Report: Industrial space vacancies drop

By Don Shilling

The local rate of vacant industrial space is near the national average.

The amount of industrial space being used in Northeast Ohio is increasing, showing that manufacturers are doing well, an observer said.

Team NEO, a 16-county economic development group, released the figures as part of its quarterly report on the region’s economic health.

Occupied industrial space has increased by 12 million square feet over the past four years to about 376 million square feet. The number has increased in 11 of the past 16 quarters.

The vacancy rate for Northeast Ohio is 8.4 percent, while the Mahoning Valley’s rate is 8.6 percent. Both compare favorably with the national vacancy rate of 7.9 percent, said Tom Waltermire, Team NEO chief executive.

He added that many area residents seem to have the opinion that there is a high number of vacant industrial buildings. This perception is driven by the area’s declining number of manufacturing jobs, he said.

Businesses that have survived, however, have learned to become more productive without necessarily adding a large number of jobs, he said.

“They wouldn’t be using more space if they weren’t selling more and doing more,” he said.

Many of the region’s large industrial factories have closed in recent decades, but they are being replaced by hundreds of smaller manufacturers that are using advanced technology to compete on the world stage, he said.

The health of manufacturing is shown when its vacancy rate is broken out from other industrial categories, such as distribution. The region’s vacancy rate for manufacturing space has fallen from nearly 12 percent in the fourth quarter of 2005 to just under 9 percent in the first quarter of this year.

If this rate continues to fall, it is likely that rents will go up and manufacturers will consider building new space for expansions, he said.

He said national publications are starting to see the region as an investment opportunity because of the likelihood of rising rents. Real Estate Research Corp. called Cleveland one of the top 10 industrial markets to watch this year. Heartland Real Estate Business said in December that the Akron/Canton region was one market to keep an eye on in the future.

Waltermire noted that Stuart Lichter, a Southern California real estate developer, has bought the former Hoover plant in North Canton and the Ford motor factory in Lorain. He also bought land from Goodyear in Akron and is putting up the company’s new global headquarters.

Waltermire said Team NEO is pleased with the economic uptick that the occupancy numbers indicate, but he added that rising rates and less available space would make it harder to attract new companies.

“Low cost is something that we sell all the time,” he said.

Team NEO also provides a quarterly update on the region’s gross product, which is the value of all goods and services produced.

The group reported that Moody’s Economy.com has reduced a previous growth estimate for 2008 to 0.9 percent, down from 1 percent. Even so, this would make the seventh consecutive year of economic growth for the region.

shilling@vindy.com