Thursday, October 30, 2014YOUNGSTOWN, Ohio -- No better sign of the resurgent commercial real estate market in downtown Youngstown is the recent news that veteran Mahoning Valley restaurant operator George Guarnieri would be taking over the top floor of the Commerce Building.
Guarnieri, who operated Belleria Pizzeria on Youngstown-Poland Road until selling it earlier this year, plans to open a casual upscale restaurant in early 2015. The restaurant -- named, appropriately enough, “The Fifth Floor” -- will occupy the former upper level of the Youngstown Club, which closed nearly two years ago.
“I’m a big fan of downtown,” says Guarnieri, who recalls living near the city’s central business district as a child.
Guarnieri’s future landlord, Richard Mills, president of Ohio One Corp., says occupancy at his company’s various downtown properties is averaging 85%. “We’re stable and well occupied, and anticipate only getting better as the residential market increases downtown” Mills says.
“We still are a bargain in the office rental market,” he says. “We’re providing full-service leases for probably 25% less than the suburbs for comparable space.”
In addition to the Commerce Building, Ohio One Corp.’s properties include City Centre One, the namesake Ohio One Building and the IBM Building.
“It’s a very exciting time for the downtown community, which obviously makes it a very exciting time for us. There’s just a tremendous amount of activity,” remarks Dominic J. Marchionda, a principal and CEO of NYO Property Group LLC.
NYO’s property manager is showing space to clients daily “so where we had a mass exodus of people leaving for a variety of reasons, now we have quite a few people inquiring, coming back and wanting to be part of the renaissance.”
Downtown activity is being driven by anchors such as Youngstown State University -- which is increasingly connected to downtown -- St. Elizabeth Health Center, Vallourec Star, VXI Global Solutions -- the largest tenant
in the city-owned 20 Federal Place building, which NYO has expressed interest in purchasing -- and the growing Eastern Gateway Community College.
“If you look outside, anybody can tell -- anybody that’s been around the downtown for a while -- what you’re seeing is a significant pickup in pedestrian traffic,” Marchionda says.
In addition to operating such properties as the 16 Wick Building, where it leases office space to a range of clients, NYO is aggressively developing residential properties downtown including the Erie Terminal Building, which opened to tenants in 2012, and the Wick Tower, where Marchionda says there is a “tremendous amount of interest” in and should be completed in the second quarter of 2015.
“The residential activity is very strong,” he affirms. NYO has the ability to deliver about 1,000 beds in and around the downtown-YSU campus district but will work with YSU “to make sure that we don’t overdo it and flood the market,” he says.
One of the major projects -- if not the major project -- on NYO’s plate is converting downtown’s Stambaugh Building into a hotel, a feature the downtown has lacked since the closing of the Wick-Pollock Inn.
NYO recently signed an agreement with a Philadelphia-based company to operate the property and the companies are working to complete the flag for the property.
“We are down to two flags. It’s just a matter of putting all the pieces of the puzzle together to make certain that in the end it’s the type of product that we want here and that can service the needs of the community,” Marchionda says.
NYO also plans to revitalize the vacant Legal Arts Centre. The company is working “closely” with a company to take over the space occupied by the Hub restaurant. “It’s a proven commodity,” Marchionda says of the potential operator. Discussions are underway with a party interested in opening a rooftop bar in the building, while the rest of the property would be developed as “premium office space,” he adds.
“Our single priority now is obviously the hotel,” he emphasizes. “The hotel is a big component to the overall success of the community.” It’s vital to keeping people downtown during the day and in the evening, and giving them what they need from a business standpoint, he adds.
Another downtown developer, Dominic Gatta III, president of the Gatta Companies, says downtown isn’t even close to its potential “or even what our peak upside will be.”
Gatta, along with Marchionda, updated downtown stakeholders on current and upcoming projects at the Oct. 22 meeting of the grassroots Economic Action Group. Gatta successfully renovated the Federal Building to accommodate apartments and a restaurant, V2, on the ground floor.
A residential component was “something that we’ve never had down here,” Gatta says. “With that residential component increasing, we’re going to see a big change and a lot more amenities that people are asking for,” such as a grocery store.
Gatta recently applied for a historic preservation tax credit for the Gallagher Building and expects to hear the results in December. He has proposed a mixed-use concept for the building similar to the Federal Building, with a restaurant on the ground level and 18 market-rate apartments on the upper floors. “There’s so much potential with that patio,” he remarks. “It’s a great spot.”
The city of Youngstown has used its ownership of the 20 Federal Building, which it acquired about a decade ago, as a tool for job creation and economic development. Low rents, ranging $3 to $6 per square foot and coupled with job-creation criteria, were aimed at bringing businesses into town from outside the city.
“One of the things we have tried to do is get the momentum going, which I think we’ve accomplished,” says David Bozanich, city finance director. Its efforts there as well as assisting various downtown redevelopment projects though grants, loans and other incentives have helped downtown to achieve “critical mass,” he says.
“We have worked with all the downtown building owners in terms of trying to provide what resources we can in order for them to also accomplish competitive proposals that allow for them to also obtain new tenants,” Bozanich says.
California-based VXI recently celebrated the fifth anniversary of the call center it opened in 20 Federal on a single floor. The company now occupies more than 2½ floors of the building plus a recruitment center on the ground floor, and employs more than 1,100 workers there.
Marchionda’s NYO Group bid $1.7 million for 20 Federal, the only bid proposal submitted Oct. 3, the second time the city sought proposals from developers for 20 Federal.
“It’s our intent to move forward,” Marchionda told the Economic Action Group Oct. 21. “Before we do, we’ll sit down with every tenant to make sure that we’re the right fit, and sit down with the city to make sure we’re the right fit. In our hands, we want to take that building to profitability.”
The city has yet to accept the bid.
Copyright 2014 The Business Journal, Youngstown, Ohio.
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