GHC Thematic Report: New Developments in Northeast Ohio Bode Well for Multifamily Housing

Northeast Ohio performed better than national averages in terms of employment rate and multifamily occupancy levels in the midst of the COVID-19 downturn, and initial signs are pointing to economic development and recovery back to pre-2020 levels. The latter bodes well for job and wage growth, which will provide support to the region’s multifamily, specifically workforce housing, real estate sectors. 

The Greater Cleveland area performed better than many larger markets during the COVID-induced recession, evidenced by the employment rate and average occupancy levels. 

After nearly 207,800 jobs were lost between January and May of 2020, employment recovery began quickly, with December’s monthly unemployment coming in at 9.2% compared to May’s 18.5% jobless rate. These levels are better than national averages. 

In addition, when looking at all apartment classes in Cleveland’s metro area, average occupancy reached 96% by year-end 2020—just 20 points lower than 2019 levels. 

Importantly, the economic recovery in Cleveland is well underway. Several developments, some described below, are already in the works and will fuel new demand for workforce housing by creating thousands of new jobs in the area. Berkadia reports the metro-wide apartment occupancy in Cleveland is projected to remain over 95%, and effective rent growth is forecast to rise 4.2% over the next few years. This is good news for multifamily and workforce housing.

Here are several exciting developments in Cleveland that pose a potential upside for the local multifamily market in 2021 and beyond:

The Cleveland Innovation District, Downtown Cleveland

Earlier this year, Ohio Gov. Mike DeWine announced an exciting new partnership between the area’s top health systems designed to drive innovation and employment opportunities in the state. The new Cleveland Innovation District, which will be located downtown near the Cleveland Clinic’s campus, aims to create over 20,000 new jobs in health care, information technology, and other fields. 

Furthermore, the Cleveland Clinic also has several other local projects underway that, when completed, will double the amount of patients it sees in the next 5 years to 4 million. These projects include: building a new hospital in Mentor, Ohio; expanding Cleveland Clinic’s Cole Eye Institute; and constructing a new Neurological Institute to consolidate outpatient care.

UH Ahuja Medical Center Phase 2 Expansion, Beachwood

University Hospitals’ Ahuja Medical Center in Beachwood unveiled its plans for a Phase 2 $236 million expansion project set to open in 2023. The expansion is expected to bring 1,000 new jobs to the community and will include a 216,000 sq. ft. hospital tower addition as well as a 78,000 sq. ft. sports medicine complex. Located in the heart of Cleveland’s East Side, the medical center will be expanded by more than 68%.

Van Aken District Phase 2 Expansion, Shaker Heights

Also in Cleveland’s East Side, the Van Aken District in Shaker Heights has proven to be a successful development by the city that will now look to a Phase 2 expansion. The $100 million, mixed-use apartment, office, and retail complex was designed so it could be continually expanded and was always intended for multi-family development. 

With the popularity of the district gaining traction, city planners are now looking to create 225 new apartments overlooking the Shaker Heights Country Club in the district.