2014 Market Assessment

DRAFT FINDINGS – APRIL 2014

Process for the Market Assessment Assessment to identify

opportunities through next investment cycle (5 to 7 years) and inform “Step Up” plan

Primary and secondary data sources

Stakeholder interviews – real estate, investment & economic development

Market Assessment Document Top Global Trends in Effect in

Cleveland Market Opportunities in this

Investment Cycle Key Market Indicators in

Cleveland

Global Trends in Effect in Cleveland

Top Global Trends in Effect Need for skilled talent is driving

businesses to compact urban centers ◦ Millennials today 36% of US workforce, 50% by 2020

Millennials & empty nest Boomers want to live downtown ◦ 40% increase in Downtown Cleveland residents

Changing workforce demographics also include women ◦ Focus on safety, mixed-use & cultural diversity

Top Global Trends in Effect Demand for Mobility Options ◦ Downtown Walk Score 87; Transit: 82; Bike 52.

Health & Wellness Opportunity for Cleveland

◦ Both Industries and Lifestyle Preferences

Social Equity a Growing National Concern

◦ Downtown as a common gathering place, inviting and welcoming to all

Current Market Opportunities

Residential: Strong & Sustained Residential is driving the current investment cycle 800+ units added w/o increasing vacancy rate 2,000 more units online by 2015 growing

downtown population to 15,000 Remaining tax credit eligible properties could

supply another 2,000 to 2,500 units – will be absorbed this cycle? Demand for resident-serving amenities

Office & Retail: Niche Opportunities OFFICE

Overall 18% vacancy / $17 rates “Super A” niche: ◦ Modern formats / smaller footprints ◦ Regional retention ◦ 8-9% vacancy & ~$30 leasing rates ◦ May support additional new build Entrepreneurial niche ◦ Street level retail conversions ◦ Co-working space

RETAIL Oversupply - contracting nationally Consolidate in key activity centers & pedestrian connectors

Niche opportunities ◦ General Merchandise $16.5 leakage ◦ Resident & worker-serving personal services ◦ Visitor-serving near convention center ◦ Health & fitness related

Visitor: Building Out $465M investments in Convention Center &

Global Center for Health Innovation Playhouse Square expansion &

enhancements 1,800 new hotel rooms in progress/planned Revenue and occupancy numbers will be

closely watched Casino Phase II timing still TBD

Key Indicators for Downtown

Reasons for Key Indicator Recommendations

Tell the story succinctly and powerfully Promote & Extend Residential Demand Recruit & Retain Skilled Talent Attract & Retain Businesses Uncover & Promote Niche Opportunities Report Data Specific to Downtown

Residential & Worker Indicators 12,000 Downtown Residents 124,000 Downtown Workers Resident Demographics

◦ 51% hold a Bachelor’s or Advanced Degree ◦ 74% White Collar ◦ 70& single, never married ◦ Average per capita income 64% higher than

metro average Residential occupancy ◦ 95% for last 11 quarters

Cleveland Diversity Index: 62.1 Cleveland Cost of Living Index: 101.0

Median Annual Wage for MSA $35,610 ◦ ~$0.5 M MSA workers’ salaries support

$1,000/mo Transit Ridership Increases 2013: ◦ Light Rail: 4.6% ◦ Heavy Rail 5.7%

Commercial Indicators

◦ 18% overall office vacancy ◦Asking Lease Rates Q2 2013

$19.10 ◦ 37,600 net absorption 2013 ◦Regional retention of businesses ◦ “Super A” ~8-9%vacancy; $30.00

s.f. asking rate ◦Aggregate Disposable Income:

$37.7 M

Visitor Indicators

◦Convention Center Bookings projected 300,000

◦Number Hotel Beds: 3,557 ◦Hotel Occupancy: 67.2% ◦Revenue per Available Room:

$79.33 ◦Downtown Visitor Attraction: 8.5 M

to top 5 venues

New: Civic Realm Indicators Safety: Comparative Crime Rates; Availability of Ambassadors

Mobility: Ridership; Walk score: 87; Transit: 82; Bike: 57

Connectivity: Bike Lanes/Racks; Transit Ridership; Wifi Hotspots

Diversity& Culture: 356 Ethnic Restaurants; 36 Cultural Gardens; 1000+ Performances; Pop-Ups & Tactical Urbanism

2014 Market Assessment

DRAFT FINDINGS – APRIL 2014