Sunday, September 2, 2001
Out-of-town developers largely made Cleveland's downtown renaissance happen, and now, Youngstown's time has come, the developers say.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- Nicholas Zarnas and Lou Frangos have an old office building and a gut feeling.
Zarnas, a Cleveland real estate developer, and his partner Frangos, the building owner, are convinced there are two dozen urban pioneers out there waiting to live in a downtown condominium and walk to work.
Young professionals, busy executives and empty-nest couples haven't lived downtown because they've never had the chance, they say. They're working now to turn their shared feeling into a reality. Whether their optimism is rewarded remains the question.
"It will bear out," says Zarnas, undeterred by the perception of downtown as a slumping center of the area's past. "There is vitality here. There is commerce here. There is work here. It may not be Manhattan, but there are people here."
Frangos is president of USA Parking Systems in Cleveland. His company bought the Realty Building in December 2000 as part of a package including several downtown Youngstown parking garages and lots, the company's prime business. Zarnas has a contract with Frangos to develop the building.
Zarnas envisions two condos per floor, each covering about 2,000 square feet. Each would have two bedrooms, 21/2 bathrooms and a study. Nicer than average details would include tile floors, cast iron and stonework.
"They make an enormous difference," Zarnas said. "It's not going to be a linoleum and Formica project."
The building has 13 floors but the elevator services only the first 12, so the top condos would encompass both floors.
Price range: He estimates the price range at $150,000 to $200,000 for each. Parking would be included with the sale. A $1,000 monthly mortgage payment is possible, Zarnas said.
"At that price, I see it selling very quickly," he said.
The building, on Federal Plaza across from the Stambaugh building, dates to the early 1920s. Nonetheless, its concrete floors and frame remain in good shape, Zarnas said. He estimates a roughly $4 million renovation would pay to demolish the mostly empty office space, replace all the building mechanical systems and build living space.
A local architect will start drawings soon. Zarnas wants to start work in the spring and have the first units ready six to eight months after.
"This is alabaster. It will clean up beautifully," says Zarnas, running his hand across the gypsum-lined lobby. "The building is entirely sound. It's ready to go."
The question is, are college professors, architects, business executives or doctors ready to buy?
Zarnas and Frangos base their optimism on the idea that downtown living is back in vogue.
Both have relatives who constantly tell them that people like living and working here. They also watch as professionals spend upwards of $150,000 on suburban homes and condos.
Belief in market: They are convinced that there are at least two dozen property owners in the market for the upscale, downtown high-rise experience.
"I understand it's Youngstown, but still ... that doesn't mean there's not a viable group of people here," Zarnas said. "We're not out selling half-million-dollar condos, we're selling $150,000 condos."
It doesn't surprise Zarnas that nobody locally has invested in residential downtown real estate. Out-of-town developers largely made Cleveland's downtown renaissance happen, he said.
"Sometimes you can't see the opportunity when you live there. It's just about proverbial," Zarnas said. "The market is ready now."
Youngstown State University is working on a study to gauge the downtown housing market that should be ready by year's end. A 1994 study said there would be demand for 20 to 50 residential units downtown.
A lack of services downtown, such as stores, shouldn't be an obstacle, Zarnas and Frangos say.
People paying for new suburban condos often have to drive 10 minutes or more to reach grocery or discount stores. That's no different than if they lived downtown.
"That's something people are willing to do to live and work downtown," Zarnas said. "That's a sacrifice people are willing to make."
The pair plan to reserve the building's first floor for retail space. They are willing to give a couple of entrepreneurs the space cheap as an incentive until the small businesses achieve success.
The whole idea makes sense to Anthony Kobak, an associate planner with the city. He should know, having studied urban living in Cleveland and spending three years renting a fourth-floor apartment in a renovated downtown building in the Gateway district. He enjoyed the apartment's unique design and walking to work.
Believes it's vital: Establishing downtown living is vital to restoring activity, he said.
"It's a key to the revitalization process," Kobak said.
Frangos perceives Youngstown, downtown in particular, as a "sleeper" waiting to come back -- just like Cleveland.
Reality also plays a part in his vision. There is plenty of vacant office space downtown, but no market-rate residential. Selling residential space also is more stable than renting to businesses.
The project, however, isn't a certainty.
Interest rates are attractively low, but there is no financing yet. Zarnas concedes that persuading a bank to fund upscale condos in downtown Youngstown will be hard because there is no precedent.
Such projects need commitments from the developer, potential customers and the city if banks are to lend, Frangos and Zarnas say.
They point out that USA has bought the building. It's not leased or under a land contract.
"We can't leave now. We've made a commitment," Frangos said. "I'm willing to invest, if others will."
City administrators and politicians have been supportive and a couple people with enough money have indicated interest in buying a condo, they said.
Developers likely would need to presell most of the units to get bank financing, said Jeffrey L. Chagnot, the city's development director.
The city can't offer financing, but it can extend 12-year, 100 percent abatements on property taxes. More than 300 nonprofit homes built in recent years have included those abatements, though no tax breaks have been done yet for private housing, he said.
Calls idea practical: A $4 million renovation cost seems reasonable, presuming there are no asbestos or fire safety issues, Chagnot said. Overall, the idea is more practical than it seems, he said.
"Can you find 24 of them? Twenty four is not a high number of units," Chagnot said.
That's what Frangos and Zarnas are counting on.
They are confident they can sell the project and keep it on time and on budget. Most important, they are sure they can do it in downtown Youngstown.
"I see it as a great opportunity ... for the center of town," Frangos said. "Every once in a while somebody has to have a crazy idea and go for it."