An in-depth look at the Cleveland office market. Analysis includes leasing, sales, construction and employment.

1. JLL Research
Cleveland | Q4 2018
Office Outlook
An in-depth look at the Cleveland office
market. Analysis includes leasing, sales,
construction and employment.

2. Q4 2018
Insight
Cleveland Office Outlook
The migration of office tenants from the suburbs to downtown Cleveland
gained additional momentum in the fourth quarter with leases signed by
Progressive Insurance, Proformex and five other companies. Over the last four
years, 29 businesses have relocated from the suburbs or established
secondary operations downtown. In total, these companies have brought
more than 2,500 jobs to the city and absorbed more than 630,000 square feet
of office space. This ongoing migration speaks to downtown Cleveland’s
resurgence and millennial’s preference for a live-work-play environment.
Also making headlines in the fourth quarter were the sales of 200 Public
Square for $187.0 million and 1111 Superior for $55.0 million. These are just
the latest in a string of high-profile trades including the Tower at Erieview,
AECOM Centre, the Shelbourne portfolio, and Key Center. More than $830.0
million of office product traded in Cleveland over the last two years, a level
that is roughly 2.5 times the historical average. The run up of investment sales
has been bolstered by interest from out-of-state buyers. A common set of
themes led these groups to Cleveland, including higher yields, attractive
valuations, and the positive underlying market fundamentals.
Outlook
Office demand will remain in expansionary mode in 2019, although it will
likely begin to moderate as the cycle matures. After a flurry of construction
activity in 2018, the development forecast looks noticeably light. Overall, we
see vacancy declining by roughly 50 basis points in 2019. Asking rents are
projected to increase in the 1.5 percent range as the market tightens and
owners upgrade assets. Flight to quality will remain a prominent trend as the
war for talent is driving many companies to upgrade their workplace.
Furthermore, the Cleveland office market will remain favorable for corporate
users with affordable rents and ample opportunities across the metro.
Tenant migration, investment sales top headlines in ‘18
21.7%
21.3%
20.1% 20.4%
2015 2016 2017 2018
Total vacancy
$16.00
$19.00
$22.00
$25.00
2015 2016 2017 2018
Average asking rents ($/s.f.) Class A
Class B
• Over the last four years, 29 companies have moved to the central
business district, absorbing more than 630,000 square feet.
• More than $830.0 million of office product traded in Cleveland over the
last two years, a level that is roughly 2.5 times the historical average.
• Flight to quality will remain a prominent trend in 2019 as the war for
talent is driving many companies to upgrade their workplace.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Fundamentals Forecast
YTD net absorption 210,604 s.f. ▲
Under construction 0 s.f. ▲
Total vacancy 20.4% ▼
Average asking rent (gross) $19.66 p.s.f. ▲
Concessions Declining ▼
-350,000
-175,000
0
175,000
350,000
2015 2016 2017 2018
Supply and demand (s.f.) Net absorption
Deliveries
Top trends

