It might be back to the drawing board for the former University Club and Martin Center on Fir Hill near the University of Akron’s campus.
Efforts by Cleveland’s Gateway Group and Paran Management, which partnered to lease the former club and turn it into a high-end boutique hotel called Martin House, were submarined by the pandemic, said Gateway chairman Tom Chema.
“We don’t have that lease anymore. We couldn’t preform within the timeframe we had agreed to,” Chema said, noting that the university now has the property listed for sale.
Chema and Paran seemed well-positioned to pull the project off at the end of 2019. Chema is the man who helped turned Cleveland’s dreams of a Gateway sports complex with new venues for professional baseball and basketball into a reality in the 1990s. Paran has a strong track record of developing and managing real estate projects, including Cleveland’s Glidden House hotel in University Circle — a property the partners and university had hoped Martin House could replicate in Akron.
Chema and Paran said they had nearly completed putting financing for the project together in December 2019. At the time, though, the always-cautious Chema made what turned out to be a sadly prophetic statement.
“We’re moving along. I hate to say this, because I have no wood to knock on in this car, but we’re on schedule,” Chema said that December.
COVID-19 struck in early 2020 and by March was declared a pandemic, putting the US in its version of a lockdown. It wasn’t anything like lockdowns in China, but it sent people home to work and effectively shuttered the tourism and hospitality industries.
It also quashed Martin House’s financing, Chema said — at least for now.
Not one to give up easily, Chema said he and Paran still hope to convert the property to a hotel, but as owners instead of leasing it from the university.
A purchase isn’t out of the question. The property is listed for sale by Independence-based Cushman & Wakefield | CRESCO Real Estate. The 35,000-square-foot building and its lot of just under 3 acres come with an asking price of $1.3 million.
Representatives of Cushman & Wakefield did not return requests for comments. University representatives declined to discuss the property because they said the school was in due diligence on the matter, though they did not say with whom.
Two real estate professionals not directly involved with the transaction said Cleveland-based Liberty Development Co. is negotiating to buy the property, but executives there also did not return requests to confirm the firm’s interest or intentions.
Chema said he and Paran have submitted a proposal to purchase the property, for terms he declined to disclose, and are waiting to hear back from the university.
Whoever buys it, Chema said the transaction should happen soon, because the building is falling into disrepair and already has significant leaks in its roof.
“It needs to happen before winter comes,” Chema said. “Someone needs to get in and do some repairs to the roof and keep water from further infiltrating the building.”
If Gateway and Paran are successful, Chema said he thinks they can still turn the property into a first-class hotel that would serve the university and its guests. They hope to resurrect their plans to convert the property, which include adding about 25,000 square feet of space and amenities such as a restaurant, coffee shop and banquet/meeting rooms.
“We haven’t given up on that idea. We would still very much like to do that,” Chema said. “I can’t conceive of a use that would be more beneficial to the university that a third party outside of the university could do.”
Chema said he also think that the tide is turning back in favor of hospitality developments as the pandemic wanes, and that financing the purchase of the property would be fairly easy because Gateway and Paran could use the property as collateral.
“We have been talking to regular commercial lenders about that,” Chema said. “We need a whole lot more money to do the (conversion) project, and that has been difficult. But to get the financing to buy the building shouldn’t be a problem.”
The hotel project would have to go back to the state of Ohio to attempt to renew tax credits that were previously awarded and have expired, though its federal tax credits remain in place, Chema said.