Justice Center would have been my first guess. The others probably aren't big enough to anchor a new office building.

 

As for private businesses, who are the major players? We think S-W is looking. Who else?

Lakefront co-developers Cumberland and Trammell Crow say their brokers are talking with two companies — one local, the other from out of town — that are interested in taking at least 100,000 square feet of office space. That's not a lot of office space, however.

 

BTW:  Justice center offices,  courtrooms and supportive uses wouldn't be merely an anchor for an office building. It would be the entire building and a rather substantial one, too. So I wonder what Pietro has in mind?

The justice center screens people entering with metal detectors. If that's their MO, it could be difficult to have the courts as a major tenant mixed with regular office tenants for whom their visitors would be hassled by the screening.

Lakefront co-developers Cumberland and Trammell Crow say their brokers are talking with two companies — one local, the other from out of town — that are interested in taking at least 100,000 square feet of office space. That's not a lot of office space, however.

 

I wouldn't be surprised if the local company was Arconic (the manufacturing half of old Alcoa).  They passed on putting their main hqs in Cleveland, but they do have substantial divisional management and operations in town. Their current office facilities weren't meant to be much more than plant managers' offices. 

The justice center screens people entering with metal detectors. If that's their MO, it could be difficult to have the courts as a major tenant mixed with regular office tenants for whom their visitors would be hassled by the screening.

 

This could be handled with separate entrances or having a public lobby on 1st floor with JC functions on floor 2-x.  All security functions would be on floor 2 with separate elevators.

Still, if a new building is built with new Justice Center uses, there's enough of those uses to justify a very large building with nothing but Justice Center uses.

 

If a new office building is built and would have government offices as an anchor tenant, I'm thinking something along the lines of the Ohio Department on Aging, Ohio Department of Health, Ohio Department of Job and Family Services, US Occupational Health and Safety Administration, etc. Something that can occupy 50,000 to 200,000 square feet in a 500,000 sf office building. A new Justice Center is likely going to be more than 1 million sf, possibly including a new jail that would push the total to near 2 million sf.

This is part of the reason why obsolete downtown office buildings are being converted into residential. Not only does it preserve and modernize aging buildings, it also boosts the downtown office market.....

 

June 28, 2018 3:08 pm      UPDATED 17 HOURS AGO

New Jersey-based buyer nabs AECOM Centre in downtown Cleveland

By STAN BULLARD

 

Cleveland attracted his attention three years ago because of its similarity to Pittsburgh, where the company it owns 4 million square feet of office space it has accumulated over the last decade.

 

"We saw Pittsburgh have a resurgence as companies moved downtown from the suburbs as the downtown multifamily market grew and they wanted to attract young workers who live downtown," Ades said. "We saw a similar thing starting to go on in Cleveland because the multifamily market is expanding and apartment occupancy is staying high. As multifamily grows, the office market gets stronger."

 

MORE:

http://www.crainscleveland.com/article/20180628/news/166641/new-jersey-based-buyer-nabs-aecom-centre-downtown-cleveland

This is part of the reason why obsolete downtown office buildings are being converted into residential. Not only does it preserve and modernize aging buildings, it also boosts the downtown office market.....

 

June 28, 2018 3:08 pm      UPDATED 17 HOURS AGO

New Jersey-based buyer nabs AECOM Centre in downtown Cleveland

By STAN BULLARD

 

Cleveland attracted his attention three years ago because of its similarity to Pittsburgh, where the company it owns 4 million square feet of office space it has accumulated over the last decade.

 

"We saw Pittsburgh have a resurgence as companies moved downtown from the suburbs as the downtown multifamily market grew and they wanted to attract young workers who live downtown," Ades said. "We saw a similar thing starting to go on in Cleveland because the multifamily market is expanding and apartment occupancy is staying high. As multifamily grows, the office market gets stronger."

