Iconic Skyscraper to Bring New Housing to Downtown Cleveland

Published by Teresa Garcia on Monday, September 10, 2018

Terminal Tower is a Cleveland icon with impressive credentials. 

Work on Terminal Tower started with the second-largest excavation project after the Panama Canal and, upon completion in 1930, the 708-foot skyscraper was for decades the tallest building outside of New York. In popular culture, Terminal Tower featured prominently in the opening credits of films such as “Major League” and “A Christmas Story.” It even has its own Twitter account with more than 38,000 followers. 

Terminal Tower is about to add another line to its resume: downtown housing. The building’s new owner, K&D Group, is leveraging federal and state historic tax credits (HTCs) to convert 12 of the tower’s office floors into 303 apartments, while retaining the rest as leasable office space.

“Terminal Tower is one of the most iconic buildings in downtown Cleveland,” said Doug Price, K&D’s CEO. “It’s a once-in-a-lifetime opportunity to do something with a piece of history.”


Early 20th-century railroad baron brothers Oris and Mantis Van Sweringen envisioned a simple train station to serve as a downtown stop for their commuter line, with a 14-story office building constructed on top of the station. Eventually the master plan evolved into something much bigger: Public Square was to become a major commercial and transportation hub and the design for a 14-story building gave way to plans for the 52-story Terminal Tower. Since then, Terminal Tower has been a defining feature of Cleveland’s skyline and an anchor of Public Square.

Journal September 2018 State Terminal Tower photo

Image: Courtesy of K&D
Terminal Tower in downtown Cleveland will convert 12 of its office floors into 303 apartments with the help of federal and state historic tax credits.

Cleveland-based real estate investment company Forest City Realty Trust bought Terminal Tower in the 1980s to lease it as office space. Forest City moved its headquarters to Terminal Tower in 1997 and in 2010 completed a four-year, $40 million renovation of the building, which included restoring the limestone façade, upgrading lighting and windows and reopening the 42nd-floor observation deck for the first time since the terrorist attacks on Sept. 11, 2001. In 2016, Forest City sold Terminal Tower to K&D Group after deciding to relocate its corporate headquarters. 

Adaptive Reuse

“Terminal Tower is a great example of what the historic tax credit does best: Preserving a historic landmark and breathing new life into it,” said Annette Stevenson, CPA, and partner at Novogradac & Company, who provided tax credit consulting and financial forecasting for the transaction. “Terminal Tower is a special part of Cleveland’s history and it is exciting to see it revitalized into housing units and preserved for future generations.”

K&D will convert the fourth through 14th floors of the building that were formerly occupied by Forest City into market-rate, one- and two-bedroom apartments ranging from about 600 square feet to 1,800 square feet. The 15th floor will consist of a gym, office space, and a restaurant with a rooftop deck. The historic corridors will be preserved.

The other floors will continue to serve as office space. While the office tenants stay in place, K&D will update the office hallways, bathrooms, common areas, lighting and sprinklers. 

Demolition began in May and the lease-up period will begin this winter when the first apartment models finish. The first move-ins will be in July 2019, with construction scheduled for completion in the first quarter of 2020.

Although Terminal Tower is a massive rehabilitation project, several factors worked in K&D’s favor. For one thing, Price said Forest City renovating the building’s exterior saved K&D millions of dollars in updates. “Forest City renovated the exterior 10 years ago with new limestone, a new roof and new windows–we didn’t have to do anything [to the outside],” said Price.

Another advantage was that Forest City had preliminary plans to convert lower floors into apartments, so K&D already knew that the conversion to housing was possible.


The federal and state HTCs played a central role in preserving Terminal Tower’s interior. PNC provided a two-year $28.5 million acquisition term loan, which converted to a $74.5 million construction loan. PNC Bank’s tax credit group also invested $12 million of federal HTC equity.

“The utilization of federal and state tax credits as an equity source greatly enhances the fundamental project economics, and are a necessity for adaptive reuse transactions like the Terminal Tower,” said Jason Phillips, a real estate banking market manager for PNC Bank. 

Foss & Company syndicated $5 million in state HTCs.

“This is the most famous building in all of Ohio,” Eric Brubaker, director of acquisitions for Foss & Company. “When I heard K&D was working on it, I said we’ve got to make this work. We can’t miss out on this. This is a once-in-a-generation type of deal.”

Other sources included a $5 million brownfields loan for asbestos remediation from the Ohio Water Development Authority and a sales tax exemption from the local port authority, saving K&D $1.8 million. K&D is providing $10.2 million in sponsor equity and will defer $7.2 million of its developer fee. 

A Renewed Downtown

The partial adaptive reuse of Terminal Tower is expected to make a significant contribution to downtown Cleveland as an emerging live-work-play destination. “This is the first infusion of residential into Public Square,” said Price. 

Brubaker said K&D’s record of turning historic commercial buildings into apartments has created an active lifestyle in downtown Cleveland. “Cleveland has had an amazing resurgence–a renaissance, really,” said Brubaker. “K&D is a big part of that because they’ve rehabbed so many historic buildings that were underutilized.”

Phillips agreed. “The landscape of downtown Cleveland is changing,” said Phillips. “There’s upward of 15,000 people living downtown now. The preservation of historic office buildings is important to our city, as these cannot be replicated.  The adaptive reuse of what may be considered functionally obsolete space by today’s office user to mixed-use residential brings life back to these buildings and has created a boom and great benefit to the city of Cleveland and for those who desire to reside in a live-work-play environment.” 

Journal September 2018 State Terminal Tower finance