sandusky land - interchange location · sandusky land - interchange location sandusky, oh summary...

SANDUSKY, OH

Sandusky Land - Interchange Location

OFFERING MEMORANDUM

CONFIDENTIALITY AND DISCLAIMER

The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant’s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein.

SANDUSKY, OH


Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation’s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers.

ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOURMARCUS & MILLICHAP AGENT FOR MORE DETAILS.

NON-ENDORSEMENT NOTICE

Section 1 PRICING AND FINANCIAL ANALYSIS

Section 2 PROPERTY DESCRIPTION

Section 3 DEMOGRAPHIC ANALYSIS

Section 4 MARKET OVERVIEW

TABLE OF CONTENTS


Sandusky Land - Interchange LocationSANDUSKY, OH

PRICING AND FINANCIAL ANALYSIS

1

PRICING AND FINANCIAL ANALYSIS


Summary

Property Sandusky Land - Interchange

Property Address 5500 Milan Road

Sandusky, OH 44870

Price Request For Offer

Lot Size (SF) 683,456

Lot Size (Acres) 15.6900

Buildable SF 560,000

Number Of Lots 2

Lot Dimensions 15.69 +/- acres

Type of Ownership Fee Simple

This information has been secured from sources we believe to be reliable, but we make no representations or warranties, expressed or implied, as tothe accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for anyinaccuracies. Marcus & Millichap is a trademark of Marcus & Millichap Real Estate Investment Services of Ohio, Inc. © 2016 X0320388Marcus & Millichap. All rights reserved.

Site Description

Assessor's Parcel Number 32-03494.024 32-03494.026

Zoning C-1, C-2*

Taxes $32,454

Tax Year 2015

Frontage Highway, Exit Ramp Visibility

Traffic Counts 27,380 (SR-2) and 23,050 (US-250)

Adjacent Development WalMart Supercenter Anchored Retail

Financing

FIRST TRUST DEED

Loan Type All Cash

FINANCIAL OVERVIEW

There are two separate parcels.

Parcel 1 (outlined in green): Erie County, OH 32-03494-024, 8.55+/-

acres, with vacant movie theater building and parking lot.

Parcel 2 (directly below Parcel 1): Erie County, OH 32-03494-026,

7.14+/- acres with visibility from State Route 2 and exit ramp.

*Contact agent for Perkins Township Zoning Resolution.


PROPERTY DESCRIPTION

Marcus & Millichap is pleased to exclusively present for sale a 15.69+/‐ acre land site consisting of 2 parcels which include a vacant movie theater building and parking lot. The site is zoned C‐1 / C‐2, which is general commercial. The subject property is situated directly off the State Route 2 (SR‐2) interchange at Milan Road (US‐250) in Sandusky (Perkins Township), Ohio. The subject property has excellent visibility from State Route 2 at the exit ramp. Sandusky is located in northern Ohio on the shores of Lake Erie. Sandusky is midway between Toledo and Cleveland in Erie County. The Sandusky area is one of the most popular tourist areas of the Midwest.

The immediate area surrounding the subject property is the predominant retail trade area serving a 25 mile radius and a five‐county local population. The subject property is adjacent to a Wal‐Mart Supercenter, Dunham Sports and Lowe’s anchored shopping center. Nationally recognized retail tenants in the immediate area include Home Depot, Kohl’s, Meijer, Target, Toys R Us, Sam’s Club, Bed Bath & Beyond, Macy’s, Sears, JCP, Petco, Jo‐Ann, and others far too numerous to list.

The immediate area is also the predominant hotel/hospitality area serving the local population and also serving a thriving tourism industry. Restaurants in the immediate area include Panera Bread, Chipotle, Taco Bell, Sonic, Longhorn Steakhouse, Olive Garden, Applebee’s, Chili’s, Ryan’s Steakhouse, Outback Steakhouse, Cracker Barrel, Buffalo Wild Wings and several others. Hotels at the SR‐2/US‐250 interchange include Sleep Inn, Maui Sands Resort & Indoor Waterpark, Americas Best Value Inn, Comfort Inn, Travelodge, Best Budget Inn, Best Western Plus Hotel & Suites, Hampton Inn, Fairfield Inn & Suites and Kalahari Waterpark/Resort/Convention Center and Great Wolf Lodge.

