Vacancy has declined steadily in the Cleveland metro area for years, and is near historic lows.
CLEVELAND—This region is not one of the truly national distribution hubs, such as Indianapolis or Chicago, that has seen an explosion of demand due to e-commerce. But the metro area just had one of its best quarters ever, and amidst a construction boom, vacancy has steadily declined and now stands near a historic low.
“We're primarily a manufacturing center,” Terry Coyne, a Cleveland-based vice chairman of NKF, tells GlobeSt.com. “We got hurt during the recession, much like Detroit.”
And like Detroit and other Midwest cities, the overall recovery has strengthened the foundations of the industrial sector. “There is not as much spec building as there is in other markets, but as employment goes up, vacancy goes down,” and local unemployment is at just 3.9%.
The third quarter saw the Cleveland metro absorb just over 1.1 million square feet of space, the most in about five years, according to a new report from NKF. Overall industrial vacancy stayed flat at 5.9%, and has been below 6.0% for four consecutive quarters. In the past year, that rate has declined 50 bps and it dropped 270 bps in the past five.
Although Cleveland is an important manufacturing center, Amazon, which just opened this 855K SF building in the Northeast, also plays a role in the market's expansion.
And developers have gotten quite active, delivering a record-setting 1.4 million square feet of new space in the third quarter alone. It's been 14 years since developers here completed more than one million square feet in a quarter.
However, distribution still plays an important role. A large portion of the new construction came from the completion of Amazon's new 855,000-square-foot fulfillment center at 20801 Miles Rd. in the Northeast submarket.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
