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Q32012 Downtown Cleveland Alliance is the not-for-profit organization dedicated to building a dynamic downtown. It is com - mitted to making downtown Cleveland the most compelling place to live, work, play and visit in the region. Downtown Cleveland Alliance, working hand-in-hand with downtown property owners, creates forums for communi- cation and involvement by a diverse group of downtown stakeholders, including local development corporations, city and county governments, civic and arts organizations, residents, young professionals and business stakeholders. By facilitating the collaboration of these groups, DCA strives to enhance the quality of life in the urban core by implement- ing initiatives like the Clean & Safe Program, economic development assistance, marketing & special events, advocacy and strategic projects. Funding is provided by Downtown Cleveland property owners who have jointly agreed to a special assessment to be used to augment services. This is not a tax, and the funding does not take the place of tax-funded initiatives. It’s an in - vestment made by members to enhance the growth, improvement and development of Downtown Cleveland. ADDRESS: 50 Public Square, Suite #825, Cleveland, OH 44113 TELEPHONE: 216-736-7799 WEBSITE: http://www.DowntownCleveland.com 1 Q3:2012 EXECUTIVESUMMARY DOWNTOWNCLEVELANDMARKETUPDATE—QUARTER3SUMMARY Downtown Cleveland’s development boom continued in the third quarter. Recognizing the power of a downtown ad - dress to attract talent, businesses across the United States are exploring relocations to or expansions in downtown areas. Downtown Cleveland is following this national trend. As noted by CBRE, “We also are seeing an in-migration of suburban tenants to Downtown in an effort to attract and retain workers.” (CBRE MarketView Third Quarter 2012). The marquee office announcement this quarter was Alexander Mann Solutions decision to locate its North American operations center in Downtown Cleveland, which will bring at least 300 jobs to the central business district. Downtown office occupancy rates increased to 81.4 percent in the third quarter, up from 77.4 percent in the third quar- ter of 2011. The downtown office market also netted an increase of 56,975 square feet, marking 6 consecutive quarters of positive net absorption. Since the first quarter of 2011, Downtown Cleveland has experienced 477,862 square feet of positive net absorption. Downtown Cleveland Class A occupancy also continues to outpace that of surrounding suburbs. (Source: CBRE, Marketview, Third Quarter, 2012). Record high demand for downtown housing continues. This marks the second consecutive quarter of 97 percent apart- ment occupancy, and the sixth consecutive quarter of 95 percent or greater occupancy. Downtown Cleveland Alliance projects over 1000 apartment units will become available over the next 24 months to meet pent up demand. Downtown’s travel and tourism industry is also thriving. The Horseshoe Casino has attracted over 2 million visitors in less than 5 months. Positively Cleveland projects that the number of annual downtown visitors will increase from 3 million to 6 million over the next year. Growth in the office, residential, and tourism markets is driving increasing interest from retailers. 