Its reputation is as shaky as ever. But the commercial real estate brokers who do business in Cleveland say that there are plenty of reasons to be optimistic about this Midwest industrial-anchored city.
And they don’t even care that LeBron James now slam-dunks in Miami.
Michael Glass, vice president and regional manager with the Cleveland office of Marcus & Millichap has never understood the negative press that his adopted city has received. He’s a transplant here, moving to the Ohio city from Chicago. And he has absolutely no regrets about making the move.
There’s a lot to love about Cleveland, he says. It’s affordable. It boasts plenty of cultural hotspots and fine restaurants. It’s blessed with a thriving medical district.
And, best of all for Glass, its commercial real estate market is again showing signs of life after the rough years of the Great Recession and its sluggish recovery.
Glass points to the recent job growth in Cleveland as evidence that the city’s economy is on the mend. In 2011, Glass said, the city had as of the start of March added about 11,000 new jobs. Since the Great Recession officially ended, Cleveland has added slightly more than 22,000 jobs.
And there’s hope for even more new jobs. Construction is now underway on a new casino – Horseshoe Casino Cleveland – in downtown. This project is expected to draw more than 5 million visitors a year to the city. For those keeping count, that’s more than all three of the city’s major sports teams – the football Browns, baseball Indians and basketball Cavaliers – combine to bring to the city in a given a year.
This new casino, which will open in 2012 in its temporary location before opening for business in its permanent building in 2013, should bring about 2,000 temporary and 1,600 permanent jobs, Glass said.
“I think the casino is a great thing,” Glass said. “It will bring a lot of life to downtown Cleveland. There have been a lot of companies over the years that have moved out to either the east or west suburbs. This project will help rejuvenate downtown Cleveland. It will bring new jobs downtown. Ultimately, it will be a good jobs creator for the metro and a positive development for downtown Cleveland.”
Market by market
It’d be incorrect, though, to say that Cleveland doesn’t still face its challenges. Certain commercial markets, for instance, remain mired in a deep slump.
Terry Coyne, executive vice president, of the city’s Grubb & Ellis office, though, said that 2011 has been a strong year so far for his city.
He also said that Cleveland doesn’t deserve the bad reputation that it has, mostly from people who’ve never lived in or visited the city.
Coyne calls Cleveland a great place to live. And he has plenty of reasons to back this up: The city boasts affordable housing. It has a thriving health-care and medical market, with some of the country’s best hospitals. It has an unexpectedly diverse arts and culture scene.
And, most importantly of all, the commercial real estate market here is on the upswing, Coyne said. And that’s especially true of the city’s industrial market.
In the last three months, Automated Packaging bought a 177,000-square-foot building from Playtex Manufacturing, Cleveland Steel Container moved to an 86,000-square-foot building and Winston Products moved to a 113,000-square-foot building, all in the Cleveland area.
To make matters even better, American Greetings — the folks responsible for so many of those Valentine’s Day and anniversary cards lining the shelves at your local supermarket — announced in early March that it will keep its headquarters in Northeast Ohio, after having previously flirted with leaving the area.
“A lot of people don’t realize what a great place Cleveland is,” Coyne said. “We have a lot going for us in Cleveland.”
Coyne is especially bullish on the city’s industrial market. He says this commercial sector is definitely on the upswing as 2011 moves toward its second half.
Coyne points to several reasons for this: Cleveland boasts a workforce with a strong base of engineering and manufacturing skill sets. This market also didn’t see much spec development during the busiest days of the commercial real estate industry’s boom times.
Of course, there’s another, less pleasant reason, why Cleveland’s industrial market is recovering faster than are some others: It was hit particularly hard during the recession. In some ways, then, this market had nowhere to go but up.
“If you look at some markets, like Atlanta or Columbus at their peaks, you’ll see that had tons of spec developments built,” Coyne said. “That didn’t happen here. We rarely get out over our skis here. You might see one or two spec buildings in a good market. But you’ll never see it to the extent that you see it in much larger markets.”
Coyne said that the fact that Cleveland has relied so heavily on automotive manufacturing – it has long ranked as the second biggest U.S. auto city, behind only Detroit – hurt the city during the recession.
This relationship with auto manufacturing might also account for some of the negative press that Cleveland has received, Coyne said. Those unfamiliar with the city and its commercial real estate market, might not understand that Cleveland today is also a hub of medical and health-related technology development.
For instance, the massive, and definitely high-tech, Medical Mart project is now underway. And the city is already home to the esteemed University Hospitals and Cleveland Clinic. The Medical Mart project includes a new convention center and a sprawling marketplace; it’s a bit like Chicago’s famed Merchandise Mart, only focusing on medical and health-related innovations.
Confidence has returned
Joseph Barna, principal with CRESCO Real Estate in Cleveland, said that since September of 2010, commercial real estate activity in the city has picked up tremendously.
Barna said that the city’s industrial market, especially, is growing again.
“The owners are confident in where the economy is going,” Barna said. “Decisions that were put on hold in terms of expansion are now moving forward.”
Manufacturing and industry have historically been important to Cleveland. The city has long been a hub for automotive manufacturing, aerospace, hydraulics, metal forming and steel.
These industries are still important for the city. But Barna is seeing something else, too: an increase in new businesses that work with clean energy and biotechnology.
“It’s been a bit of a well-kept secret,” Barna said. “But we already have that base of medical knowledge here, with Cleveland Clinic, University Hospitals and Case Western Reserve University and its medical school. There’s also a cost-of-living here that is well below the national average. You can come here with any kind of skill and make a good living.”
