Recently, I attended the annual NAIOP Awards of Excellence, the flagship event for northeastern Ohio’s commercial real estate industry. Some of the distinguished winners were David Stover, of Hanna Commercial Real Estate for Industrial Broker of the Year; Rico Pietro, of Cushman & Wakefield, for Office Broker of the Year; and Chris Seelig of Colliers International for Retail Broker of the Year. Other winners of note were Hanna Commercial Real Estate, for Industrial Transaction of the Year; Cushman & Wakefield’s Investment Transaction of the Year; and Colliers International for Office Transaction of the Year. As in previous years, this event was a success, and brought more than 300 of the industry’s professional together to acknowledge the best and brightest in our industry.
And the industry looks good in the state’s largest MSA.
Cleveland, where GRS Group calls home in the state, has a relatively bright office market right now, according to a Colliers report. During the first quarter, vacancy was at 12.9 percent, down five basis points from the prior three months, and the Cleveland East’s submarket rate was a tight 6.5 percent. Part of this has to do with a lack of group-up development, making it more of a landlord’s market. Additionally, Key Center Tower, the state’s tallest building, sold for $267.5 million, to Millennia Companies, during the quarter.
On the multifamily end, as it is in many urban areas in the country, more people are wanting to live near downtown for public transportation access and proximity for shopping and nightlife. And about 19,000 new workers are expected to enter downtown Cleveland this year, according to a Marcus & Millichap report. Partially because of this, 1,600 apartment units are expected to come online in the city this year, up from 700 in 2016. This addition to the market will cause vacancy to slightly increase, as Marcus forecasts, but at the same time, rental rates are expect to rise 3.8 percent.
And look for more investment. Since Cleveland is not considered a gateway metro area, but has a stable economy, investors are seeing opportunities for higher returns, up to 300 basis points more than the primary U.S. markets, Marcus says. If forecasts like these hold true, there will be more to celebrate at next year’s NAIOP event.