Downtown properties gobbled up for housing
Frangos-owned buildings sold to create apartments
YOUNGSTOWN
Real-estate developer Louis Frangos said his business is a lot like playing “Monopoly.”
“You buy something, you sell something,” he said.
But lately, Frangos of Cleveland is doing a lot more selling than buying.
v Frangos finalized the sale of the former Paramount Theater, 138 W. Federal St., to the city on Nov. 2 for $80,000.
The city plans to seek about $500,000 in state funding to remove asbestos and demolish the old theater, except its facade.
v Frangos will have a deal done next month to sell the Erie Terminal, 112 W. Commerce St., to Dominic and Jacqueline Marchionda, whose company, US Campus Suites LLC, built the $8 million, 114-bed Flats at Wick student-housing complex.
The Marchiondas plan to spend $7 million to $7.5 million to turn Erie into a 60-bed housing complex with retail space on the first floor by late 2011.
v The Marchiondas also signed a one-year exclusive purchase option last month on the Wick Building, 34 W. Federal St., from Frangos.
v Frangos has rented 11 of the 23 units at $8.4 million Realty Tower Apartments, 47 Central Federal St. Only two were rented when the complex opened in September 2009.
But “if the right deal came along I’d sell Realty,” Frangos said.
He added that he is “absolutely still looking at other Youngstown properties to purchase.”
His companies own six other buildings [one includes a parking deck] and six parking lots in the city’s downtown.
“We buy with the ultimate goal to sell,” Frangos said. “Do you sit and hold [a property] and wait for a return or do you sell it?”
Frangos told The Vindicator in August 2007 that he’d convert Realty, Wick and Erie into housing complexes “in two to three years.”
Frangos bought Realty on Dec. 14, 2000, along with three nearby parking lots for $540,000 from a private company. He purchased Erie Terminal from the city for $375,000 on June 29, 2007, and bought the Wick Building from the city for $125,000 on May 20, 2005.
Frangos has no plans to develop Erie and Wick.
Because of that, Bill Sperlazza, Frangos’ development project manager, left his job two months ago.
“Bill was primarily the construction manager for us,” Frangos said. “Had we decided to develop Erie and Wick, he would have done that work for us.”
In contrast, Dominic Marchionda said his student-housing complex on Madison Avenue has been a tremendous success with all units occupied.
His original plan was to start the second phase of that project, another four-story, 114-unit student apartment complex off of Madison Avenue and Elm and Bryson street, shortly, but that’s been put on hold till about the third quarter of 2011.
The reason for the delay, Marchionda said, is he first wants to transform the vacant Erie Terminal into a 60-bed apartment complex for Youngstown State University graduate students, upper classmen as well as young professionals.
“It’s the main connector between YSU and downtown,” he said of Erie. “It’s the last piece of the puzzle, if you will. Erie is beautiful, but unfortunately for Lou, his project came on the market when the economy hit a brick wall.”
The sale will be final next month, Marchionda and Frangos said.
Both declined to disclose the sale amount. But Frangos said he made a profit on the building. Marchionda said he coveted the building and ended up paying “a little more for Erie than I wanted.”
Because of that, Marchionda said, he took the option on the Wick Building. He and Frangos declined to reveal the cost of that option, but Marchionda said he got a good deal.
He plans to talk with city officials about Wick and do a market study. Marchionda envisions a combination of housing and retail, including a restaurant.
Youngstown Mayor Jay Williams said he is pleased Marchionda wants to develop the Erie Terminal soon and is interested in the Wick Building.
“We want to see downtown development,” Williams said. “If there are multiple players in it, that’s not a bad thing.”
Property developers are still facing a “challenging market,” the mayor said.
“Not all deals are going to work out,” he said. “We are in favor of development. Marchionda has momentum. Frangos has been a good investor and a good partner. It’s good for [development] to be diversified.”
Besides a struggling housing market, Frangos has also run into legal issues.
James, Peter and George Pantelidis, New York investors who are Frangos’ partners in Realty, sued him for about $1 million. A Cuyahoga County Common Pleas Court ruling required Frangos to pay about $905,000 to the brothers, which he did.
Frangos refuses to pay $100,000 more saying the brothers owe him about $300,000.
Frangos said he and the brothers “are making significant progress in resolving” the money issue, and the matter should be concluded as early as this week.
Also, City Architecture of Cleveland filed a lawsuit Nov. 1 against Frangos, who owes the company about $175,000 for architectural services for Wick, Erie and Realty. All but about $15,000 is for work at Wick.
“They’ve been patient,” Frangos said of City Architecture. “We are in serious discussions and I hope to have that resolved very soon.”