Market Snapshot: Cleveland Industrial Market Heating Up
The Cleveland Industrial market ended 2014 on a high note.
By Adrian Maties, Associate Editor
The Cleveland industrial market ended 2014 on a high note, according to recent data collected by CBRE. The region saw over 260,000 square feet taken off the market, registering positive absorption for the 19th consecutive quarter.
Overall, the Cleveland industrial market registered 2,206,094 square feet of positive absorption last year. As a result of all this positive activity, the region’s industrial availability has fallen under 7 percent for the first time since 2009. Vacancy also dropped slightly in Q4 2014, reaching 6 percent for the first time since 2007. One important transaction occurred in Strongsville, where AkzoNobel opened a new research-and-development center last fall. The Dutch multinational signed a lease for 77,500 square feet of space in the Class-A industrial facility at 8220 Mohawk Drive.
According to CBRE, the East, South, Southeast, and West submarkets have all experienced decreases in both availability and vacancy, with the largest drops registered in the East. The submarket wrapped up 2014 with an industrial vacancy rate of 10.9 percent, and an availability rate of 11.3 percent.
The area’s 6.8 percent availability is also encouraging speculative development. Several developers have already announced plans to start work on new projects this year. Ray Fogg Corporate Properties LLC plans to expand in Euclid, with the addition of a second building in the Bluestone Business Park, and ORG Holdings L.L.C. intends to build a 200,000-square-foot warehouse in Solon.
CBRE also reported that average asking rents remained steady during the last quarter of 2014, ending the year at $4.55 per square foot. This places the Cleveland area further behind the national average of $6.01 per square foot. Rents showed improvement in the Downtown, East, Northeast, South, and Southeast submarkets, while in the Geauga West, Lake County West, Southwest, and West they fell or stayed the same. The East submarket was once more the star performer. It recorded the highest lease rates, as well as the highest increase in Q4, moving from $7.05 to $7.23 per square foot.
Sales activity also intensified in the last quarter of 2014. According to CBRE, transaction activity totaled 2,731,057 square feet in Q4, making it the strongest quarter of the year.
Chart courtesy of CBRE