Q2 2012 Cleveland, Ohio Retail Market Trends

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Q2 2012 Cleveland, Ohio Retail Market Trends

Community-neighborhood shopping center vacancy fell 20 basis points in the second quarter of 2012 to 14.7%. The rate is down 40 basis points year-over-year, good news for a market that has had double-digit vacancy since 2008. August data show no change. No community-neighborhood space has completed so far in 2012, acording to Reis’ latest construction data. No community-neighborhood center space is under construction. Vacancy near 14.0% is forecast to prevail through 2013, after which small declines are forecast.

Reis reports average community-neighborhood asking and effective rents of $14.91 psf and $12.76 psf, down 0.4% and 0.3% for the quarter, but up 0.1% over 12 months. August data show slight increases. For year-end 2012, Reis expects asking and effective rents to post losses of 0.4%. Across-the-board rent losses have been a fixture here since 2008. In fact, the average rent change from 2002 to 2011 was a 0.5% increse for asking rents, and a 0.3% decline for effective rents, so this is not a retail landlord’s market, to say the least. However, Reis does forecast asking and effective gains to gradually take, hold, approaching the 2.0% mark for both rental categories by 2014.

For power center space, Reis reports vacancy at 12.6%, down 80 basis points year-over-year. Lighthouse Square Village, a 450,000-square-foot power center, is under construction in the West Suburban submarket for completion in December 2012. Power center asking rents are listed at $17.92 psf, up 0.2% over 12 months.

“Manufacturing Helps Lift Economy, Boost Retail Spending,” stated Marcus & Millchap’s third quarter 2012 report. “Firm job gains supported healthy consumer spending in the first half, a trend that will continue in the coming months, though improvements to retail operations will lag into next year,” according to this source.