Cleveland Clinic plans to subpoena most of its Independence office space

The Cleveland Clinic plans to vacate much of its office space in Independence, in a move that could be a blow to the market.

Real estate mediators say the region’s largest employer plans to pour about 200,000 square feet into the Independence Technology Center, at 6801 Brecksville Road. Those offices are the subject of chatter about a widely anticipated underwriting opportunity to soon reach the market.

“My knowledge is that that space is available, even if it is not publicly listed,” said Damon Taseff, principal with Allegro Real Estate Brokers and Advisors. “And that’s the case with a lot of shadow space in Cleveland right now.”

In an email earlier Tuesday, May 25, a spokeswoman for the Clinic confirmed that the hospital system plans to sublet about two-thirds of its space on the property. The Clinic occupies more than 90% of the 306,000-square-foot building under a lease that will work through 2026.

About 2000 Clinic employees, in home care and finance, are associated with the facility. Some of these employees will remain on site, while others will work on hybrid programs – in an office only part of the time – or will be completely away, said Angie Kiska, the spokeswoman.

“To ensure a safe environment for our caregivers throughout the pandemic, many of our administrative caregivers throughout the organization have been successfully transitioned to working remotely or a hybrid function,” he wrote in an emailed statement. “As we move forward, we maintain this model for a small portion of our administrative workforce.

“This change is a reflection of the strategy of working today and tomorrow to intentionally recruit, develop and retain the best talent from the communities we serve to support our mission.”

As the numbers of COVID-19 cases fall and public health restrictions increase, employers across the region weigh in on how, when – and if – to return workers to the office.

For the Clinic, the sublease of Independence seems to be part of a larger administrative reorganization, it is always evolving. The health care provider will win the office’s footprint even as its clinical presence grows, with planned projects including a new hospital in Mentor and a pathogen research center on its main campus on Cleveland’s East Side.

Real estate professionals are waiting for the clinic to set up an additional space, in locations including the five-building building of the health giant in Beachwood.

“I’ve heard that the primary victims are at least one building on campus (Beachwood) … and then a few administrative locations that are struggling,” said Rico Pietro, a director of Cushman & Wakefield-Cresco Real Estate.

Kiska said the Clinic is in the “early stages” of a transition process and has no final details on the real estate that is at stake or part of the workforce that will not be tied to an office. The Clinic employs 68,700 people, more than 45,000 in Northeast Ohio.

CBRE Group Inc. brokerage, which has been trading the Clinic’s 98-hectare Lyndhurst campus for sale since 2019, will also launch the Independence sublease.

The Clinic has been a tenant in the building, a former steel research center, since 2002. A major addition a decade ago allowed the Clinic to relocate hundreds of additional workers to the property, which is often called Cleveland Clinic Business Operations. Center.

“As owners, we’re happy to work with them,” said building owner Dick Pace, CEO of Cleveland-based Cumberland Development. “They’re looking to subcontract because they’ve changed their working model … If they can reduce some of their costs, it’s good for the organization.”

He believes the space will appeal to local tenants and office users further afield, outside the region and the state. The property includes a fitness center, cafeteria and ample parking. The recently opened Hemlock Creek Trail crosses the grounds, linking users to the Trail and Cuyahoga Valley National Park.

“We think we’ll be in a good place in the market to be able to find tenants,” Pace said, adding “I think we can be very competitive on prices.”

In an email, Independence Mayor Gregory Kurtz described the city’s relationship with the Clinic as “solid and productive”. He is confident that the relationship will continue.

“The pandemic disrupted life and business as usual last year,” Kurtz wrote. “Employers have scrambled to establish remote work options for their staff and operations. Because of experience, many organizations and employees have embraced the smarter-not-more-difficult work mentality as part of the new normal “

When the Clinic space becomes officially available, he wrote, “the city’s prime location, business-friendly attitude and 360-degree access to a deep regional pool of talent, clients and customers will be critical to attracting and retaining companies to occupy this position. ”

Taseff predicted that other large employers in the region would take on a similar deal in the coming months, as they acknowledged that many administrative and support jobs can be done almost anywhere.

“People understand that they can make it out of the site and save on real estate costs,” he said. “I think where they can, they will.”

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