FRIDAY, JULY 7, 2023
According to reports, global coatings firm The Sherwin-Williams Company’s current downtown Cleveland headquarters has been sold for $48.5 million as construction continues on its new global headquarters and research and development center.
The historic building, in addition to a piece of riverfront property, was purchased by local businessman Dan Gilbert’s real estate company, Bedrock. The purchase includes over 1 million square feet of office space at Landmark Office Towers, the Breen Technology Center and the former Baltimore and Ohio Railroad Building.
Cuyahoga County public records show that Bedrock paid $38 million for the 900,000-square-foot Landmark Building and $10.5 million for Sherwin’s 140,000-square-foot Breen Technology Center. The purchase included the neighboring 126-year-old railroad depot, in addition to 9.67 acres of riverfront land on which Sherwin-Williams’ parking lots, athletic courts, jogging track, gazebo and greenspace are located.
Bedrock reports that Sherwin will continue to use the Landmark Office Towers until at least December 2024. After Sherwin-Williams moves out it will evaluate and make plans for the building, Bedrock said.
The real estate company adds that the purchase further advances its Cuyahoga Riverfront Master Plan. The plan reportedly includes the redevelopment of 35-acres of riverfront property, using Tower City Center as a gateway between downtown and the waterfront.
Gilbert's Bedrock buys Sherwin-Williams' historic Cleveland HQ for redevelopment plan https://t.co/6qDgGEck63
— Crain's Detroit Business (@crainsdetroit) June 30, 2023
“When we announced the Cuyahoga Riverfront Master Plan, we knew that collaborating with public, private and non-profit partners would be an integral part of our vision and we are especially pleased to have worked with the team at The Sherwin-Williams Company to acquire the Landmark Office Towers and Breen Technology Center,” said Catherine Clark, Chief Investment Officer at Bedrock.
“These properties, coupled with the historic B&O Railroad Station, will help to advance our plan for the riverfront in the years to come.”
Sherwin has also posted construction progress images of both the new headquarters and R&D facility for the first quarter of 2023.
Project Background
In September 2019, the company announced that it had begun exploring options for a new HQ. As part of the exploratory process, Sherwin said it was considering multiple potential sites, including locations in Cleveland (where it’s been headquartered since 1930), Northeast Ohio and several other states.
In February 2020, Sherwin announced that it had decided to continue its relationship with Northeast Ohio by finalizing plans to build a new global headquarters and research and development center in Cleveland and the surrounding area. The decision came after a months-long competitive site selection process.
Preliminary plans call for an investment of at least $600 million to build both facilities. The new HQ is set to be located in downtown Cleveland and be about 1 million square feet. The planned new R&D center would be in Brecksville, a suburb of Cleveland, and would serve as the corporate anchor for a new mixed-use development project and would be approximately 500,000 square feet.
The two facilities are slated to house more than 3,500 employees with room for growth, according to the company. The facilities would add a minimum of 400 jobs over time, an 11% increase to the company’s current workforce.
Then, in September of that year, Sherwin announced key partners for the building of the new headquarters and research and development center. Additionally, the timeline was shifted after activities were stalled due to COVID-19, with transition expected in 2024.
In 2021, Sherwin presented its preliminary plans for its new R&D facility. The plans called for a 600,000-square-foot campus that will reportedly be responsible for product development, coatings research, color technology and process engineering. The current plan is to break ground no later than the fourth quarter of that year, with an expected transition into the new facilities by 2024.
The following month, Sherwin announced the selection of five minority construction management firms for its Building Our Future project. The firms are based in Northeast Ohio and are either minority- or female-owned. The companies joining the project are:
The initial set of selected firms will provide construction management services, with four of the five also providing skilled trades employees that are able to perform activities such as carpentry, millwork and painting.
Sherwin reported that it had collaborated with the City of Cleveland, the City of Brecksville, Cuyahoga County, the State of Ohio and the Port Authority, to establish and publish requirements for inclusion, diversity and equity, community engagement and community participation related to the project.
Sherwin Q1 Financial Results
In April, Sherwin announced its 2023 first quarter financial results, highlighting an 8.9% net sales increase year-over-year to $5.44 billion. The coatings manufacturer added that net sales from stores in the United States and Canada open more than twelve calendar months increased 14.2% in the quarter.
Sherwin-Williams also noted that its consolidated net sales increased primarily due to selling price increases in all segments and higher architectural sales volume in the Paint Stores Group, partially offset by lower sales volumes in the Consumer Brands and Performance Coatings Groups.
Additionally, acquisitions increased consolidated net sales by 1.8%. However, currency translation rate changes decreased consolidated net sales by 1.0%.
Income before income taxes also increased to $614.8, as compared to the $461.1 million reported in the first quarter of 2022—up about 33.3%. This was primarily due to selling price increases in all segments and higher sales volume in the Paint Stores Group. These factors were partially offset by increased investments in long-term growth initiatives, lower sales volumes in the Consumer Brands and Performance Coatings Groups, and higher employee-related costs.
Diluted net income per share ($1.84) and diluted adjusted net income per share ($2.04) were also reportedly up from 2022 by 30.5% and 26.7%, respectively. Diluted net income per share included a charge of $0.20 per share for acquisition-related amortization expense.
In the Paint Stores Group, net sales increased to $2.86 billion from $2.49 billion in Q1 of last year. The company attributes this to higher sales volumes across all end markets, as well as selling price increases.
Net sales in the Consumer Brands Group increased by 2.4%—from $852.2 million to $872.7 million. This was also due primarily to selling price increases and strong growth within Latin America, partially offset by lower sales volumes in all other regions. However, currency translation rate changes decreased CBG's net sales by 1.7%.
In the Performance Coatings Group, net sales increased—from $1.65 billion to $1.71 billion, primarily due to selling price increases in all end markets and incremental sales from acquisitions, according to Sherwin. Acquisitions increased this Group’s net sales by 5.4% in the quarter.
Looking ahead, Chief Executive Officer John G. Morikis noted that while the first quarter was strong, it was a “seasonally smaller quarter,” and the company’s outlook for the full year remains unchanged.
Tagged categories: Business management; Business matters; Business operations; Coating Business; Coatings; Good Technical Practice; Industry News; Paint; Program/Project Management; Projects - Commercial; Purchasing; Research and development; Sherwin-Williams
