Industrial real estate indicators in Cleveland are nearing cyclical peaks, suggesting the market is approaching the top of the current real estate cycle. Vacancy rates have dipped below past lows and asking rents are approaching prior highs. Meanwhile, construction activity has increased substantially over the last two years with over 2.9 million square feet added, exceeding totals from the prior six years. Development has focused on the Southeast submarket, where over 1,000 acres of land have been sold for large projects in recent years. Overall, the Cleveland industrial market saw further gains in Q4 2016 but multiple data points point to the market reaching a mature stage in the cycle.

1. Industrial Outlook
Cleveland | Q4 2016

2. Rent peak and vacancy trough from the prior cycle
Source: JLL Research
Construction activity over the last 36 months
Source: JLL Research
Aggregate land sales in the Southeast submarket*
Source: JLL Research
8%
10%
12%
14%
$3.30
$3.50
$3.70
$3.90
2004 2006 2008 2010 2012 2014 2016
Rents Vacancy
Prior rent ceiling
Indicators suggest we are nearing the peak of the real estate cycle
We are currently in one of the longest periods of economic expansion in modern
history. This period of economic growth has done much to bolster the industrial
property sector in Cleveland. However, there is reason for caution as we enter
2017. Multiple indicators are suggesting that we are approaching the peak of the
real estate cycle. First, vacancy has dipped below the trough of the prior cycle,
and it appears to be leveling off near 9.0 percent. Second, industrial rents are
nearing the peak of the prior cycle, and the most recent data suggests that rents
may be plateauing around $3.75 per square foot. Finally, employment in multiple
industrial sectors declined during 2016.
Construction totals are up, with spec projects seeing mixed results
Construction activity is increasing as we approach the peak of the cycle. More
than 2.9 million square feet of new supply has been added in the past two years.
That number exceeds the construction totals for the prior six years. Speculative
construction has returned to the marketplace, signaling the return of developer
confidence. Five speculative warehouses were delivered during the last 36
months, totaling 741,000 square feet. The performance of these assets has
varied, with some leasing up quickly and others sitting partially vacant. Despite
these mixed results, developers remain cautiously optimistic, and additional
speculative projects are currently under construction.
Development activity has been concentrated in the Southeast submarket
The Southeast submarket is centrally located within the Cleveland metropolitan
area, making it a logical choice for regional distributors. Also, it has hundreds of
acres of greenfields and is home to a number of municipalities with pro-business
tax policies. The economic development tools most commonly used in these
communities are property tax abatement and income tax credits. Preceding
much of this construction activity has been the acquisition of land by developers,
and during the past six years, more than 1,000 acres has traded hands. The
largest developments currently underway in this submarket include the Corner-
stone Business Park in Twinsburg and the Seasons Business Park in Stow.
The market records further gains as the peak nears
Industrial Insight
Cleveland | Q4 2016
336,385,585
Market size (s.f.)
2,068,399
YTD total net absorption (s.f.)
$3.75
Average asking rent (p.s.f.)
1,213,000
Total under construction (s.f.)
9.1%
Total vacancy
0.6%
Net absorption (as a % of stock)
-0.8%
12-month rent growth
1,562,000
YTD completions (s.f.)
JLL Cleveland Industrial Outlook | Q4 2016
Prior vacancy floor
59%23%
18%
Owner-user
Speculative
Build-to-suit
56%
44% Occupied
Vacant
Construction totals by type (s.f.) Recently completed spec projects
$0
$100
$200
0
200
400
2011 2012 2013 2014 2015 2016
Total acres sold Average price per acre (000s)
*Analysis includes land comps ≥5 acres

3. Construction deliveries (m.s.f.)
Source: JLL Research
Total availability (%)
Source: JLL Research
Average asking rent ($ p.s.f.)
Source: JLL Research
2,257
Industrial Fundamentals
Cleveland | Q4 2016
0.0
0.5
1.0
1.5
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Warehouse & Distribution Manufacturing Flex
$2.00
$4.00
$6.00
$8.00
$10.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Warehouse & Distribution Manufacturing Flex
5.0%
10.0%
15.0%
20.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Warehouse & Distribution Manufacturing Flex
JLL Cleveland Industrial Outlook | Q4 2016

