CLEVELAND—Hertz Investment Group recently completed its purchase from TIER REIT of Fifth Third Center in Cleveland and has decided to retain JLL as the leasing agent for the trophy office tower.
Tenants currently occupy about 78% of the 508,397 square-foot building, but Andrew Coleman, JLL senior vice president, tells GlobeSt.com that the downtown market is undergoing a transformation that is driving a lot of leasing activity.
As reported in GlobeSt.com, since 2011 the metro area has seen billions of dollars flow into new healthcare, hospitality, multifamily, office, industrial and retail development. Major projects include downtown's Cleveland Convention Center and the adjoining Global Center for Health Innovation, formerly known as the Medical Mart.
“But more recently, much of the activity downtown has centered on residential conversions,” Coleman says. Developers have begun to take advantage of the intense demand for downtown apartments by renovating class B and C office buildings into residences. This process will not only displace office users and tighten that market, but also make downtown a more vibrant and attractive neighborhood with additional retail and other amenities.
“The new workforce is demanding a downtown address,” Coleman adds. The younger generations want to have the option to walk or bike to work and most office users seeking new space will focus their efforts on the CBD.
The K&D Group, Inc. just bought the historic 21-story Keith Building downtown, he points out, where it plans to move many of the office users currently in its Leader Building, which it plans to convert into residences.
And although the downtown will see some new office construction, Coleman says these spaces will be more expensive and users that pick this option will have to shrink their footprints. Among the top trophy spaces in the CBD “companies looking at us versus new construction are going to find very good opportunities.”
He adds that Santa Monica, CA-based Hertz will be very aggressive about filling the spaces in Fifth Third. And in the approximately one year that it has handled the leasing, JLL has already gotten agreements for a half-dozen renewals and expansions. In the next few months he expects to ink a big deal for the building that “will make a splash in the market. We're going to be in a really good spot in a year.”
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