15 new restaurants have opened in 2012 with more on the way, including J. Gumbo’s and Chipotle. Cumberland Development master- leased 60,000 square feet of retail space at the Colonial Marketplace and Euclid Arcades, creating new opportunities for resident and visitor oriented retail. RTA also expanded the free downtown trolley service to better connect commuters, visitors, and residents with central business district amenities. Of special interest to businesses is the NineTwelve Trolley, which connects the NineTwelve District to Downtown Cleveland’s most affordable parking. As we move into the 4th quarter, the momentum in Downtown Cleveland continues to build. With decisions on the hor-i zon regarding the Cuyahoga County government’s real estate, the Cleveland Municipal School District Administration Building, and state historic tax credits, there has never been a better time to invest in Downtown Cleveland. Published October 2012 2 INNERBELTBRIDGECONSTRUCTION The Ohio Department of Transportation and the Innerbelt Project Team work to replace the 53-year-old Innerbelt Bridge with two new bridges and expand the number of lanes from eight to 10. Crews are currently working to build the new westbound bridge – the first of the pair. Employing as many as 500 people and investing nearly $300 million dollars in greater Cleveland, the first new bridge alone is the largest infrastructure investment in ODOT history. The first new bridge will open in the fall of 2013, with work immediately beginning on the second bridge. 3 Q3:2012 MAJORINVESTMENTS&DEVELOPMENTUPDATE EAST5THSTREETARCADES CUYAHOGACOUNTYPROPERTYSALEUPDATE MEDICALMART&CONVENTIONCENTER Cumberland Development President Dick Pace has master leased the Bidding on Cuyahoga County’s 13 properties, which represents New sod and grass is being laid atop Mall A; below is the new 750,000 60,000 square-foot historic shopping landmark, Colonial Marketplace 1.4 million square feet of real estate in downtown, closed in mid- square feet Convention Center. Construction is scheduled to be-com Arcade, now known as East 5th Street Arcades. Over 400 young September. The county received 31 proposals from developers, pleted in July 2013, two months ahead of schedule & under budget. The professionals and downtown residents came together to share ideas on property owners and others who seek to capture part of the dynamic Convention Center has 17 meetings and shows scheduled for 2013, 12 what types of retail and ambience they’d patron at the East 5th Streereinvestment and interest in Downtown Cleveland. Final selections for 2014, nine for 2015. The Medical Mart, the first in the world, will Arcades. Renewed investment is drawing interest from successful, will be made and announced by the end of Q4. feature four floors of the world’s most advance medical technology: local retailers. first floor - Health & Home Theme; second level - People, Patients, & Caregivers; third floor - Clinical Spaces; fourth floor- Healthcare IT. 4 MAJORINVESTMENTS&DEVELOPMENTUPDATE LAKEFRONTDEVELOPMENT TOWERATERIEVIEW TROLLEYLINES Cleveland City Council approved legislation authorizing the city The Tower at Erieview, a 40-floor skyscraper Downtown, is now of - RTA introduced three new routes for its free trolleys in downtown to enter into a one-year lease of 20-acre of the city’s lakefront with fering $17M in tenant improvements to businesses seeking to expand Cleveland and expanded their operating hours into evening and Geis Cos. This allows Geis Cos. to begin pre-development work for or relocate to this Downtown address. A new notable tenant includes weekends. The C-Line trolley serves casino and convention visitors, a lakefront office park. To develop the remaining 70 acres along the London-based Alexander Mann Solutions, an international recruit - the L-Line provides connections to lakefront destinations, and the lakefront, Mayor Jackson announced a panel which will develop and ment firm with clients such as Mercedes-Benz, plans to bring at least NineTwelve Line links office workers to large parking facilities. In review a request for proposals for a single developer or firm to lead a 300 jobs to Downtown Cleveland and its North American headquar - partnership with Downtown Cleveland Alliance, RTA raised funds comprehensive mixed-use plan. ters. Winks, a Winking Lizard brand, opened its doors to crowds of from local sponsors as a match in federal funding to operate the-ex fans in early October at the Galleria, which is connected to the iconic panded service for three years. building. 