “professional class” to the suburbs isn’t lost on anyone, Platz’s Thomas says.
The city, private investors and building owners need a strategy around the repurposing of the available properties that focuses on smaller spaces to accommodate the current market and apartments, he says. A law firm that required 8,000 square feet may now no longer need that much space.
Most downtown buildings will move toward some sort of joint or flex use, Thomas predicts.
“There needs to be both a residential component and then a re-look at the office space,” he says. “We see significant demand for residential housing and then a repurposing at the office level.”
Pictured: The Mahoning National Bank tower, left, no longer houses Huntington Bank. It’s for sale at a listing price of $3.75 million.