Located on the shores of Lake Erie, where the Cuyahoga River spills into the Great Lakes, Cleveland boasts favorable geographic features that served as an impetus for its incorporation and rapid economic growth at its inception. Like many other Rust Belt cities, Cleveland suffered a mass exodus of jobs to locations overseas following the national decline in manufacturing in the 1970s. Other major industries have since stepped in to fill the void, including the financial and advanced energy industries and the insurance, healthcare, life sciences, and technology sectors. The healthcare sector is a cornerstone for the market, including the presence of Cleveland Clinic and University Hospitals; this sector's influence was the driving factor in the development of the Convention Center and Global Center for Health Innovation (known as the Medical Mart), which is the only facility of its kind in the United States. The city is also home to two major universities, Cleveland State University and Case Western Reserve University.
The relatively recent developments of Caesars Entertainment's and Rock Gaming's Jack's Casino Cleveland, Cleveland Medical Mart & Convention Center, and Flats East Bank have spurred subsequent development throughout Cleveland's CBD. Moreover, the Downtown Cleveland Alliance is focused on positioning the city for new office, retail, hotel, and entertainment developments, with over $6 billion in investments along Euclid Avenue alone since 2010. Two prominent developments include The Beacon, a 29-story luxury apartment building; and The Lumen, a 34-story apartment building, and Cleveland's largest residential project in downtown in more than 40 years. These projects are expected to be completed by 2019 and 2020 respectively. Furthermore, city tax and other business incentives, coupled with easy access to major transportation portals by air, train, water, and road, enhance the area's appeal as a commercial and manufacturing center.
In 2016/17, over 2,000 hotel rooms were added to the Cleveland market, highlighted by the 600-room Hilton Cleveland, 189-room Drury Plaza Cleveland, and the 122-room Kimpton Schofield hotel. While the increase in room nights was substantial, the unaccommodated demand levels are very high particularly on weekends and midweek, and much of this supply is expected to be absorbed into the market over the next two years. The new convention hotel allows Cleveland to compete for more events and will allow the Global Center for Health Innovation to achieve its full potential. Limited new supply is expected for the CBD in the near term, while the suburbs are still experiencing moderate supply growth. As such, occupancy is expected to remain relatively stable throughout the greater Cleveland market in 2018, before increasing moderately as demand across the commercial, convention, and tourism sectors supports growth in the long term.
Limited sales volume occurred in Cleveland since January 2016, with only the Marriott Key Center and Ritz-Carlton trading during that period. The Marriott was part of a portfolio transaction, and the Ritz sold as part of the casino transaction. Additionally, the Residence Inn Marriott Downtown sold in November 2017 as part of a four hotel portfolio for a reported $43,000,000 ($245,714/room). Cleveland has become a prime tourist destination in the Midwest and beginning to capitalize on the completion of their convention center and new convention hotel. While overall growth is slowed in recent years due to new supply, the outlook remains positive for Cleveland given its growing economy and numerous developments underway.
