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Construction activity is up, industrial and office vacancies seem to have
stabilized, and the investment market is on fire.
Hi my name is Terry Coyne and I'm a commercial
real estate broker with the Cleveland office of Grubb & Ellis and you're watching The Coyne
Report.
Today, I would like to give a market update for the third quarter and year-to-date on
the Cleveland real estate market and I will do this by examining three areas.
First the industrial market.
Second the office market and third the investment
market.
The industrial market is made up of about 300,000,000 ft.
2008, our vacancy rate was 10.8%, 2009 11.
5% and today its 12.5%.
A dramatic rise in vacancy rates, but if you peel back the numbers you realize that our
market has been adversely affected by one building and thats the Chrysler building in
Twinsburg.
2.6 million square feet which just came on the market because Chrysler left.
If you take that building out of the numbers
you see a market that has actually stabilized with some slight rental increases.
Large transactions for the marketplace this
quarter includes Winston Products taking 110 thousands square feet, DHL taking 25,000 ft.
and Cleveland Steel Container taking a little over 80,000 square feet.
The office market is made up of about 39,000,000
ft.
The class A, B and C markets all seem to have stabilized, but the class A market, having
a vacancy rate of approximately 17.5%.
What you're seeing right now is a lot of people moving from the class C to B and the class
B to A markets.
Significant transactions for this quarter included Rosetta starting their move downtown
from Independence and Beachwood.
They've taken two floors so far and expect to be fully moved in over the next three months.
The construction activity has doubled since 2008.
This year by the end of 2010 we should have
about 906,000 ft. constructed, half of which will be for Superior Beverage in Glen
Willow.
The investment market is highly affected by the interest rate.
Interest rates right now for loans are very
low and the activity is up because the core larger markets on the East and West coasts
in Chicago and New York.
Investors can't find enough product to meet their returns and those investors are now
fleeing to secondary markets like Cleveland and you now are seeing prices increase and
rates decrease.
Overall we expect 2010 to end up as a stabilized year and 2011 to repeat the same as this year.
Once again I'm Terry Coyne and thank you for watching the Coyne Report.