From CB Richard Ellis:

 

Local unemployment rates dropped sharply during the quarter from 7.1 % to 5.4%. Ohio had a slight drop from 6.4% to 6.1% and the

national rate declined as well to 5.1%. In the Cleveland MSA, more employment was seen in service-providing industries, with a boost of

6,100 jobs. There was also growth in the goods-producing sector with an additional 3,700 jobs since May 2004. Manufacturing and

Educational and Health Services sustained slight losses in employment. The effect of these declines is unknown, as it is questionable how these changes will affect real estate markets.

 

Cleveland’s Central Business District (CBD) appeared to stabilize in the second quarter after 170,000 square feet was vacated by ICI Paints

in the first quarter of 2005. A handful of sizeable occupancies contributed to the second quarter rebound, while a number of signings

and rumored deals, combined with renewed interest in the improvement of the downtown area have poised the market for a solid

performance in the next 12 to 18 months. Overall, the CBD had a slight decrease in vacancy dropping from 22.04% in the first

quarter to 21.07% in the second quarter. Class “A” vacancy fell a half percent to 17.38%, which was mainly driven by the US Department of Health and Human Services leasing 35,000 square feet and Wells Fargo leasing 9,200 square feet in 200 Public Square. Likewise, class

“B” vacancy rates declined as blocks of space in the 2,000 to 15,000 square foot range were occupied. Realty One’s relocation from the South Suburban submarket to 31,000 square feet in the CBD occurred in the second quarter, which helped to improve class “B” vacancy and absorption.

 

You can see the full PDF report here:

http://gkc2.cbrichardellis.com/GlobalMarketReports/us/cleveland2q05ofcdt.pdf

 

Great news all around, especially that unemployment rate.  I think we are beginning to see the fruits of Cleveland's efforts to turn the regional economy on again.

well, isn't that encouraging!

That's pretty impressive. I think it's interesting to note that Greater Cleveland's unemployment rate went from being above the statewide average to below it, even though the statewide unemployment rate also fell.

 

I know one day doesn't make for an accurate appraisal of the overall economy, but when I brought a friend in from Cincinnati yesterday, she had a hard time getting hotel space. Most hotels were booked last weekend, so she came up this weekend. North Coast Harbor was busy with tourists, apparently from all over the world, based on the variety of their accents and languages. The Warehouse District was hopping, Flats West Bank was hopping, Little Italy was overflowing with people (and water, with the hour-long downpour!). She wondered if Cleveland was always this busy and, like a good little promotionalist, of course I said "yes!"

 

There's still a lot of work to do (21% office vacancy), so let's keep plugging away at filling up those vacancies, plus the nasty suface parking lots and keep building more housing.

 

KJP

more housing = more amenity retail = more around-the-clock action downtown = more businesses wanting to be a part of something labeled as "thriving" or "successful" = lower office vacancy rate. 

my thoughts exactly, this is a solid set of positive news for the city.  CBRE also mentioned several possible major moves into downtown (probably OfficeMax and such) that would be a sizable drop in vacancy.  The rebound is at hand, folks, it just took a little longer then we thought.

Plain Dealer Front Page here we come!  Right?

This is really good news. The best part of the article is that they expect a solid perfomance in the next 12-18 months. I just wish we could fast-forward to 2010.

I agree wooley, I'd like to see if Cleveland finally ends its population decline by 2010.  I am honestly hopeful that the city will gain population by the next census, or at least in some of the more revitalized areas (downtown, OC, tremont, shaker, etc).

Here it is, almost three weeks since CBRE issued that report, and I haven't seen word one from the PD on this. Was there anything in Scene or Free Times?

 

Ahem...I did mention it in my Write Of Way column in Sun!

 

KJP

"I haven't seen word one from the PD on this. Was there anything in Scene or Free Times?"

