Downtown Cleveland Alliance’s work helped continue momentum in the region’s employment capital and fastest growing residential neighborhood. Office tenants and retailers alike continue to seek out locations close to Downtown’s rapidly increasing population of millennials and baby boomers. Q1 highlights include:
• Major employers like Spero-Smith Investment Advisors and Fox Sports Ohio announcing moves from suburban
locations to Downtown Cleveland
• DCA member Benesch recommitting to Downtown, becoming the first announced office tenant for nuCLEus, a planned $300 million mixed-use development in Downtown’s Gateway District
• Demand for downtown Class A office space out-pacing demand for suburban locations
• The grand opening of Heinen’s, Downtown’s largest grocery store, in the historic Cleveland Trust Rotunda, leading an influx of 15 downtown retail commitments
• 97 percent occupancy rate in market-rate apartments, with more than 400 additional residential units projected to
come online in 2015
3. Q1 2015
3
DOWNTOWNCLEVELANDMARKETUPDATE-QUARTER1SUMMARY
QUARTERSUMMARY
Downtown Cleveland Alliance’s work helped continue momentum in the region’s employment capital and fastest growing
residential neighborhood. Office tenants and retailers alike continue to seek out locations close to Downtown’s rapidly
increasing population of millennials and baby boomers. Q1 highlights include:
• Major employers like Spero-Smith Investment Advisors and Fox Sports Ohio announcing moves from suburban
locations to Downtown Cleveland
• DCA member Benesch recommitting to Downtown, becoming the first announced office tenant for nuCLEus, a planned
$300 million mixed-use development in Downtown’s Gateway District
• Demand for downtown Class A office space out-pacing demand for suburban locations
• The grand opening of Heinen’s, Downtown’s largest grocery store, in the historic Cleveland Trust Rotunda, leading an
influx of 15 downtown retail commitments
• 97 percent occupancy rate in market-rate apartments, with more than 400 additional residential units projected to
come online in 2015
Vibe, A Wellness StudioHeinen’s at The 9 Santorini Taverna
NEWRETAILERSOPENED/COMMITTEDTODOWNTOWN
CLEVELANDINQ1
FoxSportsOhio/SportsTimeOhio
MAJORDOWNTOWNWINSIN
OFFICERETENTION&RELOCATION
Spero-Smith Benesch
15Including: Vibe, A Wellness Studio; A Kitchen and Bar; Heinen’s at The 9; Santorini Greek Taverna; Barrio Gateway; Equal
Exchange Coffee; Johnnyville Woods; Cleveland Fray; Happy Hour Collection; FlapJacks; Chicago’s Home of Chicken and
Waffles; C’est Macarroon; Cathy’s Creamery; Blue Edge Small Box; Rocket Fizz
4. Q1 2015
4
RETAILMARKETUPDATE
RETAILOVERVIEW-RETAILOPENINGSANDCOMMITMENTSSHOWDOWNTOWNGROWTH
Fifteen retailers opened or announced commitments to Downtown Cleveland
in Q1. In addition to Heinen’s, 8 retailers opened: Vibe, A Wellness Studio;
Santorini Greek Taverna; Barrio Gateway; Johnnyville Woods;
Cleveland Fray; Happy Hour Collection; A Kitchen and Bar; and Equal
Exchange Coffee.
See our retail spotlight on page 5 to learn more about Heinen’s first eight
weeks operating in Downtown Cleveland.
In addition to the opening of nine retail locations in the beginning of 2015,
six retailers made commitments to open in Downtown Cleveland. These
announcements will add an ice cream shop, a candy store, a furniture store,
two restaurants and a gift and beauty supplies shop to Downtown’s retail
offerings. Starbucks also announced plans to open a seventh downtown
location in 2015.
DOWNTOWN’SRETAILAUDIENCE
Downtown Cleveland’s aggregate spending power is increasing with downtown’s residential population, which is projected
to reach over 20,000 within 4-5 years based on the recent demand trends. Since 2000, Downtown’s purchasing power
has increased by over $100 million.
