What area is your expertise?
For the purpose of this report I will be discussing the office market in and around Akron.
What trends do you see presently in office development in your area?
Akron has historically been a fairly conservative and stable office development market. Fortunately, this has meant that our area has not fallen in the trap of being over developed like a lot of cities experience in a market downturn. However, as we’ve experienced in the past down markets, those tenants that are making moves are expecting and getting rental concessions, increased tenant improvement allowances and very attractive rental rates. We’ve also experience a substantial increase in locally owned businesses opting to either build or buy their own office space which is due to the attractive mortgage rates and sale prices.
Who are the active office developers in your area?
In the 35-plus years that I’ve been in the office/industrial real estate business, I have not seen as many major expansion projects announced as I’ve seen in the past 18 months in our area. These projects will undoubtedly help bolster the Akron economy and help spur additional growth, or a trickledown effect as some would choose to say. There are several local companies that are involved in the new office space developments in the area who include, but are not limited to:
Testa Companies and their development of Point West Lifestyle Office Park, a new 90,000-square-foot Class A medical/office facility, located White Pond Drive.
Dellaganese and Co. and their ownership and management of Embassy Parkway in Fairlawn.
Welty Companies, with the construction of the new First Energy facility on White Pond Drive.
Wojno Development Company’s development of a new 53,000-square-foot select specialty hospital in downtown Akron.
Please name one or two significant office developments in your area. What impact will these projects have on the market?
The Sterling Jewelers Inc. Expansion
Sterling Jewelers Inc., the U.S. headquarters for Signet Group PLC, the world’s largest specialty jewelry retailer, has recently expanded its 350,000-square-foot campus to include a neighboring 86,000-square-foot office building. This expansion will help support 2,300 local Sterling employees and will allow for additional job creation.
The First Energy Expansion
The First Energy Corporation is nearing completion of a new 208,00-square-foot office complex, adjacent to their West Akron/White Pond Drive campus. This new $30 million plus, LEED-certified building will house 700 employees and enhances the job growth expansion in the area.
InfoCision Management Company
InfoCision Management Company is one of the largest privately held telemarketing companies in the country. In the past year they have acquired two office buildings totaling 68,000 square feet adjacent to their corporate campus and will soon break ground on a new 90,000-square-foot office building which will allow them to increase their employee base on campus by an additional 300 jobs over the next few years.
Goodyear Tire and Rubber Company New World Headquarters
This $900 million plus project, not only will be saving 3,000 plus jobs, but has promised to include the creation of a mix of retail, restaurant, office and hotel properties near the headquarters building.
Where is the majority of development taking place? Why is this area doing well?
The majority of the future office development is expected to take place on the west side of Akron, near the Interstate 77 and Cleveland-Massillon Road/Ridgewood Road exits. There is in excess of 150 acres of office/R&D zoned land with the advantage of access to city utilities. North along the Route 8 corridor between Stow and Hudson. South near I-77 and the City of Green and near the Akron Canton Airport.
A majority of office development is happening in the Fairlawn/Copley/Montrose area along the I-77 north/south corridor near shopping, new housing and along Route 18 going east and west. Additionally, new office, retail and housing developments in and around downtown Akron have increased due to plans for new facilities at the Goodyear Tire and Rubber Company headquarters and Bridgestone Firestone Technical Center. The Biomedical Corridor, running from east to west through downtown Akron, is also promoting development efforts in the medical office sector.
What area do you expect to be the next big development market? Why?
East Akron:
Bridgestone Firestone Technical and Research Center
The recent announcement that Bridgestone Firestone will be building a new 240,000-square-foot research and development technical center is great news to the city of Akron, who has worked very hard with the state and county to offer a $68 million public financing inducement to keep them in the city. This is another example of the high-income job retention going on in the city of Akron that is so important to our local economy.
The University of Akron Expansion Projects
In the fall of 2009, the University of Akron Zips will play their home soccer and football games in the new $60 plus million, 30,000 seat InfoCision Stadium. The University has also recently acquired the adjacent historic Quaker Square retail and hotel project, a reported $22 million purchase, for use a residence hall with the balance being used by the university for other activities.
The southwest part of the campus is also getting a facelift with a new $25 million student housing and retail development which is currently under construction on the corner of South Main Street and Exchange in downtown Akron.
Downtown Akron:
There’s been a tremendous amount of growth at each of the local hospitals in past years. Akron Children’s Hospital for one, has invested $160 million plus over the past 5 years to build its downtown campus. A ribbon cutting ceremony has recently been held in honor of a new 53,000-square-foot select specialty hospital east of downtown Akron, which is being built through a collaboration between Akron General and Summa Hospitals. Akron General has also expanded to the north with a new health and wellness center in Stow, Ohio with a $73.6 million, 42,000-square-foot specialty medical center. Summa Health System recently broke ground for the new 232,000-square-foot Crystal Clinic Orthopedic Center, at an estimated $100 million cost.
Please give a measure of office vacancy rates. Please give a measure of available sublease space.
Office vacancy rates vary from region to region and are not unreasonably high considering the current market conditions. Sublease space is somewhat uncommon, and there are only a few chances to take advantage of a sublease opportunity.
What impact do current interest rates have on the office market? What predictions do you have for interest rates and their effect on the office market in the next year?
The current interest rates are very attractive to buyers at this time, but are starting to climb which is an indication that now is the time to make a move in acquiring real estate. Not only are mortgage rates attractive, but also because of the terrific deals that are being offered on existing buildings and especially for user/investors. We have seen a rise in the number of companies choosing to purchase their own office buildings rather than continue leasing space. The entire office market is soft at this time, however, medical space continues to be in