Michael Cantor, Allegro Realty Advisors

American Greetings sold its world headquarters building in Brooklyn, Ohio, earlier this year, to Industrial Realty Group. Allegro Realty Advisors, the largest exclusive tenant representation and corporate services firm based in Ohio, facilitated the transaction. Allegro Managing Director & Principal Michael Cantor worked on the deal together with George Hutchinson, Allegro’s Director of Corporate. Q: [...]

American Greetings sold its world headquarters building in Brooklyn, Ohio, earlier this year, to Industrial Realty Group. Allegro Realty Advisors, the largest exclusive tenant representation and corporate services firm based in Ohio, facilitated the transaction. Allegro Managing Director & Principal Michael Cantor worked on the deal together with George Hutchinson, Allegro’s Director of Corporate.

Q: What led Industrial Realty Group to buy the massive American Greetings world headquarters facility?

A: Industrial Realty Group is a company that has established itself as a developer that buys and repositions large corporate real estate facilities. In fact, I believe that they are now the largest industrial property owner in Ohio, and certainly one of the largest in the United States. What they do is they buy a large facility that’s being underutilized, they break it into a multi-tenant facility, upgrade it and do some new development. And that’s what they plan for this new facility, as well.

Q: What are the terms of the deal?

A: The facility has more than 1.6 million square feet of space, and occupies more than 150 acres in Brooklyn, Ohio. The transaction closed midyear. Property records show that the purchase price was $15.5 million, so close to $10 per square foot. Also, American Greetings will continue to occupy space in the Brooklyn facility until their new Creative Studios headquarters facility is completed; their new facility is currently under construction in Westlake. While the construction process takes place, they have a lease agreement with Industrial Realty Group, and will remain in the Brooklyn building until they’re ready to move.

Q: American Greetings first announced its intention to move to a new location in 2011. Was it hard to find a buyer for the massive facility? How much interest did it attract?

A: We toured and evaluated the building with more than 10 industrial and office developers, and received proposals from three. Generally, my sense was that each of these groups was looking at the property from a similar standpoint as Industrial Property Group, which meant taking a 1.6 million-square-foot building and dividing it into smaller components that can be leased to multiple businesses.

Q: American Greetings announced its plans to move to the new location in the summer of 2016. Will finding tenants to replace it be a problem?

A: First of all, there are also a couple of third-party tenants occupying industrial spaces in the building. I believe that the building has potential and is marketable to office and industrial users. Allegro Realty Advisors was first engaged by American Greetings a few years ago to provide strategic corporate real estate advisory services, to help determine the most appropriate use for the property and the best approach to dispose of it. I think that our study, which we market tested with a number of office and industrial developers, really pointed in the same direction as Industrial Realty Group is now turning, which is that there is a market for office and industrial space and that this building should be a multi-tenant facility in the future.

Q: What does this deal mean for Brooklyn and the Cleveland area?

A: Brooklyn knew that American Greetings was planning to move to Westlake. The deal gives them some clarity about American Greetings’ plans to leave, and it also provides them now with a new partner to work with in Industrial Realty Group. It will help them develop a strategy to attract new businesses, jobs and a tax base for the city. The fact that American Greetings will continue to occupy space in the Brooklyn building until their Westlake facility is finished gives both Industrial Realty Group and the city of Brooklyn some time to attract businesses to refill this space.