Between
Theaggregate
incomeof
Downtown
Residents
increased
2000-2013
119%
CHANGESINDOWNTOWN’SPURCHASINGPOWER
$150
DOWNTOWNAGGREGATEINCOME
(INMILLIONS)
$200
$250
$300
$350
$100
Years
2013
2010
2000
MILLENNIALS
76%
INCREASE
BABY BOOMERS
98%
INCREASE
OVERALL POPULATION
70%
INCREASE
2000 - 2013
SOURCE: 2009-2013 AMERICAN COMMUNITY SURVEY FIVE YEAR ESTIMATES
SOURCE: U.S. CENSUS BUREAU; 2009-2013 ACS FIVE YEAR ESTIMATES
5. Q1 2015
5
RETAILMARKETUPDATE
RETAILSPOTLIGHT:HEINEN’SBOOMSINFIRST8WEEKSDOWNTOWN
Heinen’s at The 9 opened with fanfare on February 25, 2015. The local, third generation, family-owned grocer renovated
the historic Cleveland Trust Rotunda at E. 9th and Euclid Avenue. Covering more than 22,000 square feet, the store
is stocked with national brand grocery items along with the highest quality produce, freshly made prepared meals, full service
meat and seafood counters and an award-winning wine and cheese department. Specialty departments in the downtown
store include prepared foods, deli, artisan cheese, seafood, meat market and produce.
The second floor of the historic rotunda features the beer and wine department including 1,000 varieties of wine and 40
wines in self-serve wine dispensers. The selection also includes more than 400 craft beers, 8 beers on tap and the option
to create Build-Your-Own 6-packs.
After eight weeks in operation, Heinen’s has reported highest dollar sales are completed on Saturdays and the highest
number of individual shoppers visit on Wednesdays.
During Downtown Heinen’s first eight weeks of operation:
Morethan118,000customer
transactionswerecompleted
Morethan16,000saladbar
purchasesweremade
Morethan6,000containersofsoup
werepurchased
Morethan14,000sportsandnutrition
barsweresold
6. Q1 2015
6
QUARTERLYTRACKINGOFOFFICESPACENETABSORPTION&VACANCY
OFFICEMARKETUPDATE
NET ABSORPTION (SF)
Cordell &
Cordell
Fifth Third
Center
Signet
Capital
Advisors
Hanna
Building
ATTRACTION RELOCATION RETENTION EXPANSION/RENEWALMAJOR TRANSACTIONS
Sources: CBRE, Colliers International, Downtown Cleveland Alliance, JLL, Newmark Grubb Knight Frank, Xceligent
Intellinet
Park Plaza
Law Offices
of Cleveland
50 Public
Square
7,948
SF
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015
25,000
20,000
15,000
10,000
5,000
0
-5,000
-10,000
-15,000
-20,000
Sherwin
Williams
Skylight
Office
Tower
Spero-Smith
Investment
Advisors
50 Public
Square
Boma
Greater
Cleveland
200 Public
Square
2,920
SF
19,985
SF
Penton
Media, Inc
1100
Superior
Ave.
Source: CBRE Office MarketView Q1 2015
MARKET COMPARISON BY CITY (CLASS A & B SPACE)
ClevelandIndianapolis Cincinnati Detroit
WB Doner &
Company
1100 Superior
Ave.
Alexander
Mann
Solutions
1301 E. 9th
Street
Newman &
Company
1801 E. 9th
Street
Everest
Land Title
323 W.
Lakeside Ave.
3,354
SFSubleasing
14,305
SF
27,033 SF
10,000
SF
27,088 SF
13,000
SF
4,981
SF
18.8%
18.7%
18.6%
18.5%
18.4%
18.3%
18.2%
18.1%
18%
18.4%
18.5%
18.7%
18.6%
18.4%
NETABSORPTION(SF)
OFFICEVACANCY(PERCENT)
Downtown has enjoyed positive net absorption in 4 out of the last 5 quarters. Vacancy held steady at 18.4 percent.
Downtown Cleveland commanded higher lease rates than similarly sized downtowns in Q1.