Sandusky is home to Cedar Fair Entertainment Company Headquarters, owner of 14 amusement parks nationwide, and owner of Cedar Point Amusement Park located in Sandusky. Cedar Point, globally known as The Roller Coaster Capital of the World, draws over 3.5 million visitors each year. Cedar Point is situated on a 364 acre peninsula on Lake Erie’s south shore and dates back to 1870. Many of the hotels serving Cedar Point visitors are located at or near the SR‐2/US‐250 interchange.

Investment Highlights

■ Nine Million Tourist Visits per Year Make the Area One of the MostPopular Tourist Destinations in the Midwest

■ The Subject Property is Situated Just Off the SR-2/US-250 Interchangewith Excellent Highway Visibility

■ Predominant Retail and Hospitality Area Serving a 25-Mile Radius inAddition to a Thriving Tourism Industry

■ $1.5 Billion Spent in Erie County by Visitors in 2013, and Growing

■ Home to Cedar Point Amusement Park Drawing Over 3.5 MillionVisitors per Year

■ Other Draws to the Area Include Beaches, World Class Fishing, Boating,Sail Boat Races, Historic Sites and Nature Areas

■ Ohio is Ranked as One of the Top Five States for Offering a Pro-Business Climate

3




INVESTMENT OVERVIEW

[Investment Description: Other draws to the area include world class fishing, boating, the Lake Erie Islands, Lighthouses, Historic Sites, beaches and Nature Areas. Participants from all over North America arrive annually to compete in national sailing events. More than 9 million trips are made to the Lake Erie Shores & Islands each year making it one of the most popular tourist destinations in the Midwest. According to The Economic Impact of Tourism study conducted for TourismOhio, visitors spent more than $1.8 billion in Lake Erie Shores & Islands in 2013, and of that amount over $1.5 billion was spent in Erie County.

Sandusky is home to Firelands Regional Medical Center which provides the finest health care services available to a five‐county area. The hospital has 311 physicians, a hospital staff with over 2,312 employees and 227 beds. In 2015, Firelands Regional Medical Center had 267,183 outpatient visits, 75,032 Emergency Room visits, and 107,462 Patient Office Visits.

Sandusky is home to NASA’s Plum Brook Station. Plum Brook Station is a remote test facility for the NASA Glenn Research Center. Plum Brook is home to three world‐class test facilities which perform complex and innovative ground tests for the international space community.

Sandusky is a Great Lakes port community with a shoreline that stretches for 22 miles within the city limits. With its unique location on the Southern Shore of Lake Erie midway between Cleveland and Toledo, Sandusky offers easy access to both major urban areas via land or water. Sandusky has one of the finest and best‐protected harbors of the Great Lakes. Its location enhances the industrial potential of the area by providing an abundant fresh water supply and access to Great Lakes shipping.

Sandusky has one of the largest Great Lakes coal ports. Lake‐oriented industries, fishing and shipping, add to a well‐diversified industrial base of foundries, automotive parts, metal fabricating, construction products, plastics and vinyl products, colorants, paints and food processing equipment manufacturing. Between 2009 and 2014 Erie County added 1,200 manufacturing jobs from companies such as Johns Manville, International Automotive Components and Sandusky International. Manufacturing employment went up 15.5 percent in Erie County from 2010 to 2012 compared to a national growth rate of 3.7 percent at that time.

The Sandusky MSA is included in the Cleveland‐Akron‐Canton, OH CSA. 60% of the county is water (Lake Erie and Sandusky Bay) and Sandusky is the second smallest county by land in Ohio. The county borders Canada to the north across Lake Erie. Sandusky is noted for being the location of the fictional ‘Callahan Auto Parts’ in the movie Tommy Boy.

