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Growth markets like Miami, Charlotte, and Austin attract investors like a moth to a flame. As a result, competition drives prices higher, eventually making it more challenging to put money to work. Not to throw shade at the Sun Belt, but with some WD40, the Rust Belt has a lot of opportunity. Luke Mooney, a Multifamily Investment Sales Associate at BWE, is very bullish on his hometown, Cleveland, Ohio.

Cleveland on the Rise

Cleveland is the largest metropolitan economy in Ohio but has a median asking rent of $1,000 lower than the national average. The low rents provide a stable floor on the downside and an inherent opportunity to add value on the upside. Additionally, the state has designated 64 opportunity zones within Cleveland that offer various tax benefits, deferring capital gains tax for up to 10 years.

Mooney has watched the peripheral submarkets transform into flourishing "thrifty communities." He details the three neighborhoods where he has seen the most investment and growth. Many of which fall within the opportunity zones. Additionally, most of the residents in these submarkets are millennials, who account for 54% of the Greater Downtown Cleveland population.

Ohio City

Located on the west side of Cleveland and near downtown, Ohio City has newly developed restaurants and nightlife have created an attractive place to live, work, and play. With the large attraction of young professionals, Ohio City added 1,500 residential units in 2021 and an increasing number of retail spaces. The median household income for Ohio City is nearly double that of Greater Cleveland. One notable development is the , a $145 million mixed-use development.

Little Italy

Little Italy, New York? No Cleveland. On the east side of the city is the rustic but beautiful town of Little Italy. Mooney explains it's one of the better areas for new development due to the older buildings and opportunity zone designation, along with its proximity to the hospitals (Cleveland Clinic and University Hospital)  and Case Western Reserve University.  He says it is already a top-rated destination for residents and consumers. Recently closing a mixed-use deal in the area that has proven for condo conversion as well.  Will Little Italy follow in Ohio City's footsteps?

Tremont

Mooney explains how Tremont is in the infancy stages. However, the area has become a popular residential area for the expanding young professional crowd. It is known for its famous restaurants, art attractions, and new luxury event site, "The Elliot." Tremont is a historical city, one of Cleveland's oldest, on the east side of downtown that has recently seen multiple apartment complexes come online or break ground.

The demand for residential real estate goes beyond multifamily. Over 50% of single-family homes purchased last year were from out-of-state investors, pushing higher prices for single-family homes. Moreover, the demand for apartment rentals will continue as it is the more affordable option. Mooney mentioned that his deal flow has steadily increased throughout the year and expects it to continue through Q1 next year. He is convinced multifamily will continue to perform well due to the growth potential in rents and utilization of opportunity zones.

Rockval Recap

Cleveland might not be on the top of your radar, but local and state governments are incentivizing change and the developing city has its sights set on growth.

If you are interested in learning more about Cleveland Multifamily, please find Luke Mooney below.

LinkedIn

Luke.mooney@bwe.com

440-941-9186

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