1 Q3 202
1 Q4 202
2 Q1 202 Class A
2 Q2 202
2 Q3 202 Class B
$
$
$1
$1
$1
$1
$12. 1 Q2 202
2 3 Q4 202 Q1 202 Class C
3 Q2 202
3 Q3 202
Source: CBRE Research, 2023
Cleveland Retail - Historical Vacancy Rate will be more comfortable making longRetail term leasing decisions, which in return Cleveland Retail - Historical Vacancy Rate 6.2% will result in increased market activity. 6.0% Prime and Class A assets will 5.8% likely be the main beneficiary of the expected increase in market activity 5.6% due to the flight-to-quality trend. 5.4% Occupiers will focus on offering 5.2% employees best-in-class amenities, 5.0% both in and around the workplace. 4.8% National headlines may imply other4.6% wise, but we’re cautiously optimistic 0 1 1 1 1 2 2 2 2 3 3 3 Q4 202 Q1 202 Q2 202 Q3 202 Q4 202 Q1 202 Q2 202 Q3 202 Q4 202 Q1 202 Q2 202 Q3 202 Vacancy Rate as we enter the new year with the Source: CBRE 2023 Source: CBREResearch, Research, 2023 state of Cleveland’s office market. While COVID-19 restrictions have after. Pad sites have remained in been lifted, the pandemic’s finger- high demand from quick-service resBy Vince Mingo, Senior Associate Cleveland Officeon - Average vs. Occupancy printsMedical remain the Rent current retailRate taurants, gas stations, car washes $17.00 94.5% and medical and urgent care users. As the world 94.0% Additionally, small-scale drivemoved another year $16.50 through-only coffee users have 93.5% past the pandemic, capitalized on excess outparcel 93.0% the macro-eco- $16.00 space that is otherwise too small 92.5% to nomic environment accommodate a full quick-service 92.0% produced new $15.50 restaurant development. 91.5% challenges for the $15.00 Big-box retail continued to see a Northeast Ohio 91.0% transition in the past year as bankretail market. With $14.50 90.5% Vince Mingo ruptcy 2hit a few notable companies. 0 1 1 2 3 3 climbing interest Q3 202 Q1 202 Q3 202 Q1 202 Q3 202 Q1 202 Q3 202 The ever-resilient retail market has rates, rising conAverage Rent (NNN) Occupancy Rate (%) shifted towards entertainment and struction costs and challenging labor Source: CBRE Research, 2023 market. Freestanding and endcap fitness users to help backfill a number markets, a new set of circumstances arose spaces able to accommodate a drive- of the high-profile vacancies. As we within the retail landscape that impacted through have remained highly sought continue to look ahead into 2024, we what was a strong rebound from the pandemic. While these factors all but froze the retail capital market sector, leasing velocity remained steady while facing historically low vacancy rates. The high cost of capital and elevated Occupancy Rate Average (%) Rent (NNN) construction costs presented significant Q3 2020 0.9168 16.47 Restoration Contractors challenges for new retail development, Q4 2020 0.9171 16.42 Q1 2021 0.9194 16.62 leading to very few net-new retail opporQ2 2021 0.924 16.85 tunities in Northeast Ohio. With only Q3 2021 0.9282 16.56 BEREA, OHIO a few market exceptions that are able Q4 2021 0.931 15.6 FACADE15.42 RESTORATION 2022 0.9334 to demand higher rent to offsetQ1rising Q2 2022 0.9368 15.71 BALCONY RESTORATION costs, most trade areas saw little to no Q3 2022 0.9399 15.8 BUILDING CLEANING new development. These factors lead Q4 2022 0.939 16.27 CAULKING & SEALANTS to a landlord-friendly market for class Q1 2023 0.9394 16.55 COATING SYSTEMS Q2 2023 0.9377 16.57 A and B retail centers, given the lack GARAGE RESTORATION 2023 0.9399 16.68 of new supply and continued Q3 tenant HISTORIC PRESERVATION demand. As we look ahead into 2024, we MASONRY RESTORATION expect to see this trend continue until STONE RESTORATION construction costs and interest rates can WATERPROOFING return to a level suitable for development www.aiconstruction.com and therefore expect to continue seeing strong fundamentals in the market.
Retail
Medical Office
With climbing interest rates, rising construction costs and challenging labor markets, a new set of circumstances arose within the retail landscape that impacted what was a strong rebound from the pandemic.
440.243.5535
www.propertiesmag.com 65