i don't understand the absorbtion rate when the overall vacancy rate is still 21%. 

 

is new space is coming on to the market diluting the effect of the absortion?  is this a net figure or does it include when one company moves buildings and "absorbs" space in a new building, but vacates its old space?

 

 

Yeah, I thought we'd been hovering around 21% vacancy downtown for the last few years. Can anyone explain?

It could depend on the class of offices available.  I think we have a glut of crappy offices, and a scarce number of nice ones.

^

Previous reports on the office market have noted that while Class A vacancy (Key Tower, 200 Public Square et al) has declined considerably, the vacancy rate for Class B space (Leader Building, Hanna Building) has increased due to tenants leaving these buildings to take on space in some of the more high profile buildings in downtown.  The 21 percent number is just an average of the vacancy rates for all types of office space in Downtown Cleveland.

 

 

EDIT: looks like punch beat me to it.

It could depend on the class of offices available.  I think we have a glut of crappy offices, and a scarce number of nice ones.

 

Just a thought and I'm probably wrong, I think we're holding steady at 21% because of the same large buildings that have been empty, Higbees, May Co. and AmeriTrust Tower.

 

Also, I think we have a good amount of A office space and it appears the c office space is turning into residential, for example the building on public square and East Fourth.

Just a thought and I'm probably wrong, I think we're holding steady at 21% because of the same large buildings that have been empty, Higbees, May Co. and AmeriTrust Tower.

 

I don't think that ameritrust or higbees is included b/c it they are not actively on the lease market.  my understanding is that FCE is going to begin putting chunks of higbees online, so i was trying to figure out if this would flood the market

hey Ctown, your anaylsis was much more professional.  Class B sounds better than "crappy"

^

I like how your analysis got straight to the point.  Saves us all some reading.

Saw this on a blog: http://www.clevelandleader.com/node/621

 

Rumour has it that Cleveland may soon be adding a search engine to its list of downtown Cleveland businesses.

 

Cleveland investor Sam Miller is reported to be buying Congoo.com with an investment of upwards of $200 million, which would be a nice boost to the dwindling Cleveland economy.

 

Congoo is a specialized search engine that allows users to search the web, as well as search premium and subscription information from over 300 sources.

 

Congoo has a partnership with Google to provide web search results, and partnerships with a number of publishers such as the Financial Times, Institutional Investor, Boston Globe, and many others to provide searchable content for the premium and subscription search function.

 

Rafael Cosentino, VP Business Development, at Congoo told the Cleveland Leader "We cannot comment on any exisiting talks with potential investors until such relationships have been formalized and made public."

 

We'll keep you posted as this story develops.

 

 

 

 

Whoa, that would be amazing. Keeping my fingers crossed.

http://www.congoo.com/aboutcongoo.aspx

 

It sounds great and I hate to be a downer, but I would be very surprised if a NJ, web-based company picks itself up and moves here just because they were bought by a Cleveland financier. 

 

If it was a strategic buyer -- a complementary company that would fold congoo.com into its existing operations -- then I could see them moving a large chunk of employees/operations here.  However, as an executive of Forest City, a real estate development company, it seems as if Sam Miller would be making a personal investment in this company, and nothing more.  However, if he has something else up his sleeve, more power to him.

Maybe he has plans for creating a technology mecca along the Euclid Corridor!

 

Or maybe not :)

 

Oh, Cleveland. A city like Charlie Brown.

Oh, Cleveland. A city like Charlie Brown.

 

Fair point, sorry for jumping to a "downer" conclusion.

No worries. I am skeptical of this thing moving here, too. I don't think most companies move to where the VC are located. But what do I know.... It'd be neat if it did. This seems like a good idea what they've got going on.

I was thinking the same thing... though the blog bit seems to imply Miller wants to move it here. Let's think about it this way: It would be a huge, wonderful, but unexpected gift if it did move to Cleveburg.

^But now, if they don't end up coming, the headlines will read: "Cleveland loses 250 jobs to New Jersey." ;) 

all of the higbee space is going to start coming on the market, and it is well suited to this type of operation.  so maybe this is tenant #2 after the CVB opens?

now that rumor seems to be false. from bfd blog:

 

 

 

Douglas Craver: Vanishing BFD Post About Sam Miller/Congoo Revisted  Loading ...

