Market conditions softened as negative absorption continued, driven by elevated move-outs and business closures. Vacancy increased but remains well below national benchmarks, reflecting the market’s historically constrained supply. Leasing activity declined meaningfully, with new deal volume falling and tenants showing greater caution, while renewals accounted for a larger share of activity.

 

Limited availability, particularly among large-bay properties, continues to restrict tenant options and weigh on overall leasing velocity. Submarket performance has been uneven, with Medina County and Strongsville benefiting from proximity to I-71 and stronger regional demand drivers. Newly delivered properties are leasing more slowly, as they entered the market during a period of weaker demand. Rent growth slowed to 2.2% annually, with quarterly declines indicating further moderation ahead.

 

Key Findings

• Availability increased as move-outs drove a second consecutive quarter of negative absorption, though overall conditions remain tighter than national benchmarks.
• Leasing activity slowed meaningfully, with fewer new deals and greater reliance on renewals, even as select submarkets along the I-71 corridor outperformed.
• Rent growth moderated and turned negative on a quarterly basis, reflecting softer demand and increased tenant cost sensitivity.

 

Cleveland Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Cleveland Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.5%
• Households: 938,269
• Current Population: 2,164,455
• Median Household Income: $75,227

 

Cleveland’s economy remains stable but slow-growing, supported by healthcare, government, and manufacturing. Industrial employment continues to anchor demand, with a large share of jobs tied to production and logistics. Population growth remains limited, though suburban counties are seeing modest gains. The region benefits from connectivity to Columbus and other Midwest hubs via I-71. However, uncertainty around trade policy and manufacturing demand is creating near-term headwinds. Business closures have also contributed to weaker space demand. Overall, Cleveland’s diversified base supports steady but modest growth.

 

Top Cleveland Tenants

Source: CoStar Group, Inc.

• HGR Industrial Surplus
• The Home Depot
• Winston Products
• B’laster Products

Population, Labor Force, & Income Growth

Source: CoStar Group, Inc.

 

Cleveland Industrial Construction

Development activity remains subdued, with Cleveland lagging national inventory growth trends. Deliveries have slowed in recent quarters and are leasing up more gradually as demand has softened. The active pipeline is limited, with roughly 399,000 square feet underway, representing a small share of inventory. A lack of shovel-ready sites remains a key constraint, as much of the market’s land requires remediation or redevelopment. As a result, a significant portion of recent development has consisted of repositioned or redeveloped properties rather than ground-up construction. Development has also shifted toward southern submarkets and areas near Akron, where land availability is more favorable. While new supply may place modest upward pressure on vacancy in the near term, the lack of construction should help preserve relatively tight market conditions over the longer term.

 

SF Construction Starts

Source: CoStar Group, Inc.

SF Under Construction

Source: CoStar Group, Inc.

 

Cleveland Industrial Sales

Investment activity has remained relatively stable, though the buyer mix has shifted in response to softer fundamentals. Transaction volume is still driven largely by smaller deals, with institutional investors pulling back amid slower rent growth and weaker absorption. In their place, private buyers, users, and REITs have taken on a larger role in acquisitions. Pricing varies by asset quality, with newer distribution properties commanding premiums near or above $100 per square foot, while older assets trade at discounts. Cap rates for newer assets generally fall in the mid-6% range, with older properties trading at higher yields. Despite near-term headwinds, Cleveland’s lower pricing and tight availability continue to attract value-oriented investors.

 

Sales Volume

Source: CoStar Group, Inc.

By the Numbers

Q1 2026 | Source: CoStar Group, Inc.

• Sales Volume: $127M
• Price Per SF: $54
• Cap Rate: 10.4%
• Vacancy Rate: 4.3%
• Rent Growth: 2.2%
• Asking Rent Per SF: $6.70
• SF Under Construction: 399K
• SF Delivered: 121K
• SF Absorbed: 420K