Market Snapshot: Cleveland Retail Recovered
- Mar 27, 2015
A recent report by CBRE shows that the Cleveland retail market has stabilized, if not fully recovered from the recession. In 2014, the area has experienced positive net absorption for the second consecutive year, vacancies have continued to drop, falling under 10 percent, lease rates have improved, and shopping center sales have continued to increase.
The overall Cleveland-area vacancy rate started to decrease in 2012 and has continued the same downward trend. CBRE reports that, at the end of 2014, the vacancy rate reached 9 percent, down from 12.4 percent at the end of 2013. Although, as a whole, Northeast Ohio has not yet returned to pre-recession levels, some submarkets have shown signs of improvement over the past few years. These include Portage County, where vacancy dropped to 8.5 percent at the end of last year, from 13.5 percent in 2011, as well as Stark County, with a vacancy rate of 9.6 percent at the end of 2014. Other areas, such as Lake County or Medina County, are still under the effects of the recession, holding vacancy rates of over 12 percent.
Lease rates have improved steadily over the past six years. And, according to CBRE data, neighborhood shopping centers, power centers, and malls are performing well at the moment. The region’s average asking lease rate has reached $12.39 per square foot at the end of 2014.
There has also been an increase in shopping center sales in Northeast Ohio, with grocery-anchor centers in high demand over the past year. Two Cuyahoga Falls properties changed hands last November. Devonshire REIT Inc. bought the 456,044-square-foot Plaza at Chapel Hill together with two other properties, in Tennessee and Indiana, for a total of $88.4 million. And two affiliates of Boca Raton-based Pebb Enterprises, Akron Jupiter L.L.C. and Akron NPR L.L.C., paid $10.5 million for the Shoppes at Chapel Hill.
Retail construction activity has also came back to life in 2014, as a result of the improving employment and the tightening Northeast Ohio residential and office markets. Some important projects have broken ground last year and, although developers are still looking for pre-lease commitments to justify new construction financing, several other projects are being planned in the region.
Chart courtesy of CBRE