Cleveland has made a comeback. Finally. We're seven years into our recovery and the hottest part of the Northeast Ohio industrial distribution market has been national corporate tenants leasing space, ranging in size from 45,000 to 80,000 SF. That larger size has always been the strongest segment of our market, with companies like Berlin Packaging, Dunkin' Donuts (National DCP) and Bridgestone Americas (Tire Wholesale Warehouse) all making significant investments.
Before the recession, the 25,000-square-foot tenant was typically as strong as the 65,000-square-foot tenant. However, during the recovery, the smaller tenant did not seem to bounce back as quickly. In my experience, when these leases do get done, they are often for much shorter periods of time. Usually they must accommodate national companies that have a wide range of requirements, including the necessity of a short-term deal. Often, they're just looking for somewhere to land before they transition to a larger space. While tenants seeking in the 25,000 SF range are still bouncing back, national corporations requiring large range space provided stellar results this quarter.
Currently, we have a very tight 1.4% vacancy rate for big box properties that feature 24-foot clear ceilings and early suppression fast response (ESFR) systems. The overall industrial market is pretty tight as well, with our latest market report showing a 6.5% vacancy rate, the lowest it has been in the history of my company, NKF, tracking real estate stats under its current methodology. I predict that Class A industrial vacancies will likely be virtually gone by year end, especially with the overall tightening of the big box market.