4. Industrial Statistics
Cleveland | Q4 2016
JLL Cleveland Industrial Outlook | Q4 2016
Inventory
(s.f.)
Quarterly
total net
absorption
(s.f.)
YTD
total net
absorption
(s.f.)
YTD
total net
absorption
(% of stock)
Total
availability
(s.f.)
Total
availability
(%)
Average
asking rent
($ p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Cleveland Totals
Warehouse & Distribution 180,663,425 987,941 2,371,197 1.3% 17,149,513 9.5% $3.80 1,289,000 866,000
Manufacturing 155,722,160 148,009 -302,798 -0.2% 13,512,531 8.7% $3.67 273,000 347,000
Totals 336,385,585 1,135,950 2,068,399 0.6% 30,662,044 9.1% $3.75 1,562,000 1,213,000
Flex 22,288,041 69,588 142,689 0.6% 2,866,463 12.9% $9.90 0 0
Downtown
Warehouse & Distribution 16,786,635 186,513 115,132 0.7% 2,459,050 14.6% $2.80 0 46,000
Manufacturing 19,235,088 -191,509 -722,334 -3.8% 3,338,779 17.4% $3.35 0 0
Totals 36,021,723 -4,996 -607,202 -1.7% 5,797,829 16.1% $3.12 0 46,000
Flex 1,370,227 -5,362 -9,243 -0.7% 232,328 17.0% $14.00 0 0
East
Warehouse & Distribution 1,966,066 17,776 113,026 5.7% 82,002 4.2% $6.72 0 0
Manufacturing 1,958,750 0 61,415 3.1% 55,068 2.8% $5.26 0 0
Totals 3,924,816 17,776 174,441 4.4% 137,070 3.5% $6.13 0 0
Flex 1,815,188 44,707 -10,703 -0.6% 232,216 12.8% $12.79 0 0
Medina County
Warehouse & Distribution 10,715,124 -77,118 -158,859 -1.5% 926,819 8.6% $4.30 75,000 150,000
Manufacturing 6,150,452 -57,650 -85,545 -1.4% 523,443 8.5% $4.89 40,000 0
Totals 16,865,576 -134,768 -244,404 -1.4% 1,450,262 8.6% $4.51 115,000 150,000
Flex 1,215,781 -66,938 -68,584 -5.6% 166,262 13.7% $7.91 0 0
Northeast
Warehouse & Distribution 21,909,231 83,999 148,870 0.7% 2,827,022 12.9% $3.03 0 0
Manufacturing 31,704,167 -10,601 -29,027 -0.1% 2,234,345 7.0% $3.57 0 0
Totals 53,613,398 73,398 119,843 0.2% 5,061,367 9.4% $3.27 0 0
Flex 2,006,641 -272 -102,287 -5.1% 294,258 14.7% $12.97 0 0
South
Warehouse & Distribution 11,973,131 -148,369 -244,066 -2.0% 1,202,881 10.0% $5.39 186,000 0
Manufacturing 10,307,906 42,765 34,465 0.3% 594,074 5.8% $4.13 0 0
Totals 22,281,037 -105,604 -209,601 -0.9% 1,796,955 8.1% $4.97 186,000 0
Flex 3,469,168 34,664 162,467 4.7% 513,638 14.8% $9.54 0 0
Southeast
Warehouse & Distribution 43,505,078 103,009 813,130 1.9% 3,599,458 8.3% $4.33 872,000 573,000
Manufacturing 20,623,385 83,079 46,768 0.2% 1,302,633 6.3% $3.92 70,000 0
Totals 64,128,463 186,088 859,898 1.3% 4,902,091 7.6% $4.22 942,000 573,000
Flex 5,964,124 107,965 110,805 1.9% 809,800 13.6% $8.82 0 0
Southwest
Warehouse & Distribution 19,902,716 436,516 -105,407 -0.5% 1,648,168 8.3% $3.57 0 0
Manufacturing 17,443,855 66,444 -5,283 0.0% 918,809 5.3% $3.50 0 0
Totals 37,346,571 502,960 -110,690 -0.3% 2,566,977 6.9% $3.54 0 0
Flex 2,907,741 -34,362 64,310 2.2% 205,152 7.1% $9.70 0 0
Summit County
Warehouse & Distribution 35,232,384 330,621 1,434,088 4.1% 2,346,993 6.7% $4.05 156,000 97,000
Manufacturing 25,008,726 50,791 -177,158 -0.7% 3,428,365 13.7% $3.58 163,000 0
Totals 60,241,110 381,412 1,256,930 2.1% 5,775,358 9.6% $3.77 319,000 97,000
Flex 2,699,540 1,895 -27,825 -1.0% 345,679 12.8% $9.18 0 0
West
Warehouse & Distribution 18,676,412 77,287 234,576 1.3% 2,067,791 11.1% $3.79 0 0
Manufacturing 23,919,062 223,890 615,201 2.6% 1,084,915 4.5% $3.24 0 347,000
Totals 42,595,474 301,177 849,777 2.0% 3,152,706 7.4% $3.60 0 347,000
Flex 1,075,446 -12,709 20,464 1.9% 80,615 7.5% $8.55 0 0