Ohio is the 7th most populous state and the 10th most densely populated. Ohio has one of the Top 5 business climates in the nation and is 2nd in the nation in the total number of new corporate facility projects. The state has a balanced budget with a $1.4B budget surplus, a high credit rating, and a pro‐business tax climate. Increasing exports continue to support Ohio’s economic growth. Ohio has a Gross State Product (GSP) of $576 billion, ranked 7th in the U.S. ]

4




INVESTMENT OVERVIEW

Sandusky City revenues are increasing. Total revenues at December 31, 2015 General Fund were $19,932,739 compared with $16,327,717 at December 31, 2014, which is a total increase of 22%.

A few items of note:

Income taxes ‐ 2015 were $9,433,948 and the 2014 amount was $6,977,782.

Admissions taxes ‐ 2015 were $3,665,452 and the 2014 amount was $2,723,977.

Hotel/motel taxes ‐ 2015 were $1,207,305 and the 2014 amount was $1,076,421.Source: www.ci.sandusky.oh.us/finance

Fueled by Cedar Point, many resort businesses and waterparks have opened in the area making the area a year round tourist destination:

Outdoor

Soak City

Monsoon Lagoon

Indoor

Castaway Bay, owned by Cedar Fair

Great Wolf Lodge Kalahari Maui Sands Waterpark & Hotel Rain Indoor Waterpark Located in Quality Inn & Suites

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INVESTMENT OVERVIEW

6




PRESS RELEASE - CEDAR POINT

Ohio’s Cedar Point to Undergo Renovation of Hotels and Water Park

SANDUSKY, OHIO - Cedar Point, an amusement park in Sandusky on the shores of Lake Erie, is set to renovate its

water park and hotels. Currently known as Soak City, the water park will be expanded to cover 18 acres and will be

renamed Cedar Point Shores Water Park. New additions to the park include Point Plummet, a 400-foot, six-story

body slide; Starboard Surge and Portside Plunge, two five-story tube slides; and Lakeslide Landing, a family splash

ground with 12 kid-sized water slides and a zero-depth entry pool.

The majority of the existing attractions will also be renovated and renamed. Upgrades and renovations to the water

park are scheduled for completion in 2017. The water park will also feature a new main entrance, poolside bar,

family changing and showering areas, additional lounge furniture, shaded areas and a new restaurant, the Crystal

Rock Café. Cabanas near the existing 500,000-gallon wave pool will also be upgraded to include free Wi-Fi,

charging stations, ceiling fans, TVs and a food and beverage service.

In addition to the water park renovations, the Breakers Express hotel will be renamed Cedar Point’s Express Hotel

and will feature the addition of 69 new rooms. All guest rooms feature two queen beds and include new bathrooms,

bedding, mini fridges and microwaves. The hotel renovations, to be complete next year, will also boast a new splash

pad and outdoor courtyard in the center of the building. The signature Hotel Breakers underwent a renovation in

2015 and will see the addition of a six-story tower by summer 2018. The addition will include 158 rooms, bringing

the hotel’s total to 669 rooms.

Point Plummet, Starboard Surge and Portside Plunge are all part of a six-story

slide structure that will be the highlight of the new Cedar Point Shores Water

Park.

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PROPERTY PHOTOS

Entrance to parcel with vacant movie theater.

Photo taken from back of parking lot with view of Murphy Gas and WalMart.

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PROPERTY PHOTOS

Photo of road exiting site.

View from parking lot looking toward Murphy Gas and WalMart.

