HEARTLAND SNAPSHOT, MARCH 2005

Cleveland Multifamily Market

Vicki Maeder, CCIM and Vice President, CB Richard Ellis

Development of new multifamily construction in Cleveland’s suburban markets has been hampered by a lack of available zoned land, reduced demand and higher than normal vacancy, according to Vicki Maeder, CCIM and vice president of CB Richard Ellis’ Cleveland office. A lack of land affects new construction in Cuyahoga County, but not as much in outlying counties, such as Lorain, Medina, Portage and Geauga, which are seeing some new construction on a limited basis primarily due to demand. Within Cleveland itself, the majority of development is taking place downtown in the Warehouse, Flats and Gateway districts. The downtown developments consist of new construction or the renovation and rehabilitation of existing buildings on a for-rent or for-sale basis.

Significant multifamily projects that have recently been completed or are under construction in Cleveland include Quay 55’s conversion of a former warehouse terminal building situated on Lake Erie along the Shoreway, which offers spectacular views of the lake. The 340-unit Bingham Building opened in the Warehouse District featuring the first grocery store in that area to serve the needs of a growing population. Along the Cuyahoga River, Stonebridge Waterfront continues to do well. The rentals leased up quickly, and the condominiums built are selling well to a growing number of residents who want to own and control their living quarters. In Westlake, Robert L. Stark Enterprises’ Crocker Park, a lifestyle project featuring office, rental and upper-end residential units, is just opening. “All of the developments are locally driven, except for the Bingham project,” Maeder says.

Condominium projects are being offered downtown in an effort to meet the demand of a growing number of residents who wish to be owners and prefer downtown living. “The mix of buyers, which range from young professionals to empty nesters, like the advantages of living and working downtown near restaurants and sporting and cultural events,” Maeder says.

Asking rents for Cleveland’s multifamily units average from $600 to $700 per month, or 75 to 80 cents per square foot. Downtown rents average from $1.00 to $1.15 per square foot, which is not much of a change from recent years.

Cleveland’s vacancy rates in the multifamily market continue to hover at higher levels than those 5 years ago. “Vacancy rates remain at above average rates in the 8 percent to 9 percent range,” Maeder says. “With the lack of new construction, a more stabilized economy, and the growing trend to convert to condominiums, those rates should stabilize and even reduce during the next several years.”

Rental growth in the multifamily market in Cleveland has been flat, and it will continue to be that way in the short-term future, according to Maeder. “As interest rates rise, the shift to home ownership will diminish and create an increase in the occupancy of the rental market, which will allow for an increase in rental rates,” she says. “The downtown market will probably be the most fun to watch as developers become more creative in selecting projects to develop to meet a changing rental/buyer group.”

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