Filed under: BFD, Tech, Cleveland, Web 2.0 — @ 4:32 pm

After generating a string of comments looking into this rumor as published on The Cleveland Leader website today, a post here at BFD was mysteriously taken down and deleted with all the comments. One of the comments I posted was from Henry Gomez’s Forest City blog which exposed it was just that, a rumor. As pointed out in the comments, it was a constructive example of citizen and professional journalists working together to expose a rumor.

 

Cleveland investor Sam Miller is reported to be buying Congoo.com with an investment of upwards of $200 million, which would be a nice boost to the dwindling Cleveland economy.

 

Congoo is a specialized search engine that allows users to search the web, as well as search premium and subscription information from over 300 sources.

 

The Cleveland Leader - Search Engine Moving to Cleveland?

 

Sounds interesting. The only problem is Sam Miller says he’s never heard of it.

 

“A what?” Miller responded when reached by phone this morning and asked if he was investing in a search engine. As for Congoo.com, “I don’t even know about it,” Miller said. He intimated that he would never invest in such a business.

 

But Miller shouldn’t feel bad. The folks at Congoo.com didn’t know who he was, either.

 

Cleveland.com/PD: Forest City Blog - Sam MIller: Search Engine Mogul?

 

http://www.brewedfreshdaily.com/2006/11/02/vanishing-bfd-post-about-sam-millercongoo-revisted/#comments

Too bad!! Can't say I'm surprised, though :)

 

I didn't realize Sam Miller was a Forest City person. When I heard that, I knew this story was far-fetched.

^

He was married to Ruth Ratner Miller if I'm not mistaken.

Well, you have to remember, I'm a kid from the Akron suburbs, and I don't know the Cleveland bigwigs ;)

 

In my 'hood, it was all about the O'Neils, lol

Way to go Penton Media Building!

From Cleveland.com:

 

5 businesses moving into Penton Media Building

 

10:15 a.m.

 

KBS Realty Advisors, owner of downtown Cleveland's Penton Media Building at 1300 East 9th St., has signed leases with five new tenants. The deals involve about 95,000 square feet at the 20-story office tower.

 

As previously announced, PR Newswire will base a huge operations base on the building's seventh floor -- about 29,000 square feet. Other recruits:

 

More at cleveland.com http://www.cleveland.com

Awesome

are these new businesses to the CBD or are they just moving space? 

 

it certainly is good news - especially if they are new to CBD or moving into more space. 

I would doubt that they are new. Most law firms are downtown. The best case scenario is that they are moving into larger spaces.

So what did that article about the possible sale of the Fifth Third Center in this week Crain's say? Can someone post it? The e-mailed brief I received from Crain's said:

_______________

 

Fifth Third Ctr. pending sale has observers abuzz

 

A Dallas real estate investment company's expected purchase of Fifth Third Center in downtown Cleveland has real estate insiders thinking institutional investors are regaining interest in the region’s office market.

I imagine it was along the lines of this article:

http://www.cleveland.com/business/plaindealer/index.ssf?/base/business/1163496808106270.xml&coll=2

I heard this from the landlord yesterday..

 

Lebron James will be leasing 15,000sq ft in downtown for his businesses operations.

I don't know the name of the building, but its the 5-story building in Playhouse Square on Star Plaza. Currently, an office furniture store is located on the first floor. All the King's men (and women) will be occupying the entire third floor.

So what did that article about the possible sale of the Fifth Third Center in this week Crain's say? Can someone post it? The e-mailed brief I received from Crain's said:

_______________

 

Fifth Third Ctr. pending sale has observers abuzz

 

A Dallas real estate investment company's expected purchase of Fifth Third Center in downtown Cleveland has real estate insiders thinking institutional investors are regaining interest in the region’s office market.

 

Fifth Third Ctr. pending sale has observers abuzz

Dallas firm’s planned purchase offers hope of renewed institutional interest in office market

6:00 am, November 13, 2006

 

Dallas real estate investment company Behringer Harvard is preparing to buy Fifth Third Center in downtown Cleveland in a deal that real estate insiders prize as a signal that institutional investors are regaining interest in the region’s office market.

 

More at:

http://www.crainscleveland.com/article/20061113/SUB/61110030

Cool news!

Group to take risk on E. Ohio building

N.Y. investors say they’re up to challenge of turning around high-vacancy asset

 

By STAN BULLARD

6:00 am, November 20, 2006

 

 

A New York investor group is preparing to buy the 1717 E. Ninth Building in Cleveland in a gamble that a renovation and an improving downtown office market can reverse the 21-story property’s staggering 80% vacancy rate.