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AREA RETAIL

10




AREA RETAIL

Erie County Map Regional Map

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AREA MAP

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AERIAL/PHOTO

Sandusky Land - InterchangeLocation

SANDUSKY, OH

DEMOGRAPHIC ANALYSIS

1 Mile 5 Miles 10 Miles

2000 Population 2,182 44,650 67,774

2010 Population 2,250 42,450 65,619

2014 Population 2,240 41,895 64,996

2019 Population 2,271 41,845 65,291

2000 Households 909 17,937 27,196

2010 Households 944 17,561 27,230

2014 Households 938 17,306 26,962

2019 Households 956 17,380 27,275

2014 Average Household Size 2.27 2.34 2.36

2014 Daytime Population 4,749 24,509 33,951

2000 Owner Occupied Housing Units 71.70% 59.27% 61.04%

2000 Renter Occupied Housing Units 24.27% 31.71% 25.77%

2000 Vacant 4.03% 9.02% 13.19%



2014 Vacant 9.22% 14.88% 17.24%



2019 Vacant 9.87% 15.67% 17.80%

$ 0 - $14,999 6.3% 17.6% 15.1%

$ 15,000 - $24,999 9.3% 13.4% 12.5%

$ 25,000 - $34,999 11.1% 12.0% 11.7%

$ 35,000 - $49,999 16.8% 16.0% 15.5%

$ 50,000 - $74,999 21.8% 17.5% 18.2%

$ 75,000 - $99,999 13.0% 10.7% 12.2%

$100,000 - $124,999 8.4% 6.6% 6.9%

$125,000 - $149,999 4.5% 3.0% 3.8%

$150,000 - $199,999 4.5% 1.6% 2.1%

$200,000 - $249,999 1.6% 0.7% 0.8%

$250,000 + 2.8% 1.0% 1.2%

2014 Median Household Income $55,226 $41,024 $43,875

2014 Per Capita Income $33,556 $23,468 $25,302

2014 Average Household Income $79,108 $55,900 $60,251

Demographic data © 2012 by Experian.

14




DEMOGRAPHIC REPORT

Geography: 10 miles

Population

In 2014, the population in your selected geography is 64,996. The population has changed by -4.09% since 2000. It is estimated that

the population in your area will be 65,290 five years from now, which represents a change of 0.45% from the current year. The

current population is 48.70% male and 51.29% female. The median age of the population in your area is 43.3, compare this to the

Entire US average which is 37.3. The population density in your area is 206.51 people per square mile.

Households

There are currently 26,962 households in your selected geography. The number of households has changed by 0.85% since 2000. It

is estimated that the number of households in your area will be 27,274 five years from now, which represents a change of 1.15%

from the current year. The average household size in your area is 2.35 persons.

Income

In 2014, the median household income for your selected geography is $43,874, compare this to the Entire US average which is

currently $51,972. The median household income for your area has changed by 6.40% since 2000. It is estimated that the median

household income in your area will be $51,821 five years from now, which represents a change of 18.11% from the current year.

The current year per capita income in your area is $25,302, compare this to the Entire US average, which is $28,599. The current

year average household income in your area is $60,251, compare this to the Entire US average which is $74,533.

Race & Ethnicity

The current year racial makeup of your selected area is as follows: 84.74% White, 10.10% Black, 0.01% Native American and 0.67%

Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and

5.02% Asian/Pacific Islander.

People of Hispanic origin are counted independently of race. People of Hispanic origin make up 3.95% of the current year

population in your selected area. Compare this to the Entire US average of 17.13%.

Housing

In 2000, there were 19,121 owner occupied housing units in your area and there were 8,074 renter occupied housing units in your

area. The median rent at the time was $404.

Employment

In 2014, there are 33,950 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed

that 51.64% of employees are employed in white-collar occupations in this geography, and 48.29% are employed in blue-collar

occupations. In 2014, unemployment in this area is 7.39%. In 2000, the average time traveled to work was 19.3 minutes.


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SUMMARY REPORT

Number of people living in a given area per square mile.


16




POPULATION DENSITY

The number of people employed in a given area per square mile.


17




EMPLOYMENT DENSITY

Average income of all the people 15 years and older occupying a

single housing unit.


18




AVERAGE HOUSEHOLD INCOME

Sandusky Land - InterchangeLocation

SANDUSKY, OH

MARKET OVERVIEW

21

MARKET OVERVIEW


Cleveland-Elyria Metro


Geography

The Cleveland Metro spans five counties in the

northeastern corner of Ohio, west of the Pennsylvania

state border, and extends 100 miles along the Lake Erie

shore and more than 40 miles inland. The eastern part

of the region lies on the Appalachian Plateau at an

elevation of 1,100 feet, while the western portion sits

upon the Lake Plain at approximately 600 feet. Higher

elevation in the east portion results in significantly

greater snowfalls.

