Retail, Office Face Highest Levels of Duress

After several years of contraction, Cleveland employers will expand payrolls at an above-average pace in 2010. The turnaround will be driven by the region’s large and expanding education and health-services sector, along with renewed growth in the professional and business services, manufacturing and trade industries. Overall, nonfarm payrolls in the metro area will increase by 2.1 % during 2010, more than twice the national rate. Cleveland registered strong job creation through the first half, led by gains in the manufacturing and professional and business services sectors, both segments of the economy that experienced some of the most dramatic contraction between late 2007 and 2009. Overall, Cleveland employers added 18,000 jobs during the first half of2010, offsetting slightly more than 20% of the losses recorded during the previous two years. This compares favorably to the national trend, with US employment gains through the first six months making up just 11 % of the cuts recorded through the downturn.

The resumption of economic growth in the metro area led to rising occupancy rates across three of the four core property sectors during the second quarter. While a single quarter does not constitute a trend, the improvements offer cause for optimism that commercial real estate fundamentals have at least bottomed, if not begun to recover.