BOSTON HEIGHTS, Ohio -- While other retailers are closing stores or pushing more of their sales online, Arhaus is betting $43 million on its future expansion and continued prosperity as a primarily bricks-and-mortar furniture destination.
A Cleveland-based retailer known for its exclusive items from global craftsman, Arhaus has 57 stores nationwide and 13 more planned by the end of 2016. That's why it is constructing a massive 770,000-square-foot headquarters building to consolidate its corporate offices, distribution center and warehouses into a single location.
Arhaus furniture's $43 million headquarters will be the largest corporate headquarters in the Village of Boston Heights, Ohio.
The sprawling brick, concrete and glass structure rising from the former Boston Mills Country Club in the Village of Boston Heights will nearly triple the size of its current warehouses in Walton Hills and Green, Ohio, and double its office space. Spacious enough to support 100 stores, the building is scheduled to open ahead of schedule in March 2016.
"This is truly a monumental milestone not only for the business, but for me personally," said John Reed, chief executive officer and chairman of Arhaus, in a written announcement.
"My vision has always been to expand Arhaus into a nationally coveted brand. We continue to delight customers in existing and new markets, and this new facility will help us continue to grow and to provide our customers with the best quality home furnishings to enhance their homes and lives. The timing is particularly poignant for me as we will move into this new facility in 2016, our 30th anniversary year."
Reed and his father, Jack, started Arhaus in 1986, opening the first store in a historic building on Cleveland's East Bank of the Flats. John Reed created the name "Arhaus" by combining the Danish port city of Aarhus with the German word for "house."
Arhaus stores now stretch across 23 states, in addition to a growing e-commerce presence at Arhaus.com. The online store will carry things that aren't always available in the store, such as tabletop items, draperies, lighting and accessories, said Tim Stover, chief supply chain officer. "Some of those online exclusives, we can do a direct ship to customer," he said.
When finished, the new headquarters will be four football fields long and two fields wide, with 650,000 square feet of warehouse space and 120,000 square feet of two-story office space, on a 64-acre site.
Arhaus furniture
Founded: 1986, in the Flats. By John Reed and his father, Jack Reed.
Headquarters and distribution center: Walton Hills, Ohio
Employees: about 1,140 nationwide, including 509 in Ohio (368 at headquarters)
Stores: 57 stores, including 10 in Ohio (Cleveland, Akron, Canton, Lyndhurst, Westlake, Dayton, Cincinnati, Columbus, Hilliard, and Perrysburg)
2012 Revenues: Estimated at $215 million (according to Furniture Today)
"This can't open soon enough for us," Stover said during a recent visit. "Our business is doing so well, we're out of space where we are." The building also will house a larger sample room, an expanded photography studio, and a large, commercial grade kitchen and dining area.
The headquarters will supply all of Arhaus' retail stores, as well as its online orders, and house nearly 400 corporate employees. Arhaus employs 1,140 nationwide, including 509 in Ohio.
Company executives had explored moving operations to North or South Carolina, until local and state officials offered incentives to convince it to stay and expand in Ohio.
Under the terms of its Community Reinvestment Area Agreement with Boston Heights, the company will receive an 85-percent break on its property taxes for 15 years for keeping 230 jobs in Ohio and adding another 163 at its corporate offices by 2019. Its annual payroll in Boston Heights will increase from an estimated $16.2 million in 2015 to $26.2 million in 2019.
In exchange, Arhaus agreed to maintain a minimum annual payroll of $20 million, and to "give preference to residents of the Village... when hiring new employees."
The headquarters also will house a 15,000-square-foot mock store for staging and to try out new designs, merchandising concepts and display ideas. No furniture will be sold out of the building.
"We continue to add new categories and expand our offerings within existing categories in order to respond to our customers' growing home furnishings needs," Reed said.
All of the offices and the main entrance will be designed by Gary Babcock, Arhaus' chief creative officer and the man responsible for why its stores look so distinctive and theatrical.
The project was designed by Arhaus with Davison Smith Certo Architects and Premier Development Partners. It will require 18,000 yards of concrete, 2,405 tons of steel, 3,355 tons of precast panels, and 26,150 tons of stone.
Arhaus is planning to add about 100,000 square feet of solar panels to power the building during peak summer months. "We're an environmentally-conscious company and always have been," said Chief Financial Officer Greg Teed, who is spearheading the project.
Arhaus was one of the first in the furniture industry to adopt a Rainforest Policy and vow never to build any wooden furniture from endangered rainforests. Instead, it and its vendors use only environmentally sustainable materials and manufacturing processes, including incorporating recycled materials in nearly 50 percent of its products, from copper to glass to reclaimed wood from barns, shipyards, and rural buildings.
"We're proud of the energy efficiencies we will be able to realize in the new facility," Teed said. That includes 75 solar tubes to save energy and provide natural light, LED bulbs throughout the building, and motion-controlled lighting in the warehouse.
Arhaus has opened seven stores this year: Sarasota, Florida; Leawood, Kansas; New Orleans, Louisiana; Scottsdale, Arizona (the company's first store in the state); Torrance, California (the first store in California); Phoenix, Arizona; and Manhasset, New York. The Torrance store is one of four planned for California.
"We'll have a lot to celebrate in the New Year, with a beautiful new world headquarters here in Northeast Ohio and continued store expansions across the country all culminating at our 30-year anniversary," Reed said.
Although its new headquarters will accommodate a fair amount of growth, it also allows for future expansion. About 22,500 square feet of space in the mezzanine level can be expanded to create more office space, and the warehouse can be extended on the south side.