HEARTLAND SNAPSHOT, JUNE 2007

Cleveland Industrial Market

Northeast Ohio is experiencing slow, steady positive growth in industrial development; historically, there have never really been too many highs or lows, in this perennially good market. This steady development is taking place in areas surrounding Cleveland that have ample amounts of currently developable land. Summit, Portage, and Geauga Counties have abundant parcels that can be used for industrial development. Lorain County is showing an abundance of developable land, while Cuyahoga County has a very limited supply of developable industrial sites.

On the downside, while the cost of capital remains low, the cost of buildings has inflated; this has created sticker shock to the uninitiated buyer that is not yet up to speed on current market conditions. Also, the cost of new construction of industrial buildings continues to rise. This is occurring due to the increasing costs of steel, concrete, masonry, and petroleum products.

Significant industrial developments are currently underway in Glenwillow, Brecksville, Hudson, Avon, Avon Lake, Strongsville and Aurora.  Geis Companies recently purchased 212 acres in Glenwillow from Browning-Ferris Industries for $4.3 million, and plans to use this site to build an industrial park with a mix of industrial, office and light manufacturing tenants. Curtis Layer Design/Build has completed construction on most of the 200 acres that are part of Aurora Industrial Park II in Aurora.  Build-to-suit industrial facilities totaling nearly 200,000 square feet have been completed in the same park for Godfrey & Wing and Technical Consumer Products. 

The reason these areas are seeing industrial growth is two-fold.  First, these areas have the land available for new industry. Second, the individual municipalities embrace new business.  They offer incentives to new companies and make their communities a place in which organizations want to relocate (e.g. Aurora is offering 100 percent tax abatement for qualified industrial firms coming into the city).

The impact that will be seen in the market is a continued decrease in industrial vacancy rates.  Since the greater Cleveland industrial vacancy rate is approximately 8.5 percent, potential build-to-suit owners and leasing prospects will slowly absorb the space that comes into the market through these new developments. Going back to Aurora Industrial Park II, Technical Consumer Products has absorbed 155,000 square feet and 20 acres of industrial space, and has the potential to expand to more than 300,000 square feet in the future.

These new industrial developments are not trying to attract one particular type of tenant, but are instead building facilities that are flexible and adaptable to a number of different kinds of industrial tenants. Naturally, all municipalities are concerned with attracting jobs to fuel economic growth, some are just more aggressive.

Significant recent leases in the area include Pioneer Commercial Manufacturing’s lease of 24,936 square feet in the Snowville Plaza, located at 6892 Snowville Rd. in Brecksville; Restaurant Technologies’ lease of 12,500 square feet in Jennings Business Center III, located at 4660 Hinckley Industrial Pkwy. in Cleveland; Builders East’s lease of 12,000 square feet in the BFI Waste Systems building, located at 8100 Old Granger Rd. in Garfield Heights; and The Plain Dealer Publishing Company’s lease of 9,952 square feet in Great Northern Industrial Park, located from 31351-31399 Lorain Rd. in North Olmstead. Current rental rates for industrial property in the market falls between $3.50 and $7.50.

Now and in the near future, Glenwillow, Brecksville, and Aurora are growing areas that people should keep an eye on for industrial development.  These are areas in which large industrial projects are currently underway. 

— Joseph Martanovic and Kevin Kuczynski are both senior vice presidents with the Cleveland office of Colliers Ostendorf-Morris.


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