5 Q3:2012 FLOTSAM&JETSAM In partnership with the Port Authority of Cleveland, DCA Ambassadors now man two custom-made boats on Cuyahoga River and in the Harbor. These boats remove floating debris from the Cuyahoga River and downtown Lake Erie shoreline. Debris removal is part of ongoing work to renew the river and remove it from an EPA environmental watch list. The boats are part of the Port’s broader mission to help restore the health of the river and serve as a proactive environmental steward in and around Cleveland’s waterways. The Port designed and built the aluminum vessels with a $425,160 grant from the U.S. Environmental Protection Agency’s Great Lakes Restoration Initiative. 6 OFFICEMARKETUPDATE OFFICEMARKETOVERVIEW Increased demand for office space in the NineTwelve District led to some of the greatest lease rate increases in the region. 2,966,698SF AVAILABLE Since first quarter 2011, vacancy has dropped 4.7% - from 23.3% to 18.6% Public Square continues to have the lowest vacancy rate, down 0.2% from last quarter – from 11.3% to 11.1% 13,007,796SF According to Jones Lang LaSalle, small to medium sized OCCUPIED tenants are making up the bulk of leasing transactions. OFFICEMARKETANNOUNCEMENTS New Tenant Moves and Announcements: Willis of Ohio, Inc., Osborn Engineering, Grant Thornton, Bizdom, Cohen Fund Audit Services General Market News: The Hanna Annex transaction has been completed by The K & D Group for $3.3 million. K & D will redevelop the property as market rate apartments. Cuyahoga County’s real estate portfolio of over 1.4 million square feet and received 31 bids in September. 81.4% 84.3% Geis Companies announced plans to purchase Lakeside 77.7% 79.4% Place (323 Lakeside Avenue). Companies touring the market:* Cuyahoga County ( 255,000 SF ); Northwestern Mutual ( 20,000 SF ); CMSD ( 70,000 SF ); Wells Fargo ( 60,000 SF ); Alexander Mann Solutions Corp. ( 50,000 SF ). Q32011 Q32012 Q32011 Q32012 *Jones Lang LaSalle CBDOFFICEOCCUPANCYPERCENTAGE CLASSAOCCUPANCYRATE 7 Q3:2012 OFFICEMARKETUPDATE QUARTERLYTRACKING 2012 3Q2012 22Q012 1Q2011 4Q2011 3Q2011 2Q Net Absorption (SF) 57,412032,94,3,84191,975 Vacan2c2y22.1%.89.28.918.6% MAJORLEASETRANSACTIONS CNOBPANLENGCTION BrandMusS clue1rttoaFt2i6)2n Osborn Engineering Co. 1100 Superior 27,033 SF (Retention) Willis of Ohio, Inc. 1001 Lakeside 10,110 SF (Retention) The OM Group 127 Public Square (Key Tower) 25,000 SF (Retention) Grant Thornton LLP 1375 E. 9th Street (One Cleveland) 20,000 SF (Retention) Renner Otto 1621 Euclid (Keith Bldg) 14,000 SF (Retention) Ohio Business Machines 1111 Superior (Eaton Ctr) 8,000 SF (Attraction) (RBrenti20500 DOWNTOWNVS.SUBURBANOFFICESPACEOCCUPANCY CLEVDEABNDRBS* Average Lease Rate $ SF/YR $17.20$16.82 Net Absorption (SF Quarterly) 56,97513,672 Vacancy Rate18.6% 21.8% MARKETCOMPARISONBYCITY(CLASSA&BSPACE) CITYNAME RENTABLESF VACANCYRATE NET ABSORPTION AVERAGESFRATE SFCONSTRUCTION Indianapolis*11,449,718 17.57,023)† $18.25 18,000 Baltimore 12,439,293 18.23,4$72920.24 † Year to Date Net Absorption Cleveland 15,974,494 18.66,$717.42500,000 * Includes Class C Office Space Columbus* 11,360,991 17.781,21.33)301,300 Office market data source CBRE unless otherwise Detro1i5*,769,276 25.135$,80.53 noted HOUSINGMARKETUPDATE HOUSINGMARKETOVERVIEW NEWHOUSINGPROJECTUPDATE The downtown residential market continued to enjoy DESCRIPTILOCEUTVELTOEPDER a record high occupancy rate of 97 percent even as the Truman Building 1030 Euclid Avenue 26 Calabrese Racek Markos market added 443 housing units. The third quarter marks 6 consecutive quarters of 95 percent or greater occupancy. Chester Commons 1120 Chester Avenue 36 Calabrese Racek