Fox Sports
Ohio/ Sports
Time Ohio
200 Public
Sqare
23,000 SF
OFFICE VACANCY %
$21.00
$20.50
$20.00
$19.50
$19.00
$18.50
$18.00
$17.50
$17.00
$16.50
$16.00
Q4 2014Q1 2014 Q2 2014
$18.28
$19.02
$20.78
$18.56
$18.13
$18.48
$18.23
$17.84
$18.19
$18.86
$18.41
$18.34
Q3 2014
$18.22
$18.89
$20.79
$16.97
Q1 2015
$18.22
$19.05
$18.92
$18.56
7. Q1 2015
7
OFFICEMARKETUPDATE
OFFICE MARKET OVERVIEW - NINETWELVE DISTRICT MOMENTUM GROWS
Downtown Cleveland Alliance hosted its annual NineTwelve District Business Forum at the Residences at 1717 in Q1,
giving businesses and residents an opportunity to hear from and share feedback with DCA, the City of Cleveland, and the
Greater Cleveland Partnership. American Landmark, owner of Oswald Centre, shared plans for upgrades to the recently
acquired 1111 Superior.
Attendees received an update on the NineTwelve District’s progress. Since the Financial District was rebranded as the NineTwelve
District four years ago, ten new world or regional headquarters—including Alexander Mann Solutions, BrandMuscle,
Britton Gallagher, and Gas Natural--have located in the district. AmTrust Financial and National General Insurance alone
have delivered over 1,100 jobs to NineTwelve and are continuing to hire. Major downtown employers like Oswald Companies,
Penton Media, Osborn Engineering, Hartland & Co., and Grant Thorton have recommitted to NineTwelve. In Q1 of 2015,
NineTwelve led all downtown districts with 18,470 square feet of positive net absorption.
The NineTwelve District’s growth coincides with the renovation and activation of Perk Plaza at Chester Commons. In order
to provide food amenities to district office workers and demonstrate a market for restaurateurs and retailers, DCA created
Walnut Wednesday, a weekly food truck event that occurs May through September. Walnut Wednesday has grown from
10 food trucks to a rotation of over 50 and attracts 1,500 people per week. Since Walnut Wednesday began, employers have
committed over 5,500 jobs to NineTwelve and two office buildings have been converted to residential use.
VACANCY RATES OF CLASS A OFFICE SPACE IN THE CLEVELAND AREA
Downtown Cleveland
Vacancy rate
15.1% $23.36
Lease Rate PSF
Suburbs of Cleveland
16.4% $22.38
Downtown’s Class A vacancy and lease rates outpaced Cleveland suburbs in Q1, indicating that employers
value the power of a downtown address to recruit and retain talent and connect with business development
opportunities.
Vacancy rate Lease Rate PSF
Sources: JLL
vs
8. Q1 2015
8
STARTUPCORNER
Downtown Cleveland serves as the hub for Greater Cleveland’s ascendant startup and entrepreneurial culture. Downtown
attracts tech-savvy talent and start-ups with the help business accelerators FlashStarts and Bizdom, events like
TechPint and StartUp Week, and the fastest commercially available fiber optic connectivity in the United States.
Since 2012, Downtown accelerator programs Bizdom and Flashstarts have bolstered 62 startup companies who have
attracted over $5.6 million dollars in investment.
Downtown Cleveland Alliance is supporting FlashStarts’ effort to establish StartMart, a central location which will allow young
and seasoned entrepreneurs to work side by side in a diverse setting by provide co-working space and additional resources.
On May 15, Downtown Cleveland will host the TechPint Startup Summit for the second year in a row. The event connects
the startup community with investors from across the region. Last year, the Summit brought 350 startup founders and
investors from across 5 states to Downtown Cleveland. The full day summit features prominent speakers and entrepreneurs
from across the country. Attendees will have opportunities to connect and collaborate with fellow founders during the
programming.
