By: Andrew Batson, Director of Research, JLL
In case you missed it, the annual JLL Skyline Review is back. The newly released research highlights 52 markets across the U.S. and Canada for an up-close view of market conditions and key trends in commercial real estate. While the report analyzes top markets across the nation, many trends impact cities closer to home—including Cincinnati, Cleveland, Columbus, Detroit and Pittsburgh.
(Above: Explore trends and data from this year’s Skyline, across OH, MI and PA cities.)
Great Lakes Cities Slowly Move into Landlord-Favorable Territory
While primary markets continue to exceed expectations, secondary submarkets are quickly catching on as a sweet spot for tenants seeking Class B and C buildings, or even Class A with considerably lower rental rates.
Rising tenant demand and consistent rent growth are pushing cities like Pittsburgh and Detroit into landlord-favorable market conditions, which have subsequently caught the attention of investors. Looking ahead to 2017 and 2018, Pittsburgh, Detroit, Columbus and Cincinnati will all either begin to enter landlord-favored conditions, or continue in them as these cities adapt to increasingly diverse economies.
New Office Construction on the Horizon
To accommodate for the spike in tenant demand, many markets are beginning to see the proposals and openings of new office buildings in downtown areas. While rental rates have hit record highs in top markets, the construction of new office spaces is expected to even out the leasing environment for tenants.
The delivery of JLL Center at Tower Two-Sixty in Pittsburgh is already 65.4% leased as tenants take great interest in their new downtown options. Similarly, Columbus is gaining headway with the proposal of Two25 Commons and Millennial Tower, which would collectively offer nearly 534,000 square feet of office, retail and residential space.
Speculative projects have also gained traction in Cleveland, as two of the city’s major occupiers—Sherwin Williams and Medical Mutual—evaluate long-term needs. A commitment from just one of these companies could result in the construction of a new downtown office tower.
Diversified Economy Calls for a Shift in Workspace
The lively employment outlook in Cincinnati, Pittsburgh and Columbus is encouraging landlords to adjust their tenant packages and rental rates to compete with developments that include creative, non-traditional office space.
New developments in Over-the-Rhine with varying open spaces for creative teams are causing landlords in the urban core to renovate and rethink their office arrangements to draw more tenant demand to downtown.
As tech giants and healthcare industries continue to flock to Pittsburgh, the desire for a mixed-use office environment is on the rise. The recently opened JLL Center includes a wide variety of spaces for employees and clients to accommodate different meetings, events and productivity styles.
Register for free to see how your city’s Skyline compares.
About the Author
Andrew Batson is a Director of Research in the Great Lakes region of JLL. Andrew is responsible for building and continuing to elevate a best-in-class research program that differentiates JLL and drives a competitive advantage in the marketplace through market expertise, analysis and insight. View Andrew’s bio or connect with Andrew on LinkedIn.