 

1. The PD is too busy being scooped on the Nate Gray scandal.

2. Scene isn't interested in business news, unless there's some salacious dirt behind it.

3. Free Times wouldn't dare print something positive - don't you know that good news isn't 'cool'?  :wink:

^Good summary of the print media in town....I do think you could swap Scene and Free Times in#2 and #3 and it would still be true

Here is what I wrote about it (in the second part of the following column) last month. If you want to comment on the Inner Belt project, there's a message string about it in the transportation section of this forum.  KJP

_____________

 

Sun Newspapers

July 21, 2005

Write of Way

Inner Belt a chance to rebuild city's core

Ken Prendergast

When taxpayer funds are used to build or rebuild a highway or other transportation facility, the goal usually is to maximize the public benefits from that investment. If the benefits are maximized, more private capital tends to flow to where the public investments are made.

That happens whenever an interchange, a lane or other similar investment is added to a highway to increase its capacity of accommodating more vehicles. Unfortunately, since the Greater Cleveland area's population isn't growing, and that most of the clean and green open land is at the outer edges of Cuyahoga County and beyond, public and private capital continues to flow away from older parts of the city that need to reinvent themselves.

That's why the $700 million Inner Belt reconstruction project is such a tremendous opportunity for the core city. But, the way the Inner Belt, a.k.a Interstate 90, is being designed, it could be a wasted opportunity.

Yes, it's going to be a newer highway. And, yes, it's probably going to be safer, with Dead Man's Curve eased, fewer merging lanes, and a fifth lane in each direction across the Cuyahoga Valley span. The Ohio Department of Transportation should be commended for adding those features.

But where ODOT and, more notably, the city are coming up short is to look at how a rebuilt Inner Belt can promote more economic development. It falls on city officials to tell ODOT how they want land to be used for the Inner Belt project.

City officials should tell ODOT they want a new, shorter bridge across a more narrow part of the Cuyahoga Valley, and build it south of the existing bridge. They should do it even if it means demolishing or moving the Greek Orthodox Church of Annunciation in Tremont. If someone could move London Bridge to Lake Havasu City, Ariz., then the church can be saved, too.

Instead, ODOT planners are seeking a longer, more expensive bridge for westbound traffic, north of the existing bridge. The old bridge will be rebuilt for eastbound traffic. Not only is that more expensive than it needs to be, it looks and sounds, well, goofy.

City officials should also tell ODOT they want the Inner Belt moved south, away from Jacobs Field and put in trench, so that the St. Vincent-Quadrangle area isn't cut off from downtown. ODOT did that in Cincinnati, rebuilding Fort Washington Way in a manner that is enabling The Banks riverfront area to be redeveloped.

And, they should tell ODOT to replace the long, one-lane, looping exit ramps to Ontario and East 9th streets with short, straight and three- or four-lane-wide ramps that take up less up space, yet can absorb rush-hour and special-event traffic.

Combine all these scenarios, and it will open up the urban wasteland of the Central Interchange, south of Jacobs Field, with many of acres of prime, clean land for development. Plus, it will make the abandoned Norfolk Southern rail yard, just south of the Inner Belt and next to Ontario, more accessible to redevelopment.

Problem is, when it comes to downtown highway projects, city officials aren't looking south. Instead, they are focusing mainly north, to the lakefront. There, city officials want to see the Shoreway rebuilt into a boulevard that will open up lakefront land for redevelopment. They also are eyeballing a possible boulevard to University Circle, as an extension of I-490 east from I-77.

Both appear to be good projects, if designed to ensure the automobile doesn't dominate the urbanscape, and allows for high-density development sites, good transit, pedestrian and bicycle access to the areas through which the roadways will pass.

City officials should take the same approach with Inner Belt, to attract more private capital to the urban core, rather than settle for a highway that only makes it easier for people to merely speed through downtown.

In case you haven't already heard, Greater Cleveland's unemployment numbers have taken a dramatic turn. For those of us accustomed to bad economic news around here, we might expect the turn to be for the worse. Not true. Not only did Greater Cleveland's unemployment rate drop, it fell so fast it overtook the state's overall rate, which also declined.

According to real estate firm CB Richard Ellis, Inc.'s Global Markets Report, the raw numbers for the second quarter of 2005 show the Greater Cleveland area's unemployment fell from 7.1 percent to 5.4 percent. Statewide, the rate slipped from 6.4 percent to 6.1 percent. However, our little corner of paradise is still above the national average of 5.1 percent — but not by much.