5. Industrial Submarket Map
Notable construction projects
Address: 38889 Center Ridge
Square feet: 347,000
Tenant: Riddell
Owner: Scannell
Building type: Manufacturing
Construction type: Build-to-suit
Est. completion: Q2 2017
Address: 14720 Foltz Industrial
Square feet: 186,000
Tenant: XL Screw
Owner: Scannell
Building type: Warehouse
Construction type: Speculative
Completed: Q4 2016
Completed: Q1 2016
Completed: Q1 2016
JLL Cleveland Industrial Outlook | Q4 2016
Address: 55 E Hines Hill Road
Square feet: 750,000
Tenant: Arhaus Furniture
Owner: Arhaus Furniture
Building type: Warehouse
Construction type: Owner-user
Address:4945 Scarlet Lane
Square feet: 114,000
Tenant: Carroll Tire
Owner: JV: Brennan, Fogg
Building type: Warehouse
Construction type: Speculative

6. Industrial Sales Activity
Cleveland | Q4 2016
JLL Cleveland Industrial Outlook | Q4 2016
This report analyzes all industrial sales completed in the last 12 months ≥ 30,000 s.f.
Top 10 sales transactions during the last 12 months
Size (s.f.) $ p.s.f. Sale date
1,202,425 $52 Mar-16
552,078 $57 Apr-16
559,867 $21 Jul-16
86,850 $115 Aug-16
166,945 $49 Mar-16
100,000 $50 Sep-16
101,000 $49 Jan-16
174,702 $26 Apr-16
93,481 $48 Sep-16
98,000 $43 Sep-16
At a glance
Total volume YTD ($) $194,565,641
Total volume YTD (s.f.) 6,097,101 s.f.
Sales activity by building type
Sales volume (s.f.)
Average warehouse price ($ p.s.f.) $43
Number of transactions YTD 43
Transactions details
Average price per square foot
$18Average manufacturing price ($ p.s.f.)
Average flex price ($ p.s.f.)
Portfolio sale Dalfen Hackman Capital $63,111,424
Building address Buyer company Seller company Sales price
1000 Seville Road Capstone Limited
687 Seville Road STNL Property Corp
Portfolio sale AIC Ventures
Portfolio sale Titan Realty
PrimeSource Building Products Inc. $5,000,000
7825 Hub Parkway Otto Reidl; William Rex William H Rex $4,900,000
22720 Steltfast Parkway Protech US Holding Inc
757 Renaissance Parkway Mar-Bal Incorporated JV: CNL, Welsh Companies $4,200,000
3000 W 121st Street New Mountain Net Lease Corp. Insight Equity $4,517,301
1006 Crocker Road
$89
$4,609,500Bonne Bell CompanyAll Pro Freight Systems Inc
Pat Catan's
Commonwealth REIT
James Doyle
Rohrer Corporation
$30,111,496
$11,500,000
$9,950,000
$8,123,640
0
450,000
900,000
1,350,000
1,800,000
East Medina Northeast South Southeast Southwest Summit West
Warehouse/Distribution Manufacturing Flex
$47
$63
$15
$44
$40
$48
$0
$35
$0
$20
$32
$8
$0
$20
$26
$10
$0 $0 $0 $0 $0
$89
$0 $0
$0
$25
$50
$75
$100
East Medina Northeast South Southeast Southwest Summit West
Warehouse/Distribution Manufacturing Flex
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
Warehouse / Distribution Manufacturing Flex
Sum of Price ($) Sum of RBA (SF)

7. Job growth (12-month change): United States vs. Cleveland
Job growth/loss by sector (12-month change): Cleveland
Industrial employment trends (12-month change, 000s): ClevelandIndustry employment stratification: Cleveland
Industrial Employment Update
Cleveland | Q4 2016
4.6%U.S. unemployment
1.6%U.S. 12-month job growth
4.5%Cleveland unemployment
0.7%Cleveland 12-month job growth
4.9%Ohio unemployment
0.9%Ohio 12-month job growth
Employment vs. unemployment rate: Cleveland
JLL Cleveland Industrial Outlook | Q4 2016
0%
3%
6%
9%
12%
950,000
1,000,000
1,050,000
1,100,000
2006 2008 2010 2012 2014 2016
Nonfarm employment
Unemployment
0.0%
1.0%
2.0%
3.0%
2011 2012 2013 2014 2015 2016
Cleveland United States
Educational &
Health Services
211,400 20%
Trade, Transportation
& Utilities
187,700 18%
Professional &
Business Services
148,300 14%
Government
137,700 13%
Manufacturing
119,100 11%
Leisure & Hospitality
104,200 10%
Financial Activities
65,300 6%
Other Services
41,800 4%
Mining, Logging &
Construction
36,400 3%
Information
14,000 1%
-4,100
-1,000
-300
200
1,100
1,200
1,700
1,700
8,400
8,700
-7,500 -5,500 -3,500 -1,500 500 2,500 4,500 6,500 8,500
Manufacturing
Mining, Logging & Construction
Information
Financial Activities
Trade, Transportation & Utilities
Professional & Business Services
Other Services
Government
Leisure & Hospitality
Educational & Health Services
-10.0
0.0
10.0
2011 2012 2013 2014 2015 2016
Trade,Transportation & Utilities Manufacturing
Mining, Logging & Construction Other Services

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Great Lakes Region
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