By Betsy Scott, The News-Herald
Greater Cleveland closed out 2016 with a low industrial real estate vacancy rate, thanks partly to Lake County.
The Cleveland Fourth Quarter 2016 Industrial Market Report compiled by Xceligent tracks about 368 million square feet of industrial space in Ashtabula, Cuyahoga, Geauga, Lake, Lorain and Medina counties.
The region’s fourth-quarter vacancy rate was 4 percent, down 0.2 percent from the third quarter and 1 percent from the same period in 2015.
The Lake County market, comprising of roughly 38 million square feet in 918 industrial buildings, had a vacancy rate of 2.8 percent, down 0.1 percent from the third quarter.
“There’s high demand for industrial and there is shrinking inventory, and that is not only in Lake County, but across Northeast Ohio,” said Patrick Dowd, vice president of Sequoia Realty Corporation based in Mentor. His company represents nearly 1 million square feet of industrial space in Northeast Ohio.
Mentor is home to 40 percent of the industrial property in Lake County and about 4.2 percent is vacant. That is improved from 4.3 percent in the third quarter of 2016 and 6.7 percent at the end of 2015.
Two buildings — the former Caterpillar and RB&W facilities — constitute close to two-thirds of the vacancies in the city, noted Ronald M. Traub, Mentor’s economic and community development director.
“The city is exploring opportunities to facilitate developable industrial sites in the city,” he said.
On the retail side, the Mentor market is in relatively good shape from a large, national tenant perspective, Dowd said.
“There’s not a lot of big box space on the market,” he said. “But we’re seeing a lot of pockets of small retail space in the 1,000- to 3,000-square-foot range. It’s just demand. There’s a lack of demand at this time. We are hoping we’re going to see that demand increase in the spring.”
Mentor maintains its retail prowess with a vacancy rate of 4.3 percent, according to the Xceligent report. That contrasts with the 7.1 percent in Greater Cleveland, up slightly from third quarter 2016, and 7.9 percent in Lake County, where Mentor accounts for 45 percent of the market.
“You look at Eastlake, there are some big boxes, Painesville Commons, but Mentor is generally in better shape than surrounding Lake County cities,” Dowd said.
Mentor is the sixth-largest retail center in Ohio in terms of sales volume, according to the 2015 Retail Trade Report released by the U.S. Census Bureau. The communities ahead of it are Columbus, Cincinnati, Toledo, Cleveland and Akron.
Meanwhile, office real estate continues to lag a bit, Dowd said.
“Generally, coming out of a recession, industrial is the first sector to rebound, then retail, then office,” he said. “We have seen a rebound in retail, but not as strong as industrial, but it has rebounded from the (2008) recession. There’s a lot of inventory of office and very weak demand all over Lake County. …
“There’s a thought that technology has affected the demand for traditional office space. You can do an awful lot with a smartphone and you can conduct business very easily.”