By: Andrew Batson, research analyst, Great Lakes Region, Jones Lang LaSalle
Experts and consumers alike look ahead to 2013 with optimism as 2012 comes to a close. Occupancy growth improved 84.1% over the course of 2012 within all markets tracked nationally by Jones Lang LaSalle (JLL). A closer look at Q4 in Ohio and Michigan shows varied activities by major metropolitan market.
Cincinnati’s economy continued to grow during the fourth quarter. The employment rate slowly heightened, with more than 1 million employed citizens. Concurrently, the unemployment rate (6.3%) reached a new low since November 2007.
The government sector in Cincinnati caused the majority of job losses, which were offset by high levels of growth in the professional and business services industry.
Cleveland experienced ongoing improvement throughout the duration of Q4. The unemployment rate hit a new low since September 2007, dipping to 6.1%. More than 1 million Clevelanders remained employed during Q4, with the majority of new jobs generated by education and health services.
Economic conditions in Columbus also rose moderately. Job growth in the metropolitan sector rose 2.3% from the previous year. A large majority of new positions were generated by the health and education sector, while the manufacturing industry decreased employment by 7.5% from 2011.
During Q4, Michigan officially became the 24th right-to-work state. In other economic news, the Detroit economy did not improve or falter, but continued to function consistently in Q4. More than 1.8 million Detroit citizens remained employed. The manufacturing industry offered a majority of new jobs as the year tapered, while the government cut jobs, a trend seen across Ohio and Michigan.
The Cincinnati real estate market experienced strained leasing activity, as well as stunted touring office activity in the last quarter. The city also sustained a significant number of relocations in 2012; however, the downtown and suburban submarkets acquired a relatively equal amount of new leasing deals.
Paycor and Dunnhumby mobilized for construction, boosting activity in Q4. Meanwhile, office construction continues to dwindle. But, from an inclusive standpoint, total investment transactions increased in 2012 due to stable activity within the capital markets.
The trend for downtown living continues in Cleveland. The city experienced increased personal property leasing activity, totaling 570,000 square feet in Q4. Downtown properties accounted for the majority of leased space during the fourth quarter.
Hefty investors entered the Cleveland market, boosting total investment sales activity. Geis Companies, a design / build company, is among the most notable transactions of Q4. In 2013, Geis will finalize negotiations with Cuyahoga County to buy the Ameritrust building for $27 million.
During Q4, Columbus experienced increased leasing and construction activity. Quantum Health, Time Warner and ADA Alliance Data Systems finalized significant lease transactions. Looking to the New Year, several large companies entered the market seeking new space, such as Verizon and Chase Bank, while others require occupancy adjustments including AT&T and Nationwide.
Detroit saw mixed real estate activity during Q4. Approximately 3.2 million square feet of space was leased in 2012; Q4 accounted for more than 600,000 square feet. These numbers pointed to stabilized leasing transactions during the last quarter.
Touring activity endured a downfall, while the capital market experienced growth in direct result to transactions involving the Blue Cross Blue Shield’s original building, United Shores’ new building and One Woodward. Construction activity remained depressed in Q4—a trend carried forward from Q3.
Cincinnati struggled to increase real estate business as the year came to a close; however, the city is expecting positive improvements in several areas for 2013. During the early months of 2013, JLL experts suspect slow employment growth in Cincinnati. However, heightened leasing and touring activity are also forecasted.
Cleveland is expecting perceptible change for the coming year. The State of Ohio also suspects slow employment growth in Cleveland during the Q1. However, continued growth within the office market, coupled with large construction initiatives, point to ongoing improvement for Cleveland real estate.
JLL experts forecast slowed employment growth in Columbus early in 2013. Smaller tenants seeking space are better positioned for success in terms of availability and rent rates; however, larger tenants will struggle to find options that suit space requirements. JLL experts predict consistent activity in the leasing and touring market sectors.
Uncertainty and ongoing political issues continue to cloud Detroit’s forecast for 2013. The experts at JLL expect continued property absorption in the coming months. In this current state, tenants searching for real estate will have a wide variety of options to choose from in downtown Detroit and in the suburbs.
For more information on your city of interest, click through to download the complete Q4 analyses:
- Cincinnati (Office Insight | Office Statistics | Office Highlights)
- Cleveland (Office Insight | Office Statistics | Office Highlights)
- Columbus (Office Statistics)
- Detroit (Office Insight | Office Statistics | Office Highlights)