3. Statistics
Note: Updates to the property set were made based on market dynamics. Historical data points included in this report reflect the updated property set.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Cleveland Office Outlook
Q4 2018
Class
Inventory
(s.f.)
Total net
absorption
(s.f.)
YTDtotal net
absorption
(s.f.)
YTDtotal net
absorption
(% of stock)
Direct
vacancy (%)
Total
vacancy (%)
Average
direct asking
rent ($p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Downtown Totals 13,830,378 52,506 -142,287 -1.0% 22.0% 22.8% $19.90 0 0
Midtown Totals 1,026,478 -5,887 111,575 10.9% 18.7% 19.6% $20.32 134,000 0
Urban Totals 14,856,856 46,619 -30,712 -0.2% 21.8% 22.5% $19.92 134,000 0
Northeast Totals 399,075 -6,003 21,044 5.3% 21.8% 21.8% $16.15 0 0
East Totals 3,992,843 -9,777 129,427 3.2% 13.1% 15.4% $23.06 214,000 0
Southeast Totals 653,559 4,692 50,418 7.7% 17.3% 17.3% $17.74 0 0
South Totals 4,746,892 21,937 74,146 1.6% 16.7% 17.2% $18.73 0 0
Southwest Totals 1,022,714 2,991 62,406 6.1% 26.0% 26.0% $18.24 0 0
West Totals 1,501,913 -12,964 -96,125 -6.4% 17.9% 18.7% $17.34 0 0
Suburban Totals 12,316,996 876 241,316 2.0% 16.7% 17.7% $19.34 214,000 0
Cleveland Totals 27,173,852 47,495 210,604 0.8% 19.5% 20.4% $19.66 348,000 0
Downtown A 5,854,816 3,729 76,794 1.3% 11.8% 12.4% $25.95 0 0
Midtown A 262,356 0 33,807 12.9% 19.7% 23.0% $23.00 104,000 0
Urban A 6,117,172 3,729 110,601 1.8% 12.2% 12.9% $25.73 104,000 0
Northeast A 0 0 0 0.0% 0.0% 0.0% $0.00 0 0
East A 2,069,271 4,818 136,899 6.6% 11.7% 16.1% $26.87 214,000 0
Southeast A 78,000 0 33,396 42.8% 0.0% 0.0% $0.00 0 0
South A 1,675,643 3,284 50,979 3.0% 13.6% 14.9% $22.74 0 0
Southwest A 88,000 0 0 0.0% 16.1% 16.1% $21.50 0 0
West A 594,777 -12,132 -72,780 -12.2% 17.2% 17.2% $17.42 0 0
Suburban A 4,505,691 -4,030 148,494 3.3% 13.0% 15.5% $23.43 214,000 0
Cleveland A 10,622,863 -301 259,095 2.4% 12.5% 14.0% $24.65 318,000 0
Downtown B 7,975,562 48,777 -219,081 -2.7% 29.5% 30.4% $18.23 0 0
Midtown B 764,122 -5,887 77,768 10.2% 18.4% 18.4% $19.33 30,000 0
Urban B 8,739,684 42,890 -141,313 -1.6% 28.6% 29.3% $18.29 30,000 0
Northeast B 399,075 -6,003 21,044 5.3% 21.8% 21.8% $16.15 0 0
East B 1,923,572 -14,595 -7,472 -0.4% 14.7% 14.7% $20.14 0 0
Southeast B 575,559 4,692 17,022 3.0% 19.7% 19.7% $17.74 0 0
South B 3,071,249 18,653 23,167 0.8% 18.4% 18.5% $17.63 0 0
Southwest B 934,714 2,991 62,406 6.7% 26.9% 26.9% $18.06 0 0
West B 907,136 -832 -23,345 -2.6% 18.4% 19.7% $17.29 0 0
Suburban B 7,811,305 4,906 92,822 1.2% 18.8% 19.0% $18.00 0 0
Cleveland B 16,550,989 47,796 -48,491 -0.3% 23.9% 24.4% $18.16 30,000 0

4. Q4 2018
Construction
Cleveland Office Outlook
2
1 4
5
This map highlights a partial list of construction projects either planned, under construction, or recently completed.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
3
2
Development: Market Square
Square feet: 137,000
Tenant(s): TBD
Owner: Harbor Bay
Construction type: Spec
Construction start: TBD
5
Development: Pinecrest
Square feet: 150,000
Tenant(s): Philips, et al.
Owner: Fairmount
Construction type: Spec
Completed: Q2 2018
4
Development: Van Aken
Square feet: 64,000
Tenant(s): ABA, RMS, et al.
Owner: RMS
Construction type: Spec
Completed: Q2 2018
1
Development: Convergent
Square feet: 100,000
Tenant(s): TBD
Owner: Equity Trust
Construction type: Spec
Construction start: TBD
3
Development: IBM Explorys
Square feet: 43,000
Tenant(s): IBM
Owner: Hemingway
Construction type: BTS
Completed: Q3 2018

