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Market Report

Cleveland Office Investment Forecast

2020 Outlook

Demand Exceeds Supply for Fourth Consecutive Year; Buyers Compete for Class B Assets South of Downtown

Education and healthcare sectors remain significant economic driver for employers expanding downtown. Cleveland Clinic and University Hospitals have been a major component in office demand growth throughout the metro as they expand to areas such as University Circle and Tremont. Small tenants gravitate toward these major employers, particularly independent medical-office-space users. As significant Class A office projects await financing, leasing for traditional office tenants has softened. Fox Sports, for example, plans to expand into 46,000 square feet at the proposed 400,000-square-foot Nucleus Class A office development. Pre-leasing has also begun for the proposed 455,000-square-foot Centennial office building downtown, scheduled for delivery in 2022. Competition for space and limited arrivals will result in tighter conditions downtown as businesses congregate near the city’s burgeoning amenities. Vacancy will dip closer to 11 percent and the average asking rent will rise at a pace that exceeds the previous 10-year average annual growth rate.

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