The iconic Alcazar Hotel in Cleveland Heights, designed by Cleveland architect Harry T. Jeffrey in the likeness of two Florida hotels, sold for $2.6 million to real estate developer Rico Pietro and business partner Erik Loomis.
The 1924 building features a penthouse ballroom and a first-floor dining room among other features. The hotel at 2450 Derbyshire Road was placed on the National Register of Historic Places in 1979.
Pietro credited Daniel Burkons, executive managing director of investments at Marcus & Millichap of Independence, with first approaching him about the property.
“I just love the kind of charm and uniqueness of the property,” Pietro said. “I’m a little bit of a sucker for these old historic properties.”
Pietro said he enjoys the challenge of updating historic properties to be competitive with new construction, although he admitted he’s a bit outside his usual comfort zone of commercial properties.
RP Derbyshire LLC is the new owner of the property as of July 12. The previous owner was Kirt Montlack LTD, which purchased the building from Western Reserve for $1.3 million on Sept. 22, 2014.
The brick building has 93 units, 180 bathrooms, eight half-baths and 800 fixtures, according to the Cuyahoga County Auditor’s Office website. It is listed in average condition.
Pietro likes the Cedar-Fairmount neighborhood and has already invested in it as part owner of the Nighttown building and adjacent buildings to it a few blocks west of the Alcazar.
Nighttown’s 16 apartments are under renovation at a cost Pietro estimated “in seven figures” and planned to be ready for lease by the end of the year. The restaurant, owned by Gregg Levy, managing partner of Red The Steakhouse, is also under renovation.
“Our hope is maybe long term to add more density to that block,” Pietro said of Nighttown and neighboring properties, of which he is also part owner. “Just because you feel like that’s what’s needed in that area is to have really kind of fun and walkable retail, so that, you know, if you’re going to that Cedar Hill area that you have the cafes, and the restaurants and the shopping all in one district. I think that’s what makes the Cedar Hill area really unique, and one of the few special neighborhoods in all of Cleveland – that you don’t, frankly, need a car and you could find something to do for the better part of a day without having to jump in a vehicle and go somewhere else.”
At the Alcazar, he said his plan is to take the public areas on the first floor of the building and to recreate them as shared space for the tenants of the building, including the first-floor music room, where he said he can imagine holding concerts by musicians from The Cleveland Orchestra.
A dining hall that now has folding tables, Pietro said, could be used as a co-working space that will have the look and feel of a library.
“I don’t see this building having dinner for 200 any time in the near future,” he said, adding that the building could hold a “first-class, high-tech” fitness center that will make it competitive with places like One University Circle with a lower threshold for rent.
Pietro said he and Loomis are discussing ideas, such as adding air conditioning to common spaces, and adding in-suite laundry to the larger units in the 93-unit apartment building.
“We’re going to be spending millions of dollars on renovation,” Pietro said. “It’s not going to be something that’s going to happen overnight. … We’re just trying to be mindful of what is kind of history, and what is something that needs to be updated to make it competitive from a leasing perspective.”
Pietro said tenants of the building will be able to remain at home during construction, even to the interior of individual units, where he said there will be “modest upgrades” such as carpeting, plumbing and painting.
“Most of our investment is into the common areas,” he said.
Working with the Cleveland Heights mayor’s office and the administration, Pietro said he hopes to begin construction in January 2023 and to finish in January 2024.
Pietro said when he first walked through, the Alcazar reminded him of the Boca Hotel in Florida.
“I just kind of fell in love with a property that I could do something to make it better,” he said.