 

MORE:

http://www.crainscleveland.com/article/20180628/news/166641/new-jersey-based-buyer-nabs-aecom-centre-downtown-cleveland

 

It looks like this building has about a 58% occupancy.  Last renovated in 1989.

 

Let's hope they can fill this place with lots of new businesses and employees.

The Ellipse  (aka 45Erieview)

 

https://theellipseat45.com

200 Public Square, formerly known as the BP Tower, is going up for sale. Reportedly Scott Wolstein and an undisclosed partner have put up a bid.

 

200 Public Square is on the market

By STAN BULLARD

 

A renovated Public Square is part of the new context for the 45-story former BP Tower. It's now named 200 Public Square and may change hands.

 

Norfolk, Va.-based Harbor Group International has marketed the 45-floor 200 Public Square and lined up at least one prospective buyer, a joint venture between Scott Wolstein and a big-league investor he declined to identify.

 

Harbor Group bought the 1.3 million-square-foot office building for $141 million in June 2005. It then had substantial vacancy from the oil company's exit from its namesake tower and Cleveland for Los Angeles after a merger. Its perks as a corporate headquarters made it a step above what a real estate developer would have added.

 

Wolstein called the potential purchase of the skyscraper a "really interesting investment" in a phone interview on Wednesday, July 11. He declined to identify an investor he's allied with on the deal.

 

"The Class A office in Cleveland is very tight," Wolstein said. "It's a beautiful trophy building. It's iconic." However, he added, "I don't know what will happen" as far as his group's bid goes. Wolstein was an unsuccessful bidder on Key Tower, the city's tallest building, before its last sale in 2016.

...

200 Public Square, formerly known as the BP Tower, is going up for sale. Reportedly Scott Wolstein and an undisclosed partner have put up a bid.

 

The beauty of having local ownership: Wolstein might feel a competitive urge to put something on top of 200 PS's garage. 

"The Class A office in Cleveland is very tight," Wolstein said.

 

The 2nd Quarter 2018 office market reports are due out shortly. It will be interesting to see what the CBD numbers are. While it's possible that the next office CBD building will be on the lakefront, a mere 100,000 sf may only buy a little relief from the tight market. Perhaps it will bridge the gap from now until nuCLEus is built or whenever the long-desired Jacobs lot tower is built. Either will require an anchor tenant. NuCLEus has one. Jacobs lot doesn't....right?

 

The beauty of having local ownership: Wolstein might feel a competitive urge to put something on top of 200 PS's garage. 

 

Is it built for that?

Here's the first 2Q 2018 office report to be released. No big changes in absorption except some property sales in the CBD....

 

CLEVELAND OFFICE MARKET

STABLE AT MIDPOINT OF YEAR

 

Conditions in the Greater Cleveland office market held steady during

the second quarter of 2018, despite 50,490 square feet of negative net

absorption. Total absorption for the first half of the year remained in

positive territory with 7,887 square feet. The East was the only

submarket to post positive net absorption in the second quarter,

netting 16,198 square feet in rebounding from the largest tally of

negative absorption of any submarket in the first quarter.

 

The overall negative absorption increased the market’s vacancy rate by

50 basis points from the prior quarter to 16.6% for all office properties.

Dating back to the second quarter of 2013, when the vacancy rate was

19.6%, the current 16.6% vacancy rate marked a full 3.0% decrease in

five years. The average asking rental rate climbed back up slightly

across the majority of the Greater Cleveland office market, finishing the

second quarter at $17.70/SF for all classes.

 

CBD ACTIVITY GARNERS CONSISTENT HEADLINES

The Central Business District’s asking rental rate was down $0.01/SF

to $18.90/SF during the second quarter, and its vacancy rate increased

by two basis points to 19.4%, even though its year-to-date absorption

was a positive 220,387 square feet, eclipsing its 193,445 square feet of

positive year-to-date absorption one year ago. The CBD saw its usual

share of robust activity this past quarter through building transfers,

pending sales, key announcements and a handful of companies

occupying large spaces.

