MIDDLE MARKET HIGHLIGHT, MARCH 2007

Toledo, Ohio
Dan Marcec

With regards to attracting new business and promoting current business in Toledo, Ohio, Steve Weathers, president and CEO of Regional Growth Partnership, says, “we work with site selectors and business developers in [our traditionally strong industries], but a larger part of our focus is on growth and development of new technology sectors coming out of our universities and businesses already in town. A good example of this is our ‘Meet the Researchers’ program, which brings together university researchers and private sector businesses with the goal of commercializing new technologies into the marketplace.”

One of the main attractions in Toledo is its stake in alternative energies; the largest solar panel manufacturer in the country is located in northwest Ohio. In conjunction with a merging of the medical university and the University of Toledo, growth in the medical device industry has become significant. The Andersons — a diversified company with interests in the grain, ethanol and plant nutrient sectors of U.S. agriculture, as well as railcar leasing, turf products production and general merchandise retailing — will construct one or more ethanol plants in the area through a joint venture with Marathon Oil Corporation.

GM Powertrain has spent approximately $500 million to expand and update its existing plant in Toledo. Now, DaimlerChrysler has announced plans to construct a new $2.2 billion plant in the area as well.

“The ethanol plant is a larger example of a trend coming to Toledo, and First Solar, the company involved in alternative energy research, continues to add and expand,” Weathers says. “In the automotive industry, GM Powertrain spent $500 million to update and redesign its plant, and DaimlerChrysler is putting $2.2 billion into a new plant. What’s interesting is with all the consolidation in automotive around the country, it really is expanding here because we are close to Detroit, but we have a lot of land. So we have picked up more than we’ve lost.”

According to CB Richard Ellis Reichle Klein’s year-end report, the vacancy and rental rates throughout the Toledo market are as follows: in the multifamily residential market, average rental rates are at $0.72 per square foot, while vacancy stands at 9.77 percent; the retail sector is seeing rental rates at a mean of $9.17 per square foot as the vacancy rate is 13.86 percent; in the office market rental rates average out to $16.24 per square foot, while the vacancy rate is 14.78 percent; and in the industrial sector, average rental rates are $3.29 per square foot and vacancy stands at 6.1 percent. Even though the overall office market’s vacancy rates are higher, Toledo’s suburban office market boasts the 15th lowest vacancy rate nationally. “It’s hard to say there is one pocket where all the development is happening, and from a commercial and retail absorption standpoint, the market looks pretty good,” Weathers notes.

Overall, development is relatively strong in Toledo, with several major projects underway or in the works. On the industrial side, a new manufacturing facility for a coking plant will bring 150 new jobs and $800 million in investment, and GM Powertrain — as previously mentioned — is upgrading its entire plant.

While the community’s focus traditionally is on the industrial technology, there is development in other areas as well. In the downtown sector, a 10- to 15-year build-out of the Marina district is underway, which will be a mixed-use community along the river. Westgate is building a new mall with Costco, Bass Pro Shops announced it would be constructing a store, and the city recently had discussions regarding a new sports arena. Further, RVI Group has acquired the One Seagate building in downtown Toledo, where Fifth Third Bank signed a lease to locate its northwest Ohio headquarters.

“I think Toledo is in a transition phase; we have a base of manufacturing, but the new technology is on the way. We put a proposal in for a wind blade test facility, for which 70 percent of all material in the world for this is manufactured by Owens Corning, which is headquartered right here,” Weathers says. “Our infrastructure is such that, over the next 20 years, these things could be manufactured here for the entire world. When you couple that with the research going on here in alternative energies and with the research in ethanol, things appear positive looking forward.”


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