CLEVELAND — Spark GHC and Cleveland Construction Inc. have formed a joint venture to redevelop a 400,000-square-foot office building in downtown Cleveland into mixed-use space. Dubbed Project Scarlet, the $100 million development involves the adaptive reuse of the Rose Building, which formerly served as the headquarters of insurance company Medical Mutual.
The joint venture plans to transform the property into a boutique hotel with apartment units and ground-floor retail space. The project team says the development will not only breathe new life into a historic structure, but also address the evolving needs of the Cleveland community for contemporary living spaces and upscale hospitality offerings.
Founded in 1934, Medical Mutual is the oldest and one of the largest health insurance companies based in Ohio. The Rose Building had served as the home of Medical Mutual since 1947, but the insurer announced in late 2022 that it would leave the downtown offices for its suburban headquarters in Brooklyn, Ohio, according to Cleveland.com.
Since 2020, the Cleveland market has emptied nearly 2.4 million square feet of office space due to negative absorption, according to Newmark. The office vacancy rate increased to 23.4 percent in the first quarter of 2024, up 50 basis points from the prior quarter.
Spark GHC is a joint venture between two Ohio-based firms, Spark Hotels and Green Harvest Capital. The entity operates as a private real estate firm focused on developing, acquiring and operating hospitality, multifamily and commercial assets.
Cleveland Construction is a national construction company specializing in general contracting, construction management and design-build services.
Jamie Dunford and Kevin Yates of CBRE led negotiations on behalf of the new ownership.
— Kristin Harlow