STARTUPCORNER-TECHPINTTOBRINGSTARTUPSANDINVESTORTOGETHERINDOWNTOWNCLEVELAND
DOWNTOWNSTART-UPSMAKENEWS:
• Crowdentials, a FlashStarts graduate based in Downtown Cleveland that verifies accredited investors online and
expedites the accreditation process, was recently recognized as one of the area’s “coolest emerging companies” in New
York’s Guest of a Guest
• Flashstarts graduate Koalaha Co. launched a web-platform for games with real-money stakes offering an alternative to
the traditional app store.
Speakers include:
• Paul Singh, formerly of 500 Startups;
• Guy Turner, Hyde Park Venture Partners;
• Tanisha Robinson, Print Syndicate.
Registration information can be found at summit.techpint.org
9. Q1 2015
9
Downtown Cleveland’s status as a travel and tourism destination contributes to office and residential development. DCA
partner Destination Cleveland reported in Q1:
• 33 percent of new residents first visited the city as a tourist;
• 37 percent of site selection executives say business trips influence their perception of a city’s business climate;
• 15 office tenant jobs are created for every 100 tourism-related jobs that are created
In addition, marquee events like the NCAA Division I Men’s Basketball Regional Tournament and the Rock & Roll Hall of
Fame Induction Ceremony generated an estimated economic impact of over $25 million.
HOSPITALITYMARKETOVERVIEW
DOWNTOWNCLEVELANDEVENTSPOTLIGHTS
HOSPITALITYMARKETUPDATE
• NCAA Division I Men’s Basketball Championship: The NCAA Men’s Basketball Championship brought March
Madness into Downtown Cleveland. With three of the four participating teams within a 350 mile drive, Cleveland saw a
greater economic impact than any other city hosting a regional game. Basketball fans flocked into Downtown, stayed is
hotels, ate at restaurants, and visited bars and spent an estimated $10 million dollars.
• The 39th Annual Cleveland International Film Festival: This year’s Cleveland International Film Festival (CIFF)
broke the record for attendance with 100,204 people taking part in the festival. This is a 186 percent increase from
attendence in 2003. CIFF was also named the second best film festival in America by the readers of USA Today.
• The 30th annual Rock and Roll Hall of Fame Induction Ceremony : The Rock and Roll Hall of Fame’s annual
Induction ceremony brought celebrities and notoriety to Downtown Cleveland. The event sold out Cleveland’s historic
Public Auditorium and drew 1,100 additional guests to the live simulcast at the Rock and Roll Hall of Fame museum.
The induction ceremony, held every 3 years in Cleveland, brought the region an estimated $15 million in economic
impact.
AVERAGEDAILYRATE REV.PERAVAILABLEROOM
HOTEL OCCUPANCY RATES
2014
65.0%
74.9%
2015
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
March 2014
June 2014
Sept. 2014
Dec. 2014
March 2015
74.6%
52.0%
67.4%
HOTELMARKETRATESANDREVENUE
MARCH2014
MARCH2015
MARCH2014
MARCH2015
$119.21 $129.85 $77.54 $87.48
10. Q1 2015
10
Developers continue to work at keeping up with demand in Downtown Cleveland’s white hot housing market. The Residences
at 1717 finished construction with 100 percent occupancy and a waitlist of 70 people. The market continues to absorb
new units as quickly as they become available, indicating that the only limit on how much the downtown residential population
can grow is how quickly developers can deliver new product.
Although downtown lease rates have risen from an average of $1.15 per square foot in 2013 to $1.33 in 2015, downtown
living remains affordable to a high number of Greater Cleveland residents. Over 500,000 Cleveland metropolitan area
residents are able to afford the average $1,000 per month one bedroom apartment.
DCA released the 2015 edition of Downtown Digs, in partnership with Live Cleveland, featuring residential opportunities in
Downtown’s six districts.