CLEVELAND

Market Highlights

Excellent infrastructure

■ Cleveland’s transportation facilities strengthen its

position as a leading center of business.

Diversifying economy

■ Education and health services is the largest

employment sector. Manufacturing jobs comprise

just 12 percent of the total employment base,

compared with 22 percent in 1990.

Revitalizing downtown

■ Cleveland’s downtown is experiencing metropolitan

rebirth, as revitalized buildings attract new

businesses, residents and visitors.

22

Largest Cities in Metro by Population

MARKET OVERVIEW

* ForecastSources: Marcus & Millichap Research Services, U.S. CensusBureau, Experian


Metro

The Cleveland metro comprises Cuyahoga, Geauga,

Lake, Lorain and Medina counties and contains almost

2.1 million residents, approximately 20 percent of the

Ohio population. The population of the metro shrunk

during the past decade but is expected to record slow

growth over the next five years. This trend reversal is

primarily a result of job gains.

Infrastructure

Cleveland is the transportation hub of the region.

Interstates 77 and 71 run north and south and are

connected by Interstate 80 and Interstate 90 traveling

east and west. Interstates 271, 480 and 680 interconnect

the freeways.

Cleveland Hopkins International Airport and Burke

Lakefront Airport provide air passenger service while the

Greater Cleveland Regional Transit Authority (RTA)

offers bus service to area municipalities. The authority

also operates the RTA Rapid Transit, a network of light-

and heavy-rail systems and the downtown trolleys.

Declared a foreign trade zone in 1990, the Port of

Cleveland, located at the confluence of Cuyahoga River

and Lake Erie, provides nine berths with rail access via

the Norfolk Southern and CSX railways.


Cleveland 389,700

Parma 80,400

Lorain 64,200

Elyria 54,700

Lakewood 51,500

Euclid 48,200

Airports

■ Cleveland Hopkins International Airport

■ Burke Lakefront Airport

Major Roadways

■ I-71, I-77, I-80, I-90, I-271, I-480 and I-490

Rail

■ Freight - CSX, Norfolk Southern

■ Passenger - RTA heavy rail

■ Commuter - RTA light rail

Port

■ Port of Cleveland

CLEVELAND

The Cleveland Metro is:

■ 140 miles from Columbus

■ 170 miles from Detroit

■ 240 miles from Cincinnati

■ 490 miles from New York City

23

MARKET OVERVIEW


* ForecastSources: Marcus & Millichap Research Services, Bureau ofEconomic Analysis, Moody’s Analytics, U.S. Census Bureau,Fortune, Cleveland Port Authority

Economy

Historically a durable-goods manufacturing area, the

metro has recently taken great strides toward boosting

its medical and biotech sectors. Today, Cleveland is a

premier corporate center featuring national and

international businesses. There are four Fortune 500

companies with headquarters in the region, including

Parker Hannifin and Progressive. The Cleveland gross

metropolitan product (GMP) is rising once again as the

local economy gains momentum. Retail sales are also

increasing yet will lag the U.S. rate of growth this year.

Cleveland Clinic, the area’s largest employer, has gained

worldwide prominence and is expanding rapidly.

Growth within the Cleveland Clinic, along with other

healthcare providers such as the University Hospitals of

Cleveland, has fueled a dynamic biomedical industry.

Cleveland is also a distribution center and a market for

raw materials. Large quantities of iron ore, limestone,

sand and gravel, iron and steel products, petroleum

products and cement pass through the Port of Cleveland

annually. As one of the country’s major railroad centers,

Cleveland has taken advantage of its position as a

crossroad for major trunks of telecommunications by

laying fiber-optic lines along railroad tracks. As a result,

a number of telecommunications hotels in the area have

provided a strong communications backbone, attracting

high-tech companies.


