the buckeye state is no peanut. to put the size oF ohio’s economy in perspective, its 2010 gross domestic product (gdp) oF $477.7 billion was the eighth
largest source for the national GDP among the 50 states and the District of Columbia. If Ohio were a
separate country, it would rank as the 27th largest national economy in the world, according to the Ohio
Department of Development.
Its economy, however, was one of the worst-hit by the Great Recession. Only in this past year did the
unemployment rate drop below the national level after hovering stubbornly at 10 percent the previous
Recovery hinges on job creation, particularly in manufacturing — the state’s largest economic sector.
The industry employed 646,700 people in the state this past January, up from 611,000 jobs in late
2009, but significantly below the level of 780,000 jobs that existed at the beginning of 2007, according
to the U.S. Department of Labor.
This economic struggle took a toll on Ohio’s commercial real estate markets. Despite scattered signs of
improvement in occupancy rates and new construction, the Emerging Trends in Real Estate 2012 report
released earlier this year by the Urban Land Institute and PricewaterhouseCoopers ranked Ohio’s three
largest cities — Columbus, Cleveland and Cincinnati — near the bottom among 51 cities surveyed nationwide. Their development and investment prospects were described as “generally poor.”
Columbus Office Market
COLUMBUS OFFICE MARKET
The Columbus office market saw
headline-making deals this past
year. Blackstone Group’s purchase
of Duke Realty’s national office
portfolio included the purchase of
19 Central Ohio office properties,
according to Cushman & Wakefield.
The overall vacancy rate for the Columbus office market ended the
year at 15.96 percent, down from
more than 18 percent in the second
half of 2010, according to a report by
Cassidy Turley. Despite the decrease in vacancies, the asking rental rate for Columbus Class-A and
Class-B office properties dropped $0.23 year over year, and ended 2011 at $17.09 per square foot as
landlords continue to reduce rents to attract tenants.
Source: Cushman & Wakefield
3 Areas to Watch
A $7 billion makeover of Cleveland’s downtown will include the development of the Horseshoe Casino and
Cleveland Medical Mart & Convention Center. The ensuing job growth likely will support the apartment market
once the projects are complete in 2013, according to a
report by Marcus & Millichap. The report projects asking rents to increase 2.6 percent this year to a record
high of $758 per month.
Home to six Fortune 500 companies, Cincinnati broke
ground earlier this year on a streetcar project that will
begin operation in 2013. The 4-mile loop will connect
downtown with the historic Over-the-Rhine area and
the city’s largest employer, the University of Cincinnati.
The first segment is projected to cost $99 million and
create 300 construction jobs.
Focus: Natural gas
Ohio is hopeful for an economic boon in the development of the Utica shale formation. A study prepared by
Cleveland State University, Ohio State University and Marietta College, and commissioned by the Ohio Shale
Coalition, projected that the development was likely to create more than 65,000 jobs in Ohio by 2014. Royalty payments to beneficiaries including landowners could increase to $1.6 billion by 2015 — a number that
exceeds the total amount of royalties distributed by the industry in the past decade, according to the Ohio
Oil & Gas Energy Education Program (OOGEEP). In 2010, Ohio’s natural gas and crude oil industry supported
and contributed to nearly 13,000 jobs and paid $32.7 million in taxes, according to OOGEEP data.
From January 2008 to April 2011, Ohio
lost 332,700 jobs, or about 6.1 percent
of nonfarm payroll employment, according to a report by the Ohio Department
of Job and Family Services (ODJFS).
Photo: Mike Wutzler
Halliburton’s plans to open an Ohio operation center to
serve companies drilling in the Utica shale formation
are moving for ward. The Zanesville-Muskingum County
Port Authority approved the company’s purchase of
178 acres in the EastPointe Business Park this past
March. The project is likely to create 300 jobs, accord-
ing to The Business Journals.
In 2009 and 2010, Ohio’s statewide
unemployment rate jumped to 10.1
percent — the highest rate since 1983,
the report says. Employment picked
up this past year, and the unemployment rate declined to 7. 7 percent this
past January from 9 percent in January
2011. ODJFS projects employment to grow by 4. 3 percent from 2008 to 2018, reaching 5.98 million jobs.
Source: U. S. Department of Labor
“The multifamily side is interesting. We are seeing
a lot more new development. New construction is
more specific to places like Columbus, Cleveland
and Cincinnati. There are spots of new activity in
some of the outlying areas, like Youngstown, but
not a lot. Cleveland seems to be extremely active because of the construction going on.”
Rania Oteify is an associate editor at Scotsman Guide. Reach her at (800) 297-6061 or firstname.lastname@example.org.
sources: The Business Journals, Cassidy Turley, City of Cincinnati, Cleveland
State University, Cushman & Wakefield, Marcus & Millichap, Marietta College,
Ohio Department of Development, Ohio Department of Job and Family
Services, Ohio Oil & Gas Energy Education Program, Ohio Shale Coalition,
Ohio State University, PricewaterhouseCoopers LLP, Urban Land Institute,
U. S. Department of Labor