Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

December 2008 Cleveland Plus Quarterly Economic Review


Published on

This edition of the Northeast Ohio Economic Review is a focus on the Cleveland Plus regional strength in headquarters. Cleveland Plus headquarters employment is strong, ranking the 10th in terms of total HQ employment and 4th highest in the nation when adjusted for scale. Cleveland Plus has 60% more headquarters employment than the national average, supported by a higher than average share of the operational headquarters occupations, such as Chief Executive, General and Operations Managers. Charts and data contained within this report include location quotient for headquarters, headquarters occupations, employment, vacancy and gross regional product.

  • Be the first to comment

  • Be the first to like this

December 2008 Cleveland Plus Quarterly Economic Review

  1. 1. Our partners include: Greater Cleveland Partnership Greater Akron Chamber Stark Development Board Team Lorain County Youngstown-Warren Regional Chamber Medina County Economic Development Corporation Northeast Ohio Economic Review December 2008 Volume 2, Issue 4 Headquarters Sector Prominent in the Cleveland Plus Region. ®
  2. 2. As we found in an earlier Northeast Ohio Regional Economic Review, the business headquaters sector continues to be particularly strong in the Cleveland Plus ® Region. This report takes a closer look at this sector’s role in driving the region’s economy. Economic Review Highlights for 2008 The Northeast Ohio Economic Review was established to provide an aggregate look at long-term trends in Northeast Ohio’s economy. In 2008, we continued our quarterly reports by taking a look at our mix of industries as compared to the U.S., reviewing a 10 year projection for industry and occupational growth, and reporting the overall climate of industrial and office commercial real estate in the 16 counties that comprise the Cleveland Plus Region. Cleveland Plus Mix of Industries Cleveland Plus has a higher share of output than the national average in many industries, including: Manufacturing, Finance and Insurance; Healthcare; and Management of Companies and Enterprises (Headquarters). Both Manufacturing and Headquarters have shares of the Northeast Ohio economy that are more than 50% higher than the national average. Manufacturing represents 22% of the region’s economy, compared to about 14% for the U.S. as a whole. 10 Year Projection: Growing Industry Sectors Northeast Ohio’s economy is expected to continue diversifying. The Information industry is expected to grow the fastest, at 34% over the next 10 years. Despite common misperceptions, manufacturing output is projected to continue growing as well. Other faster-growing sectors include: Professional and Technical Services; and Finance and Insurance sectors. 10 Year Projection: Higher Paying Jobs Will Grow Faster Projections for the next ten years show higher paying occupations account for all the expected growth in employment. Jobs with above average pay are projected to grow 7.5%. Expected high-growth occupations include: Computer/Math, Business/Finance, Education, Training and Library, Sciences, Legal and Management. Industrial Real Estate is Strong and Growing Northeast Ohio is the sixth largest industrial market in North America. Our industrial vacancy rate is among the lowest in the past 5 years, with the Manufacturing vacancy rate showing a significant decline since 2006. In addition, there are approximately 411 million total square feet of Industrial space in the region, larger than at any time since 2000. Office Space Market Continues to Thrive Even in the face of a soft national economy, the demand for space in the Cleveland Plus office market continues to grow. Occupied Class A space is up nearly 17% since 2003. In addition, there is more Class A, B, and C occupied space than any time in the past five years. Total occupied space has increased to almost 112 million square feet. Northeast Ohio’s vacancy rate of 12.1% is nearly on par with the U.S. average and notably lower than many other major U.S. markets such as Atlanta, Chicago and Phoenix. In Summary Even in the face of the current national economic decline, the Cleveland Plus Region continued to benefit in 2008 from its long-term trend of steady, moderate growth. We are diversifying and transitioning our economy to high-skill industries, indicating that education and workforce development will become even more valuable in the future. Our industrial and commercial real estate markets remain strong. By maintaining the course with Northeast Ohio’s advancements in biomedical, alternative energies, high-tech manufacturing, corporate management and entrepreneurship, the region will accelerate growth and ensure long-term vitality.
  3. 3. “The decision by Goodyear to keep our headquar of available talent and the overall positive busines possible by the collaborative spirit between the reg -Robert J. Keegan, Chairman of the Board, Chief Executive Officer and President of The Goodyear Tire & Rubber Company, commenting Cleveland Plus Headquarters Employment Strong This graph looks at total Headquarters Employment: NEO and US Cities 2006 headquarters employment among the top 20 Metro- 120000 politan Statistical Areas 100000 (MSAs). The Cleveland 80000 Plus region ranks 10th in Employment terms of total employment, 60000 and is greater than larger 40000 regions such as Houston, 20000 Phoenix and Atlanta. 0 Source: County Business Patterns, 2006 “Headquarters are one of the core competitive advantages of the region.” -Edward W. (Ned) Hill, Professor and Distinguished Scholar of Economic Development, Maxine Goodman Levin College of Urban Affairs, Cleveland State University Cleveland Plus Headquarters Employment Share Share of Headquarters Employment: NEO vs US Cities 4th Highest in Nation St. Louis New York This graph demonstrates San Francisco the proportion of head- NEO Detroit quarters employment as Boston a percentage of total Philadelphia Chicago employment in major Atlanta Seattle U.S. markets. Once Los Angeles adjusted for scale, the Tampa San Diego Cleveland Plus region Phoenix Miami has the fourth largest Riverside concentration of head- Baltimore quarters employment, 0.2 0.6 1.0 1.4 1.8 2.2 2.6 LQ Value 60% more than the national average. Source: Bureau of Labor Statistics (BLS) and
