Cleveland's industrial real estate market continues to weather the Great Recession. Buildings with over 100,000 SF, which represent almost half of all square footage in the market, currently have a vacancy rate of 10.5%. But not every building is created equal. Features like ceiling height, sprinkler system and location tell a more detailed story. As a model of the entire market, we'll investigate the Southeast submarket, Cleveland's largest. Buildings with a clear ceiling height of 24' or greater are better suited for distribution purposes than those with lower ceiling heights. Taller racks can be assembled and inventory stacked higher in buildings with higher ceilings. Structures with 24' clear ceilings make up just over 23% of the entire Cleveland market.
The Southeast submarket, which includes the cities of Solon, Aurora, Streetsboro and Twinsburg, has one third of all 24' clear buildings in the Cleveland area. While the market vacancy rate in these buildings is 18%, in the Southeast it is a slightly lower 17.4%. Nearly half of the vacant space in the Southeast's 24' clear data is a result of the Chrysler Stamping Plant's closing in 2010, however.
Another factor that disting-uishes buildings is sprinkler system type. The Early Suppress-ion Fast Response (ESFR) system is designed to put out fires quickly, whereas most sprinklers take longer to detect fire and spray less water. This system is useful in distribution buildings, especially when flammable materials are being stored. The ESFR system is relatively new, and not many buildings have it; buildings of 24' clear ceilings with ESFR make up just over 4% of the Cleveland market. The Southeast submarket has 55% of these buildings.
Another factor that disting-uishes buildings is sprinkler system type. The Early Suppress-ion Fast Response (ESFR) system is designed to put out fires quickly, whereas most sprinklers take longer to detect fire and spray less water. This system is useful in distribution buildings, especially when flammable materials are being stored. The ESFR system is relatively new, and not many buildings have it; buildings of 24' clear ceilings with ESFR make up just over 4% of the Cleveland market. The Southeast submarket has 55% of these buildings. The Southeast submarket is Cleveland's largest, and it has a disproportionate number of distribution facilities, with more large and up-to-date distribution sites than any other Cleveland submarket. This may reflect a growing trend, and more distributors may soon realize that Cleveland's low costs and central location make it an ideal site for distribution purposes.
