Issue: October 2006 Issue
On the Bright Side
Commercial real estate trends are shining a light at the end of the tunnel.
Although no one is comparing the region's upward trends in commercial real estate development to LeBron's vertical leap, there is more reason for hope of an ongoing healthy status than even just a year ago.
Brian Hurtuk, vice president, office specialty, CB Richard Ellis in Cleveland, says his firm has been very encouraged looking back over the past 12 months and looking forward over the next 12 months that Cleveland's central business district is finally achieving net absorption in the market.
"Slowly but surely the vacancy rate is starting to go down," he says. "That's an encouraging sign." Hurtuk credits that shift primarily to the fact that as businesses are relocating from space A to space B, the majority are taking an average of 15 to 25 percent more space than the offices they left. "That's something we need for the economy to keep getting stronger," he declares.
According to Hurtuk, office occupancy on the city's East Side is extremely healthy, especially along the Interstate 271 corridor, where the vacancy rate has recently dropped below 10 percent, and landlords are getting good rates.
"In that marketplace, for the first time in five years, you're actually hearing developers discussing the possibility of new buildings," Hurtuk says. "That doesn't mean they're going to do it, but before, if you even brought it up, you probably got fired."
While the Rockside Road corridor in Independence is still addressing some challenges, Hurtuk adds, there are many good office spaces available. "Rockside or downtown are what we call a tenant's market," he explains. "A tenant has the opportunity to make some good deals, but if they're making good deals, the landlords are still happy because they're filling their spaces."
Major retail development projects, such as City View Center in Garfield Heights and the Steel Yard Commons in Cleveland, continue to flourish throughout the region. "We've got a lot of big development projects coming online, so the retail market retains its steady, active pace," says David Browning, managing director for CB Richard Ellis.
The most significant news pertaining to the industrial market, Browning says, is still the sale of the Duke Realty portfolio, the largest industrial sale in the region in many years. The firm, which decided to leave the Northeast Ohio market to focus on development of properties in Arizona, Colorado and Nevada, sold roughly half of its local portfolio last year, and the sale of the other half was completed this summer.
Of course, the vibrancy of development in the region always comes back to the health of the center. Browning points to two key residential projects downtown that will impact the core for many years: the Zaremba condominiums at East 14th Street and the Wolstein project in the Flats, which was recently slowed by the Ohio Supreme Court ruling that eminent domain cannot be applied solely for economic development.
However, Browning remains optimistic that the project will eventually proceed. "The Wolstein project is an important ingredient of what we need to have happen on the East Bank of the Flats," he says. "For them to acquire the site, they need to pay fair market value for the land, and many of us in the industry hope that the current owners of the properties will accept a reasonable, fair market value for their properties."
More articles for Gaming in Ohio:
Roll the Dice
Taking a Stand
The Stakes Are High
On the Bright Side
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