CLEVELAND

Port of Cleveland Quick Facts

■ 13 million tons pass through port annually

■ Primary inbound cargo: steel, machinery, iron

ore and limestone

■ Outbound: machinery and steel

■ Supports nearly 18,000 direct and indirect jobs

■ 12 docks

■ $1.08 billion in personal income

■ $1.8 billion in annual economic activity

24

MARKET OVERVIEW


Labor

After years of contraction due in part to the decline in manufacturing and the recession, the Cleveland

employment base has been expanding since 2011 at an average annual pace of 1.2 percent and now includes more

than 1 million jobs. Over the next five years, job growth is forecast at a yearly rate of 1.1 percent.

Local and state agencies continue to develop programs aimed at improving employment and helping workers

transition from manufacturing jobs by updating skills. Workforce training is provided by several sources, including

local community colleges, which have programs in place to train support staff in a wide range of clinical and

medical laboratory techniques. This shift of skill sets among the metro’s employment base will remain important

in coming years, in light of Cleveland’s burgeoning biotechnology sector.

Today, Cleveland’s labor force is dominated by the education and health services, which accounts for 19 percent

or nearly 200,000 jobs. Many of these positions are at the Cleveland Clinic and other local hospitals and clinics.

The sector is expected to add roughly 15,800 workers through 2020, an annual growth rate of 1.5 percent.

Being a large transportation hub, the trade, transportation and utilities sector comprises 17 percent of total

employment. This sector is expected to contract slightly during the coming five years. During this time, the largest

growth will be in the professional and business services sector. Approximately 30,700 positions are due in this

segment, which should bolster demand for office space.

* ForecastSources: Marcus & Millichap Research Services, BLS, Moody’s Analytics


CLEVELAND

25

MARKET OVERVIEW


Major Employers

Employers

There are four Fortune 500 firms located in Cleveland:

Parker Hannifin, Sherwin-Williams, Progressive and

TravelCenters of America. Insurance is one of the

leading industries in the region, partly because of the

presence of Progressive.

Cleveland has long been recognized as a world leader in

healthcare and medical services, and several of the area’s

top employers are in these industries. The region is

considered an important source for the development of

new healthcare devices, diagnostics and therapies

because of its growing concentration of companies in

the life science industry. With the help of the Cleveland

Clinic, University Hospitals and Case Western Reserve

University, the University Circle area is becoming a

national center for biomedical and micro-

electromechanical technologies.

Cleveland is home to many large manufacturers, led by

auto and steel producers. The metro also houses

hundreds of smaller manufacturing plants, including the

makers of machinery and machine tools, transportation

equipment, electrical equipment, fabricated metal

products, and plastics and polymers.

Redevelopment projects in Downtown Cleveland are

attracting businesses and residents back into the city.

* ForecastSources: Marcus & Millichap Research Services, Moody’sAnalytics, BLS


CLEVELAND

Progressive Corp.

The Cleveland Clinic

University Hospital Cleveland

Sherwin-Williams Co.

MetroHealth System

KeyCorp

Case Western Reserve University

Parker Hannifin Corp.

Swagelock Co.

Lincoln Electric Holdings, Inc.

26

MARKET OVERVIEW


Demographics

Cleveland’s improving employment opportunities are

attracting residents to the metro. After years of decline,

the population is increasing. During the next five years,

the area is expected to gain 15,500 residents.

The median age in the metro is 41.1, compared with

37.5 for the country. This trend should change slightly

as jobs bring younger workers to the area. Growth in the

medical and technology industries is drawing and

retaining an educated workforce. Of residents 25 or

older, more than 28 percent hold at least a bachelor’s

degree, up from 24 percent in 2000. Continued growth

in these sectors will raise the median household income

more than 18 percent to an expected $61,200 annually

in 2019.

New residents are increasing demand for housing. The

median price of a home in the metro, at nearly

$125,200, is well below the U.S. median. This,

combined with a median household income of $51,600

per year, makes Cleveland a relatively affordable place to

live. Nearly 67 percent of area residents are

homeowners, compared with less than 64 percent

nationally. Over the next five years, income growth will

outpace the rise in home prices, making homeownership

more attainable for some.

* ForecastSources: Marcus & Millichap Research Services, AGS, Experian,Moody’s Analytics, U.S. Census Bureau


CLEVELAND

27

MARKET OVERVIEW

The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision.


