Reichle Klein Group's 2024 Year-End Office Overview

CONTACT:
Joe Mehling – Director of Marketing
419.794.1137
jmehling@rkgcommercial.com

Unfortunately, there are not a lot of positive things to report about the Toledo, Ohio office market at end of 2024 other than that the bottom of the market may have passed or be near. The downward slide appears to have ceased. However, the market continues to be burdened by oversupply of space and low demand.

There are users active in the market and steady transaction activity though there are few, if any, new to market users and those searching for space are not typically seeking to add square footage. Consequently, it is unclear whether the leasing activity will result in positive net absorption of space. Most of the activity is being generated by tenants currently located in the area looking to upgrade their space or improve their lease terms.

The one factor that provides a glimmer of hope for improvement to the supply/demand balance is that some of the space inventory could be eliminated through repurposing of space or current office building sites to alternative uses. One example is the possible conversion of more office space to apartments in the Tower building downtown.

The Reichle Klein Group yearend 2024 survey found that the overall market vacancy rate increased three tenths of a percent from mid-year 2024 but is down from the high of 20.2% reached at the end of the fourth quarter 2023. The market recorded negative net absorption of 33,949 square feet in the second half of 2024. Asking rates in most classes and submarkets are down and the average asking rental rate for the overall market dropped to $17.87 per square foot from $17.91 per square foot at the end of 2023.

The cost of tenant improvements and interest rates continue to be a hurdle to transactions. Those landlords unable or unwilling to expend cash to improve spaces remain at huge disadvantage to those that can and will.