Cleveland Market Overview
By Andrew Coleman & J.R. Fairman, Jones Lang LaSalle
Economy
Tour velocity slowed as tenants prepared for 2011. Seasonally unadjusted employment rose over 19,500 in November when compared the previous year. Manufacturing, professional and business services, education and health services, and leisure and hospitality have driven the growth, as all sectors have experienced six or more months of consecutive year-over-year increases. Conversely, the information, financial activities, and government sectors have continued to struggle, experiencing six or more months of consecutive year-over-year decline. Cleveland should sustain slow employment growth through the first quarter of 2011.
Market Conditions
Despite the addition of approximately 12,900 employees to the professional and business services sector in 2010 (through November), the Cleveland office leasing market continued to decline. Renewals and expansions continued to drive activity through the fourth quarter as tenants in the market have leveraged deflated rental rates and attractive concession packages being offered by landlords competing for new tenants. As such, quoted Class A and B rental rates were down 3.2 and 3.1 percent through 2010 respectively.
Outlook
Leasing activity should remain relatively stagnant through 2011. Renewals will continue to drive activity, with expansions accounting for a majority of the positive absorption. Quoted rental rates will continue to fall through 2011, though not at the same pace as 2010.
Information courtesy of Jones Lang LaSalle. Please contact Andrew Coleman or J.R. Fairman at (216) 861-7171 with any questions.