 

Cyrus Sakhai, a principal in Sovereign Properties Ltd. of Manhattan, said the investors “like the opportunity” presented by the property, formerly known as the East Ohio Building.

 

More at:

http://www.crainscleveland.com/article/20061120/SUB/61117027

^I could be wrong, but I've always felt that building would do well as a residential conversion. It's close to Gateway, Playhouse Square and CSU. The views are surprisingly good from the upper floors.

 

A photo of the building in question:

^that's funny because some bigwig real estate people in town have thought the same. but, nothing is planned.

^I could be wrong, but I've always felt that building would do well as a residential conversion. It's close to Gateway, Playhouse Square and CSU. The views are surprisingly good from the upper floors.

 

A photo of the building in question:

 

MayDay I was thinking the same thing!  that is a cool building. I wish that someone would build on top of the parking garage!

 

I wonder if they have thought about checking to see if the building can be made for mix use.  Offices on the lower, condo's ontop.

^I would think they'd look at it from all angles. 

 

The retail space is where the Wall Street Deli used to be, correct?

^Yep. There was recently a pizza place at the same location but it tanked. With the large windows and seats/counters right at the windows, it would be a good spot for a Starbucks (or preferably a well-run local spot).

Does this building have access to parking? Why don't they make it residential instead of office? It looks like a nice enough building -- reminds me a little of the condo towers in Lakewood --I think anymore that it'd be more productive to increase actual residents downtown rather than people who come during the day and leave.

 

The only problem I see with residentializing "old" buildings is the lack of parking. I don't think the average person in NE Ohio is ready to go car free. I think having a convenient parking space gives people a little bit of a cushion.

Does this building have access to parking? Why don't they make it residential instead of office? It looks like a nice enough building -- reminds me a little of the condo towers in Lakewood --I think anymore that it'd be more productive to increase actual residents downtown rather than people who come during the day and leave.

 

The only problem I see with residentializing "old" buildings is the lack of parking. I don't think the average person in NE Ohio is ready to go car free. I think having a convenient parking space gives people a little bit of a cushion.

 

adaptive resuse is very popular here, however, I think people in the area are ready to REDUCE a car.  Cleveland has the potential for wonderful rail lines, but we don't have Transit Authority with the creativity or balls to do it!  But that is a completely different thread!

Does this building have access to parking?

 

The answer is in the article. Look for the number "500."

I had a brain fart. I actually knew it had parking. But the rest of my post still stands.

 

I think people would like to *reduce* car usage, but I don't think they are ready to go 100% carfree like NYC. I went to a "young professional" event with people from work last week, and on this big long sheet of paper, they had written "Favorite place to go on a first date" and "Favorite bar" -- stuff like that -- and I was very surprised to see so many places in the suburbs listed. I think in order to steal some of them away and into downtown, they're going to need an expensive security blanket.

"I don't think the average person in NE Ohio is ready to go car free."

 

Are you suggesting that I'm somehow superhuman?

http://www.niemworks.com/else/im/spidey2001/upside_down.jpg

those damn Marvel comics lovers!  :whip:  :whip:

Last time I checked, I'm not the least bit of Asian descent.

^^ Yeah, but it's a funny picture to me, lol

Last time I checked, I'm not the least bit of Asian descent.

 

You're in costume, how can you tell?

 

Is that on the Silver Line?

That whole block on Superior between E. 9th and E. 12th is rather dead at the moment. You've got the diocese on the south side, which is pretty but doesn't add much street life, and this empty building plus two parking garages (with no ground floor retail) on the north side. Someone needs to slap some retail into the ground floor of those garages.

That whole block on Superior between E. 9th and E. 12th is rather dead at the moment. You've got the diocese on the south side, which is pretty but doesn't add much street life, and this empty building plus two parking garages (with no ground floor retail) on the north side. Someone needs to slap some retail into the ground floor of those garages.

 

Preach Blinky...Preach!

Vacancies at pre-recession rates

Grubb & Ellis survey finds levels of empty office, industrial space receding markedly

 

 

By STAN BULLARD

 

6:00 am, November 27, 2006

 

The taste for industrial and office space ran so strong among businesses in Northeast Ohio in 2006 that they pushed vacancies down to levels not seen since the start of the decade, according to Grubb & Ellis Co.’s just-completed forecast of year-end market conditions.

