Downtown areas across the country, like Cleveland’s, are thriving. There is a wave of Millennials and Baby Boomers moving to city centers because of close proximity to work, entertainment, public transportation and shopping.
Cleveland is no different, and the downtown office market is getting stronger as a result, according to a recent JLL report. Since 2010, vacancy has steadily decreased in the area. At 4.2 million square feet of empty space that year, it has fallen to 3.1 million square feet as of last year’s fourth quarter. By 2020, it is forecast to hit 2.2 million square feet.
JLL points out that part of the reason for this is due to the conversion of about 15 poorly performing office assets into multifamily buildings. This shows that there is a demand for more downtown living.
This, in part, has led to a strong retail market in Cleveland, according to Colliers. Though the fourth quarter saw a small downtick in occupancy, Cleveland has seen absorption of just under 1.5 million square feet over the last two years. What is helping the market, says Colliers, is an increase in healthcare, professional services and tech employment.
Downtown Cleveland retail is reaping much of the benefit of these developments.
The Downtown Cleveland Alliance last year said that the 14,000 residents in the city center area have $300 million in spending power. Heinen’s Fine Food and Geigers, Ohio retailers, have both opened downtown, and more than 20 new restaurants debuted in the locale since 2015.
One of the possible game changers that could continue to transform downtown Cleveland is nuCLEus, a mixed-use development that, at more than 50 stories, would have 150,000 square feet of retail and restaurants, 200,000 square feet of offices and 500 apartment units.
There is also a lot happening in the Warehouse District of the city. Developers Citymark and Weston are building a massive multi-use project that could house 1,200 residential spaces. In total, more than three million square feet of development is planned, which will include multifamily, retail, restaurants and office space.
The migration into downtowns across the country is a commercial real estate reality. The job growth and development in downtown Cleveland, mixed with a desire by tenants to live and work in a vibrant downtown, is a great example of this trend.