by Dan Rafter
The city of Cleveland has plenty to celebrate these days as the NBA’s Cavaliers celebrate their championship over the Golden State Warriors. But that long-awaited championship isn’t the only good news for Cleveland residents: According to the latest research from Marcus & Millichap, the retail market here is firmly on the rise.
According to the company’s second-quarter retail report, vacancy rates in the Cleveland market should drop 40 basis points this year to 7.2 percent even as retail construction continues to increase. Marcus & Millichap reported that builders are expected to increase retail inventory by 0.4 percent this year with 667,000 square feet of new space in the Cleveland market.
As vacancy rates fall, retail rents are expected to rise, of course. Marcus & Millichap predicts that the average asking rent in the Cleveland retail market will increase in 2016 by 1.1 percent to $10.99 a square foot. In 2015, the average asking rent climbed 1.2 percent.
During the last 12 months, developers delivered more than 684,000 square feet of retail space in the metropolitan area, primarily in the Erie County and Lorain County submarkets. The largest development during this time was the 110,000-square-foot Kroger supermarket in the Erie County submarket. The 75,000-square-foot Levin Furniture store in the Lorain County submarket was the second-largest example of retail construction.
The biggest retail project under construction now in the Cleveland area is Pinecrest in the East submarket. Scheduled to open in 2017, this mixed-use development will contain 350,000 square feet of retail space, 90 apartments, a hotel and 150,000 square feet of office space. Tenants already signed for the project include REI, Whole Foods and The Steakhouse.
So, yes, if you live in Cleveland, enjoy the ticker-tape parade. But remember that once the glow from LeBron’s latest title fades, you can still enjoy all the new retailers that are opening in your market.