 

The largest sale of the quarter was the 1.3 million-square-foot 925

Euclid Avenue building (formerly known as the Huntington Building),

which transferred for $40.0 million, or $29/SF, to Millennia Companies.

Millennia has become a major player in the CBD over the last couple of

years, having previously purchased Cleveland’s tallest building, Key

Tower, located at 127 Public Square, in early 2017, as well as the

Statler Arms apartment complex in January. The company has also

recently been involved in redeveloping other CBD multi-family,

restaurant and office assets. Although plans for 925 Euclid Avenue are

still being formulated, it is believed that Millennia will proceed with a

mixed-use redevelopment that includes apartments, offices, a hotel,

dining establishments and additional retail.

 

The most active CBD owner/developer in the second quarter was the

K&D Group, which made headlines with at least four different projects.

 

Perhaps the most significant news regarding K&D came in June, when

the company was awarded $50.0 million in state historic tax credits to

help partially fund the $100 million-plus redevelopment of the city’s

iconic Terminal Tower, located at 50 Public Square. The project

includes the transformation of 12 of the building’s lower floors into

300-plus apartments as well as updating existing office spaces and the

addition of a restaurant and rooftop deck. In April, K&D sold the 54,000-

square-foot Stonebridge Center office building, located at 2019 Center

Street, for $1.7 million, or $31/SF, to The Hive My Place, Ltd.

 

K&D made headlines again the following month by announcing its

intent to initiate improvements to the 435,000-square-foot Post Office

Plaza office building, located at 1500 West 3rd Street, a building the

company purchased in the third quarter of 2017. Shortly after this

came news of K&D signing a letter of intent to purchase 55 Public

Square, a 22-story, 427,000-square-foot property the company plans to

partially convert into apartments. The proposed purchase price and

closing date are still to be determined.

 

A couple of key CBD leases also began this past quarter, including

Forest City’s headquarters occupation of 147,795 square feet at Key

Tower and Electronic Merchant Systems’ relocation from the South

submarket to 48,433 square feet at 250 West Huron Road.

 

GBX Group (formerly global X) formally settled into its new

headquarters at 2101 Superior Avenue at the end of the first quarter.

This kicked off the transformation of the Superior Arts District, which

was formally designated as an arts improvement district by the city of

Cleveland earlier in the year. One component of that plan is to use

federal funding to turn Superior’s center traffic lane into a buffered

bicycle lane that stretches from Public Square to East 55th Street. GBX

Group is the largest stakeholder along this stretch of town, having had

a hand in redeveloping several buildings, and it is the driving force

behind the anticipated remaking of several more of its properties in the

district. The company focuses on acquiring historic real estate in urban

markets that have significant tax and other incentives available to

them. Adding to the newfound excitement in the district was the

announcement that the Cleveland Police Department had selected the

250,000-square-foot former Plain Dealer building at 1801 Superior

Avenue as its new headquarters. The nearly $60 million deal includes

the purchase and renovation of the building by second-quarter 2019.

Cleveland.com/Advance Ohio, currently the largest tenant in the

building, has tentative plans to stay in the CBD by moving to the

Western Reserve Building, located at 1468 West 9th Street.

 

Another CBD development was the announcement of the planned

purchase of the 575,000-square-foot AECOM Centre, located at 1300

East 9th Street, by New Jersey investor Rugby Realty. This transfer was

expected to close at the end of the second quarter or beginning of the

third quarter. Rugby intends to aggressively market the building’s

existing vacancy as well as make several common area improvements.

 

Technology company MCPc occupied 20,000 square feet at the brandnew

61,575-square-foot Link59, which Hemingway Development

delivered in the second quarter at 5900 Euclid Avenue. Growth

Opportunity Partners also moved into 5,600 square feet at MidTown’s

newest office building.

 

Despite the continued optimism and vitality of the CBD office market,

planned and ongoing conversions to multi-housing will continue to shrink

inventory over the next few years.

