The article is published as part of an exclusive content-sharing agreement with neo-trans.blog.
It’s not a good situation when the two major commercial segments of the market — office and industrial — are both seeing sluggish times in terms of leasing activity. In fact, both sectors in Greater Cleveland saw tenants give back more space to the market than they absorbed due to some large, high-profile departures.
Newmark, global a real estate brokerage and analytics firm, noted in its latest second quarter 2025 market reports released this week that national trends are affecting Greater Cleveland and not in a good way. Meanwhile the continued demand for more housing and data centers may be the salvation for both through conversions.
“As calls for employees to return to the office increase across the country and in the Cleveland market, those policy readjustments have had minimal affect on decisions to expand footprints, though there have been exceptions,” Newmark’s office market report noted.
NEOtrans broke the story last week that Sherwin-Williams is ending its post-pandemic hybrid work policy in which employees have been working one or two days per week at home and several days per week at the office.
Now, everyone who has an office will work in it 100 percent of the time starting Jan. 1, 2026. Of course, Sherwin-Williams is in the unique situation of having two brand-new office buildings totaling 1.7 million square feet and costing up to $750 million to build that it wants to fill.
Greater Cleveland’s office market saw 131,373 square feet of negative absorption in the second quarter of 2025, breaking its streak of four quarters in a row in the positive. The negative absorption caused the quarterly overall total vacancy rate to increase to 23.1 percent, up 30 basis points from the prior quarter, Newmark noted.
Total second quarter 2025 leasing activity for non-owner-occupied office buildings measuring 10,000 square feet and larger in metro Cleveland was 213,600 square feet, the second-lowest quarterly total in the last 16 years for the second quarter in a row, behind the fourth quarter of 2021’s tally of 193,150 square feet.
Unsurprisingly, the region’s office market’s quarterly total overall average asking rental rate decreased by $0.12 per square foot from the first quarter of 2025 to $20.99 per square foot in the second quarter of 2025.
As a result, the 2025 year-to-date average asking rent total decreased to $21.05 per square foot from $21.11 per square foot, and the year-over-year asking rent growth rate dipped to 2.6 percent from 2.9 percent.
“Despite the tepid office sales activity in the second quarter, maturing loans and a plethora of buildings with low occupancy could create a situation where distressed office assets emerge as potentially attractive acquisitions for savvy investors,” Newmark’s office report stated.
It noted a prime example of this — the upcoming third-quarter auction of the 576,503 square feet office building located at 1100 Superior Ave. This is the former Oswald Center in Downtown Cleveland’s Central Business District.
Meanwhile, things were worse in Greater Cleveland’s industrial market. It posted a steep negative absorption of 2.8 million square feet in the second quarter of 2025 — the lowest quarterly result in recent history, triggered by a series of high-profile closures and move-outs.
“Efficient supply chains are crucial to the industrial sector but rising debt costs are fueling a wave of corporate retail bankruptcies with impacts across the market,” Newmark reported.
“The recent financial struggles of JoAnn Inc. and Big Lots illustrate how these pressures are transforming the industrial landscape, resulting in significant consequences,” the report continued.
As a direct result, the industrial vacancy rate increased by 100 basis points to 5.2 percent for the quarter. Despite this uptick, the year-to-date vacancy rate remains relatively healthy at 4.7 percent, still well below the long-term average of 7.4 percent.
And there is some optimism. Demand for industrial space in Cleveland recovered slightly after hitting a historic low earlier in the year. Quarterly leasing volume reached 2 million square feet, reflecting renewed activity, though it was not enough to offset significant move-outs that weighed on overall absorption.
Unfortunately, this and several dozen other occupations in the second quarter were unable to overtake the large move-outs that transpired, including JoAnn Inc., which shut down its 1.2 million-square-foot facility at 5455-5555 Darrow Rd. in Hudson in the Southeast submarket.
The market’s industrial direct average asking rent contracted year-over-year in the second quarter of 2025 by negative 3.9 percent, down from 2.8 percent in the first quarter. The second quarter saw a direct average asking rent of $5.88 per square feet, which was down by $0.14 per square foot from the previous quarter’s total.
Headlining the second quarter’s lease transaction activity was PipingRock Health Products’ 408,767-square-foot signing at Turnpike Commerce Center on State Route 44 in Shalersville in the Southeast submarket. The company will likely occupy the space in the third quarter.
Another notable lease was IndiMade Brands inking 79,203 square feet at 14450-14580 Foltz Pkwy. in Strongsville in the Southwest submarket. A significant occupation in the second quarter was Piston Automotive moving into 175,000 square foot at 37988 Avon Commerce Pkwy. in Avon in the Northwest submarket.
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