Brian Hurtuk knows the Cleveland office market. He’s managing director and executive vice president with the Cleveland office of Colliers International. And he’s long studied the office trends in this market.
What he sees today is an office market in Cleveland that is steadily improving.
“The downtown CBD office market in Cleveland has always been somewhat of a big checkerboard. Usually, companies are robbing Peter to pay Paul with the different office buildings. They’ll take new space but then leave another space vacant,” Hurtuk said.
The market, though, is slowly starting to change.
“One of the good things that has been happening now, though, is that when a company moves from one building to another, at least in the last three years, that company has been taking an extra 15 or 20 percent of space,” Hurtuk said. “The growth in the CBD office market, then, is modest. But we definitely have seen some net absorption transpire because of this trend.”
Colliers reported that the downtown Cleveland office market ended the fourth quarter last year with 132,613 square feet of positive absorption, which is up slightly from 129,813 square feet of absorption in the third quarter.
The downtown Cleveland office market had a vacancy rate of 17.5 percent at the end of the fourth quarter last year, compared to an overall Cleveland office vacancy rate of 13.6 percent at the end of the same quarter. That overall vacancy rate is down from 13.7 at the end of the third quarter of 2013. At the end of the third quarter last year, the downtown Cleveland office vacancy rate was 17.8 percent.
“In general, I’d classify the downtown right now as extremely vibrant,” Hutuk said. “And it’s not only in the office sector where I’m seeing more activity. Retail is alive and well, too, in downtown Cleveland. Some of the storefronts that had been sitting idle are starting to see activity. I think we’ll continue to see big changes in downtown Cleveland in the next year.”
Hurtuk said that increased foot traffic throughout downtown Cleveland is playing a big role in retail’s improvement. As Hurtuk says, during a typical day 120,000 people come to downtown Cleveland to work.
Hurtuk expects downtown foot traffic to only increase as more local residents choose to live in the heart of the city. He said that there are six active conversion projects – turning office space into multi-family space – taking place now in downtown Cleveland.
“This is good for downtown,” Hurtuk said. “We have certain office buildings that have gotten to a stage in their lives when they become functionally obsolete. You can’t tear all these obsolete buildings down. Why not give them a great rebirth as multi-family space? Bring apartments to downtown turns the lights back on at some of these corners. It pulls older product out of our office inventory that can’t be leased.”