 

VAN AKEN DISTRICT OFFICE DELIVERS IN EAST

 

Suburban Submarkets Compete With But Still Fall Short of CBD

The suburban office submarkets saw an overall average asking rental

rate increase of $0.11/SF, which reached $16.55/SF despite an 80-basispoint

increase in overall suburban vacancy to 13.8%. The East

submarket’s overall asking rent was once again the highest of the

suburban submarkets, having increased $0.35/SF from first-quarter 2018

to $18.84/SF. The South’s overall asking rent was down $0.15/SF to

$15.94/SF from the prior quarter, while the Southwest’s rental rate

decreased $0.46/SF to $15.14/SF, and the West’s rent increased by

$0.40/SF, the most this past quarter, to $14.81/SF.

 

Although the East’s vacancy rate increased slightly to 13.3%, it was still

the second-tightest submarket in the area and was home to significant

activity. The highly anticipated new, 66,000-square-foot Class A multitenant

office building at the Van Aken District’s mixed-use development,

located at 20159 Van Aken Boulevard in Shaker Heights, delivered in the

second quarter. Despite a scheduled third-quarter formal grand opening,

law firm McGlinchey Stafford occupied its 18,000-square-foot lease,

while ABA Insurance moved into 17,500 square feet, and Paragon

Advisors occupied 6,320 square feet. After an increase of $0.11/SF to

$23.31/SF, the East’s Class A asking rent remained the highest in the

entire market.

 

The West submarket netted the most negative absorption of the quarter

at 31,096 square feet, prompting a 90-basis-point increase in vacancy to

15.9%. Nonetheless, as noted earlier, the West’s overall asking rental rate

increased, led by a $0.14/SF increase in the average asking Class A

rental rate to $16.98/SF.

 

The South submarket, which netted the second-largest amount of

negative absorption at 25,227 square feet, remained the tightest with an

11.3% vacancy rate. This marked a 40-basis-point increase in vacancy

from the previous quarter. The South continues to attract businesses, as

evidenced by insurer Medical Mutual leasing 324,539 square feet at the

former American Greetings headquarters at 1 American Road/10601

Memphis Avenue. The company will consolidate its suburban operations

at this space by early 2020. Already-established tenant Inogen also

announced an approximately 50,000-square-foot expansion at this

property. Additionally, Great Lakes NeuroTechnologies announced a

planned move from Valley View to 6100 Rockside Woods in

Independence, having leased 7,500 square feet there.

 

ECONOMIC CONDITIONS

 

The Greater Cleveland economy continued to add more jobs

throughout the first half of 2018, as total payroll employment grew in

May by 1.3% year-over-year. Overall payroll employment for the United

States also grew in May, by 1.6% year-over-year.

 

Most industry sectors saw growth from May 2017 to May 2018,

including: mining, logging and construction (4.8% growth);

manufacturing (4.1% growth); trade/transportation/utilities (2.8%

growth); financial activities (0.5% growth); professional and business

services (1.0% growth); education and health services (0.4% growth);

and government (0.1% growth). Total nonfarm employment also saw

an overall increase year-over-year by 1.3%. The information sector

remained flat.

 

Conversely, the “other services” industry contracted the most, by 1.0%.

The only other industry to report a negative change over the past year

was the leisure and hospitality industry (negative 0.7%).

 

MORE DATA/CHARTS AT:

http://www.ngkf.com/Uploads/FileManager/2Q18-Cleveland-Office-Market.pdf

The beauty of having local ownership: Wolstein might feel a competitive urge to put something on top of 200 PS's garage. 

 

Is it built for that?

