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Ofce Trends ReportSecond Quarter 2011

Cleveland, OH
Grubb & Ellis Cleveland
1350 Euclid Ave., Suite 300, Cleveland, OH 44115
www.grubb-ellis.com
Prepared by:
Deirdre McGuane VP, Research
216.453.3052 deirdre.mcguane@grubb-ellis.com

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The Turnaround Takes Hold
The Northeast Ohio ofce market is gaining steam going into the second half of 2011.
During the second quarter, there was 193,000 square feet of positive net absorption, the
largest growth in occupancy since year-end 2008. In this same period, vacancy decreased
by 30 basis points and ended the quarter at 21.9 percent. Currently, 628,000 square feet
is under construction in the Central Business District (CBD), between two multi-tenant
developments. The largest suburban development underway is the 580,000-square-foot
Eaton Corporation in the East suburban market, which will be owner-occupied upon
completion, after they relocate from the CBD in 2013.
The CBD experienced some notable gains with 143,000 square feet of positive net absorp-
tion in the second quarter. Several technology companies, such as Rosetta and MCPc,
wanted to be part of the downtown revitalization and relocated from the suburbs. MCPc
began relocating from an industrial building in Strongsville to over 45,000 square feet in
the Class B, Plain Dealer building at 1801 Superior. The location offers free parking and
room to construct an additional 50,000-square-foot technology/distribution center. Cliffs
Natural Resources expanded into the 50,000-square-foot sublease vacated by PNC Bank at
200 Public Square. Cliffs will continue their growth through the rest of the year, eventually
occupying 200,000 square feet and becoming the largest tenant in the building.
During the second half of the year, in the West suburban market, the developer of Crocker
Park Lifestyle Center in Westlake is expected to receive nal approval for a new ofce
building. American Greetings recently renewed their commitment to remain in Northeast
Ohio and announced plans for their corporate relocation from Brooklyna Cleveland
suburbto the mixed-use development.
Ferro Corp. revealed plans to move their downtown headquarters to 6060 Parkland in
Mayeld Heights, in the East submarket. Novelis vacated the 63,000-square-foot building
in the fourth quarter of 2010, after consolidating operations in Atlanta. (continued on
next page)
KEY TRANSACTIONS
.
* Indicates Transaction Represented by Grubb & Ellis
OMNI Property Companies
purchased
33,840 SF at
6400 Rockside
Independence, OH
from *Newark Corporation
for $2,300,000
*Towards Employment
renewed
15,794 SF at
Sterling Building
Cleveland, OH
from Munsell Realty Advisors
Cliffs Natural Resources
leased
66,254 SF
200 Public Square
Cleveland, OH
from *Harbor Group Intl, LLC
Vacancy Rate
Completions vs. Absorption
(in Thousands of SF)
Asking Rental Rates
($/SF/Yr. Full Service)
Absorbed Completed
Class A Class B
CBD Suburban Combined
12%
16%
20%
24%
2Q 09 4Q 09 2Q 10 4Q 10 2Q 11
-300
-200
-100
0
100
200
2Q 09 4Q 09 2Q 10 4Q 10 2Q 11
$16
$18
$20
$22
$24
2Q 09 4Q 09 2Q 10 4Q 10 2Q 11
Ofce Trends ReportSecond Quarter 2011
Cleveland, OH

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OFFICE TERMS AND DEFINITIONS
Total SF: Office inventory includes all multi-tenant and single tenant
buildings at least 20,000 square feet. Owner-occupied, government
and medical buildings are not included.
Office Building Classifications: Grubb & Ellis adheres to the BOMA
guidelines. Class A properties are the most prestigious buildings
competing for premier office users with rents above average for the
area. Class B properties compete for a wide range of users with rents in
the average range for the area. Class C buildings compete for tenants
requiring functional space at rents below the area average.
Vacancy and Availability: The vacancy rate is the amount of physically
vacant space divided by the inventory and includes direct and sublease
vacant. The availability rate is the amount of space available for lease
divided by the inventory.
Net Absorption: The net change in physically occupied space over a
period of time.
Asking Rent: The dollar amount asked by landlords for available space
expressed in dollars per square foot per year in most parts of the
country and dollars per square foot per month in areas of California
and selected other markets. Office rents are reported full service where
all costs of operation are paid for by the landlord up to a base year
or expense stop. The asking rent for each building in the market is
weighted by the amount of available space in the building.
* Grubb & Ellis statistics are audited annually and may result in revi-
sions to previously reported quarterly and final year-end figures.
Reproduction in whole or part is permitted only with the written
consent of Grubb & Ellis Company. Some of the data in this report has
been gathered from third party sources and has not been indepen-
dently verified by Grubb & Ellis. Grubb & Ellis makes no warranties or
representations as to the completeness or accuracy thereof.
By Submarket
TotaI SF Current Qtr Year To Date
NET ABSORPTION
Under
Construction SF Vacant SF
CIass A CIass B
Vacant %
ASKING RENT
AvaiIabIe %
CBD
21,969,702
4,795,162 21.8%
143,554 (6,326)
628,000 $21.81 $19.28 23.7%
CBD TotaI 21,969,702 4,795,162 21.8% 143,554 (6,326) 628,000
$21.81 $19.28 23.7%
East
7,752,574
1,533,574 19.8%
24,402 68,013
- $22.27 $17.03 25.1%
South
4,797,768
1,113,531 23.2%
5,126 32,026
- $21.62 $17.64 25.7%
Southwest
1,444,804
266,291 18.4%
15,077 5,352
- $17.10 $15.16 21.0%
West
3,436,155
901,100 26.2%
5,802 33,059
- $18.52 $13.96 28.7%
Suburban TotaI 17,431,301 3,814,496 21.9% 50,407 138,450 -
$21.03 $16.10 25.6%
AVAILABLE FOR SUBLEASE
By CIass
Suburban CBD
2,470,231 73,492 142,987 Class A 16.6% 14,884,830 628,000 146,617 172,821 19.7%
4,165,200 30,309 (122,530) Class B 24.2% 17,245,455 - 230,117 50,259 26.6%
1,974,227 90,160 111,667 Class C 27.2% 7,270,718 - 147,322 51,089 29.9%
- - - Unclassified - - - - -
21.9% 39,401,003 628,000 TotaIs
193,961 132,124 524,056 274,169 8,609,658 24.6%
$17.91 $21.36 628,000
193,961 TotaIs
39,401,003 21.9% 132,124 24.6% 8,609,658
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as of 2nd Quarter 2011
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Columbus
Cincinnati
(continued from front) Ferro signed a
long-term lease in Mayeld Heights
and will be vacating their headquar-
ters in the CBD building on Lakeside
Road, near East Ninth Street. In the
South market, BF Goodrich Landing
Gear completed the move into the
40,000-square-foot building on 6225
Oak Tree in Independence.