JLL Cleveland Office Insight
2
Office employment sectors record modest gains in 2014 According to the most recent estimates from the BLS, total non-farm employment in Cleveland stood at ~1.0 million payrolls, representing an annualized increase of 13,000 jobs or 1.3 percent. Meanwhile, unemployment decreased 1.9 percentage points year-over-year to 5.4 percent. Jobs growth among office-using employment sectors in Cleveland has been trending up in recent months, recording an annualized net gain of 2,700 jobs across the metro. Employment gains were led by the professional and business services sector, which added 3,900 jobs year-over-year. Office employment trends (12-month change) Source: JLL Research Legal and healthcare industries dominate leasing activity in 2014 The legal and healthcare industries drove leasing activity through 2014, comprising more than 55 percent of total square feet leased. During the fourth quarter, the largest lease completed downtown was by Frantz Ward, a Cleveland-based law firm, which leased 46,000 square feet at 200 Public Square. Frantz Ward will relocate next April from Key Tower. In the suburbs, the largest lease was completed by GrafTech International, a maker of graphite electrodes and other carbon-based products. Graphtech plans to move its headquarters to 24,000 square feet at Park Center Plaza 1 in the first quarter of 2015. 2014 Leasing activity by industry Source: JLL Research Investment sales streak continues through the fourth quarter Capital markets activity surged in the fourth quarter with a number of transactions involving out of town investors, including the $26.5 million sale of Northeast Ohio's largest suburban office park. A Canadian investor group purchased the Summit Office Park from an affiliate of Aegon, a lender that has owned the Independence properties since 2009. The sale involved nearly 500,000 square feet of office space. The Canadian group plans to renovate the lobbies and other shared spaces in the buildings, known as Summit One, Two, Three and Four. At the time of sales the portfolio was 69 percent occupied. Office sales volume ($ millions) Source: JLL Research 16.1% Total vacancy 203,141 YTD net absorption (s.f.) 127,182 Q4 2014 net absorption (s.f.) 0.3% 12-month rent growth 0 Total under construction (s.f.) 0.0% Total preleased Office Insight Cleveland | Q4 2014 2014 a banner year for capital markets 33.7% 21.7% 9.4% 7.6% 7.1% 6.7% 6.2% Legal Healthcare High-tech Other services Business services Financial services Manufacturing Media and entertainment Construction $86 $57 $43 $129 $157 $0 $50 $100 $150 2010 2011 2012 2013 2014 -15.0 -5.0 5.0 15.0 2010 2011 2012 2013 2014 Financial Activities Professional & Business Services Information Government
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Transcript of JLL Cleveland Office Insight
Office employment sectors record modest gains in 2014
According to the most recent estimates from the BLS, total non-farm
employment in Cleveland stood at ~1.0 million payrolls, representing an
annualized increase of 13,000 jobs or 1.3 percent. Meanwhile, unemployment
decreased 1.9 percentage points year-over-year to 5.4 percent. Jobs growth
among office-using employment sectors in Cleveland has been trending up in
recent months, recording an annualized net gain of 2,700 jobs across the metro.
Employment gains were led by the professional and business services sector,
which added 3,900 jobs year-over-year.
Office employment trends (12-month change)
Source: JLL Research
Legal and healthcare industries dominate leasing activity in 2014
The legal and healthcare industries drove leasing activity through 2014,
comprising more than 55 percent of total square feet leased. During the fourth
quarter, the largest lease completed downtown was by Frantz Ward, a
Cleveland-based law firm, which leased 46,000 square feet at 200 Public Square.
Frantz Ward will relocate next April from Key Tower. In the suburbs, the largest
lease was completed by GrafTech International, a maker of graphite electrodes
and other carbon-based products. Graphtech plans to move its headquarters to
24,000 square feet at Park Center Plaza 1 in the first quarter of 2015.
2014 Leasing activity by industry
Source: JLL Research
Investment sales streak continues through the fourth quarter
Capital markets activity surged in the fourth quarter with a number of
transactions involving out of town investors, including the $26.5 million sale of
Northeast Ohio's largest suburban office park. A Canadian investor group
purchased the Summit Office Park from an affiliate of Aegon, a lender that has
owned the Independence properties since 2009. The sale involved nearly
500,000 square feet of office space. The Canadian group plans to renovate the
lobbies and other shared spaces in the buildings, known as Summit One, Two,
Three and Four. At the time of sales the portfolio was 69 percent occupied.
Office sales volume ($ millions)
Source: JLL Research
16.1% Total vacancy
203,141 YTD net absorption (s.f.)
127,182 Q4 2014 net absorption (s.f.)
0.3% 12-month rent growth
0 Total under construction (s.f.)
0.0% Total preleased
Office Insight
Cleveland | Q4 2014
2014 a banner year for capital markets
33.7%
21.7% 9.4%
7.6%
7.1%
6.7%
6.2% LegalHealthcareHigh-techOther servicesBusiness servicesFinancial servicesManufacturingMedia and entertainmentConstruction
$86
$57
$43
$129
$157
$0 $50 $100 $150
2010
2011
2012
2013
2014
-15.0
-5.0
5.0
15.0
2010
2011
2012
2013
2014
Financial Activities Professional & Business Services Information Government
Cleveland
Current conditions – market and submarket Historical leasing activity
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
497,252
638,622
343,692 311,557
-226,431 -329,946
81,442
-204,430
644,368
203,141
-500,000
-100,000
300,000
700,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
$19.75 $19.77 $19.94
$19.45
$19.74
$19.46
$19.13 $19.05
$18.93 $18.98
$18.50
$19.00
$19.50
$20.00
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
17.4%
15.1% 14.8%
13.9%
15.1%
16.3% 16.6%
17.5%
16.9%
16.1%
12.0%
14.0%
16.0%
18.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Suburbs
Land
lord
leve
rage
Tenant leverage
Peaking
market
Falling
market
Bottoming
market Rising
market
CBD
1,600,000
2,000,000
1,700,000
1,400,000 1,500,000
1,000,000
1,500,000
2,000,000
2010 2011 2012 2013 2014
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