 

Not that I know of; but with it's relatively low-rise, something could probably be managed

So in our speculations of who could be the anchor tenant for a new office tower, I ran into someone last night who suggested it could be AmTrust Financial. This insurance firm technically has its headquarters in New York City and has an office in Alpharetta, GA but most of its operations are in Cleveland now. That includes its mergers and acquisitions department which my friend says occupies an entire floor in its building at 800 Superior. They are growing like crazy through M&A as well as organically. In fact, she says that building is almost entirely occupied by AmTrust, which is amazing considering the company was started only 20 years ago. Its Cleveland office was located in Seven Hills until 2011 when it relocated its 250 jobs downtown. Now they have well over 1,000 jobs there. This is despite them laying off 100 IT people in January who were working duplicate jobs from other companies AmTrust acquired. Soon they will outgrow their 450,000 square foot building where they reportedly occupy about 400,000 square feet. McDonald Partners Financial Advisors has already moved out of 800 Superior but UBS remains a tenant. I don't know who else is in there. But at their rate of growth, AmTrust will soon spill over into other buildings or need its own building someday.

My wife was doing an audit at a company in 200 Public Square, and apparently this company had employees whose workspace was in conference rooms, or just in the middle of the floor, and not even a cubicle.  The need for space is rising, to be sure!

So in our speculations of who could be the anchor tenant for a new office tower, I ran into someone last night who suggested it could be AmTrust Financial. This insurance firm technically has its headquarters in New York City and has an office in Alpharetta, GA but most of its operations are in Cleveland now. That includes its mergers and acquisitions department which my friend says occupies an entire floor in its building at 800 Superior. They are growing like crazy through M&A as well as organically. In fact, she says that building is almost entirely occupied by AmTrust, which is amazing considering the company was started only 20 years ago. Its Cleveland office was located in Seven Hills until 2011 when it relocated its 250 jobs downtown. Now they have well over 1,000 jobs there. This is despite them laying off 100 IT people in January who were working duplicate jobs from other companies AmTrust acquired. Soon they will outgrow their 450,000 square foot building where they reportedly occupy about 400,000 square feet. McDonald Partners Financial Advisors has already moved out of 800 Superior but UBS remains a tenant. I don't know who else is in there. But at their rate of growth, AmTrust will soon spill over into other buildings or need its own building someday.

 

Not entirely "office" related, but AmTrust promotes from within too. Good friend of mine has worked there since he graduated college and has been promoted 4x in 5 years. Could be great for Cleveland if they continue organic growth.

National General, based in Winston Salem NC is the other major tenant in that building (multiple floors). They have close ties with Amtrust and are also growing rapidly through acquisitions as well. I think you may be on to something. Between the two it seems they will need more space soon. 

National General, based in Winston Salem NC is the other major tenant in that building (multiple floors). They have close ties with Amtrust and are also growing rapidly through acquisitions as well. I think you may be on to something. Between the two it seems they will need more space soon. 

 

I knew I was forgetting someone else! I saw the tenant list but didn't know anything that was happening with National General. That's good to know they are growing and have close ties to AmTrust.

After some dicey post-2008 years, AmTrust is back on its feet and in the process of being taken private by two New York families that already control it.  They are in the process of settling a years-long battle with the SEC over practices and accounting. With the owners in New York, the very top management will probably remain there; but their recent expansion of functions in Cleveland says the rest will be here.  The owners aren't famous for monumental buildings, so their move might just be into some place with more space at a nice price.  Erieview Tower, perhaps? 

I don't think AmTrust can move to any other existing building downtown unless it's something old and big that's awaiting a residential conversion like 925 Euclid. No Class A building downtown has anything close to 400,000 to 500,000 square feet available. At the rate AmTrust (and National General) are growing, there simply isn't any single building that can accommodate them. Their needs are far larger (and growing) than the Cleveland Police Department and it couldn't find anything in an existing building in the heart of the CBD either.

I don't think AmTrust can move to any other existing building downtown unless it's something old and big that's awaiting a residential conversion like 925 Euclid. No Class A building downtown has anything close to 400,000 to 500,000 square feet available. At the rate AmTrust (and National General) are growing, there simply isn't any single building that can accommodate them. Their needs are far larger (and growing) than the Cleveland Police Department and it couldn't find anything in an existing building in the heart of the CBD either.

