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Demand Up for Office Space in Mahoning Valley
YOUNGSTOWN, Ohio -- Demand for additional -- or at least different -- office space is contributing to activity in the Mahoning Valley market, commercial real estate agents report.
“We’re seeing a lot more activity for office space right now,” says John Horvath, broker associate with commercial services at Northwood Realty Services, Poland.
In many cases, satisfying pent-up demand is driving office deals, Horvath says, as businesses that needed space two or three years ago are acting on that need.
“People feel confident in the market and feel confident of where the country is going,” he says. “What’s good for tenants is that rental rates have risen only slightly.”
Rates for space range between $9 and $12 per square foot, with $9 or $10 “kind of the sweet spot,” Horvath says, and space for medical practices going closer to $12.
“There’s nice space out there available for that $9 to $12 per square foot range,” he says.
Historically, the U.S. Route 224 corridor has been active, but Horvath is seeing increased activity in the Howland commercial market as well.
On Market Street south of the Southern Park Mall in Boardman, there is “commercial ground that certainly will be in play in the future,” he adds. “That whole corridor is just going to keep growing.”
Horvath is busy doing site acquisition work for national chains including CVS Pharmacy, Applebee’s and Dollar General. He recently closed on property for a new Dollar General in Leavittsburg and relocation of the chain’s store in North Lima. He is also working on several others throughout the region.
“They are very aggressive in terms of finding new sites,”Horvath says. “This is their market.”
Joe Sylvester Jr., president of the Joseph Sylvester Construction Co. in Boardman, says he, too, is seeing considerable activity in filling vacancies of office space in his properties. “Rates are holding steady,” he says, generally in the $9 to $12 range.
Sylvester attributes some of that appetite to continuing demand from companies in the oil and gas industry. “This is where we’ve seen a definite spike in growth for office space among related companies,” including engineering firms, he says.
Some medical groups are expanding and moving into various areas to cover a larger footprint in the Valley, he adds.
“When you drill into office specifics, what we’re really seeing is that it’s not new players surfacing,” says Dan Crouse, broker with Routh-Hurlbert Real Estate, Warren.
“We see a fair amount, as the year is ending, of people whose leases are coming up shuffling and looking for better space, better deals,” he reports. “It’s local reshuffling of the deck. That’s almost 100% of it.”
The boost agents enjoyed from oil and gas is over “and we expected that,” Crouse says. Most office leasing that he and colleague Chuck Joseph see centers around medical practices near the hospitals in Warren and into Howland Township.
“We have [space] across the board in various sizes,” Crouse says. “That’s what’s keeping the prices from growing and what’s keeping office space from being built.”
Crouse says he’s seeing “significant” hard inquiries about industrial land, anywhere from 24,000 square feet for a warehouse to up to 48,000 square feet of heavy industrial space. “These are things in play that are being negotiated,” he says.
At Edward J. Lewis Inc., Youngstown, broker associate Jim Grantz says he has five lease deals in the works for office space.
“Some of it’s consolidation, people that are merging multiple offices into one,” Grantz says.
Lewis recently closed on a new location for National Tire & Battery in Boardman and Grantz anticipates closing by the end of the year on land for another retail project.
“On the warehouse side of things we’ve been quite busy,” he adds. “The users that we’re seeing are out of the area and they’re looking at this market because of our terrific highway system.”
Retail activity remains strong, whether for soft goods, food and restaurants or automotive suppliers, says Bill Kutlick, broker-owner of Kutlick Realty LLC, Boardman. “This year we’re exceeding last year in sales and leasing,” he reports.
A combination of new construction and redevelopment is taking place, according to Kutlick.
“The Boardman market warrants redevelopment dollars and that’s what’s happening,” he explains. Retailers and landlords are working together on upgrades of older properties, to renovate their facades to a “newer look,” perform energy-efficiency upgrades and install new lighting, signage and landscaping.
“You can’t say that landlords are neglecting their properties,” Kutlick remarks.
One example is the Tiffany Square plaza at Route 224 and South Avenue, where a renovated façade, an energy-efficient roof and mechanicals were installed. “It’s basically a completely new structure,” Kutlick says.
“Redevelopment is what is happening in our community,” he says. “It’s not going out and building 100 to 150 acres. It’s taking the commercial real estate that we have and repurposing that.”
From his perspective, the office market is stable, Kutlick says. As space is being leased, he sees a reduction in square footage tenants seek. He attributes that in part to greater use of computers (and smaller, more powerful computers), resulting in companies needing less space for staples such as filing cabinets.
The broker-owner also reports he is working on several hotel properties, although he acknowledges the Valley could be approaching the “point of saturation. I don’t know if it’s here yet but we may be reaching that point in the not-too-distant future sometime,” Kutlick says.
Kutlick recently took over the listing of the former MetroPlex hotel and conference center on Belmont Avenue.
“I look at the interstate traffic as a huge asset to that property,” he says. “Some people look at Belmont and say it’s a challenged area. I look at it with a completely different set of eyes.”
The 10-year tax abatement that would be available for improvements made to that property is “a big plus for redevelopment,” Kutlick continues, and how it’s used likely will involve more than lodging. “It may be one of the largest convention facilities in this area,” he says.
One commercial sector in need for space is industrial, particularly with infrastructure in place for manufacturing and warehousing, he says.
“There are other communities that have that infrastructure and most of these companies are not going to wait until we get it,” he cautions.
Pictured: John Horvath of Northwood Realty Services sees renewed confidence in the Valley’s commercial real estate market.