Originally Published: 1/11/15
By STAN BULLARD
Roger Zona, president of energy and telecommunications consultant TPI Efficiency/NPEC, likes living and working near the Cuyahoga River in downtown Cleveland so much that he bought a building in the Flats to house the company.
TPI Efficiency and sister company Non-Profit Efficiency Corp., which helps nonprofits qualify for energy programs and avoid unnecessary taxes, and their 20 employees, started 2015 at 2020 Center St. on the west bank of the river, in a former industrial building that has housed three restaurants the past 20 years.
In its most recent incarnation, the structure was known as Stonebridge Plaza, an empty office building and eatery that Willoughby-based K&D Group had hoped could provide food services and business homes as part of a plan to add other uses to the nearby residential Stonebridge apartment and condominium buildings. The Lofts at Stonebridge Plaza building adjoins the office building.
K&D had weighed converting the gable-roofed, two-story building into apartments, but instead sold it last October to Zona's Stanley Zona LLC for $416,500, according to Cuyahoga County land records.
K&D CEO Doug Price said the sale allowed his firm to shed the problem property as it focuses on undertaking larger apartment conversions of old office buildings in the central business district.
For Zona, the property was perfect. He had hoped to buy a building on Old River Road, where TPI/NPEC was previously located as a tenant in the Hausheer Building, 1250 Old River, but none was available. Instead, Allegro Realty Consulting found him Stonebridge Plaza, which K&D was marketing quietly.
“Other buyers were looking at it as restaurant space. But it's had a tough track record as a restaurant,” Zona said. “With a little vision, we've turned it around because we looked at the property in the right way.”
TPI/NPEC occupies about 10,000 square feet in the complex, much more than the 3,700 square feet it occupied on Old River, in part because it will devote some space to storing lighting and other equipment it helps clients procure. Plans also call to rent some of the first floor as incubator space to help other businesses get started in the city.
The Flats already incubated Zona's company.
While renting nearby in the Warehouse District, where he now owns a townhouse, Zona launched TPI in 2009 in his apartment. The firm grew into a third-floor office on Old River. Zona wanted his new office to be near downtown because he enjoys the city and younger people on his sales force want to live downtown or in a nearby neighborhood.
They want the same things in a location that Zona, 37, does: a hip environment near downtown's attractions.
“I grew up in Chardon and bought a house in Mentor in 2001. I quickly learned living in the city was right for me and moved into downtown Cleveland around 2002. I have never left the city since,” Zona said. TCP even used services from HSB Architects+Engineers, a former neighbor, to design changes to the new office since it was purchased in October.
More of Center Street also may be in play in the future.
Land records show that K&D transferred ownership of the five-story Stonebridge Office Building, 2019 Center St., to the lender, a conduit loan sold to bondholders now referred to as “CSFB 2004 C3 Complex 2019 LLC.”
Price said the mortgage was for $3 million and the nearly empty office building is now worth just $2 million, so the company gave it back to the lender in a deed-in-lieu of foreclosure transaction.
Even though K&D signed off from the property, it may not be forever. Price said he hopes to bid for the building at current market prices when the loan's special servicer eventually puts it up for auction. Price wants to convert the building to apartments, he said, and has the advantage of owning surrounding parking lots.
David Browning, managing director of CBRE Group Inc.'s Cleveland office, said conduit loans typically go to auction because special servicers or trustees for the loans cannot negotiate to reduce outstanding principal like other lenders as they represent multiple holders of shares of bonds who might want to pursue different directions to work out the loan. An auction provides fairer treatment for the holders, said Browning, a receiver on multiple commercial properties in foreclosure cases and workouts in the downturn.
Browning's firm did not play a part in the Stonebridge Center transaction, but he said he met Zona and heard his story at a Downtown Cleveland Alliance meeting.
“This is just what people want to see in the city,” Browning said.