Cleveland Market Overview
According to the World Population Review, Cleveland is the second-largest city in Ohio with a whopping population of 372,101 people. Cleveland’s growth is mainly driven by industrial, healthcare, and tech companies. The market boasts affordability, a low-density population, and a corporate-friendly environment, making the metro an appealing climate for residents and investment opportunities. Big-box retailers are moving into the market at record levels, and healthy absorption levels support the growth. Similar to national trends, discount and home improvement retailers are popular, as well as grocery and service-based retailers that are considered pandemic-resilient. Current fundamentals are record-high, with rent growth averaging 5.1%, retail sales at $704M, and vacancy rate at 4.6%.
Repurposing Trends in Retail Leasing
In 2020 and 2021, retail struggled as consumers reallocated their spending and pivoted to online shopping. Retail spaces with strong location fundamentals were swept up quickly and remain in high demand, especially for repurposing trends. The top move-ins include discount retailers, grocers, and restaurants. In the Cleveland metro, ample unused retail space is being transformed into industrial as e-commerce continues to take off. Minimal deliveries and new development have taken place, but demand expects to remain positive and keep vacancy in check through the remainder of the year.
Currently, construction is very limited in Cleveland after a record 1.4 million square feet was delivered in 2019. Over the past 12 months, just 320,000 square feet have been delivered, with a significant percentage of that being the Meijers in Brunswick in the Medina County submarket. Additionally, only 290,000 square feet are underway, with grocery retails being the largest project. A majority of development includes the conversion of long-vacant shopping centers into residential or industrial uses.