MARKET SNAPSHOT
$1,199 3Q 2024
92.5% 3Q 2024
301 [YTD: 1,315]
3.6% 3Q 2024
-40 BASIS POINTS
656 [YTD: 1,490]
Cleveland’s multifamily market led the nation in rent growth in Q3 2024, ranking first among major U.S. markets.
Projections for 2025 indicate that 1,700 units will be delivered, a reduction of approximately 800 units from the 2,500 delivered in 2023.
Major investments like the Cleveland Clinic’s Neurological Institute ($1.1 billion) and Sherwin-Williams’ new HQ ($600 million) will create jobs and fuel apartment demand in the coming years.
In line with typical seasonal patterns, demand in the Cleveland multifamily market eased in the third quarter following a strong spring in terms of net leasing activity. However, despite the slowdown, the third quarter of 2024 stands in contrast to 2022 and 2023, when negative net absorption was recorded during this period. Looking at the broader picture, net leasing activity across the first three quarters of 2024 remains well above the average for the same period from 2014 to 2019.
The pace of apartment construction in the Cleveland market is slowing, with groundbreaking on new projects decelerating. Projections for 2025 indicate that 1,700 units will be delivered, a reduction of approximately 800 units from the 2,500 delivered in 2023. Over the past year, the majority of these deliveries were concentrated in the Downtown Cleveland submarket, which accounted for over 44% of the total market wide completions.
Occupancy rates in Cleveland are on the path to recovery, though some submarkets continue to face challenges following a significant inventory expansion in 2023. Over the past 12 months, the influx of new units caused occupancy rates across the broader Cleveland multifamily market to decline by 40 basis points year-over-year. Despite this, signs of recovery are emerging, with the average occupancy rate remaining stable between the second and third quarters of this year. While six of Cleveland’s ten submarkets saw annual declines in occupancy, this was an improvement from the eight submarkets that experienced declines in the previous quarter. The Brooklyn Heights submarket stood out, recording a 140-basis-point increase in occupancy, demonstrating localized strengths within the broader market.
Cleveland’s apartment market is outpacing national trends with significant rent growth. In Q3 2024, the average rent for new leases rose by 3.6% year-over-year, reaching $1,199, which not only exceeded the national average increase but also positions Cleveland leader among major U.S. multifamily markets for annual rent growth. This upward trend is anticipated to continue, with rents expected to climb by 5.0% by the end of the year. This growth is supported by stabilizing occupancy rates and a deceleration in new construction. Notably, desirable areas such as Brooklyn Heights and South Cleveland recorded some of the highest rent increases, at 10.9% to 7.9%, respectively.
In August 2024, the Cleveland, OH Metro Area saw moderate job growth, with 5,400 new positions added, reflecting a 0.5% increase, according to the Bureau of Labor Statistics (BLS). The Education and Health Services sector led the gains, adding 7,500 jobs, a 3.7% annual increase, followed by the Professional and Business Services sector, which grew by 5,000 jobs, or 3.2%. However, these gains were partially offset by annual losses in the Financial Activities and Manufacturing sectors. Despite this, Cleveland’s unemployment rate remained low at 3.9%, below the national average of 4.2%.
August 2024 ANNUAL JOBS CREATED
AUGUST 2024 EMPLOYMENT GROWTH
AUGUST 2024 Unemployment rate
4.2% us August rate
Nominal Change
from August 2023
to August 2024: 7,500
Percent Change: 3.7%
Nominal Change
from August 2023
to August 2024: 5,000
Percent Change: 3.2%
Nominal Change
from August 2023
to August 2024: 900
Percent Change: 2.3%
Nominal Change
from August 2023
to August 2024: 500
Percent Change: 0.4%
Nominal Change
from August 2023
to August 2024: 400
Percent Change: 0.2%
| Sector | Nominal Change from August 2023 to August 2024 | Percent Change |
|---|---|---|
| Education and Health Services | 7,500 | 3.7% |
| Professional and Business Services | 5,000 | 3.2% |
| Other Services | 900 | 2.3% |
| Government | 500 | 0.4% |
| Trade, Transportation, and Utilities | 400 | 0.2% |
| Mining, Logging, and Construction | -200 | -0.5% |
| Leisure and Hospitality | -600 | -0.6% |
| Information | -600 | -4.1% |
| Manufacturing | -3,200 | -2.7% |
| Financial Activities | -4,500 | -6.1% |
Sherwin-Williams is set to move into their new massive global headquarters in downtown Cleveland in early 2025.
Cleveland Clinic is moving forward with the construction of a new Neurological Institute building on the health system’s main campus in Cleveland.
A unique public-private partnership unites the State of Ohio with Cleveland’s leading healthcare and higher education institutions.
Cleveland’s multifamily market demonstrated strong rent performance in the third quarter of 2024, ranking first among major U.S. multifamily markets. With a shrinking construction pipeline, occupancy is expected to further stabilize in 2025, and rent growth is projected to remain robust, with forecasts predicting a 5% to 6% annual increase by late 2025. Demand will be supported by ongoing capital investments, particularly in the healthcare sector, a key pillar of Cleveland’s economy. Cleveland Clinic and University Hospitals, the metro’s largest employers, are driving this growth. Cleveland Clinic has committed to creating thousands of high-skill jobs by 2028 as part of the $565 million Innovation District, which includes a global center for pathogen research and human health, supported by Ohio’s 15-year job creation tax credit. Additionally, Sherwin-Williams, a Fortune 500 company, plans to invest $600 million in a new headquarters and research facility in northeast Ohio, bringing over 4,000 jobs. With continued growth in the education and health services sectors, Cleveland is emerging as a hub for job creation and economic expansion.
Sources: Costar; ESRI; U.S. Census Bureau; Yardi Matrix; U.S. Bureau of Labor Statistics
