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September 25, 2018 02:00 AM

Akron tried to keep Myers Industries, but isn't sure it had a chance

Dan Shingler, Crain's Akron Business
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    Crain's Akron Business photo by Shane Wynn
    The East End development at the former Goodyear Tire & Rubber Co. headquarters was among the most viable options in Akron for Myers Industries' new headquarters. Myers instead is looking to move to downtown Cleveland.

    AKRON — Many in Akron were confused recently when Myers Industries Inc. announced it was picking up stakes after 85 years in the Rubber City and moving 35 miles north to Cleveland.

    Akron is not Cleveland. It's years behind its big sister in terms of downtown development and its bar and restaurant scene.

    But that's no reason to downplay the Rubber City's ability to provide space and amenities for a corporate headquarters, its backers say.

    Many in Akron were upset that Myers made it sound like Akron didn't have space for such a company.

    "They made their decision, I'm sure, based on lots of different reasons," James Hardy, chief of staff to Akron Mayor Dan Horrigan, said, "but globally, I agree with other folks — we have space for a corporate headquarters in downtown Akron."

    Mr. Hardy and others were struck when Myers Vice President Kevin Gehrt told Cuyahoga County officials that the company "tried really hard to stay in Akron…(but) we just weren't able to find the right property with the right owner, or the metrics and financials to make it work."

    Myers did not return a call or email requesting an interview to discuss its move.

    The company is not small — it's listed on the New York Stock Exchange — but it's not huge, either. It generated net sales of $547 million in 2017 and needs only 40,000 square feet of space for the 120 employees it intends to employ initially in Cleveland.

    Commercial real estate professionals in Akron said the city would have no trouble finding space for a company of that size — and that Myers had numerous opportunities in Akron if it wanted to stay.

    Privately, at least five sources who spoke to Crain's Cleveland Business — a Tire Business sister publicatin — said they believe the real reason for the company's move was that some of its executives, including CEO David Banyard, live in Cleveland's wealthy suburbs.

    "There's an old adage in real estate that if you look at where the CEO lives, you know where the company is going to locate," Tom Fox, president of NAI Cummins Real Estate, said.

    Mr. Fox noted that he was speaking generally. He didn't work with Myers on a search of local properties, but like others, he disagrees there are no good places in Akron to locate a midsize corporate headquarters

    Downtown, for example, there's the AES Building, he said, which is offering 65,000 square feet of Class A space on Main Street. That's something Mr. Hardy and others said Myers looked at, initially showed interest in, but then dropped.

    He also noted that the city has land available right downtown for new construction, thanks to the closing of the Innerbelt highway, and said the city would have worked with any company seeking to build a headquarters there — a point on which Mr. Hardy concurred.

    But developers note that the cost of new construction is extremely high.

    "The cost of OSB board (particle board used in construction) has doubled in the last few years," Akron developer Tony Troppe said.

    Jerry Fiume, managing director at SVN Summit Commercial Real Estate Group in Akron, said there are still spaces in Akron that Myers could have used.

    "I would thoroughly disagree with the CEO of Myers Industries," Mr. Fiume said when asked about Akron's ability to host the company. "There's East End (the former Goodyear headquarters) in Akron, there are all kinds of options in downtown Akron. There's a building right here at Ghent in Fairlawn that's available," Mr. Fiume said.

    Lichter's East End, along with the AES Building, were among the most viable locations for Myers, said real estate sources and Hardy. Built around Goodyear's former headquarters, it offers 1.4 million square feet of space, luxury apartments, restaurants and amenities, including a theater.

    "We clearly could have accommodated them at East End. They were not interested," Mr. Lichter said.

    It's not as if the parties didn't have time to work on something. Mr. Hardy said the mayor began courting Myers about two years ago, after it hired Banyard.

    "We had a good amount of notice. The mayor suspected it was time to pay a visit when the new CEO came in, because he was not from Akron and we'd been noticing that the C-suite members were less from," Mr. Hardy said.

    At first, things went well.

    "The CEO was very upfront that they wanted to find another location for their corporate headquarters and to their credit, at least in the beginning, they were very clear that they wanted to give Akron first shot at it," Mr. Hardy said.

    The city worked for months to put together a package it hoped would keep the company in town, he said, including a $750,000 loan from the Akron Chamber's Development Fund to pay for improvements at the AES Building, $200,000 in workforce assistance from Summit County, $150,000 from the county and an offer from the city to take Myers' old building.

    Ultimately, the company took a deal that included a $400,000 loan from Cuyahoga County and $2.6 million in improvements by the landlord of North Point Tower in Cleveland, Myers' future home. The company also expects the city of Cleveland to approve a $405,000 loan and grant package and is working with JobsOhio for more support.

    Akronites don't think the decision came down to a six-figure loan, or even building improvements. Many suspect Myers had made up its mind and was heading to Cleveland. They were still shocked.

    "Honestly, everybody felt like, 'We're good to go.' We thought in a matter of weeks we'd hear that the lease was signed. … We were not even aware there was a competition going on within the region," Mr. Hardy said.

    Some say they understand Myers' reasoning, though. Cleveland does have more to do downtown than Akron at the moment — and Akron's promise of a vital downtown surrounding its big, mixed-use Bowery Project and other developments requires a wait and is no sure thing.

    "There's no question that Akron doesn't have the downtown vibe that Cleveland does, and maybe that's what these guys are looking for," Mr. Fox said.

    Akron can't let this slow it down, though, Mr. Hardy said. If anything, Myers' move to Cleveland only affirms the wisdom of the city's drive to develop its downtown into a mix of apartments, retail, restaurants and other amenities.

    "Cleveland, you're right, it's about 10 years ahead of us," Mr. Hardy said. "We've been stepping on the gas full bore to catch up and build out the Akron urban core — and this is why."

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