Cleveland looks to unlock I-X Center's industrial potential
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Built in 1942 as the Cleveland Bomber Plant, the 2.2 million-square-foot facility is now known for its regional trade shows. Photo: Sam Allard/Axios
The I-X Center could soon have the financial tools for its operator to give it a facelift and attract major industrial tenants.
Why it matters: The facility known for its regional trade shows could be a cash cow for the city of Cleveland if one or more advanced manufacturing tenants with high-paying jobs occupy the space.
Yes, but: Industrial Commercial Properties (ICP), which operates the facility, can't make sufficient investments to modernize it (nor attract long-term tenants) without an extended lease, owner Chris Semarjian told City Council Wednesday.
- And there's a degree of urgency, as ICP has been in active conversations with an industrial tenant from California that could occupy 400,000 square feet and grow to as many as 900,000 square feet, Semarjian said.
State of play: The current lease expires in 2039 — an uninspiring term, it turns out, for long-haul industrial tenants concerned with the installation of costly heavy machinery.
- The city and ICP are negotiating a 49-year lease extension to solve the core problem.
The latest: City Council's transportation committee heard legislation Wednesday that would sweeten the deal further by reducing ICP's rent based on the site's total payroll.
- Under the proposed deal structure, if ICP secures tenants with a payroll of more than $75 million annually, its rent would drop by 20%.
By the numbers: ICP currently pays $2.7 million annually to the airport, which owns the facility.
- A new rate has not been set but must, per FAA regulations, reflect fair market value as determined by an appraisal.
The big picture: Tom McNair, Cleveland's economic development chief, championed the proposed lease as a win-win, citing a new early termination clause and the return of 50 acres of developable land to the city.
Friction point: Councilman Brian Kazy was the committee's lone vote against advancing the legislation.
- He thinks ICP's recent decision to "get in bed" with Haslam Sports Group to continue hosting I-X Center trade shows is "optically not good," even if the arrangement is only temporary.
- He said he had heard for years that the I-X Center was courting mysterious high-profile tenants that never seemed to materialize.
- "It's all pie in the sky," Kazy said. "I can tell you that I'm talking to Ms. October, but that doesn't mean I'm gonna date her."
The other side: A miffed Semarjian countered that his company had invested upwards of $32 million in the facility and is already paying the city annual rent plus 100% of the facility's operating expenses.
- "Our spleen is being let in public, and you're saying you don't trust me? Right now, you have handcuffs on me, making me go through the world blindfolded, hopping on one leg."
The intrigue: Before calling a vote, chair Charlie Slife sought clarity on a rumor that ICP had been seeking to attract a data center at the site.
- Semarjian said that although a data center could be an ancillary tenant, it would not be the facility's primary use.