  4. 4. ters in Northeast Ohio is a testament to the quality s environment in Northeast Ohio and made ion's public and private entities.” on his company’s decision to build a new headquarters for their 3,000 corporate and North America Tire employees. Cleveland Plus Strong in High Skill Headquarters Occupations This chart depicts Northeast Ohio’s position in the occupations that typically are associated with business headquarters. Northeast Ohio’s strong national position in corporate headquarters is supported by a higher than average share of the occupations that are most important to the operation of a business headquarters. This concentration of occupations makes existing headquarters successful and provides a strong labor pool for those looking to establish new headquarters in the region. Share of NEO Headquarters Occupations vs the US 1.8 1.6 1.4 LQ 1.2 1.0 0.8 0.6 Chief Executives Accountants and Auditors General and Operations Sales Managers Computer Programmers Financial Managers Managers Occupation Source: BLS, Occupational Employment Statistics “We looked at the quality of labor force, the KEY: abundance Location Quotient (LQ), as used in the charts to the left and above, compares Northeast Ohio and other regions of labor and the to the U.S. as a whole. An LQ of 1.0 represents the national average. An LQ of 1.2 is 20% higher than the quality of national average. An LQ of 0.8 is 20% less than the national average. infrastructure.” -SP Data Chief Executive Dan Plashkes comments on why his company chose the Cleveland Plus region for their US Headquarters
  5. 5. Northeast Ohio Employment Mirrors National Trends Northeast Ohio Total Employment This chart shows total (Not Seasonally Adjusted) employment in Northeast Ohio without seasonal adjustments. 2.08 By viewing employment on a 2.06 quarter to quarter basis we can 2.04 see the overall trend that occurs (Millions) 2.02 due to seasonal patterns of 2.00 employment. Q3 of 2008 did 1.98 not see the typical seasonal 1.96 increase between the second 1.94 and third quarter and lagged 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 2008 2003 2004 2005 2006 2007 employment of one year ago. This is similar to the national Q1 Q2 Q3 Q4 picture. Total employment remained just over 2 million Source: BLS, Occupational Employment Statistics workers in Q3, and is down approximately 1.5% from last year. Demand for Industrial Space Continues to Grow Northeast Ohio Occupied Industrial Space This graph shows the total amount of industrial space occupied by quarter, from third 395,000,000 10.0% quarter of 2003 to third quarter 9.5% 390,000,000 of 2008. Over this period, 9.0% 385,000,000 8.5% total occupied industrial space Vacancy Rate Occupied Sq. Ft. 380,000,000 8.0% has grown significantly with 7.5% ten consecutive quarters of 375,000,000 7.0% growth since the first quarter of 370,000,000 6.5% 2006. In addition, occupied 365,000,000 6.0% industrial space is higher than at any point in the previous five years while vacancy rates of Occupied Space Vacancy Rate 7.5% are also at their lowest point in the past five years. Source: Bureau of Labor Statistics (BLS) and
  6. 6. Growth Still Northeast Ohio: Real GRP Projected for Billions (2007 Dollars) 2008 $190 0.4% $180 0.4% 0.5% (-.9%) Modest growth is still projected for 1.8% 2.6% 0.3% (-1.9%) 1.2% $170 1.2% Northeast Ohio’s 2008 Gross Regional 2.6% 4.8% Product, based on projections from $160 Moody’s Moody’s 3.0% $150 3.8% detailed models of regional economic 5.1% 3.6% 0.3% conditions are revised as actual data $140 is received. Reflective of soft condi- tions in recent years, this updated $130 chart contains lower estimates for $120 2006, 2007 and 2008 compared to 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 previous reports. Real GRP Average Annual Growth = 1.6% Moody’s estimates that the Northeast Ohio economy has grown at an annual Source: Moody's rate of 1.6% over the past 15 years and has grown in 13 of the past 15 years. About Team NEO Team NEO markets Northeast Ohio to attract business investment in targeted industry clusters. The organization is a joint venture of the largest metro chambers, representing 16 counties and their 4 million people. Team NEO serves as a central resource, informing and serving those considering investment in Northeast Ohio and is a co-founder of the Cleveland Plus® Marketing Alliance, a coalition to drive strategic, long-term marketing for Northeast Ohio. For more information, visit Data Sources: Team Northeast Ohio uses a number of data sources for the Regional Economic Review. One of the primary sources is the Moody’s ( Northeast Ohio modeling system. This firm is the leading independent provider of economic, financial and industry research and data that specializes in national and metropolitan economic growth forecasts. Moody’s county level Ashtabula Lake output, employment and payroll historical data are estimated from several publicly available sources and are summarized into the Team NEO regional footprint. It is important to understand data provided by are estimates of Cleveland Geauga economic activity. Cuyahoga Team NEO also uses data from federal and state sources as part of the report. As with, the informa- Trumbull Lorain tion for the Team NEO footprint is derived from data reported at either the county or metropolitan level. We rely Summit Portage heavily on data from the U.S. Bureau of Labor Statistics ( and Ohio’s Labor Market Information Youngstown Medina Akron ( for information on wages, unemployment and both general and industry-specific Mahoning employment. In addition, Team NEO uses data from the Census ( to track housing- related activity including the number of single and multifamily permits, as well as their values. Ashland Wayne Columbiana Canton Richland Due to market limits within the CoStar database, historic trend data for the Team NEO region is Stark defined as 10 of the 16 counties forming the regional footprint. These counties include Ashtabula, Carroll Cuyahoga, Geauga, Lake, Lorain, Medina, Portage, Richland, Stark and Summit. Cleveland Plus 16-County Region 737 Bolivar Road, Suite 2000, Cleveland, Ohio 44115 888.NEO.1411 • •