 

Bought a pal lunch today at Walnut Wednesday to probe this issue further.

 

He doesn't think there's anyway they're moving. He mentioned to me that Ohio Savings Bank lost a number of jobs and a few floors on that building may be a 10+ year patch.

Bummer. Thanks for inquiring. That's probably the only company that could justify a new tower downtown for the foreseeable future. Oh well, I guess those parking craters will endure for a few more decades.

Bummer. Thanks for inquiring. That's probably the only company that could justify a new tower downtown for the foreseeable future. Oh well, I guess those parking craters will endure for a few more decades.

 

Yeah, I always try to be optimistic about it as well. But his explanation made sense to me - I still hope he's wrong, though.

National General, based in Winston Salem NC is the other major tenant in that building (multiple floors). They have close ties with Amtrust and are also growing rapidly through acquisitions as well. I think you may be on to something. Between the two it seems they will need more space soon. 

 

"National General"  Now that's a solid generic, non-descript name of a company!

 

Wait. Could we possibly be getting the old AmTrust Bank (Ohio Savings) 1801 East 9th Street mixed up with AmTrust Financial, across the street at 800 Superior?  Two totally different companies and buildings.

National General, based in Winston Salem NC is the other major tenant in that building (multiple floors). They have close ties with Amtrust and are also growing rapidly through acquisitions as well. I think you may be on to something. Between the two it seems they will need more space soon. 

 

"National General"  Now that's a solid generic, non-descript name of a company!

 

FKA GMAC Insurance

Wait. Could we possibly be getting the old AmTrust Bank (Ohio Savings) 1801 East 9th Street mixed up with AmTrust Financial, across the street at 800 Superior?  Two totally different companies and buildings.

 

I think he was saying that there's space available in the old Ohio Savings building. I'm sure his source knows that that AmTrust was a 120-year-old bank that was shut down in 2009 whereas this AmTrust is a commercial insurance company founded only 20 years ago.

Wait. Could we possibly be getting the old AmTrust Bank (Ohio Savings) 1801 East 9th Street mixed up with AmTrust Financial, across the street at 800 Superior?  Two totally different companies and buildings.

 

I think he was saying that there's space available in the old Ohio Savings building. I'm sure his source knows that that AmTrust was a 120-year-old bank that was shut down in 2009 whereas this AmTrust is a commercial insurance company founded only 20 years ago.

 

I see it now, thanks for pointing it out. Read too fast the first time.  In the end that would still be a good outcome. Continued job growth downtown and refilling some recently vacated office floors.

 

Pure speculation on my part but my guess is both the large law firms will be out that building soon. A lot of large firms recently upgraded their space and I would expect Weston Hurd/Walter Haverfield to continue that trend.

 

Redirected from the Erieview thread since this is reckless speculation/wishful thinking...

 

I assume the Jacobs Group is aggressively marketing its Public Square lot. If so, sign Weston Hurd, TransDigm, and Walter Haverfield as the anchor tenants for a new tower on that lot.

 

Oh, and I hope Cuyahoga County will soon issue an RFP for building a new Justice Center with a lease/purchase option. If they do, I would think Weston would have the leg up with its Superblock on Superior. A parking deck wrapped with housing in the north half, facing St. Clair would be nice.

 

....End reckless speculation/wishful thinking

^ I guess a lot of this depends upon the fate of Nucleus. If Benesch leaves 200 PS then there is a huge gap to filled, I think they have 3 full floors.

 

^ I guess a lot of this depends upon the fate of Nucleus. If Benesch leaves 200 PS then there is a huge gap to filled, I think they have 3 full floors.

 

 

By that time other companies will hopefully have grown enough to fill most of the CBD voids -- which aren't many, at least in Class A.

