By Jerry Fiume, SVN Summit Commercial Real Estate Advisors
You’ve heard it before. In Akron, everything is earned, and nothing is given. No quote better represents the fabric of the City of Akron, Summit County and Northeast Ohio. Aside from an unstoppable work ethic, the other key characteristic of our marketplace is one of steady consistency.
Our pricing is steady, our cap rates are steady and our opportunities are steady. With that said, there is a renaissance underway in our area. Akron is experiencing residential growth driven by a 15-year, 100 percent residential tax abatement program for all new residential and multifamily construction. This also applies to recent rehabilitation work, helping Akron stand out as a competitive and attractive place to invest in real estate. Plus, increased residential investment will continue to attract more commercial investment.
Akron has made a significant investment in its downtown neighborhood, spurring significant residential, retail and office growth. The city invested $30 million to facelift Main Street, including several significant mixed-use projects like The Bowery and the 159, creating a better-looking, more walkable downtown that is becoming a premier place to live. Hundreds of new apartments have been constructed in former office buildings, and hundreds more are on the way. The downtown residential population is increasing, which is attracting other businesses and amenities.
Akron has also been a leader in repositioning defunct shopping malls thanks to a collaboration between the private and public sectors. Rolling Acres Mall was transformed from one of the nation’s most infamous dead malls into a 640,000-square-foot Amazon facility employing nearly 3,000 people at a living wage with benefits. The 860,000-square-foot former Chapel Hill Mall is in the process of being transformed from a dying mall into a mixed-use commercial center with light retail, light manufacturing, commercial and wholesale activity, all of which is attracting jobs to the area.
With regard to the office market, we are seeing an increase in vacancy but asking rents are holding steady. Obviously, this is being driven by the COVID-19 pandemic, as we are seeing office users working to determine what the modern office looks like going forward.
For example, some professionals have adapted to working from home full-time while others want to get back into an office setting. We are seeing disruption with regard to how traditional office space is being used — but it is still being used.
Depending upon the source, overall vacancies range from 14 percent to 17 percent with asking rents for Class A space ranging from $20.27 to $21.02 per square foot and Class B rents ranging from $16.37 to $16.71 per square foot. These asking rents have been consistent over the past five years, and we suspect that the bump in vacancy won’t be permanent as office users start to evaluate their productivity going forward.
The industrial market, however, is steady as she goes. Online shopping and distribution have had a positive effect on our local market, as elsewhere in the country. Depending upon the source, overall vacancy is hovering between 3.6 percent to 4.5 percent, and asking rents for warehouse space range from $4.60 to $6.50 per square foot, averaging $4.75 per square foot. Light industrial asking rents range from $3.65 to $6.20 per square foot, and flex space rents range from $8.02 to $8.32 per square foot. Anecdotally, I am aware of lease transactions in each of these asset classes where rates were higher.
With the industrial market being steady and strong, and the office market experiencing a repositioning, there are many opportunities in the Akron market. Opportunities are based on consistency in our past, present and future. We can be sure that everything in Akron will continue to be earned and not given.
Jerry Fiume is managing director with SVN Summit Commercial Real Estate Advisors LLC. This article originally appeared in the August 2021 issue of Heartland Real Estate Business magazine.