Out-of-state investors are discovering Cleveland. And they like what they see.
That’s the takeaway from a recent report from JLL. The CRE giant reported that in the last two years, office investment sales in Cleveland have totaled more than $550 million. And investors from states other than Ohio account for a good chunk of these sales, JLL says.
The biggest benefit of all this new investment activity? JLL says that the new owners of commercial properties throughout Cleveland plan to reposition their assets. This means that tenants will see upgraded finishes and added amenities. The bad news for tenants? Once investors finish their upgrades, higher rents will follow.
While out-of-state buyers are becoming increasingly important, this doesn’t mean that local buyers don’t matter. JLL says that local real estate groups have increased their activity, too, as the economy improves. These locals have acquired some of Cleveland’s iconic office assets, including the Key Tower, which Millennia purchased for $167.4 million in January of this year.
JLL also pointed to local apartment operator K&D. This company has acquired 2.5 million square feet of office space during the last five years. K&D is turning much of this space into residential uses. Some of K&D’s acquired office space, though, will remain office, including space in Cleveland’s Terminal Tower, Post Office Plaza and the Keith Building.
JLL expects capital markets activity to remain elevated in the coming months. Several high-profile assets in the Cleveland market are now listed for sale, including The Tower at Erieview, AECOM Center, 1100 Superior and 1111 Superior.