Markos The rising demand for downtown housing also drove Schofield Building 2000 E. 9th Street 50 Calabrese Racek Markos price per square foot up from $1.05 to $1.14. With multiple Reserve Square 1701 E. 12th Street 232* K & D buildings reporting wait lists of several hundred people and many months, it is welcome news that over 1100 units Hanna Annex 2051 E. 14th Street 102 K & D are projected to become available within the next 18-24 1717 East Ninth 1717 E. 9th Street 223 K & D months. Rosetta Building 629 Euclid Avenue 85 MRN Avenue District 1211 St. Clair Avenue 56† Panzica / Zaremba / Geis HOTELMARKETOVERVIEW The Langston 2100-2200 Chester 308‡ Polaris Real Estate The increasing visitor traffic generated by new attractions like the Horseshoe Casino and Greater Cleveland Aquarium, in addition to attractions like the Rock & Roll Hall of Fame & Museum and PlayhouseSquare, increased 1100 hotel occupancy from 68 percent in September 2011 to 75 percent in September 2012. Positively Cleveland estimates *After this addition, Reserve Square will have nearRESNEWTIALn total. †28 of the units are currently available for lease. UNITSAVAILABLEIN that the number of annual visitors to Downtown Cleveland ‡194 of the units are currently available for lease. will double to 6 million in 2013. This increase in visitor THENEXT18MONTHS traffic, along with K&D’s conversion of the Embassy Suites into market-rate apartments should propel new downtown hotel development. Hanna Annex currently under construction Rendering of new apartments inside the Hanna Annex 9 Q3:2012 HOUSINGMARKETUPDATE HOUSINGMARKET 2012 Q32011 Q3 RENTAL Total Units: 4,171 4,636* Occupancy: 94.6% 97.0% PSF rental: $1.05 $1.14 *220 new rental units now online OWNED Total Units: 936 936 Num. Sold: 18 18 Avg. Sale Price: $304,413 $249,132 PSF For Sale: $210.70 $159.83 HOTELOCCUPANCY 2011SEPT 2012SEPT Avg. daily ra$t1e1:2.25 $116.53 REV per available room: $75.86 $86.94 Occupancy r6a7t7:4.6% MAJORHOTELPROJECTUPDATE DESCRIPTIOLOESTIIISPETTIOND 4A814QiSete.sn7i7 14St 0p30ofgtW. Kimpton E 9 & Euclid Ave 120 Begins Construction Q1 2013 741 UNTSTENLEW AVAILABLEIN THENEXT18MONTHS 10 RETAILMARKETUPDATE ARRIVEDIN2011 ANNOUNCEDFOR2013 CLE Clothing Lago (Flats East Bank) Noodle Cat Ken Stewart’s (Flats East Bank) Taza Toby Keith’s I Love This Bar (Flats East Tavo Bank) Bar Louie Dos Tequilas (Flats East Bank) Pura Vida Flip Side (Flats East Bank) Constantino’s Market (expansion) Willeyville (Flats East Bank) The Bike Rack Urban Farmer (Westin Hotel) Chipotle Society Lounge 2012TODATE Cleveland Pickle Red the Steakhouse Barroco Grill Cowell & Hubbard J. Gumbo’s Colossal Cupcakes Tilted Kilt El Guero Mexican Grille Hodge’s GoodFellar’s Nova Bar & Grill Brgr9 Charka Exotic Indian Cuisine Potbelly’s Sandwich Shop Black Dog Kitchen & Bar Rosie & Rocco (Horseshoe Casino) B Spot (Horseshoe Casino) Corky & Lenny’s (Horseshoe Casino) Winks Bar and Grill Black Dog Kitchen 11 Q3:2012 TRANSPORTATIONMARKETUPDATE GREATERCLEVELANDREGIONALTRANSITAUTHORITY STEP-BY-STEP: MONTHLYRIDERSHIPREPORT:JUNE2012 3EASYSTEPSFORUSINGTHENINETWELVETROLLEY Using the new trolley is simple. PERFORMANCEOVERVIEW: Service times First. Select where you would like to park. Monday–Friday 6:00 a.m. – 9:00 a.m. Ridership comparisons between 2011 and 2012 are displayed below: Monday–Friday 3:00 p.m. – 6:00 p.m. Cleveland • The Municipal Parking Lot (Muny) near I-90 Stadium Q32012 Q32011 Q3DIFFERENCE Frequency only $3.00 / day. Bus 8,305,836 8,179,843 1.54% Lakefront Every 15 minutes Warehouse WStreetttractionsn reqCoast Muny Lotbor • The Gateway East Garage near Quicken Loans Healthline 1,172,900 1,140,300 2.86% DisFlats Lakeside Ave Lakeside Ave Arena is just $4.00 for early bird commuters. East W 6th W 3rd OntarioMall DE 6thllE 9th E 1 Success Bank Main Office th H.S. Schedule Total Bus 9,478,736 