Projected Downtown Cleveland apartments coming online in 2015 include:
• Flats East Bank
• Schofield Building
• Ivory on Euclid
• The Creswell
HOUSINGMARKETOVERVIEW
AVERAGEMONTHLYRENTFOR1BEDROOMAPARTMENT
HOUSINGMARKETUPDATE
Q12015
97.2%occupancy
Q12014
94.5%occupancy
Flats East Bank Apartments
NUMBEROFRESIDENTSWHOCANAFFORDA1BEDROOMDOWNTOWN
inthe GreaterClevelandArea*
*Cleveland Metropolitan Statistical Area, including Lorain, Medina, Lake,
Geauga and Cuyahoga Counties
11. Q1 2015
11
HOUSINGMARKET
Q1 2014 Q1 2014Q1 2015 Q1 2015
$1.15
Number
Sold
17
Avg. Sale
Price
$210,135 PSF For
Sale
$189.14
TOTAL
UNITS
880
TOTAL
UNITS
5,565
Occupancy
97.2%*
$1.15
Number
Sold
14
Avg. Sale
Price
$197,112PSF For
Sale
$181.06
TOTAL
UNITS
880
$1.33
HOUSINGMARKETUPDATE
Lakeside Avenue
East9thStreet
East18thStreet
Quicken Loans
Arena
Progressive Field
Public Square
EuclidAvenue
ProspectAvenue
SuperiorAve.
St.ClairAve.
East14thStreet
Carnegie Avenue
Euclid Avenue
East6thStreet
OntarioStreet
EastMallDrive
W.9thStreet
W.6thStreet
W.3rdStreet
Huron Road
teertsdr3.W
First Energy
Stadium
Chester Avenue
Flats East Bank
(Phase 2)
The Malls
16
4
5
6
7
1
19
23
22
25
17
14
12
2
1022
20
9
8
11
13
2418
15
21
11
32
26
27
28
30
3
29
31
33
TOTAL
UNITS
5,196
94.5%
Avg. PSF
Rental
$1.25
Occupancy
DOWNTOWNCLEVELANDRESIDENCEMAP
OWNED RENTED
Avg. PSF
Rental
*36 of 38 properties reporting
Residences PlannedUnder Construction/Renovation
1. Residences at 668
2. Avenue District Apartments
3. Joshua Hall Building
4. University Lofts Apartments
5. Euclid Block
6. University Lofts Condos
7. University Studios
8. Langston
9. Lofts at Rosetta
10. Residences at Hanna
11. Seasons at Perk Plaza
12. Reserve Square
13. Residences at 1717
14. Residences at The 9
15. 2320 Lofts
16. National Terminal Apartments
17. The Sphere
18. Flats East Bank
19. Schofield Building
20. The Creswell
21. Ivory on Euclid
22. Starr Gennett Building
23. Park-Southworth Building
24. CSU West Residential
25. Superior Warehouse Lofts
26. Corning Place
27. Standard Building
28. 75 Public Square
29. Leader Building
30. nuCLEus
31. May Company Building
32. Halle Building
33. Johnson Court
Residential Units Built Since 2007
12. Q1 2015
12
Asset Plus Companies, Inc., the largest privately-owned
student-housing developer in the U.S., paid $4.5 million for
Heritage Hall at the eastern edge of Downtown Cleveland.
Cleveland State University, which has owned the building and
operated it as a dorm since 2009, sold the property. The building
also currently houses the Downtown YMCA, which will move to
the new location in the Galleria in early 2016. According to Asset
Plus Companies, the property will be renovated into an off-
campus housing option for the students in the next year.
HERITAGEHALLSELLSFOR$4.5MILLION
The $272 million Hilton Downtown Cleveland is more than a
third of the way completed and is on track to be visitor ready by
the Republican National Convention in July of 2016. With Phase
1 being completed at the end of Q1 2015, the construction
team moved on to phase 2 in early April keeping the project on
schedule. In November, high winds prevented work from being
done on the hotel’s tower, but the construction team used the
time to work on the lower levels of the project and were able to
keep the schedule on track. With completion of the project a little
more than a year away, leaders are now focusing on the hotel’s
initial operations, staffing and training needs.