Pacing the job growth was a rise in employment in the service-providing industries, where 6,100 jobs were added in the past year. Another big growth sector was in the production of goods, adding 3,700 jobs. Manufacturing, educational and health services saw a slight loss.

CBRE noted another positive sign, that the downtown Cleveland office market appears to be stabilizing. In recent months, a number of tenants have agreed to move to downtown, or expand into vacant space.

Tenants include Realty One, Case Western Reserve University, and National City Bank. All told, more than 200,000 square feet was gobbled up in just the last three months, reducing office vacancy rates from 22 percent to 21 percent.

CBRE's market report noted a couple of big question marks remain, namely the fate of the Defense Finance Accounting Service and whether Charter One Bank's offices will be down-sized after its recent acquisition. But, the report was upbeat, noting recent market activity, plus the city's aggressive efforts to attract more technology firms downtown, and the pending creation of a downtown improvement district.

"Cleveland's Central Business District has reason to be cautiously optimistic when looking to the next 12 to 18 months," the report said.

 

END

I too was amazed that the PD/Scene/FT/anybody hadn't mentioned these improved numbers, but then I remembered the "woe is us" Cleveland media could never print positive news without somehow spinning it into the death of the city.  Thanks, KJP, for bucking the trend of doom and gloom and showing people that good things ARE happening here.  If we (and indeed, the nation) heard more about these good things going on, Cleveland's can't-do attitude could be slowly reversed.

ok...so the DFAS is expanding.  Denver company opening up office.  Quicken opening up.  and the county, city, DTP and Development districts working hard to retain current downtown tennants.

 

the numbers must have improved.  :|

 

I wonder - since its an election year - if we will hear anymore surprise company moves?  :?

CBRE's latest report, released after Sept. 30, shows a minor rise in overall office vacancy rates, though Class A space saw a slight drop in vacancies. Also, the region's unemployment fell slightly, from 5.6 to 5.5 percent, though not as dramatic a drop as in 2Q (when it fell from 7.1 to 5.6 percent). Still, Greater Cleveland's unemployment rate is better than the statewide average of 5.9 percent, yet worse than the national average of 4.9 percent.

 

See the full report at http://gkc2.cbrichardellis.com/GlobalMarketReports/us/cleveland3q05ofcdt.pdf

 

I was surprised it made no mention of the DFAS decision, unless CBRE is waiting to see if Congress amends Bush's recommendations in any way. Also, it makes no mention of Quicken Loans' announcement to open a call center downtown. Again, CBRE may be waiting to see where they will lease space.

 

By the way, see CBRE's industrial and suburban office market reports for Greater Cleveland, visit:

 

Industrial:  http://gkc2.cbrichardellis.com/GlobalMarketReports/us/cleveland3q05ind.pdf

Suburban office:  http://gkc2.cbrichardellis.com/GlobalMarketReports/us/cleveland3q05ofcsub.pdf

 

KJP

what's this about a Denver company opening an office here?  I'm assuming it's not too huge if I haven't heard about it!

I saw that the Elyria company that was to locate in the burned-out building on West 25th street will now take up space at the Idea Center in Playhouse Square. 

Well, that makes sense.  Too bad about West 25th, though.  I hope this doesn't mean that the building will be lost!  Every time I pass that building I want to cry!

i finally saw it the other day.  i realllly was hoping it wasnt that building, damn it looked near complete for new tenants.

what's this about a Denver company opening an office here?  I'm assuming it's not too huge if I haven't heard about it!

 

MGD here is the forum on UrbanOhio.  http://www.urbanohio.com/forum2/index.php?topic=5609.0

 

Although the way I read it is that the company is "opening" an office here in cleveland not "relocating" from Denver. 

 

However, if the Corporate HQ's was to relocate..that would be quite a bit of good news!

 

This is going to hurt:

 

Empty Charter One offices hit market

 

By STAN BULLARD

 

6:00 am, November 21, 2005

 

The downtown Cleveland office market this week took its hit from the job cuts and office moves that resulted from Charter One Bank's merger with Citizens Bank.