5. Q4 2018
Leasing
Cleveland Office Outlook
This dashboard analyzes leasing activity ≥ 5,000 square feet over a 12-month period, ending December 31, 2018.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Leasing activity by size
1,451,363
79
445,106
943,098
63,159
529,183
922,180
Growing Shrinking Stable
1,053,033
398,330
Notable leasing transactions
Submarket Size
Medical Mutual 1 American Rd Southwest
Veterans Administration 6100 Oak Tree Blvd South
Sherwin Williams 1660 W 2nd St Downtown Renewal Stable
S&P Data 1500 W 3rd St Downtown Renewal Growing
GSA 1001 Lakeside Ave Downtown New Lease Shrinking
HIMSS 1 Saint Claire Ave Downtown Renewal Stable
PBGC 24701 Euclid Ave Northeast New Lease Stable
Hyster-Yale Materials Handling 5875 Landerbrook Dr East Renewal Growing
Philips Electronics 100 Park Ave East New lease Stable
Covia 2 Summit Park Dr South New Lease Stable30,000
51,810
46,000
45,455
43,000
40,988
40,325
32,357
324,539 New Lease Growing
58,821 Renewal Stable
Leasing activity by transaction type
New lease
Renewal
Tenant Address Type Footprint
Tenant footprint Leasing activity by industry
13 1 65
Class C leasing (s.f.)
Urban leasing (s.f.)
Suburban leasing (s.f.)
Class B leasing (s.f.)
12 months at a glance
Leasing activity (s.f.)
Number of transactions
Class A leasing (s.f.)
49%
21%
16%
Professional and business services
Financial Services
Scientific and technical
Public and private institutions
Real estate
Legal services
Other
64 7 7 1
0
150,000
300,000
450,000
600,000
750,000
5,000-19,999 20,000-39,999 40,000-59,999 60,000+
Total s.f. leased Number of leases#
Leasing activityby submarket (s.f.)
34%
24%
16%
14%
Downtown
Southwest
South
East
Northeast
Southeast
Midtown
West
Leasing activityby industry (s.f.)

6. Q4 2018
Employment
Cleveland Office Outlook
3.7%U.S. unemployment
1.8%U.S. 12-month job growth
4.4%Cleveland unemployment
2.9%Cleveland 12-month job growth
4.6%Ohio unemployment
2.1%Ohio 12-month job growth
-0.5%
0.2%
0.9%
1.6%
2.3%
3.0%
2014 2015 2016 2017 2018
Cleveland U.S.
-700
-200
400
2,000
2,600
3,800
4,900
4,900
5,400
7,700
-2,500 1,300 5,100 8,900
Other Services
Information
Financial Activities
Government
Mining, Logging & Construction
Manufacturing
Educational & Health Services
Leisure & Hospitality
Professional & Business Services
Trade, Transportation & Utilities
0%
4%
8%
12%
910,000
1,010,000
1,110,000
2014 2015 2016 2017 2018
Employment Unemployment
19%
18%
14%13%
12%
10%
6%
Educational & Health Services
Trade, Transportation & Utilities
Professional & Business Services
Government
Manufacturing
Leisure & Hospitality
Financial Activities
Mining, Logging & Construction
Other Services
Information
* Represents 12-month change in employment. All charts represent the latest economic data available from the Bureau of Labor Statistics as of December 2018.
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Job growth by sector*Historical employment
Job growth*
Employment by industry Office employment*
-2,000
500
3,000
5,500
8,000
10,500
2014 2015 2016 2017 2018
Professional & Business Services Information
Government Financial Activities

7. Andrew Batson
Vice President, Research
+1 216 937 4374
andrew.batson@am.jll.com
Johnathan Miller
Research Associate
+1 216 937 4381
johnathan.miller@am.jll.com
Contact
© 2019 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
About JLL
JLL (NYSE: JLL) is a leading professional services firm that
specializes in real estate and investment management. A
Fortune 500 company, JLL helps real estate owners,
occupiers and investors achieve their business ambitions. In
2017, JLL had revenue of $7.9 billion and fee revenue of $6.7
billion; managed 4.6 billion square feet; and completed
investment sales, acquisitions and finance transactions of
approximately $170 billion. At the end of 2017, JLL had
nearly 300 corporate offices, operations in over 80 countries
and a global workforce of 82,000. As of December 31, 2017,
LaSalle had $58.1 billion of real estate assets under
management. JLL is the brand name, and a registered
trademark, of Jones Lang LaSalle Incorporated. For further
information, visit www.jll.com.
About JLL Research
JLL’s research team delivers intelligence, analysis and
insight through market-leading reports and services that
illuminate today’s commercial real estate dynamics and
identify tomorrow’s challenges and opportunities. Our more
than 400 global research professionals track and analyze
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conditions in over 60 countries, producing unrivalled local
and global perspectives. Our research and expertise, fueled
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drives successful strategies and optimal real estate
decisions.