CONVENTIONCENTERHOTELCOMPLETESPHASE1OFCONSTRUCTION
MAJORINVESTMENTS&DEVELOPMENTUPDATES
The Cleveland Indians spent Q1 of 2015 prepping for the opening
day of the 2015 season. On April 10th, the Indians welcomed
a sold out crowd of 35,789 fans into the recently renovated
Progressive field. The Cleveland Indians unveiled a new section
called “The District.” Packed with CLE-centric concessions,
modern structural designs and amenities, and a new two-level
bar called “The Corner,” the updates bring Cleveland culture,
as well as local vendors, into the park. The District includes
concessions by Cleveland’s own Great Lakes Brewing Co.,
Dynomite Burgers, Melt Bar and Grilled, Sweet Moses, and
Barrio. The $26 million investment made by the team removed
a section of seats and created a new gate at center field, creating
a new view of Downtown and better connecting the energy inside
the ball park with the energy on Downtown’s streets.
INDIANSRENOVATETOINCLUDELOCALFLAVOR
13. Q1 2015
13
DCAOVERVIEW
Fourteen new City Advocates were announced in Q1 of 2015. The 2015 class of City Advocates were selected by a committee
of DCA staff members and program alumni. The committee reviewed nearly 85 written applications and interviewed
30 finalists. These participants, each representing a broad range of professional expertise and personal interests, are the
seventh class of DCA’s City Advocates. During their two-year commitment to DCA, City Advocates will become actively
involved in the growth of Downtown.
CITYADVOCATES
DCA’s Ambassador programs employs more than 60 hard-working people who
are dedicated to keeping Downtown’s streets clean and safe year-round. The DCA
Ambassadors can be seen patrolling Downtown’s neighborhoods by foot and by
bike, acting as both mobile concierges and an incredible cleaning staff. No matter
what your needs are, the Ambassadors are there to assist you quickly and efficiently.
CLEAN&SAFE
Downtown Cleveland Alliance’s Business Development Center coordinates DCA’s advocacy efforts. The Alliance enjoyed
success on each of its Q1 advocacy priorities in Q1: the Ohio Historic Preservation Tax Credit (OHPTC), affordable
parking, and special event permitting reform.
Downtown Cleveland projects have secured over $150 million in Ohio Historic Tax Credits, leveraging an additional $1.4
billion in private and public investment. The OHPTC was included in both the Governor’s proposed budget and the
version passed by the Ohio House of Representatives. The Alliance will continue to advocate for the Ohio Senate to maintain
and make improvements to the OHPTC. The Alliance also successfully advocated against a proposal to apply the state sales
tax to parking. In Q2, the Alliance will advocate for these priorities, in addition to adequate state funding for public transportation.
ADVOCACYUPDATES
88,595 POUNDS
COLLECTED
OF TRASH FROM DOWNTOWN STREETS
729 SAFETY ESCORTSTO & FROM DOWNTOWN DESTINATIONS
PROVIDED
606 MOTORISTS
ASSISTED
12,565 VISITORS
SERVED AS CONCIERGES TO
InQ1of2015,DCA’sAmbassadors:
Main Avenue Bridge Renovation
Downtown Cleveland Alliance has selected three finalists for the redesign of the
Main Avenue Bridge underpass. Centered at the intersection of West 9th Street and
Main Avenue, this project is part of DCA’s continued efforts to elevate Downtown
Cleveland through Step Up Downtown. Fifty-one responses to the Request for
Qualifications were received from firms throughout the U.S. and Canada. Selected
from this list, the three finalists are Balmori of New York City, Latent of Chicago
and PORT of Chicago.
Public Square Construction
The next step in continuing Downtown Cleveland’s momentum towards improving
our vibrant, thriving urban core is to create a unique public space that links pockets of
existing development and promotes further growth. With construction beginning
in Q1 of 2015, the vision of Public Square is in the process of becoming reality.
STEPUPDOWNTOWN
Step Up Downtown is DCA’s vision and tactical plan for linking and enhancing downtown development districts, public
spaces, and assets. Unveiled in 2014, DCA and partners in the advancement of Downtown have already made great strides
towards the completion of the Quick Wins outlined in Step Up Downtown. In Q1 of 2015, two keystone Step Up Downtown
projects made monumental strides: