The corner of Euclid Avenue and East 9th Street was the heart of Cleveland’s office market. In the 1980s, nearly 60,000 office jobs were located within two blocks. Today, of the 10 built-as-office-buildings of eight stories or taller seen here, three are vacant, three others were converted to residential/hotel uses, and four remain as occupied office buildings. The PNC Bank Plaza at center is a healthy outlier (NEOtrans). CLICK IMAGES TO ENLARGE THEM.
Newmark: Downtown stress is ‘accelerating’
Newmark’s market reports are well-regarded in the real estate industry. Their data is typically dry, yet spot-on. And they almost always avoid drama in their analyses. But their second-quarter 2026 office market report for Greater Cleveland added some unusually colorful adjectives to their data.
“Cleveland’s office market remains fundamentally challenged, with vacancy near record highs, demand weak, and recovery measured in years, not quarters,” noted Newmark’s report summary.
Newmark said the Cleveland-Elyria-Mentor metropolitan area’s blended year-to-date vacant rate of 22.8 percent ranks as the fourth-highest on record, trailing only the previous three years.
But it noted that some of the numbers were skewed by a vacancy bomb going off in the normally strong East Suburban submarket. That vacancy bomb was the sale of a formerly owner-occupied office property — the former Progressive Insurance headquarters, 6300 Wilson Mills Rd. in Mayfield Village.
Dubbed Campus 1, the 640,000-square-foot complex sold in April at auction for $6.75 million, or just $10.55 per square foot, according to Cuyahoga County property records.
The former Progressive Insurance headquarters, Campus 1, on Wilson Mills Road in Mayfield Village, sold at auction in April to an investor group that includes Premier Development Group and local attorney George Simon. Its sale and return to tracked inventory caused a seismic reversal in market absorption (Hines).
For context, real estate Web site Zillow.com says the average size of a house in the city of Cleveland is 1,251 square feet. And it says the average sale price of that house is $140,000 — or $111.91 per square foot.
Because it was owner-occupied, Campus 1 didn’t count in Newmark’s and other real estate firms’ tracked inventory in the Greater Cleveland office market.
The introduction of the Campus 1 property to tracked inventory caused the Greater Cleveland office market to throw back 666,072 square feet for the quarter. Four of the last five quarters have seen negative absorption in this market.
The second quarter of this year would have fallen even if the Progressive property hadn’t sold, but it wouldn’t have plunged so far. A big reason for that was weak leasing activity, Newmark said. It totaled only 361,013 square feet — a 41 percent drop from the prior quarter.
Despite this, the quarterly average asking rental rate reached $22.17 per square foot in the second quarter, up $0.44 per square foot in the first quarter. And it was a 3.2 percent increase year-over-year.
After the completion of the new Sherwin-Williams headquarters earlier this year in Downtown Cleveland, no new major additions to the region’s office inventory are planned (NEOtrans).
While the Greater Cleveland economy gained a small number of jobs, five of the 10 industry sectors in the market saw employment losses from May 2025 to May 2026, Newmark said.
“Two of the three office-occupying industries experienced annual job declines, with the information and business/professional sectors posting a negative 1.4 percent,” the report said. “The financial activities sector came in at positive 0.3 percent year-over-year.”
And the report focused on the troubles downtown, the region’s central business district. Newmark said CBD distress is increasing in both scale and frequency.
“CBD distress is accelerating, with multiple towers trading in recent quarters at historically low numbers and several more experiencing financial difficulties, signaling structural repricing and a long recovery,” Newmark continued.
NEOtrans broke the story on some of those bargain-basement sales, such as 800 Superior and the paired Ohio Savings and Park plazas selling for extra-low discount prices to the Kassouf family.
Office properties that are updated with new technologies and amenities are the ones that are retaining office tenants and attracting younger workers to the office (Cresco).
All three buildings are more than 50 years old. They have not been updated in years, falling from being ranked as Class A properties, and have seen their office tenants vacate them.
The 23-story, 475,921-square-foot 800 Superior sold in May for $4 million, or $8.40 per square foot. Thirty years ago, it was appraised at $58 million, or $121.87 per square foot, by Cuyahoga County for tax purposes.
Across East 9th Street, the 18-story Ohio Savings Plaza and, at the other side of the connecting Huntington Parking Garage acquired earlier this year by Kassouf, the nine-story Park Plaza sold for $4.25 million, public records show.
Combined, the two buildings total 457,736 square feet, selling for $9.28 per square foot. Ohio Savings Plaza had a peak taxable market value of $25.4 million in 2000-01; Park Plaza’s peak value also was in 2001 — $9.95 million. At a total of $35.35 million, that was $77.23 per square foot.
“Taken together, these transactions signal that downtown Cleveland’s Class B/C office market has reached a structural repricing moment, with values resetting at levels that would have been difficult to imagine a few years ago,” Newmark’s report concluded.
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