With little demand for new retail space and even less money to fund new development, developers and owners have been focused on improvements at existing properties, tenant retention and strategic redevelopment.
Westfield has plans to relocate the food court at Great Northern Mall in North Olmsted, Ohio, to allow for a new anchor and restaurant space with exterior entrances, which continues with the trend of turning malls inside out. In Solon, Giant Eagle has won a rezoning effort to replace its store at Solar Shopping Center with a new 99,000-square-foot store and Getgo fuel station. The remainder of the center is slated to undergo a complete redevelopment as well. Giant Eagle has also replaced its stores at Southland Shopping Center in Middleburgh Heights and the Day Drive location in Parma with new larger prototypes. Coral Company has revised its development agreement with the city of South Euclid to allow for the Cedar Center North redevelopment project to be completed in phases; leasing for the all-retail first phase is currently under way.
The largest retail development in the Cleveland market is Visconsi Companies’ Plaza at Southpark in Strongsville, which has just opened with Costco, Bed, Bath & Beyond and Best Buy as anchors. Small space and junior anchor space are still available. Plaza at Southpark will continue to bring retailers to focus on Royalton Road in Strongsville and add to the stress on occupancy rates of the older retail centers in the southwest suburbs.
The city of Avon in Lorain County and Beachwood on Cleveland’s eastside remains very active, compared to the rest of the Cleveland market. The Avon market is driven predominately by suburban flight from western Cuyahoga County. In Avon, Canton-based Deville Development is well under way with its City Center project, which will include a new Marc’s grocery store, Chipotle and AT&T.
In Beachwood, the activity is centered in Chagrin Highlands with University Hospital’s Ahuja Medical Center and the development of a more than 50-acre new global headquarters for Eaton Corporation. Chagrin Highlands will be home to Cleveland’s first Lifetime Fitness, which is slated to open soon.
Vacancy rates have increased to 8.1 percent from 7.2 percent a year ago with negative net absorption of more than 1 million square feet in the past year, according to CoStar. Average rental rates are off just more than 4 percent from last year, although that may be a little misleading due to the significant reduction in leasing velocity in the market. Rates will have to come down further for leasing velocity to come back up to more traditional volumes.
For future development, downtown Cleveland is the market to watch. It’s positioned to capitalize on several large-scale developments planned or under way, including the mixed-use Flats East Bank project, a new convention center and medical mark, and a planned casino across from Quicken Loans Arena.
— Chris Seelig is senior vice president of retail services with NAI Daus’ Cleveland office.