 

Industrial vacancy will slide to 9.6% in the 288 million-square-foot industrial market in Northeast Ohio by year-end from 10.5% a year ago. The 9.6% rate is the lowest since it stood at the same figure in 2000. A recession that began in 2000, plus the terrorist attacks of 9/11 and the manufacturing woes of the Midwest, pushed Northeast Ohio industrial vacancies as high as 12.8% by year-end 2002.

 

Meantime, the vacancy-plagued office market continues its march toward recovery. Grubb & Ellis estimates Northeast Ohio office vacancy will fall from 21.4% last year to 18.5% by year-end — the lowest since it stood at 17% at the end of 2001. The survey covers 37.7 million square feet of multitenant office buildings larger than 40,000 square feet.

 

Downtown office vacancy will be 20.4% by year-end, which is down significantly from 24.2% a year ago and is at its lowest level since hitting 20% in 2000. Grubb & Ellis estimates suburban vacancy will sit at 16% at year-end, down from 18% a year ago and below the 17% vacancy rate seen at year-end 2001.

 

“This is a pretty healthy story,” said Bob Nosal, managing director of the Cleveland office of Grubb & Ellis. “No wonder those guys from the outside are coming in.”

 

 

Mr. Nosal referred to out-of-town buyers who have bought or are preparing to buy industrial and office properties in the region. These outsiders have been enticed by occupancy levels and rents that are improving and properties that are bargains compared with other parts of the nation.

 

Happy to say the S-word

 

The decline in industrial vacancies occurred even though construction of industrial space this year climbed to 1.6 million square feet, twice the 800,000-square-foot total of 2005, Grubb & Ellis reports.

 

Most industrial construction is built to specification for customers who cannot find what they want in the market. Little speculative rental construction is under way because rents haven’t risen enough to cover higher construction costs for developers, said George Stevens, a vice president in Grubb & Ellis’ industrial unit.

 

Terry Coyne, director of Grubb & Ellis’ industrial unit, said he is “really impressed with these numbers.”

 

“I’m also really impressed that the deals are due to manufacturers growing or manufacturers needing warehouse space,” Mr. Coyne said.

 

The reappearance of manufacturers is a marked change from earlier in the decade, when warehouse operators building distribution centers accounted for most of the industrial activity.

 

Mr. Stevens said the industrial market is strong enough that even “ugly buildings,” or older structures with 14-foot-tall ceilings rather than much-sought newer buildings with ceilings up to 30 feet tall, are selling. He noted he’s seeing sellers once more receive multiple bids for properties in some areas, such as the centrally located Interstate 77 corridor.

 

The S-word, or shortage, even is back in the industrial broker’s vocabulary in some parts of town.

 

“Look at the West Side,” said Michael Petrigan, a Grubb & Ellis vice president. “Nothing is available.”

 

'Real growth' downtown

 

In the office market, the activity level among downtown’s skyscrapers surpassed that in the suburbs. Absorption, which measures the change in the volume of occupied space, was 316,954 square feet downtown compared to 279,578 square feet in the suburbs, Grubb & Ellis reports.

 

Office tenants reduced the volume of vacant office space downtown by 11% to 4.3 million square feet this year from 4.8 million square feet last year. That volume of space is similar to filling a building almost the size of the 31-story One Cleveland Center skyscraper. Vacancy among class A, or top-tier, buildings downtown will decline by year-end to 11% from 12% last year.

 

“A lot of years we’ve seen companies move from point A to point B with no impact on the market,” said Jeff Cristal, director of Grubb & Ellis’ office unit. “But this year we’ve seen companies come in, such as Quicken (Financial Services Inc.), that are new to the market. That’s real growth.”

 

The tightening up of the downtown office market means tenants will pay more, or receive fewer concessions, for cutting deals downtown than they would have last year, said Alex Jelepis, a Grubb & Ellis vice president who specializes in the office market.

 

However, the west suburbs broke stride this year with the rest of the suburbs.

 

Office buildings in the west suburbs will see a vacancy spike, to 19.6% by year-end from 17% last year, in contrast to declining vacancies in the rest of the market. The increase is because the office component of Crocker Park opened this year and added space to the market, Mr. Nosal said.

 

 

 

Yay!