When people manufacture products in the U.S., they manufacture them in the Rust Belt, and Cleveland is in the heart of the Rust Belt. Our manufacturing sector has experienced increased occupancy and decreased vacancy levels quarter over quarter for the past three quarters. Cleveland historically has been a manufacturing market, and when manufacturing is strong the Northeast Ohio market is strong. In addition to the strength of manufacturing, the development of the Utica and Marcellus Shale is the biggest factor affecting Cleveland right now. The Utica and Marcellus Shales have been big in the Pennsylvania market for the past five years, but development is now moving westward into Ohio. As drilling increases, so too does the need for services for the drillers. The drillers and their service providers need real estate, and there have been dramatic increases in prices over the past four months in rural markets such as Steubenville, Ohio. That growth is beginning to move toward Youngstown, Warren, and up to the Streetsboro area. Employment is expected to grow dramatically over the next five years. While the overall manufacturing market is surging, there are still challenges in old properties that were modern in the 1930s and 40s, which …
Ohio
The office market vacancy rate for the Cleveland market registered 22 percent in the third quarter, up 10 basis points from the previous quarter, according to Grubb & Ellis. Vacancy in Cleveland's West submarket decreased to 24.9 percent, 130 basis points lower than the second quarter. While most of the region's submarkets saw little to no change in vacancy, the South submarket increased to 24.3 percent, 110 basis points higher than the previous quarter. The region posted 16,708 square feet of negative net absorption in the third quarter, lowering positive absorption to 115,416 square feet year to date. On a quarter-over-quarter basis, average asking rental rates for Cleveland's Class A office market increased 18 cents to $21.54 per square foot. During the same time period, average asking rental rates for Class B office space rose 11 cents to $18.02 per square foot. To view the entire report, click here
The Columbus retail market finished the third quarter with moderate positive absorption of 118,454 square feet, according to Colliers International. This marks the sixth consecutive quarter of positive absorption. Still, consumer demand and confidence have remained stagnant over the past six months. In construction news, both the 44,000-square-foot Rave movie theater and the nearby 55,000-square-foot Hobby Lobby Project in Grove City were completed in the third quarter. To read the entire Columbus retail report, click here. To read third-quarter reports on other property sectors, click here.
The Cleveland real estate market can be characterized by a variety of ‘good news/bad news’ stories. For example, American Greetings announced earlier this year that it would be building a new $100 million world headquarters in Cleveland’s suburb of Westlake, Ohio. And while retaining this Fortune 500 company in the region is good news to most, it certainly was bad news to Cleveland’s suburb of Brooklyn, the long-time home to the company and its 1,750 workers. But no where is the ‘good news/bad news’ story more compelling than in the central business district or CBD. First, the good news. Cleveland is undergoing a massive construction boom, the largest since the late 1980s/early 1990s. Over $1 billion of new development is currently under way in the CBD alone, spearheaded by three primary projects. The first is the long-anticipated Medical Mart and associated convention center. This $465 million complex will include a four-story permanent showplace for medical equipment and technology, connected to a 230,000-square-foot convention center, which is anticipated to be completed in 2013. The $465 million Medical Mart and adjacent convention center is expected to be complete in 2013. The second is the Horsehoe Casino, initially converting 300,000 square feet in …
It’s no secret that Cincinnati has a beautiful landscape, a world-class arts and culture scene, and a rich history, but it is little known for its vibrant business community. Cincinnati is truly located in the “heart of it all” and many people are indeed surprised by the economic influence that exudes from this market. Cincinnati is the 24th largest U.S. metro area with a population of just over 2 million. Cincinnati is home to ten Fortune 500 company headquarters, and, per capita, that places the city higher than New York, Boston, Chicago, or Los Angeles. Kroger Company, Procter & Gamble and Macy's Inc. are all headquartered in the city and it has recently been chosen as the North American headquarters for First Group and dunnhumby, both of which have tapped into the local labor pool. With the strength of the city’s business community, Cincinnati’s office market has been relatively stable over the last 15 years, with overall vacancy rates hovering around 15 percent. Unfortunately, it has not been immune to the economic woes of the last several years and many companies have made cuts or downsized. The Cincinnati office market is approximately 37 million square feet and around 13 million …
Greater Cleveland’s office market is showing some signs of recovery, and this is being fueled by the many development projects in the works. Planned developments include a casino to be located in the Tower City area opening sometime in 2013 and a proposed Medical Mart facility, which will be located next to Cleveland’s convention center in the heart of downtown. Another projected office development is the East Bank project by Scott Wolstein, which will house the national headquarters for Ernst & Young and law firm Tucker-Ellis. The project will be the first phase of a planned office, retail and residential development at the edge of Cleveland’s historic warehouse district. Eaton Corporation also is planning a new 400,000-square-foot campus in the Chagrin Highland’s 630-acre corporate community on Cleveland’s east side, which will leave Eaton’s current building at 12th Street and Superior, in the central business district, with more than 300,000 square feet available. Other major deals in the works are the relocation of Huntington Bank (approximately 100,000 square feet) from its namesake historic property at East 9th Street and Euclid to the former BP building, which is now 200 Public Square. The iconic bank building is home to several large firms …
Lately, it has been quite challenging to pick up a newspaper, watch television or even view an online news source and not be inundated by sour economic events occurring throughout the world, as well as in the Greater Cleveland area. As we navigate our way through these uncertain times in the economy, and more specifically in the commercial real estate industry, owners and users of real estate will be faced with challenges as well as opportunities. The Cleveland industrial real estate market, which ranks as the ninth largest industrial market in the United States, remains healthy largely due to its conservative growth during the last decade. The Cleveland economy is comprised of a diverse range of businesses from many different sectors, making it less prone to volatile cycles common in other industrial-based regions. Our local industrial market, which consists of numerous submarkets, had a vacancy rate ranging from 8 to 10 percent throughout 2009. The average lease rate for industrial space was approximately $3.90 per square foot. Both of these indicators compare favorably to the U.S. average, which has slightly higher vacancy and lease rates. A major obstacle weighing on today’s real estate consumer in the Cleveland area is the …
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 …
Cincinnati-area multifamily developers are watching expenses, right-sizing and, if they have a management arm, expanding their third-party management operations to increase potential income streams. Buyers are seeking short sales and loan assumptions, allowing buyers to put very little money down to invest and continue to leverage their cash for future purchases. Of course, cash is still king. There are many new buyers in the market, but developers have been extremely quiet, as they shore up their portfolios by trimming overhead, cut costs, and become more lean and efficient. Also, developers have a limited supply of cash that may be needed elsewhere to shore up the company, which prevents them from pouring any money into new endeavors. Their resources are stretched, which limits their ability or desire to purchase land holdings for future development. As the recession recedes and demand grows, the downtown, north (Union Center and Liberty Township) and northeast (Mason and South Lebanon) submarkets will be in need of further multifamily development. In Northern Kentucky, outlying markets in close proximity to downtown that feature good access to the Interstate 75 or Interstate 275 corridors, will continue to need multifamily development. The central Cincinnati submarket, an area north of downtown …
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 …