Q2 2012 Cleveland, Ohio Commercial Real Estate Economy

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Q2 2012 Cleveland, Ohio Commercial Real Estate Economy

The Cleveland economy is growing, but not fast enough to produce enough jobs to really get the metro going, the Cleveland Plain Dealer reported in August. An analysis prepared by Team Northeast Ohio, a business attraction group, noted that “the local economy continues to grow and diversify, driven by manufacturing with a high-tech edge,” according to the report. “But to achieve the kind of robust growth that creates jobs, analysts say, the region likely needs to boost its skills.” “Team Northeast notes that that the regional economy is on track to grow by 2.0% this year and to add more than 10,000 jobs,” the Plain Dealer reports. “Total employment recently surpassed 2 million workers in the 18-county region tracked by Team NEO, the result of eight consecutive quarters of economic growth. With an unemployment rate of 7.2%, Northeast Ohio is outpacing the national average of 8%. Meanwhile, the number of people filing first-time claims for unemployment benefits has fallen significantly,” the report stated. “The news, while positive, is tempered by how much the region lost in one of the worst recessions since the Great Depression. Northeast Ohio is still down about 150,000 jobs from 2007, when the recession began, and the gross regional product—the total value of goods and services produced here—is nearly 5.0% below its $194 billion peak,” according to the report. “Analysts say a faster recovery will require faster growth among some large employers, and they see potential in an emerging sector of Manufacturing. A niche know as Instruments, Controls and Electronics, or ICE, has grown by more than 10.0% in Ohio since 2000 and it’s expected to grow by another 25.0% before the end of the decade, Team NEO projects. ICE companies make industrial computers, lighting systems, measuring devices and electrical equipment.”

In general terms, the most recent Current Employment Survey (CES) data from the Bureau of Labor Statistics (BLS) is moderately positive. Total non-farm employment increased by 6,200 jobs (0.6%) in the 12 months ending in July, in line with the increase noted in the previous Reis Observer. Total private employment is up by 10,000 jobs (1.1%), again close to the Cleveland Metropolitan Statistical Area’s (MSA) previous reading for this category. Manufacturing sector employment is up by 2,500 jobs (2.1%), a statistic that will have interesting bearing on the developments noted earlier in this report. However, the Mining, Logging and Construction sector, which includes the oil and gas extraction industries, is coming to the fore despite it having posted a loss of 1,500 jobs (4.3%) in the 12 months ending in July. In May, The Plain Dealer reported the “Northeast

Ohio’s economy continues to grow at a steady but modest clip, thanks largely to an old friend—Manufacturing—but observers see a powerful new catalyst on the horizon. Major energy companies are investing millions into Ohio’s surprise resource—the natural gas trapped deep in ancient shale deposits. With drill permits being acquired at accelerating rates, it’s only a matter of time before large-scale drilling becomes an economic stimulus,” this source reported, again citing an analysis by Team Northeast Ohio. If the natural gas boom really takes off, it could dramatically transform Cleveland’s economy, not to mention the rest of the state and region.

Rounding out the employment sectors, Wholesale and Retail Trade added 1,300 (2.7%) and 3,700 jobs (3.7%), respectively, but the white-collar oriented Finance and Insurance added a low 600 jobs (1.2%) while Professional and Business Services employment fell by 2,200 jobs (1.5%). Employment Services, which includes temporary employment agencies, saw an increase of 1,300 jobs (5.2%). The substantially government-funded Education and Health Services industry saw employment increase by 5,800 (3.1%). Leisure and Hospitality employment fell by 1,100 jobs (1.2%). While not known as a tourist destination, Cleveland will be getting its share of visitors in the form of superheroes: Crain’s Cleveland reported in September that “at least one Avenger is headed back to the streets of Cleveland”. The Greater Cleveland Film Commission announced that Marvel Studios will film portions of “Marvel’s Captain America: The Winter Soldier” in Cleveland, according to this source. The movie is set for release by Walt Disney Studios in 2014. The movie will be directed by brothers Anthony and Joe Russo, Cleveland natives.