 

John Glasstetter, a CB Richard Ellis vice president, has started marketing for sublease a total of 182,569 square feet in the Erieview Plaza and IMG Center buildings. Much of the space was renovated since 2000 as the bank expanded.

 

The move hikes by 44% the volume of sublease space available in the city center.

 

From Tuesday's Crain's Cleveland Business on the Web

I'd like to see what CBRE has to say about it.

I saw an article in Crains that said downtown office vacancies were tailing off. I was wondering if anyone who is a subscriber would be nice enough to post this article?  :-)

if there's an article in crain's that's online you can just go www.bugmenot.com and it will spit out a username and password for you to use.

All seems like pretty good news, though it irks me that no mention is made of live-work in the discussion of industrial space. Joe Cimperman and a coalition of artists are working hard in Columbus to revise building codes to allow artists and others to live and work in Cleveland's myriad old industrial buildings. This should be considered the true future -- and best use -- of such buildings.

^It was mentioned in Sun Newspapers.  :-D

Great, KJP!

By the way, can't wait for your Pesht story to appear tonight or tomorrow. :)

From Crain's

 

450 jobs exit Halle Bldg. For space on Superior

 

By STAN BULLARD

 

6:00 am, January 23, 2006

 

Snapping a string of office tenant wins for Cleveland’s Theater District, First American Lenders Advantage plans to leave the Halle Building and move to the 1100 Superior Avenue Building.

 

Although the company, which formerly went by the name First American Title Solutions, is little known, the loss is a big one for the Halle Building. Lenders Advantage is a growing provider of title services to lenders, particularly for quick-turnaround home equity loans. It’s a Cleveland-based division of First American Corp., a national title company and business information provider headquartered in Santa Ana, Calif.

 

The late-summer move will transfer about 450 jobs to 1100 Superior, said David Petro, Lenders Advantage vice president and national sales manager. The company has leased two-and-a-half floors at 1100 Superior, or 68,000 square feet of offices, he said. That’s about the same amount of office space the company occupies at the Halle Building, but it occupies all the fourth floor and parts of three others in the Theater District building.

 

“It’s difficult for us to operate the way we are,” Mr. Petro said. “This will make for more efficient work flow. We need more meeting rooms, more break areas and dining rooms.”

 

Lenders Advantage tried to remain in the Halle Building, but the structure couldn’t accommodate its need to consolidate from smaller offices to a larger, more efficient one, Mr. Petro said. Lenders Advantage looked at Halle’s third floor as a site to consolidate but was told it wasn’t available because of the pending move of Case Western Reserve University’s back-office operations to the building.

 

Pat Lott, senior vice president of office leasing at Halle landlord Forest City Enterprises Inc., said, “We were disappointed to lose them. We tried to keep them.”

 

Mr. Petro said Lenders Advantage found the space it needed downtown after a six-month search that included sites outside the central city. He said the company elected to stay downtown because of the lease it secured and the desire to minimize the disruption to employees, many of whom use public transportation.

 

While some of the company’s increase in personnel downtown is from America’s appetite for home-equity loans, Mr. Petro said Lenders Advantage grew in Cleveland because it decided to centralize operations here.

 

During the last year, the company closed 12 regional production offices around the country to centralize operations in Cleveland and moved to the city employees who were willing to transfer here. Mr. Petro estimates those moves and job growth connected with rising business levels helped boost its Cleveland work force to 450 from 350 a year ago. He put the division’s national work force at 550.

 

Lenders Advantage has applied for Cleveland’s Job Creation Grant program, which rewards companies that add office jobs downtown by giving them annual grants equal to about 1% of their prior year’s payroll. Two calls to Greg Huth, the city’s interim economic development director, to request the grant data weren’t returned by Crain’s deadline last week.

 

Al Wiant, a principal of the Brandon Wiant Converse real estate brokerage who assisted Lenders Advantage in its search, said the grant is justified because the company is making a big commitment to the city.

 

Lenders Advantage will become 1100 Superior’s largest tenant, said Mark Ferris, property manager for building’s manager, the Gerald Hines Interests.

 

The Halle Building will be about 85% leased once Lenders Advantage leaves and Case moves in.

 

..................

