right in the Middle: SignS of econoMic thaw acroSS the MidweSt

right in the Middle: SignS of econoMic thaw acroSS the MidweSt

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Northeast Ohio: Transformation Fueled by Innovation in Cleveland Plus Region


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Article from the Jan/Feb edition of The Leader discussing the transforming economy of Northeast Ohio fueling growth in biomedical, advanced energy and innovation

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Northeast Ohio: Transformation Fueled by Innovation in Cleveland Plus Region

  1. 1. right in the Middle: SignS of econoMic thaw acroSS the MidweSt Siemens and then institutions like Case Western Reserve, University Hospitals and the Cleveland Clinic and its founda- tion,” Fujita said. “You have the com- mercial infrastructure as well as all these other resources.” The Cleveland Clinic, recognized as one of the best cardiovascular hospitals in the world, leads the GCIC, a $250 mil- lion endeavor dedicated to cardiovascu- lar R&D that also includes Cleveland’s Case Western Reserve University and University Hospitals of Cleveland. Ohio’s Third Frontier initiative, which is dedi- cated to providing funding and assistance for medical and bio projects with com- mercial promise, provided a $60 million grant for the GCIC. Third Frontier isn’t solely limited to startups, though. Along with a fuel- cell research at Stark State College of northeaSt ohio: employees have created bio startups Technology and Case Western Reserve, tranSforMation fueled worth nearly $1 billion, while the Third Frontier also played an integral by innovation region’s history as a lighting-industry role in bringing Rolls Royce’s U.S. by bailey webb hub evolved to include medical imaging fuel cell business to Canton. Similarly, manufacturing and R&D by companies BioEnterprise, which includes Akron’s Northeast Ohio’s history of innovation like GE, Philips, Hitachi, M2M Imaging BioInnovation Institute, is a business and manufacturing expertise combine Corp. and Quality Electrodynamics formation, recruitment and acceleration with a set of forward-looking incentives (QED). program designed to grow healthcare to create a perpetual transformation of companies and commercialize biosci- the area’s economy. Hiroyuki Fujita, who earned a PhD ence technologies in Northeast Ohio, in physics at Case Western Reserve while the region’s Jump Start Inc. is The region, which includes Cleveland, University in Cleveland, founded QED a nonprofit partnership that boosts Akron, Youngtown and Canton, is at the in suburban Cleveland in 2005, and the entrepreneurship and assists startups crossroads of the steel and auto indus- company, which makes patent-protected with business plans and funding. So tries, as well as the Midwest and East detectors used in the OEM’s magnetic far, Jump Start has provided expertise Coast, and boasts corporate and cultural resonance imaging machines, has grown and assistance to more than 200 com- titans and touchstones such as Goodyear, to 50 employees and $4.7 million in 2008 panies and loans to 40 entrepreneurial the Cleveland Clinic, Sherwin Williams, revenue. QED has been awarded grants endeavors, including electric car startup Diebold, the Cleveland Orchestra and the by the National Institute of Health, the Myers Motors and medical device firm National Football League’s Pro Football State of Ohio and the Cleveland Clinic’s Checkpoint Surgical. Hall of Fame in Canton. In fact, the Global Cardiovascular Innovation Center region claims the fourth largest concen- (GCIC), and Forbes magazine recently Northeast Ohio’s burgeoning bio and tration of headquarters’ jobs in the U.S. named QED one of the top 20 most prom- medical community played a role in land- ising companies in the U.S. ing MMPI’s Medical Mart & Convention The region’s existing base, formed over Center (MMCC) in Cleveland’s CBD. A the past century-plus, plays a big role “Cleveland is a center of excellence for comprehensive marketplace for the medi- in shaping its future. Northeast Ohio’s the healthcare industry because you have cal and healthcare industries, the $536 63 hospitals and 230,000 bio/medical the major OEMs such as GE, Hitachi and million MMCC will include a 100,000-sq.- 2 0 1 0 th e lea d er 60 january / february
