University Square shopping center finally sold to developers, ending decade-long saga

UNIVERSITY HEIGHTS, Ohio — One of Northeast Ohio’s biggest real estate messes is finally getting cleaned up.

On Monday, local developers Brad Kowit and Gregg Levy bought University Square, a failed, multilevel shopping center at the busy intersection of Cedar and Warrensville Center roads. Now, they’re preparing to transform part of the property into apartments while luring new retailers to the corner and renovating the long-troubled garage.

The path here was filled with twists and turns.

University Square, which opened with fanfare in 2003, has been struggling for more than a decade. It’s been through a foreclosure, lender ownership and bankruptcy court.

Kowit and Levy, who both grew up nearby, have been trying to buy it for five years. They still can’t quite believe they made it to this point.

“Today, Brad and I looked at some things and we walked around…we were like, ‘We own this?’” Levy said, with a laugh, on Wednesday afternoon. “We’re like, OK, let’s go. It’s time to roll up our sleeves and get to it.”

Kowit, standing next to him, picked up where his business partner left off. “It’s just pieces by pieces. You take the apartment piece. You take the retail piece. You take the grounds. You just look at each piece and get a plan for each and put it together.”

‘The garage is going to be safe’

The developers are tackling the center of the property – a layer cake of empty stores wrapped around a five-story parking garage. They also acquired a retail strip along Warrensville Center, where there’s a Verizon Wireless store and a KeyBank branch.

Their project does not include the two anchor stores, Target and Macy’s, which are still open. The retailers own their buildings and have a stake in the garage, where portions of floors and ramps are blocked off and hidden in the shadows.

Kowit and Levy plan to start by tackling basic repairs at that garage, where they’ll fix lights, decommission elevators, repair sprinklers and clean up old shopping carts and tires.

“The garage is going to be safe,” Levy said. “It’s gonna be lit. It’s going to eventually be open and airy. And it’s going to be functional and clean. When everyone talks about University Square, the first thing they mention, ‘Oh the garage. Oh the garage.’ That was a huge concern to us. We’ve done plenty of studies on it, and we know what it’s going to take to maintain it. And we have the budget to maintain it.”

Early next year, after the holiday shopping season, they’ll peel off roughly 70 feet of the garage at the north and western ends, letting more sunshine in behind Macy’s and the buildings along Cedar. That project will eliminate several hundred parking spaces and get rid of pedestrian bridges that once led to HomeGoods, Famous Footwear and other stores.

Kowit & Co.

The developers will also repave parking lots, rip out landscaping and update signs.

Along Cedar, the three-level retail building will become six floors of apartments. The project will dramatically cut the amount of retail at the center. The developers plan to carve out two courtyards on Cedar to turn the rectangular building into an E-shaped complex.

Construction on the roughly 210-unit apartment project could start next summer. Early plans show a mix of studios, one-, two- and three-bedroom units, with a few live-work spaces. The developers are toying with the possibility of a pool, a dog park and a patio.

The apartments could open in late 2026 or early 2027.

Kowit & Co.

New retailers will arrive first on the Warrensville Center side of the site.

Kowit said he and Levy have signed a lease with Urban Air, an indoor trampoline and adventure park, to fill 58,000 square feet. That’s the former Tops Markets grocery store on the second floor – a space that’s been empty since 2006.

Urban Air could open in late summer or early fall of 2025.

“From a location standpoint, Cedar and Warrensville is one of the top intersections on the East Side,” said Kowit, a longtime real estate broker who is seeing plenty of interest from potential tenants.

He said the retail market wasn’t what doomed University Square. The challenge was the shopping center’s unique layout – and, ultimately, a financial structure that dragged it down.

“All the retailers that were here are still in the market,” Kowit said. “The layout didn’t work. They moved down the street. Around the corner. The multi-level is just too difficult.”

Anthony Garcia/News 5

Here’s the backstory.

University Square began losing tenants just a few years after it opened. Some spaces on the top floor never got leased. They’ve been sitting vacant for 20 years.