 

This must mean that the building was going to be damned near 100% full before this latest move was announced!  It's too bad, but at least they're staying Downtown.  The Halle Building has a lot going for it, though, and should be better able to find a replacement tenant, or allow existing tenants to lease the space, than many of our buildings with large amounts of vacant space.

One good thing about this - 1100 Superior (aka the Diamond Building) has had one of downtown's highest vacancy rates, and I imagine that won't be the case once First American moves in.

I don't feel like this is significant.  At the very least, we are more secure in that we have another tenant who will be around for a while.  I would like to keep office density in key places, such as the theater district. But, I feel that the Halle building should be one of the easier buildings to rent out. I believe the FCE owns it.

I thought Jacob's owned the Halle last time I checked.  I know he has been unloading properties over the past few years, when did FCE buy it.

 

Or did they always own it?

punch the ratners own halle's. i dk the date, but i found this quote from roldo on cool clev:

 

"MORE SIGNS OF A MOVE? Stan Bullard's in Crain's Cleveland Business reported a couple of weeks ago (the Plain Dealer caught up a week later) that Forest City, home of Sam Miller and the Ratners, has turned over its leasing of its downtown properties in Cleveland to others.

 

Forest City hired CB Richard Ellis, a real estate broker, to lease its Cleveland properties, reportedly some 25 percent vacant.

 

Now Forest City holds many downtown spots including the Terminal Tower and the Halle's building. It's not exactly a novice in handling downtown properties. "

 

 

^ I don't like the sound of that....

In today's PD: 

 

more at

 

Taking offense with Kuwaiti owner

1100 Superior so successful competitors feel outmaneuvered

Saturday, March 11, 2006

Christopher Montgomery

Plain Dealer Reporter

 

Everyone in the Cleveland commercial real estate world is talking about the 1100 Superior Building, formerly known as the Diamond Building.

 

The downtown building's manager is cutting attractive deals and landing office tenants that could take it from being half-empty today to 90 percent full in a matter of months.

 

More at cleveland.com http://www.cleveland.com/business/plaindealer/index.ssf?/base/business/1142069933127180.xml&coll=2

Some interesting stuff from CB Richard Ellis' 4th quarter report...

 

http://gkc2.cbrichardellis.com/GlobalMarketReports/us/cleveland4q05ofcdt.pdf

 

Based on what we are currently seeing in markets nationally, we are

hopeful local markets will continue to stabilize and improve during

2006 as a number of large tenants begin to occupy space over the

next year.

 

Cleveland’s Central Business District (CBD) has further reason to be

optimistic when looking to the next year. Case Western Reserve’s

commitment to 131,000 square feet in the Halle building and Forest

City bringing to market the Higbee Building in phases is an

important step for downtown recovery primarily along the Euclid

Avenue Corridor and Public Square. Additionally, Education Loan

Servicing Corp. will expand to 63,000 square feet in MK-Ferguson

Plaza by the end of 2006.

 

While the suburbs may continue to be an attractive alternative to

downtown, recent enacted legislation such as the approval of the

Special Improvement District and rollout of the CBD Job Creation

Incentive Grant program should continue to add some much needed

leverage in retaining existing tenants and attracting new tenants to

the CBD. However, if owners in suburban markets continue to offer

attractive rates and incentives as well, the CBD could be in for a

prolonged fight for tenants shopping in the market.

 

 

I must have missed Education Loan Servicing Corp.'s locating at MK Ferguson. Of course, we have Quicken Loans going in there, too. Plus, CBRE didn't mention University Hospitals putting 600 workers in the former Atrium Office Building, plus some other recent moves to downtown (not to mention the DFAS expansion).

 

Something tells me downtown's office market is about turn a corner it hasn't turned in about 15 years....

Is the CWRU plan still going foward? I figured that with a 40 million dollar deficit they would not be in a position to be leasing office space.

 

This is the first I've heard about the Higbee building. I know the top floors were partially converted to office space, are they going to finish that and market the space now?

The Case proposal to move some adminstrative offices to the Halle Building is on hold.

I love good news. Cleveland office market looks to be on the rebound. With new housing and a rebound in office downtown will be reborn.

