Foreclosed 23-Story, 475,789 Sq. Ft. KeyBank Center Auctioned Off for $7.15M; Handing Over the Keys, Cleveland Style

Bidders did not exactly come out of the woodwork in Cleveland as the 23 story KeyBank Center auctioned off for $7.15M

Bidding has ended on Cleveland�s foreclosed 23-story KeyBank Center. The 475,789 square foot building on Superior Avenue sold for $7.15 million.

Bidding began on Monday afternoon at $3.5 million and ended at 2 p.m. on Wednesday.

Building Sells for $15.03 a Square Foot

Math is simple enough.
$7.5 million divided by 475,789 square feet = $15.03 per square foot.

This should give you an idea of what property is worth in Cleveland.

Handing Over the Keys, Cleveland Style

Inquiring minds might be interested in the assessed value for property taxes.

Crain's Cleveland Business reports KeyBank Center headed for auction

The lender controlling the 23- story office building at 800 Superior Ave. in downtown Cleveland is going the auction route to find a way out of owning KeyBank Center, better known as the former McDonald Investments Center.

LNR Partners, the real estate financing and investment concern based in Miami Beach that took title to the 440,000-square-foot building in February 2010, has listed the property at Real Estate Development Corp.'s website Auction.com for an online auction running from 10 a.m. July 25 to 10 a.m. July 27.

The property carries an asking price of just $3.5 million, well below the $44 million market value the Cuyahoga County assigns it for property tax purposes.

Alex Jelepis, a Grubb & Ellis Co. senior vice president who is marketing the property with Guggenheim Realtors in Beachwood, said the low starting price is to attract interest in the offering. He said he expects the building to sell for more than the asking price.

The building, which dates from 1969, will have occupancy of just 37% when the Calfee Halter & Griswold law firm exits for a nearby building next year. Its owner, LNR Partners, handles bank-owned properties and invests in buying defaulted loans or distressed properties from banks.

Dallas-based real estate firm Behringer Harvard handed over the keys to LNR rather than face the daunting task of finding new tenants for the building after Calfee moves. The red-brick KeyBank Center is a different structure from Key Tower, the tallest building in the state and KeyCorp's headquarters.

Prime Cleveland Location

This is not a horrible looking building or a poor location either.

Courtesy of Akron News please consider this image and commentary.

The building used to showcase McDonald Investments on its facade and lists a prestigious downtown financial district address of 800 Superior Avenue, but is now in foreclosure. It's prime -- right behind PNC, across from Bank One and Charter and Huntington, in case you're looking for bankers as neighbors. The auction house soliciting bids for the property notes it's had a "long history of housing some of Cleveland most prominent financial institutions," including Key Bank. When it was built in 1969, it was the city's fifth tallest structure.

The office property has been in play for more than a year. In a March 2010 story "Commercial real estate challenges apparent in downtown Cleveland corridor," The Plain Dealer noted the building had passed from owner to a lender and wasn't the only major office building in the city's financial district impacted by foreclosure.

It's quite a deal for a building boasting almost a half-million square feet of office space as well as an attached 328-space parking garage on more than an acre and a half of prime Cleveland downtown space.

There you have it. Prime building space in Cleveland is worth $15.03 a square foot. The building assessed at $44 million went for $7.15 million, "priced low to attract bidders".

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
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