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    Cleveland’s Thriving Theater Hub Lures Residents

    CLEVELAND — When a national tour of “Joseph and the Amazing Technicolor Dreamcoat” played here last month, Vincent Wil Hawley walked from his apartment at Residences at Hanna, a new 102-unit conversion in a renovated office building annex, and was in his seat five minutes later.
    “It’s basically like you’re living in the middle of Broadway,” said Mr. Hawley, 30. “It’s fun to have so much culture outside your door.”
    Residents of Midtown Manhattan are accustomed to walking to the Theater District to see what’s new on Broadway. But Mr. Hawley’s trip to and from Cleveland’s gilded Palace Theater was something much more significant. It was a sign, decades in the making, that this city’s efforts to create a thriving residential real estate market in its downtown core was starting to look more like a box-office hit than a flop.
    An estimated 12,000 people now live in downtown Cleveland, double what the population was in 2000, according to the Downtown Cleveland Alliance, a nonprofit organization that represents property owners. Rental occupancy is near a record high of 95 percent. Such growth has roots in initiatives that Rust Belt cities like Cleveland and Detroit are using to lure residents, including tax credits, new business incentives and outreach to millennial professionals looking for affordable and bike-friendly city living.
    But in Cleveland there’s a more marquee reason people are moving downtown: the theater. PlayhouseSquare, a nonprofit that operates nine performance spaces in Cleveland’s theater district, has run its own real estate services division since 1999. With last fall’s opening of Residences at Hanna, Playhouse Square took its first step into the world of residential real estate, an unusual project for an arts organization that is usually more concerned with renewing subscriptions than leases.
    The worlds of theater and real estate merge in several ways. In New York, performing arts organizations often benefit from mixed-use development. In 2012, Off Broadway’s Signature Theater moved into a multi-venue complex on the ground floor of the MiMA building on West 42nd Street. Regionally, theaters are landlords out of necessity; they lease or own apartments and other housing for out-of-state actors and crew members. Live-work spaces for artists are commonplace across the country.
    Residences at the Hanna is anchored on the ground floor in part by the Hanna Theater, which was built in 1921 and once attracted stage luminaries like Katharine Hepburn and Henry Fonda. Today it houses the Great Lakes Theater, a company that produces classic works. Rents there range from $750 for a studio to $1,600 for a two-bedroom.
    Mr. Hawley, a jewelry designer, says he pays $1,275 for a 925-square-foot, one-bedroom apartment with unobstructed views of Lake Erie. All units in the eight-story building were leased before the project was completed in October. As with many other new buildings downtown, there’s a waiting list to get in.
    Today PlayhouseSquare manages more than 2.3 million square feet of office and retail space in northeast Ohio. Just under half of that is in the PlayhouseSquare district, which includes five historic theaters, dating back to the 1920s, that after decades of neglect were renovated as part of a 27-year, $55 million campaign of public and private funds.
    “We are creative, and that carries over to how we create a neighborhood,” said Allen Wiant, the vice president for strategic development in the theater group’s real estate division.
    Credit a musical for the original effort to redevelop PlayhouseSquare. In 1973, a production of the musical revue “Jacque Brel Is Alive and Well and Living in Paris” that was to run for two weeks became a hit and ran for over two years. That success brought people downtown and renewed interest in saving Cleveland’s historic theater district.
    PlayhouseSquare realized that filling theater seats on a regular basis required restaurants and bars nearby, where people could come before a show and stay after.
    Fast-forward a few decades. PlayhouseSquare officials viewed the eight floors of the Hanna annex, which include the theater and several floors of former office space, as an adaptive reuse opportunity. The K&D Group, a regional developer behind other downtown apartment buildings, bought the annex for $3.25 million from Playhouse Square’s real estate division. As a component of the transaction, made public Dec. 29, 2011, PlayhouseSquare agreed to lease the ground floor for retailing, situated near the Hanna Theater, from K&D for a period of years.
    Almost 40 years after the closing of “Jacque Brel,” and after millions of dollars in renovations and area development, people are not just being entertained in Cleveland’s theater district. They’re calling it home.
    “A logical evolution is residents,” said Joe Marinucci, the president and chief executive of the Downtown Cleveland Alliance and a former vice president for real estate development for PlayhouseSquare. “That creates more of a 24/7, dynamic environment.”
    PlayhouseSquare is also in the middle of a $16 million transformation of the surrounding streetscape, with new signs, gateway arches and the renovation of a small commons featuring a food kiosk called Dynomite. On May 2, the organization will hold a lighting ceremony for its new, retro-looking electronic signage and a gigantic LED crystal chandelier that will hang over an intersection near the theaters.
    In addition, two new restaurants will be opening in the next several months.
    “It’s not just about what’s on stage,” said Art Falco, the president and chief executive of PlayhouseSquare. “It comes down to creating a vibrant area, too.”
    Mr. Marinucci said that until occupancy reaches over 20,000, downtown is “still short” on the number of people needed for a truly round-the-clock neighborhood with significant pedestrian traffic. Amenities like drugstores and supermarkets are still lacking downtown, although Heinen’s, a local grocery chain, plans to open a 33,000-square-foot supermarket this fall some five blocks away from the Hanna as part of the renovation of a former bank building.
    Despite the positive turnaround in its theater district, Cleveland continues to face serious economic hurdles. A recent study from the Brookings Institution found great income inequality in Cleveland, with the poor getting poorer. Neighborhoods just outside downtown, like Fairfax and Hough, the site of riots in the 1960s, show few signs of revival.
    But PlayhouseSquare’s residential project may provide a model for other struggling Rust Belt cities that are eager to find the synergy that links the performing arts, urban development and affordable commercial real estate.
    “The basic rule in real estate for 5,000 years is value is tied to location,” said Robert L. Lynch, the chief executive of Americans for the Arts, a nonprofit arts advocacy organization in Washington. “Whenever you can do something that enhances a location, you enhance the value. Art and theater are value enhancements.”