While Cleveland’s economy was once rooted in steel and automotive manufacturing, it has transformed into a diversified metro. Healthcare stands out as one of the largest industries, led by medical networks like Cleveland Clinic, University Hospitals, and MetroHealth. The metro’s financial sector continues to grow, aided by the presence of a Federal Reserve Bank and several banking institutions. Affordable housing and a low cost-of-living further position Cleveland as an attractive destination for businesses and residents alike.

 

Cleveland Demographics

Source: CoStar Group, Inc.

• Unemployment Rate: 4.3%
• Current Population: 2,071,905
• Households: 895,156
• Median Household Income: $73,652

 

Population, Labor, and Income Growth

Source: CoStar Group, Inc.

 

Key Findings

• Cleveland’s industrial vacancy rate reached 4.3% in the third quarter, well below the national average. Small-bay properties lead demand, with availability at around 3.6%.
• About 1.3 million square feet is under construction, with major projects like Scannell Properties’ facility in Middlefield and Sherwin-William’s center in Brecksville leading development.
• Most of Cleveland’s investments for 2025 were under $10 million. REITs and user-buyers each accounted for 20% of annual sales volume.

 

Market Performance

Industrial performance across Cleveland shows signs of cooling, with a 4.1% vacancy rate and negative absorption of 319,788 square feet in the third quarter. Move-outs pushed absorption negative for the second straight period, though limited construction has kept overall availability well below the national average.

 

Leasing volume has softened, with new leases down 33% year-over-year, though submarkets like Medina County and Strongsville remain bright spots due to strategic access to I-71. Smaller manufacturers dominate leasing activity, over 90% of new leases are under 25,000 square feet, leaving the market sensitive to tariff and cost pressures. Despite slowing rent growth, Cleveland’s constrained supply, modest construction pipeline, and low large-bay availability continue to underpin relatively stable industrial fundamentals.

 

Cleveland Industrial Supply & Demand Dynamics

Source: CoStar Group, Inc.

 

Cleveland Construction

Industrial construction in Cleveland remains modest, with inventory expanding just 1.6% since 2020—far below the national average of 11.2%. About 380,000 square feet delivered over the past year, a 75% decline from the prior year, as new projects faced slower lease-up amid softening demand. Current construction totals roughly 1.3 million square feet, or 0.4% of inventory, well under national levels. Development is constrained by limited shovel-ready sites, prompting adaptive reuse of older properties such as Highland Business Park and the Forward Innovation Center. Efforts like the 1,000-acre Northeast Ohio Mega Site aim to attract major manufacturers and bolster future industrial growth.

 

SF Construction Starts

Source: CoStar Group, Inc.

 

SF Under Construction

Source: CoStar Group, Inc.

 

Sales

Cleveland’s industrial investment market remains stable, with third quarter sales volume reaching $96.6 million. Most trades are smaller, under $10 million, as institutional investors remain cautious amid modest absorption and slower rent growth. Institutional buyers accounted for just 9% of activity, down from a five-year average of 26%, while users and REITs each represented about 20%. The largest deal involved Plymouth’s $65 million purchase of nine Cleveland-area properties. Pricing for newer assets averages around $100 per square foot, while older facilities trade closer to $60 per square foot.

 

Sales Volume

Source: CoStar Group, Inc.