 

On a second note, what are we going to do about the media in Cleveland? I cringe when I turn on the news or open the Pain dealer (Plain Dealer). The media plays a large part in the Brain Drain of this region. Maybe if they promoted this region better, we could turn this area around faster. There is so much positive stuff going on in this region on a daily basis that is not even considered as news. There are so many intelligent smart young people and professional in this region and they get little attention from the media. What can we do about this?

 

Read Sun Newspapers.

I love good news. Cleveland office market looks to be on the rebound. With new housing and a rebound in office downtown will be reborn.

 

On a second note, what are we going to do about the media in Cleveland? I cringe when I turn on the news or open the Pain dealer (Plain Dealer). The media plays a large part in the Brain Drain of this region. Maybe if they promoted this region better, we could turn this area around faster. There is so much positive stuff going on in this region on a daily basis that is not even considered as news. There are so many intelligent smart young people and professional in this region and they get little attention from the media. What can we do about this?

 

 

I've said it numerous times...until Cleveland, cuyahoga county and the state of ohio have a strategic marketing campaign.....nobody will know we are here!

You won't get one from the state. If it doesn't promote God and guns while gagging gays, they're not interested.

 

Job creation? What's that?

Man something need to be done guys. I here many people talking about this all the time. I guess it will be up to the citizens of this city to change our Image for the better.Out of towners are shocked at how some of Cleveland's citizens are down on this city. Why does it take a outsider to make people realize how beautiful this city is. Cleveland has beat up on itself for to long, its time for a change, who's with me.

Some interesting stuff from CB Richard Ellis' 4th quarter report...

 

When do the quartly reports come out?  When will the first quarter of this year come out?

 

Cleveland has beat up on itself for to long, its time for a change, who's with me.

 

I think we're all with ya.

 

When do the quartly reports come out?  When will the first quarter of this year come out?

 

Not sure...maybe a month after the quarter ends? I checked to see if the first-quarter report was out for this year, but it isn't yet.

Cool, my last post sounded pushy.  Sorry

(bad day making cars)

No problemo

from a link in Crains:

http://www.costar.com/News/Article.aspx?id=BBE6EF74488586F14666717E57F3999D

 

If this is for real, we should expect to see some cranes soon.

 

 

Cleveland Office Market Riding Record Crest

Torrid Absorption Pacing Record Investment Sales

 

 

Investors across the U.S. may not have figured it out, but the homegrown real estate community in Cleveland knows a good thing when they see it -- and the Cleveland office market is a good thing right now.

 

2005 was the biggest year ever achieved in terms of investment sales volume and 2006 so far is outpacing that record.

 

Absorption is also occurring at a torrid pace. Net absorption has totaled more than 825,000 square feet this year compared to about 695,000 square feet for all of last year, according to CoStar Group data.

 

The activity translates into a lucrative year so far for the brokerage community as well.

 

"We do not track by square feet, but on a closed commission basis we are up over 75% for the same five months of 2005," says Jim Gerspacher, president of Gerspacher Real Estate. "The greater percentage by far has been leasing commissions which are up 236%, while sales commissions are up 56% for the same time period."

 

The office market turnabout kicked off in late 2004 says, James P. Breen, principal of Breen & Fox.

 

"The effects of the tax cuts that had stimulated the national economy started to finally take hold here," Breen says. "And as decisionmakers found that the growth was sustainable, they started to make some long-term commitments to space, particularly in the past 18 months. In addition, you are actually starting to see a real tightening, as reported by employment and executive search firms here locally in the labor markets. These are all good signs for the office market."

 

Breen paints an interesting scenario for Cleveland's downtown given the brisk pace of absorption.

 

"If you look at Class A and B buildings built after 1950 or 1960, the vacancy rates are in the 14% range today, and I think the actuals are a little lower, as some buildings are 'sand-bagging' on their reporting of occupancy levels," Breen says.

 

"Now if you take the current rate of absorption in that class of buildings and project it out, it gets real interesting, real fast," he adds. "At the current rate of absorption, the vacancy rate for that class of buildings becomes 4% in only six quarters, or the end of 2007, and it goes to zero -- that's right zero -- in the third quarter of 2008."

