2022 Q1 Market Snapshot for the Cleveland, OH Office Market

Economic and Demographic Update

Population: The population in Cleveland in the 1Q of 2022 was 2,074,756. This represents a decrease in total population of 7,058 over the course of the last year. During 2021 Q1, the Cleveland population stood at 2,081,814. The number of people employed rose to 1,041,727 in 2022 Q1 from 1,032,496 over the last quarter, an increase of 9,231 or 0.89% for the period.

Median Income: The median household income for Cleveland in the 1Q of 2022 was $62,017. At this time last year, the median household income was $56,056. 2022 Q1 median income represents a quarter-over-quarter increase of 2.51% and a year-over-year increase of 10.63%. Cleveland has a median household income lower than the U.S. average, which is $70,941.

Current and Historical Data Review (Rates PSF, Vacancy)

Office leasing: Overall office base rent rates have increased by $0.39/SF. They went from $17.43/SF in 2021 Q4 to $17.82/SF in this most recent quarter. Office rates grew in 2022 Q1 when compared to last year’s quarter, when office base rent was $17.01/SF.

Vacancy rates stayed consistent at 8.00%. They stood at 7.80% this time last year. The vacancy rate is expected to decrease from 8.00% to 7.80% next quarter.

In the Cleveland market’s central business district (CBD) specifically, 2022 Q1 base rents stood at $21.08/SF, an increase from $20.96/SF in 2021 Q4. When compared to last year’s quarter, CBD office rates decreased from $21.62. 

CBD vacancy rates went from 10.15% to 10.17%. The CBD vacancy rate is expected to increase to 10.32% next quarter. 

Office Sales Metrics (Average Cap Rates, Volume, Average Price PSF)

For investors, the average cap rate during 2022 Q1 was 6.50%, compared to the previous quarter’s average cap rate of 8.50%. The average cap rate was 14.70% this quarter last year.

In terms of transaction volume, there were 37 sales transactions during the period. That’s a decrease compared to the 71 transactions in the previous period. Last year at this time, there were 40 transactions. In terms of transaction amounts, office transactions were valued at $49,801,828 in 2022 Q1. That’s an increase compared to $37,242,220 of transaction value in the previous period. Last year at this time, office transactions were valued at $51,281,940.

Industrial Leasing Metrics (Rates PSF, Vacancy)

Industrial leasing: For the Cleveland, OH industrial sector, we look at warehouse and distribution spaces specifically. Warehouse and distribution base rent rates have increased by $0.16/SF. They went from $5.41 in 2021 Q4 to $5.57/SF in this most recent quarter. Warehouse and distribution rates grew in 2022 Q1 when compared to last year’s quarter, when industrial base rent was $5.21/SF.

Vacancy rates also went from 4.40% to 4.20%. Next quarter, the vacancy rate is expected to drop to 4.00%.

Industrial Sales Metrics (Average Cap Rates, Volume)

For investors, the average industrial cap rate during 2022 Q1 was 8.50%, compared to the previous quarter’s average cap rate of 8.50%. The average cap rate was 8.60% this quarter last year.

In terms of sales volume, industrial transactions were valued at $80,591,608 during the quarter. That’s a decrease compared to $180,406,528 of transaction value in the previous quarter. Last year at this time, industrial sales transactions totaled $143,727,200.

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All data aggregated in this report is provided by CoStar Realty Information Inc. CoStar is a provider of information, analytics and marketing services to the commercial property industry in the United States, Canada, the United Kingdom, France, Germany, and Spain.

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