9,320,143 1.67% Flats W 9 East Side Æ 90 Bank th DEparte ClevelaarrivEe Rack (fDEpartycle arrivE St. Clair Ave Muny Lot th th commuters) is $5.00 a day, or $25.00 perny Lot RAPIDTRANSIT Rail 2,254,129 2,146,605 5.01%Flats Public Sq. 5:45 AM 5:59 AM 5:45 AM 5:55 AM Settlers 6:00 AMmonth, to park your bike. Landing & Casino Superior Ave 6:14 AM 6:00 AM 6:10 AM Warehouse Payne Ave E 18th E 21stM 6:29 AM 6:15 AM 6:25 AM PARATRANSIT Paratransit 163,125 144,723 12.72% otrednie Euclid Ave 6:30 AM22E 23rd6:44 AM 6:30 AM 6:40 AM ediL66(e District Chester Ave Chester Ave Second. Find your nearest trolley stop. R West Prospect (S) East 4th 6:45 AM 6:59 AM 6:45 AM 6:55 AM 7:00 AM 7:14 AM0 7:00 AM 7:10 AM TROLLEYS Trolleys (E & B Lines)* 271,966 237,559 14.48% og aR ver Prospect Ave ya PlayhouseSquare 7:15 AMto the n7:29 AMtrolley 7:15 AMtween 6:7:25 AM Cu West Prospect (N) Huron Rd Euclid Ave 7:30 AM 7:44 AM 7:30 AM 7:40 AM and 9:00am. Trolley stops are designated by a Total Ridership 11,904,664 11,620,385 2.45% 7:45 AM 7:59 AM 7:45 AM 7:55 AM Blue Line 8:00 AM"NineTwe8:14 AMlley" si8:00 AM 8:10 AM Gre( 6 6 ) Cleveland *New Trolleys added 9/10/12, see below ( Airntario 8:Univity 8:29 AM 8:15 AM 8:25 AM (aAk /A ) Prospect Ave 8:30 AMs 8:44 AM 8:30 AM 8:40 AM Sen Blvd. Capital University CSU • The NineTwelve trolley will come every 15 Lorain Aved. Field Carnegie Ave Convocation 8:45 AM 8:59 AM 8:45 AM 8:55 AM Center Stephanie Tubbsutes.9:14 AMolley ru9:00 AM continu9:10 AMp CenterTransit runs along E. 9th Street with a turnaround at W. 25 - Ohio City 90 DEpart arrivE th DEpart th arrivE People are choosing to ride the Rapid downtown, and using the free trolleys or the Rapid Station Inner Belt Freeway 90 Muny LoE. 4th and Prospect/Huron. You can board a Lot 2:49 PM 2:59 PM 2:45 PM 2:59 PM HealthLine, to complete their trips. On the Red Line, average weekday ridership is up 10% the ninetwelve Line Charity Hospital04 PMtrolley 3:14 PMone of t3:00 PMrous sto3:14 PM in September. 3:19 PM 3:29 PM 3:15 PM 3:29 PM There is now a fast and free way to shuttle either direction. F Av ee l d between the Municipal Parking Lot and work 3:34 PM 3:44 PM 3:30 PM 3:44 PM September 2012: 5,219 bikes boarded, 5.8% increase from September 2011. Year To Date 3:49 PM 3:59 PM 3:45 PM 3:59 PM with RTA’s NineTwelve Trolley. The Trolley picUnified totals 34,622 bike trips. 77 TeCentergies 4:04 PM. Enjoy 4:14 PM, easy t4:00 PM 4:14 PM Tremont up every 15 minutes during the morning and Cuyahoga 4:19 PM 4:29 PM 4:15 PM 4:29 PM H Community JVocational Real-Time information is available and being used by many customers. It provides the next 90 afternoon rush periods, stops at offices along Metro Campus 4:…and disembark at the stop nearest to your placePM E. 9th Street to the Gateway District, and is 4:49 PM 4:59 PM 4:45 PM 4:59 PM three buses or trains coming to the customer’s stop. www.riderta.com/nextconnect/ 5:04 PMployment5:14 PM NineTwe5:00 PMtrict. 5:14 PM free to ride. Signs identify the stops along the 5:19 PM 5:29 PM 5:15 PM 5:29 PM Trolley ridership for Q3 2012 compares E-Line and B-Line with Q3 2011. Not included route, which is serviced by RTA Trolleys. 5:34 PM 5:44 PM 5:30 PM 5:44 PM • To return to where you parked, simply in this comparison are the new trolley routes, which went into service 9/10/12 and have 5:49 PM 5:59 PM 5:45 PM 5:59 PM 6:04 PMboard th6:14 PMwelve Tr6:00 PMt one of6:14 PM carried approximately 7,000 customers in September. The new trolley lines are the C-Line, the designated stops between 3:00pm and L-Line and NineTwelve Line. All trolleys are ‘free with a smile’. 6:00pm. Disembark at the trolley stop nearest where you parked, walk to your car or bicycle, and quickly slip out of downtown. It's that easy! 12 Cover photo: © 2012 Aerial Aspect Photography
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