 

I'm the guy that desperately googles "Cleveland office" at least once a week to see if there's any progress in office employment, inventory development, etc. So if I sound desperate/hopeless, I am. ;)

Pure speculation on my part but my guess is both the large law firms will be out that building soon. A lot of large firms recently upgraded their space and I would expect Weston Hurd/Walter Haverfield to continue that trend.

 

Redirected from the Erieview thread since this is reckless speculation/wishful thinking...

 

I assume the Jacobs Group is aggressively marketing its Public Square lot. If so, sign Weston Hurd, TransDigm, and Walter Haverfield as the anchor tenants for a new tower on that lot.

 

Oh, and I hope Cuyahoga County will soon issue an RFP for building a new Justice Center with a lease/purchase option. If they do, I would think Weston would have the leg up with its Superblock on Superior. A parking deck wrapped with housing in the north half, facing St. Clair would be nice.

 

....End reckless speculation/wishful thinking

 

Unfortunately, I recall GOTTAPLAN stating in another thread recently that he was speaking to somebody with the city and the Weston superblock is all but dead.  I hope that is not the case but it seems to ring true because we have not heard a peep about it for almost a year, either positive or negative.  Those parking lots are like cockroaches.  They are going to out live us all.

I don't doubt it. Sounds like Weston is more interested in Ohio City right now (EDIT: and renovating the rest of the Marion Building on West 3rd when the last county offices move from it to the CPD HQ after the CPD moves to the old Plain Dealer HQ...whew!).

 

Regarding the future of the Superblock, I commented on it at the Justice Center thread:

https://www.urbanohio.com/forum/index.php/topic,30352.msg929727.html#msg929727

I guess it's now official/done?

 

The NRP Group Relocates Headquarters to Downtown Cleveland

PRESS RELEASE PR Newswire

Aug. 7, 2018, 09:00 AM

 

CLEVELAND, Aug. 7, 2018 /PRNewswire/ -- The NRP Group, a vertically integrated, best-in-class developer, builder, and manager of multifamily housing, has relocated its headquarters to the Halle Building at 1228 Euclid Avenue in Downtown Cleveland from its current offices in Garfield Heights, Ohio.

 

MORE:

https://markets.businessinsider.com/news/stocks/the-nrp-group-relocates-headquarters-to-downtown-cleveland-1027438532

 

Interesting report with very detailed breakdown of Class A and Class B data in different submarkets around the metro area. It also suggests that if any new inventory is built downtown, the anchor tenant(s) could come from the suburbs....

 

Urban migration, flight to quality are trends to watch

 

Top trends

• Downtown Cleveland has undergone a transformation and the market

has seen a procession of office tenants relocate to the urban core.

• Flight to quality has been a dominant trend this cycle, as businesses

invest in the workplace as a means to attract and retain top talent.

• Looking forward we see vacancy steadily declining with rent growth

averaging 2.0 percent annually. New construction will be limited.

 

Downtown Cleveland has undergone a transformation over the last five years,

one that has been well documented in the national media. Dozens of new

restaurants have opened, several new hotels have been built, and downtown

has welcomed close to 5,000 new residents. Companies have taken notice,

and the market has seen a steady procession of office tenants relocate to the

central business district. As a result, office vacancy has declined and market

conditions downtown have shifted from tenant-favorable to a neutral state.

This trend has been intensified by the conversion of 3.6 million square feet of

underperforming office buildings to residential use. While conditions have

tightened, opportunities for office users still exist across the quality spectrum.

Despite the recent run-up downtown, the suburbs remain the principal

corporate address, home to 81.0 percent of the region’s headquarters. One of

the most prevailing trends of this cycle has been the flight to quality, as

businesses invest in the workplace as a means to attract and retain top talent.

As evidence, six corporate headquarters have been constructed in the

suburbs since 2012 totaling 1.6 million square feet. Speculative developers

have also been accommodating the flight to quality trend, delivering 300,000

square feet of new multi-tenanted office space over the last year.

