Estudio de localización

Many downtown storefront retail markets are in contraction or stagnation nationally with the high popularity of online retailers and suburban lifestyle centers. ESRI estimates that there are 445 retail establishments in Downtown Cleveland, representing 11.5% of all Downtown Cleveland businesses. Just over half (227) of the estimated retail establishments are classified as Eating & Drinking places. Nearly all new Downtown Cleveland retail openings in 2012-2014 as reported by DCA are eating and drinking places.

The storefront retail market in Downtown Cleveland as a whole currently has a significant oversupply while certain pocket areas remain strong. Within this market cycle, the Downtown Cleveland retail market is not expected to expand enough to significantly impact vacancy. Within this context, it is particularly important to focus retail attraction in activity centers and along key connectors such as Euclid Avenue. Concentrating retail activity in areas can create comfortable, vibrant nodes and connections that contribute to a vital, safe, pedestrian-friendly civic realm in Downtown Cleveland.

Selected Retail Categories 2013 Demand (in Millions) 2013 Gap (in Millions)

General Merchandise stores $17.0 $16.5

Grocery stores $13.0 $10.8

Automotive Parts Dealers $15.7 $6.7

Electronics & Appliance stores $2.7 $1.7

Home Furnishings stores $0.6 $0.5

Health & Personal Care stores $7.6 $0.2

Source: ESRI Business Analyst

2014 Downtown Market Assessment

While the overall retail market expansion potential is limited, some opportunities do exist within specific niches and locations. New Downtown residents with greater spending power are driving some new resident-serving retail, such as the Heinen’s grocery store. 2013 estimates from ESRI demonstrate retail leakage in Downtown Cleveland in the following categories:

Blending the leakage data with knowledge of recent and in-progress development in Downtown Cleveland suggests targeted opportunities such as:

• Additional entertainment-oriented retail & restaurant may continue to be viable in key managed districts adjacent to attractions, such as Playhouse Square, 5^th Street Arcades, and the Warehouse District.

• The strong growth in upscale residents creates demand for more resident-serving retail - such as housewares and pet stores - perhaps clustered near the new Heinen’s supermarket at 9^th Street & Euclid Avenue.

• Personal service retail such as tax preparation, shoe repair, and similar could be located to serve both residents as well as downtown workers.

• Technology & wellness-related retail such as phone stores, exercise apparel, sporting goods, local foods, etc. appear viable, perhaps filling in vacancies along Euclid Avenue.

• Limited visitor-serving retail such as food service, sundries, etc. appear viable in the immediate vicinity

of the new Cleveland Convention Center and Global Center for Health Innovation.

• Overall, worker numbers suggest demand for more quick-serve lunch options, but the pattern of office towers that are somewhat isolated from one another may make it difficult to select a location(s).

A pioneering downtown mixed-use retail project, Tower City currently leases to an eclectic mix of tenants that appeal to a diversity of customers. While Tower City faces some of the same retail market challenges as indoor shopping malls across the United States, the mixed-use nature of the complex - including office building, two hotels, and a casino - provides a distinct and appealing character. Its position atop the city’s central commuter rail station offers a strong advantage to create a unique retail market for downtown residents and workers, as well as to serve residents of east and west side neighborhoods. The planned renovation of Public Square is an opportunity that could catalyze new tenanting in Tower City. As both Tower City and “big box” retailers confront changing retail demographics, one possibility worth exploring may be whether Tower City could host an urban format of a multi-department store which downtown residents and other users desire and is supported in the large gap ESRI indicates in General Merchandise retail.

2014 Downtown Market Assessment

The Playhouse Square district is adding new enhancements including additional performance halls and restaurants, enhanced public spaces, and has recently installed the largest outdoor chandelier in the world over Euclid Avenue. (See rendering.)

Hotel Occupancy and revenue per available room both increased in 2013 over 2012, prior to the opening of the convention center.

Investments in visitor facilities and attractions have spurred more than 40% increase in downtown hotel rooms. The 484 room Westin Hotel opened in May, 2014 and 1,300 additional new rooms are under construction or planned. It is possible that planned units may

somewhat exceed demand. Hotel developers will be watching downtown hotel occupancy and revenue numbers carefully as the early projects are opened to decide how quickly – and perhaps whether – to build out all of the planned rooms. If all the planned new rooms are built, some older properties may subsequently need to be refreshed or repurposed.

The growth in hotel development will impact the supply and demand for parking, which will in turn impact surface and structured parking owners, visitors, and commuters. Only 200 new parking spaces will accompany the 1,300 hotel rooms that will enter the market by mid-2016. According to a 2010 Colliers national parking survey, Downtown Cleveland commuters and visitors enjoy daily parking rates 49 percent below the national average. Monthly rates, in contrast, are only 4 percent below the national average. Although the opening of the Cleveland Convention Center and the Horseshoe Casino led to modest rate increases around Public Square, downtown parking rates remain stable. Increased demand driven by hotel development and visitor traffic, in addition to hotel and office development, will create upward pressure on parking rates.

An open question in the visitor market is how soon the planned Casino Phase II may be built. The developer has said it will go forward and is currently evaluating the site and considering what to include in the amenity package, but it is as yet unclear when Phase II will be initiated.

2014 Downtown Market Assessment