The general purpose, multi-tenant office market in Cleveland saw its vacancy rate decrease 20 basis points in the second quarter of 2012 to 21.0%. Vacancy here has been close to 20.0% since 2009, and was not much lower the years before that. The rate is up 40 basis points from second quarter 2011. August data show a decline of 10 basis points. Reis reports second quarter Class A vacancy at 19.1%, down 40 basis points from first quarter, and Class B/C at 23.0%, unchanged. The volume of vacant stock remains high at 7.45 million square feet. Despite light construction, net absorption has lagged. In the ten years ending in 2011, new construction totaled 1.9 million square feet, while net absorption was negative 2.9 million square feet. There have been no completions so far in 2012 and net absorption reached negative 15,000 square feet at the end of second quarter. It should be noted that some sources report increased activity downtown. “Among identified tenants in the market, demand for downtown office space was particularly high. This follows a trend seen over the past year as several high profile relocations and/or expansions have taken place downtown,” Jones Lang LaSalle reported in the second quarter.
Reis reports second quarter average asking and effective rents of $18.42 psf and $14.61 psf, both up 0.1% for the quarter, and up 0.7% and 0.8%, respectively, over 12 months. Asking rents increased two cents by August. Second quarter Class A asking rents were reported at $20.81 psf, and Class B/C rents finished the quarter at $16.00 psf. Looking forward, Reis does not forecasts rental gains exceeding 2.0% for both measures until 2014, while vacancy will fall just below 20.0% that year.
Cushman & Wakefield reports a second quarter direct average asking rent of $16.61 psf, up 0.2% over 12 months, and an overall vacancy rate of 12.2%, down 40 basis points over 12 months.