Outlook

Office vacancy in Cleveland currently stands at 19.3 percent and will likely end

2018 unchanged due to the speculative office developments completed

earlier this year. Taking a longer-term view, we see vacancy declining at a

modest rate of 1.0 percent annually for the next few years. Rents are projected

to appreciate annually in the 2.0 percent range as the market tightens and

owners upgrade assets. The construction forecast is limited. However, several

proposed projects could kick off with the signing of an anchor tenant. All in

all, the Cleveland office market will remain favorable for corporate users with

affordable rents and ample opportunities across the metro.

 

MORE:

http://www.jll.com/united-states/en-us/Research/US-Cleveland-Office-Outlook-Q2-2018-JLL.pdf

Bargain buying! Listen to the always insightful Alec Pacella (of NAI Daus) as he does a YouTube item on the Tower at Erieview sale and his view on the big challenges it faces from competition. 

Sale of 200 Public Square looms

http://www.crainscleveland.com/article/20180812/news/171541/sale-200-public-square-looms

 

NEO punches above its weight in HQ jobs

http://www.crainscleveland.com/article/20180812/news/171521/neo-punches-above-its-weight-hq-jobs

K&D pulls out of 55 Public Square, says deal wasn't workable.

 

http://realestate.cleveland.com/realestate-news/2018/08/55_public_square_sale_falls_th.html#comments

Yep. Posted in the 55 Public Square thread. ;)

Cleveland Office Market Is on Very Solid Ground

Posted on August 23, 2018 by Kristin Hiller in Market Reports, Midwest, Midwest Market Reports, Office, Ohio

 

U.S. economic growth in 2018 is expected to be the strongest in three years. The steady momentum in the Cleveland office market fully supports this forecast. Overall vacancy rates in the Cleveland metro area align with national trends in the range of 12 to 14 percent, rental rates are increasing modestly with averages in the low $20s per square foot and the market for Class A office space continues to be very tight.

 

Tenant improvement allowances offered by landlords are rising faster than rents in a competitive leasing environment, ranging from $20 to $60 per square foot. Larger, multi-floor blocks of quality space are becoming especially difficult to come by in both the central business district (CBD) as well as the suburbs, making new office construction projects more viable than in the past.

 

MORE:

http://rebusinessonline.com/cleveland-office-market-is-on-very-solid-ground/

Just spoke to someone who said Sherwin Williams office staff is growing again and their legal department has wrapped up the Valspar acquisition work. No news about needing more office space however. Hope springs eternal.

 

KJP, how far along were they with a new tower?  Was there an actual design?

From what I understand, yes. But I never saw it. I also don't know how detailed it was. But I recall someone on this board saying that we Urbanohioans would probably like the design.

^^ New tower?

^^ New tower?

 

Others have posted here that SW took a new tower off the table while it was sorting out the Valspar acquisition. My assumption was that SW (which was seriously looking at a new tower before it got larger from adding Valspar) would reconsider the tower after SW emerged from the acquisition process. If that's a reasonable assumption, then how soon might SW reconsider it?

I've heard good things about the potential of this moving forward as well. Not sure when, but it's in the very early stages.

Just spoke to someone who said Sherwin Williams office staff is growing again and their legal department has wrapped up the Valspar acquisition work. No news about needing more office space however. Hope springs eternal.

 

 

I've heard that SW is looking to expand their office space presence in the Skylight Tower.

How much space is available in Skylight Tower? Or are other tenants being moved out to make space for SW?

Just spoke to someone who said Sherwin Williams office staff is growing again and their legal department has wrapped up the Valspar acquisition work. No news about needing more office space however. Hope springs eternal.

 

 

I've heard that SW is looking to expand their office space presence in the Skylight Tower.

 

Hmmm that doesn't sound right....They've been reducing the number of employees (by a lot) at Skylight and moving them to Midland or Hinckley Pkwy.