Tuesday, November 06, 2007

Retail Market Overview 2008

Retail developers have built one million square feet or more annually for the past five (5) years in Northeast Ohio. This has kept retailers, leasing agents and the brokerage community very busy filling space. Our research indicates that there are a few projects that have broken ground or will break ground early next year; The Plaza at SouthPark in Strongsville, Deerfield Crossings in Amherst, Bridgeview Commons in Garfield Heights, however the bulk of the retail activity has been absorbing existing retail space. The majority of the vacant space left by Tops Grocery stores was absorbed by Giant Eagle. The availability of the Tops real estate was also a factor in less grocery anchored shopping centers being built than in previous years. The big box retailers continue to actively identify in-fill and relocation opportunities. Wal-Mart has opened a SuperCenter at Steelyard Commons which shall fill a retail void on the near south side of Cleveland. Target opened on West 117th on the Lakewood-Cleveland border which filled a retail void on the near west side. Giant Eagle will soon join Target on West 117th. It’s too early to determine if the retailers will exceed expectations in these markets, however if the sales projections are met or surpassed you can expect additional retail development in the City of Cleveland as well as the first ring suburbs.

Developers are pursuing referendum initiatives in Boston Heights, Broadview Heights, Orange, and Solon. In the event these developers are successful Northeast Ohio could experience more than one million square feet of new construction in 2008. Additional speculative development has been proposed for Cleveland’s Central Business District and includes The Flats East Bank project proposed by Scott Wolstein and Bob Stark’s Warehouse project. Mr. Wolstein’s project has cleared several obstacles over the past year and Bob Stark’s vision and success in the suburbs bodes well for his planned project downtown.

The City of Cleveland is blessed with active community development organizations. Several CDC’s are undertaking major renovation projects in their neighborhoods. Northeast Shores Development Corporation is in the process of redeveloping the Waterloo District. The Detroit-Shoreway CDC created the Gordon Square Arts District. Both of these projects are worth mentioning because of their impact on the local neighborhood. These projects are located on the major arteries that serve each neighborhood and are positive first impressions. I anticipate that both projects will be a catalyst for new urbanism and ultimately will lure residents from the suburbs back into the City.

For additional information regarding the CDC progress, go to www.northeastshores.org or www.dscdo.org.

2008 Trends
• Consolidation in the Financial Services Sector
• Big Box in-fill and relocation
• Shrinkage in the causal theme restaurant industry
• Increased mixed use developments using universities as the anchor
• Redevelopment of major arteries serving neighborhoods in the City of Cleveland
• Increased environmental awareness and green initiatives
• Strong sales projections for Home Improvement Retailers
• Rental Rates should increase slightly
• Investment activity to remain strong, significant number of foreign buyers


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