Expiring Leases Rev Up Plans for New Construction
While residential real estate markets have been rocky because of the subprime crisis, high class office space in downtown Cleveland is actually doing pretty well. Vacancy rates are down to around ten percent and about half a dozen big employers like Huntington Bank have leases set to expire in the next few years. That's sent developers to the drawing boards and into meeting rooms to woo potential tenants. Douglas Miller is with The Richard E. Jacobs Group.
Douglas Miller: There's a number of large tenants that are in the marketplace looking for different opportunities and that's really what's been driving a lot of the activity that you're seeing.
The Jacobs Group is proposing a $180 million, 21-story, green-certified building for Cleveland's Public Square to be built with developer Hines. Greg Van Schaack is project developer for Hines Midwest. He says the companies want more than half the building pre-leased before breaking ground.
Greg Van Schaack: There are tenants out looking today, but that's what its all going to come down to. If the tenants want to be in this building, we wiill welcome them and we will make the building a reality but we can't start the building without users.
Ernst and Young and law firm Tucker, Ellis & West have announced they will move to new space in the Flats proposed by The Wolstein Group. Robert Roe is president of Staubach Company's Cleveland office. He believes there is enough demand for two or three new buildings downtown.
Robert Roe: The banking and financial markets, for the most part, nobody's going to build a building until they've signed at least 50 percent or more in most cases now.
Roe wouldn't talk about his client, Eaton Corporation, who is also looking for new space.
New construction will mean losses for some older downtown buildings. CB Richard Ellis' Managing Director David Browning says these spaces will have to reinvent themselves.
David Browning: The building that has lost several tenants is the Huntington Bank building at the corner of 9th and Euclid and that's a building that needs to be recast. Whether it's apartments, hotel or renovated into a higher grade of office space than it currently is offering.
The Jacobs/Hines project at Public Square could break ground as soon as next year. Mhari Saito, 90.3.