Quality of Life

Often cited as the model for urban rebirth, Cleveland is

living up to its image as a “New American City.” Major

attractions in the metro include the Rock & Roll Hall of

Fame, professional sports, unique ethnic neighborhoods,

great shopping and dining and a national park for

outdoor recreation. Cleveland’s downtown district

continues to witness economic revitalization as new

building construction, such as the medical mart and

convention center, and major renovations reshape the

city’s historic centers.

Cultural opportunities include the Theater District in

downtown Cleveland where Playhouse Square is

located. The facility has four theaters that house Opera

Cleveland and stage Broadway musicals. The city has

two orchestras, as well as the Cleveland Museum of Art

and the Museum of Contemporary Art.

Cedar Point Amusement Park is a short drive away.

Only one park in the world has more roller coasters

than Cedar Point.

Cleveland is home to several highly ranked institutions

of higher learning, producing graduates in fields ranging

from biomedical research to computer science and

engineering. These include Case Western Reserve

University, Cleveland State University and John Carroll

University in University Heights. * ForecastSources: Marcus & Millichap Research Services, NationalAssociation of Realtors, Moody’s Analytics, U.S. Census Bureau


CLEVELAND

28

MARKET OVERVIEW


Active Investment Capital Points to Confidence in Expanding Cleveland

The strength of the local economy is palpable, with steady job growth and heavy metro investment supporting

Cleveland’s retail market. The unemployment rate has fallen to the lowest level since mid-2001, led by hiring from

construction, education and health services employers. Development is broad-based as major construction activity

happens in many different areas throughout the metro. In Westlake, west of Cleveland, the mixed-use

development Crocker Park is undergoing a $400 million expansion that will include the new American Greetings

tower, drawing further need for high-end retailers and restaurants. Downtown Cleveland is experiencing a

revitalization of multifamily development in addition to a new hotel that will lure new residents and travelers to

retailers in the area. In University Circle to the east, metro builders have new high-rise apartments in the works,

spurring increased retail development. Although the pace of construction will accelerate in 2016, expanding

retailers will absorb the new space, helping push the metrowide vacancy rate to the lowest level of the current

cycle. These tighter market conditions will incite another year of modest rent growth as lease rates approach pre-

recession levels.

High yields are the primary driver of investor interest for Cleveland real estate; however, positive market sentiment

has also been a contributing factor. As cap rates continue to compress in their home markets, buyers from New

York City to Florida enter the metro seeking higher returns. These investors are able to leverage their deep pockets

to bid heavily on properties, supporting robust price increases, especially in the single-tenant segment. Sellers have

taken advantage of strong valuations as single-tenant properties approach peak pricing. These assets trade with cap

rates in the high-6 percent area. As the single-tenant market nears maturity, some buyers may expand their

portfolio to include multi-tenant assets trading at cap rates that have room for further compression.


* Forecast

CLEVELAND

29

MARKET OVERVIEW


2016 Market Forecast


* ForecastSources: CoStar Group, Inc.; Real Capital Analytics

NRI Rank43, up 2 places

Employmentup 1.8%

Construction667,000 sq. ft.

Vacancydown 40 bps

Rentup 1.1%

Investment

Demand will outpace supply this year, bumping Cleveland up two places in the NRI.

Cleveland employers will hire 19,000 workers in 2016, an increase of 1.8 percent. Metroorganizations added 23,100 jobs last year, led by gains in the leisure and hospitality sector.

Developers will bring 667,000 square feet of retail space to market this year, growing totalinventory by 0.4 percent. In 2015, 512,000 square feet was delivered.

The metrowide vacancy rate will fall 40 basis points to 7.1 percent in 2016. Clevelandregistered an 80-basis-point drop last year.

Rent growth will hit 1.1 percent this year with the average asking rate reaching $10.99 persquare foot. An increase of 1.1 percent was also realized in 2015.

Areas on the edge of the metro like Avon, Concord and Medina are gaining momentum withrobust population growth indicating potential for future NOI improvements.

CLEVELAND

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