Office vacancy rates in downtown Akron have ballooned at the same time they are falling elsewhere in the country.
The Akron rate hit 23.5 percent last year, up from 11.9 percent five years earlier.
The increase — spurred in part by the recent closure of the ExxonMobil Chemical Co. office and companies opting to locate in the suburbs — is worrisome for city leaders who are attempting to breathe new life into downtown.
“That’s not great,” said Suzie Graham, president of the Downtown Akron Partnership. “We would love to be back in the 12 percent range. That’s where we want our market to go.”
There is concern that the rate could go even higher.
Huntington Bancshares is taking over FirstMerit Corp. and there’s the potential for downsizing at the FirstMerit buildings downtown.
Summit County also created major vacancies in two buildings when it moved and consolidated its Job and Family Services Department south of downtown earlier this month. The government-owned buildings weren’t included in the current vacancy rate figures. The county wants to sell them, meaning they could be included in future rates depending on their use.
Rather than looking at the high rate as a negative, city leaders see it as an opportunity to remake the center city.
Mayor Dan Horrigan, who took office last month, has city and community leaders working on a strategic plan for downtown, with one of the major goals already being to provide more housing.
Some of the available office space could be turned into housing, thus reducing the vacancy rate and providing more energy downtown, Graham said.
Rates elsewhere
Commercial real estate company CBRE reported last month that downtown vacancy rates plummeted nationwide to 10.3 percent in the fourth quarter of last year, the lowest rate since 2008.
Some of the lowest rates were reported in Oakland (3.7 percent), San Francisco (5.6 percent) and Charlotte (6.3 percent). The highest were in Albuquerque, N.M. (33.6 percent), Tucson, Ariz. (30.5 percent) and Norfolk, Va. (29.2 percent).
In Ohio, vacancy rates were 16.7 percent for Cincinnati, 18.7 percent for Cleveland and 12.7 percent for Columbus, according to CBRE.
Downtown vs. suburbs
Cynthia Bender, president of the Evans Building and Crossroads Management Realty Co., said it can be difficult to get companies to look at downtown properties.
Some companies also have consolidated and don’t need as much space, or they have their employees work from home, she said.
The second floor of the Evans Building, about 10,000 square feet, is vacant, although Bender said that a small mental health agency and graphic design firm are planning to move in.
The building is on the northeast corner of Exchange and South Main streets — a vibrant area with multiple restaurants and bars, plentiful parking and the Canal Park baseball stadium nearly across the street.
“We’re just a best kept secret,” Bender said, adding that she believes the city should be more active in promoting and offering incentives for office space downtown.
CBRE Vice President Gary Rickel, who is based in Akron and has been keeping track of vacancies downtown since 1985, called the local increase disturbing, especially for a downtown that has hovered traditionally in the 11 percent or 12 percent range.
He noted that companies are choosing to locate in the suburbs.
While the downtown rate has climbed, the suburban rate has fallen by nearly the same percentage. It dropped from 24 percent five years ago to 12.7 percent last year.
The loss of ExxonMobil Chemical Co., which had occupied 150,000 square feet in the AES building, is another reason for the downtown increase.
The Law Building, an 11-story building formerly known as the Key Building, also has a lot of vacant space. That building, which is up for sale for $3 million, has 194,810 square feet.
“It’s not like we’re a huge market,” Rickel said. “Small moves make a big percentage difference.”
Akron should strive to be around 15 percent, he said, noting that if the rate falls too low, it hinders the ability of businesses to locate downtown or move around.
Rickel, who helped found the Downtown Akron Partnership, is a big proponent of the center city.
“Downtown has a great story to tell,” he said. “We have to convince people that this is where they want to be.”
Downtown fan
Ryan Pritt, co-founder and president of Pritt Entertainment Group, needs no convincing.
His company, which specializes in video production, animation, graphic design and branding projects, is renovating a more than 100-year-old building at the northwest corner of South Main and West Cedar streets.
Pritt Entertainment, which has 20 full- and part-time employees, had outgrown its other office downtown.
Pritt, 29, wanted space that had character and personality that fit with the creative agency, along with a site that offered restaurants and other attractions within walking distance.
That can’t be found in the suburbs, he said.
The company’s new three-story space has hardwood floors, the original tin ceiling on the first floor, a spiral staircase and exposed brick. There’s also an NBA Jam video game and gum ball machine for workers when they want to take a break.
Pritt Entertainment has sponsored events downtown and has outings for employees. The goal is to get them invested more in the company and city so “they feel like they are part of something that’s bigger than a 9-to-5 job,” Pritt said.
He is excited about the prospects of a rebirth of downtown.
“It would be cool to be on the ground floor of helping downtown come back,” he said.
Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com. Follow him on Twitter at @armonrickABJ.