 

"Granted these are only projections," Breen notes, "but to run reasonable projections (that don't even factor in any growth in the absorption rate) that result in zero space in that category in only nine quarters or 820 days would have been thought of as unachievable a couple of years ago."

 

Larger tenants are already in a bind. The law firm of Baker & Hostetler will require 200,000 square feet by January 2008, says Alex Jelepis, an office broker with Grubb-Ellis and whose name is a common sight on for lease signs in windows downtown. Right now Baker & Hostetler has only two existing options, Jelepis says, staying at National City Center or relocating to 200 Public Square.

 

"Gradual economic expansion coupled with a lack of new CBD inventory has driven demand especially for downtown Class A, which is approaching healthy vacancy levels of approximately 11 to 11.5%," Jelepis says. "Law firms, professional services, insurance and financial services are contributing to demand as these sectors appear to be well-performing and growing in Cleveland."

 

The city of Cleveland has aided the downtown resurgence, says Myrna I. Rodriguez-Previte, vice president of Midwest Real Estate Partners LLC.

 

"The city's new Job Creation Grant is one of the attributing factors for the year's expected strong office absorption," Rodriguez-Previte says. "Questex Media being the first recipient, relocating to Fifth Third Center from a west side suburb, and to date five other companies have been approved or awarded the grant."

 

Rodriguez-Previte and Kevin M. Piunno also of Midwest represented Ashley Capital, the owner of Fifth Third Center, in Questex Media Group's 19,264-square-foot lease. Jelepis represented Questex.

 

Building sales have surged on this wave of leasing activity in this downtown that fronts the waters of Lake Erie.

 

The two largest office property transfers in past year are illustrative of what has been happening to real estate values, too.

 

1. 200 Public Square (mentioned earlier). The 1.2 million-square-foot sold a year ago for $141 million or about $119/square foot. Jelepis was the listing broker on the deal.

2. 127 Public Square. This 1.4 million-square-foot changed control six months ago in an ownership reconstitution deal that totaled $315.7 million or about $230/square foot.

 

"I think there are a few things driving this," says Alec Pacella, CCIM and investment broker with Grubb & Ellis. "First is the recovering office market. Fundamentals are clearly improving, with decreasing vacancy rates, increasing leasing velocity and absorption, decreasing concessions and stabilizing rents. Bolstered by these positive signs, investors are purchasing with confidence, as the prospects of reaping future rent appreciation seem good."

 

"Second," Pacella says, "there remains an abundance of capital out there. Despite their recent run-up, interest rates remain at very low levels, which allows buyers to leverage up their already full war chests. And third, supply is catching up with demand."

 

Cleveland's suburban communities, too, are not being left out of the resurgence. An example is what happened with the 462,00-square-foot Allen Bradley Building in Mayfield Heights. Owner Rockwell Automation sold the property last November for $55.3 million or about $120/square foot. The new owners then flipped the property this past February for $61.4 million or nearly $133/square foot.

 

Investors have even expanded their acquisition horizon further out from downtown this year.

 

Cleveland developer Mark R. Munsell purchased a major interest in 13 office buildings totaling 626,000 square feet in nearby Akron this spring. The seller Dellagnese Properties retained a small interest. And while a purchase price was never disclosed, Munsell mortgaged the properties for $73.25 million. Assuming a standard loan-to-value ratio of 70%, the price for the properties could well have exceeded $100 million.

 

"There is no denying that the market is brisk, clearly bolstered by the Dellagnese/Munsell portfolio transaction that closed a few months ago," Pacella says. "The past few years have been characterized by a shortage of quality product. It seems as this year, the product pipeline is filling and, with the Duke office portfolio looming on the horizon, this trend is certain to continue. So considering the start that we are off to, it looks to me that this year could shape up to be even bigger than last year."

 

 

GREAT NEWS!

Former Mayor Campbell did a great job planting these seeds, and it looks like Mayor Jackson is doing well to continue the momentum. 

 

With all of the new office workers and the new residents...WOW!

Awesome.

 

Hopefully soon we'll need some more office towers -- and you know where the first new one needs to go:  PUBLIC FREAKIN' SQUARE

The feel good story of the day!  Great news!