Cleveland’s Industrial Real Estate Market Shows Signs of Strong Gains
Megan Sims, cleveland.com
There are signs that point toward the Cleveland area having an unexpected and sustained boom in the industrial real estate arena.
According to JLL, a real estate company, whose specialties include commercial and industrial industries, 9.8 million square feet of industrial space has been added over the last five years.
David Stecker, executive vice president of JLL, said that Cleveland is appealing to industrial users for a variety of reasons, including availability of land sites and labor.
“Available labor is really important and a common theme we see amongst our clients seeking out a competitive labor pool,” Stecker said. “Then, also, just logistically it’s important for a lot of these users, eCommerce groups, retailers, logistics companies to be closer to customers. So Northeast Ohio’s been a beneficiary of that trend.”
Stecker said he noticed the uptick in industrial demand in 2015 and 2016 with many of the companies focusing on proximity to their consumer base, whom over the years with the popularity of Amazon, have begun to expect shorter shipping times.
Just at JLL, multiple speculative projects are under construction.
For example, construction began in June on the 450,000-square-foot Westfield Commerce Park in Medina County’s Westfield Township near Interstates 71 and 76. Another project in the works is Commerce Park 71 in Lodi, a 358,000-square-foot warehouse, which is expected to be completed by the end of the year.
Terry Coyne, the vice chairman of Cleveland’s division of the commercial real estate firm Newmark, agreed that the industrial real estate market has been “fantastic” over the last five years.
Newmark has been following almost 5.6 million square feet of industrial product under construction as the third quarter ends. Of this, about 4 million square feet is speculative.
Coyne noted the Turnpike Commerce Center project led by Geis Companies in Portage County’s Shalersville Township will account for 1 million square feet alone.
When it comes to repurposing and new construction, Stecker said that he had seen a little bit of everything. From vacant manufacturing spaces that have found a new life to companies being more creative and utilizing buildings that initially were not built for industrial use.
Stecker said he could see the boom continuing.
“The online shopping craze we don’t think is something that’s gonna go away, and that drives a lot of the warehouse demand,” Stecker said.
“Locally, we don’t have an overbuilt markets,” Stecker said, adding that spec projects are a “catalyst for new companies to come into our market and create jobs and opportunities and enhance neighborhoods, or different markets that may have been underutilized for generations now.”
Coyne, however, offered caution, taking into account recent spike in mortgage interest rates.
“I think there’s definitely a slow down coming,” he said. “I’m not sure if it’s here yet. But are you’re gonna pay 7% interest on your house, or you are going to go and spend money on disposable stuff. You’re probably not gonna spend money on an extra sweater. And if you don’t buy consumer goods as much as you used to, you don’t need warehouses as much.”