The Great Recession hit in 2007, hammering retail. And as stores closed, University Square landed upside-down. It wasn’t bringing in enough money to cover debt payments.

In 2013, the flailing property landed on the auction block.

A Detroit-area real estate speculator bought it for just $175,000 – less than the price of a typical Northeast Ohio house. Then, he stopped paying the bills.

That led to a foreclosure lawsuit and a lender takeover in 2015.

But it still took almost a decade – and a bankruptcy case filed last year to force the issue – to unwind a complicated legal and financial tangle.

“It’s been a drain, you know, watching the businesses just slowly, just drift away,” said Alvin Williams, who stopped by Target to buy light bulbs on Thursday.

Anthony Garcia/News 5

He used to walk up and down the stairs at the center. Now, he avoids them. He can’t help feeling nervous about the garage.

He’s looking forward to change, a $50 million project that will bring new places to shop, eat and live to the suburb where he’s lived for decades.

“University Heights is a pretty stable community,” he said. “But more is better.”

‘Unfortunately, it took us 10 years’

The developers had to work with a huge cast of characters to get to this point.

There was the Cleveland-Cuyahoga County Port Authority, which issued bonds back in 2001 to pay for the construction of the garage. There were the bondholders who took control of the property in 2015 through a foreclosure settlement.

The city and the local school board had to restructure an old deal that pledged new property-tax revenues from the project to pay debt service on the bonds. And Target and Macy’s had to sign off on changes to a complicated agreement that didn’t allow apartments on the site.

Then there was the Cuyahoga Land Bank, which just wiped out more than $30 million in delinquent taxes and special assessments – most of that is money the bondholders were entitled to – so that Kowit and Levy could start fresh.

The land bank is temporarily holding the parking garage. Eventually, the University Heights Parking Garage Community Improvement Corp. – a single-purpose entity created by the city – will own the garage.

“The amount of meetings that we had across a number of parties is monumental,” said Joe Landen, a managing director with Lapis Advisers. The Denver-based investment firm was the majority bondholder on University Square.

He credited Kowit and Levy for being willing to stick around when other prospective developers walked away. Landen also expressed appreciation for University Heights Mayor Michael Dylan Brennan and applauded Luke McConville, the city’s former law director.

“He was literally like the glue that held this together,” Landen said of McConville.

News 5 reporter Maya Lockett met with Brennan at the property in March as the deal was coming together.

University Square moves forward with redevelopment plans

RELATED: University Square moves forward with redevelopment plans

“This is going to be the key place, the premier place to be, better than it was originally envisioned 20 years ago,” Brennan said at the time.

Lapis, which focuses on tricky turnaround deals, was also motivated to figure things out.

“There’s a lot of other large investment firms that would have just buried this in their portfolio. … We’re happy to assist with the resolution,” Landen said. “Unfortunately, it took us 10 years. It was a record-setter for Lapis, in a number of ways.”

The bondholders ended up getting about 22 cents for every dollar of the outstanding principal as part of the complicated financial restructuring.

The developers paid $3.5 million for their slice of University Square.

Anthony Garcia/News 5

‘It’s time to move on’

On Thursday, Jessica Isaac was unloading her 4-year-old and her groceries from her cart outside Target. She shops there often but always parks just beyond the garage.

“It makes me nervous, like the visual of it,” she said.

She moved to neighboring Cleveland Heights from out of town in 2015 and never saw University Square in its heyday. To Isaac, the center has always seemed “like a retail district in need of love.”

Now she’s excited for the redevelopment and the prospect of new places to shop – and a brighter, better-maintained place to park.

As part of their project, Kowit and Levy plan to rename the property. They’ve settled on Bell Tower Center, in a nod to the bell that hangs on the corner.

That bell has been on the site since 1957 when the May Co. department store opened its first freestanding suburban Cleveland outpost at Cedar and Warrensville Center.

“We thought that that would be a good name to bring back,” said Kowit, adding that the apartments will be called the Residences at Bell Tower Center.

“It also gets rid of the old name,” he said. “It’s time to move on from University Square.”