  2. 2. right in the Middle: SignS of econoMic thaw acroSS the MidweSt America comfort knowing that we’re International Airport – as well as the going to be here next year and five and market’s historical performance – sug- ft. (9,290-sq.-m.) conference center, 10 years from now.” gest long-term health for the submar- scheduled to open this year, and 120,000 For its part, Alter Group carries ket. In anticipation, Alter has developed sq. ft. (11,148 sq. m.) of permanent show- no CMBS debt, recently completed two buildings at Lake Center Corporate rooms plus 300,000 sq. ft. 27,871 sq. m.) two CBD office developments and Park in Mt. Prospect, Ill., which is for trade show exhibitors scheduled to has one suburban office building at accessible to both Interstate 90 and open in 2013. its Corridors office park in Downers O’Hare. The market may be the slow- Grove, Ill., in predevelopment. Alter’s est Alter Group Senior Vice President “That combination of having the clini- Dearborn Plaza is 92 percent leased, Pat Gallagher’s seen in his three-decade cal capabilities, work force and state with Google serving as its largest ten- career, but, through his experience willing to invest has really made a ant. At 111 West Illinois St., Alter weathering past downturns, he is both difference,” said Carin Rockind, vice completed a Class-A building at the optimistic and realistic. president of Team Northeast Ohio, an end of 2008 and is marketing 150,000 “In the last big fallout, ’88 to ’90, economic development organization sq. ft. (13,935 sq. m.) as a single block, while developers had some issues that markets the 16-county region. “It’s with rooftop signage options. with overbuilding, Corporate America really having the core infrastructure, With one of the few big blocks of was pretty healthy,” Gallagher said. work force and supply chain that adds available space, Alter may be well “The past 10 or 12 months, Corporate to the businesses’ bottom line.” positioned in the CBD market. In America has been on the sidelines, Chicago’s CBD, 155 N. Wacker deliv- dealing with a double whammy. We are As with bio, medicine and healthcare, ered in late 2009 73 percent leased, and seeing an uptick in activity and some Northeast Ohio’s existing knowledge 353 N. Clark and 300 E. Randolph were suggestion that Corporate America is base and history with high-tech met- under construction, totaling 2 million coming back and re-engaging.” als, polymers and chemicals create new sq. ft. (185,806 sq. m.) of office space Meanwhile, Chicago’s industrial opportunities. The region’s expertise that, collectively, is 72 percent pre- market posted 4.9 million sq. ft. in metalwork and approximately 330 leased, according to Jones Lang LaSalle. 455,224 sq. m.) of negative net absorp- companies involved in alternative Even as the amount of CBD sublease tion through the third quarter of 2009, energy also made it an attractive fit for space declines, as well as the average according to CB Richard Ellis, which Rolls Royce in Canton and wind energy size of sublease blocks, small- and has lead to an 86 percent decline in component manufacturers and OEMs medium-sized tenants who can pull speculative construction over the past across the area. NASA’s Glenn Research the trigger are finding unprecedented two years. Center in Cleveland as well as 2,300 deals, said Keith Knox, managing It’s still Chicago, though, crossroads of Northeast Ohio firms in the aerospace director in JLL’s Chicago office. In America’s railroads and commerce, and, sector, including Parker Hannifin and Chicago’s suburbs, where corporate as with its office market, a number of The Timkin Co., produces R&D and consolidations and concentrations of significant requirements are in the mar- high-paying jobs across the region. defunct residential lenders have the ket, though they take longer to cross the For its part, Akron’s concentration of market at 20.8 percent vacant, one finish line these days, said Tim Brauer, polymers research at the University of tenant recently subleased a block of managing director in CB Richard Ellis’ Akron’s College of Polymer Science and essentially new, turn-key space for $14 Chicago office. Companies that survived Engineering and Bridgestone’s $100 mil- gross, Knox said. Three years ago, ten- the past two years are starting to look lion R&D center, as well as Goodyear’s ants typically paid triple that amount. forward, he said. commitment to keep its headquarters in “Chicago is a bit unique because “There’s an increase in the number the city, will maintain Akron’s century- we’re still delivering new construction, of companies that a year or 24 months long status as a global hub for the indus- and we still have huge pressure in the ago would make a short-term com- try and create new opportunities and marketplace from a vacancy perspec- mitment,” Brauer said. “We’re seeing transformation, Rockind said. tive” Knox said. “If you have the abil- an improvement in activity, but how ity, landlords are dying to commit.” significant and sustainable, it’s hard “The way we’re diversifying our econ- Alter Group’s industrial strategy for to tell. There are a lot of obstacles, but omy and the heritage of expertise here metro Chicago is similar to its office we’re seeing some encouraging signs. have led to these new industries sprout- outlook, as the veteran Chicagoland “It’s a tenants’ or buyers’ market, ing up,” Rockind said. “It’s our job right developer prepares for economic resur- and this is the time to take advantage now to really leverage that expertise.” gence. Though O’Hare submarket of that,” Brauer said. availability, at 12.5 percent, essentially doubles its historical average, modern- ization and redevelopment at O’Hare 2 0 1 0 th e lea d er 61 january / february