A downward spiral. Those are the words that Newmark used to describe how the greater Cleveland office market ended 2020.
In its fourth quarter 2020 Cleveland office market report, Newmark said that the Cleveland-area office market generated 406,142 square feet of negative absorption. This came after three consecutive quarters of positive absorption here.
The culprit? In absolutely no surprise, much of the blame goes to the COVID-19 pandemic.
However, COVID isn’t solely to blame for the slowdown in absorption here. According to Newmark’s report, the overall Cleveland office market struggled for much of 2019, too, until the fourth quarter of that year, when it began a rebound.
That rebound was cut short by the pandemic, with the Cleveland office market starting to feel the effects of COVID-19 in the latter half of the second quarter of 2020. The market has continued its downward trajectory ever since.
The vacancy rate for the Cleveland-area office market hit 17.6 percent in the fourth quarter of 2020. That was up from 16.5 percent in the third quarter and 16.4 percent a year earlier.
Average asking rents dipped to $18.11 a square foot, down from $18.18 a square foot in the third quarter of the year and $18.30 a year earlier.
Development in the office sector has slowed in the Cleveland area, too. Newmark reported that 100,000 square feet of office space was under construction in the Cleveland market during the fourth quarter of 2000. That is down from 160,000 square feet during the same quarter a year earlier.
Cleveland’s East submarket fared the worst in 2020, generating 158,936 square feet in negative absorption for the year. By contrast, the South submarket netted 261,387 square feet in positive absorption for 2020. The CBD was the only other submarket to end 2020 with positive office absorption, with 135,850 square feet for the year.