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Lofty goals?

Developer succeeds by tapping into urban market

By Marc Lefkowitz

Conventional wisdom suggests that during sustained periods of low interest rates, people purchase homes and high-end apartments go vacant. Such wisdom would make developer David Perkowski far from conventional.

Perkowski develops and manages market-rate apartments at a time when Cleveland ranks near the top of national indices of housing affordability. And his places are filling up with tenants. Perkowski has tapped a market—urban dwellers with money— and supplies what they want, he says.

David Perkowski grew up in Strongsville where his father worked in a factory. When he received his undergraduate degree from Cleveland State University in 1987, he started buying small apartment units in the city. Soon after, Perkowski left his job in banking and began redeveloping larger buildings into apartment spaces. He convinced his more mechanically inclined brother Doug to go into business with him and they formed Charge Development.

David had the financial acumen and Doug managed the buildings, and together they would pioneer the wave of market-rate apartment projects in Tremont and Ohio City. For the next 17 years, they rehabbed places like The Merrill on W. 25th and the Federal Knitting Mills at W. 29th and Detroit and marketed them to artsy and urban types.

The business relationship ended a few years ago, but Perkowski and his wife, mother of two sons, and business partner, Karen, divulge few details of the split, except to say “we changed directions and lifestyles.”

It’s a hazy summer afternoon and Perkowski is giving a tour of his latest creation—the $4.5 million Hyacinth Lofts—51 units in a converted Cleveland Board of Education building. The building and lot occupy a sleepy, tree-lined corner of E. 63rd Street and Waterman, facing a park in Slavic Village.

Perkowski excitedly talks about the building’s common video screening area, and swats away questions about the inherent risks in managing properties.

“There’s been a lot of success in Slavic Village,” he says, matter of factly summing up the extent of his market research. “The five-year holding period [required on deals that get Historic Tax Credits like the Hyacinth Lofts before most developers sell units off as condos] is just one part. The key to the rental business is building community.”

With receding light brown hair, small, oval-frame glasses and a dash of Woody Allen-like nerdish confidence, Perkowski’s voice climbs a notch as the tour of Hyacinth leads into a six-car garage that he’s in the process of converting to a shared studio space for performing artists. Some units are equipped with sound editing rooms and all have industrial touches like giant concrete support columns and exposed brick and ductwork.

Perkowski’s track record helped secure some public financing, including a $420,000 grant from Cleveland’s Housing Trust Fund (which is supplied by Federal block grants), and a $500,000 forgivable second mortgage from the Cleveland Development Partnership.

With construction nearly complete, 30 percent of the units are rented to the likes of a filmmaker with two small children, a photographer and a dancer—established professionals. Unlike Perkowski’s much higher profile project, the $10 million Tower Press apartment renovation completed last year, Hyacinth isn’t offering 16 below market rate lofts to artists based on a juried review. That move earned Perkowski instant recognition for a project that is first of its kind for the region, perhaps the nation.

“When we called other cities like Austin to find out how to do this, they didn’t have anything like [Tower Press],” says Karen Perkowski.

She speculates that her husband’s reputation for “getting things done” may have been the reason then-Community Development director Linda Hudacek called. Hudacek was helping the building owners find a developer who didn’t mind a tree growing through the roof and other structural issues.

“Nothing is insurmountable to David,” Karen says. “He never gives up.”

The higher risk at Tower Press—“Literally, every day we had to check the structural columns,” he says—offered greater rewards. Tower Press is nearly 100 percent occupied and interest continues to have a spill over to Hyacinth Lofts (Perkowski has done very little in the way of advertising).

There may be greener pastures to pave over for profits in the ‘burbs, Perkowski admits, but he’s found his niche in the city.

“There’s a higher growth opportunity outside of Ohio, in places like Las Vegas...we need to create jobs in Cleveland and that will help increase the demand for housing.”

Perkowski doesn’t pretend to have answers on how the city could begin doing that. But, for his part, he sees Tower Press and Hyacinth Lofts as a calculated gamble on the future Cleveland.

The Tower Press is once again announcing the availability of subsidized live/work lofts for artists earning less than $25K a year. Artists will be selected through a competitive 2-part jury process. First, artists' submissions will be screened, and finalists will be selected by a jury of outstanding regional arts professionals. Then finalists will be interviewed and selected by a panel of community leaders. To apply, artists should submit a resume (including complete day and evening contact information), 10-15 clearly labeled slides of work (at least 10 current work), a slide description sheet, and a self- addressed, stamped envelope (for return of slides) to: Tower Press Ltd. P.O. Box 91644 Cleveland, OH 44101-3644. For details, email info@towerpress.com.

 

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