The document summarizes economic signs of recovery in the Midwest, focusing on Northeast Ohio and Chicago. Key points: 1) Northeast Ohio is transforming its economy through innovation in healthcare, bioscience, and advanced manufacturing. This is fueled by major institutions like the Cleveland Clinic and a state initiative that provides funding for promising projects. 2) Chicago's office market is seeing signs of recovery, with new construction leasing well and sublease space declining, though availability remains high. Industrial space is overbuilt but some companies are looking to expand. 3) Both regions have existing industry clusters and expertise that are creating new economic opportunities through diversification into fields like alternative energy and advanced materials.

1. right in the Middle: SignS of econoMic thaw acroSS the MidweSt
Siemens and then institutions like Case
Western Reserve, University Hospitals
and the Cleveland Clinic and its founda-
tion,” Fujita said. “You have the com-
mercial infrastructure as well as all these
other resources.”
The Cleveland Clinic, recognized as one
of the best cardiovascular hospitals in
the world, leads the GCIC, a $250 mil-
lion endeavor dedicated to cardiovascu-
lar R&D that also includes Cleveland’s
Case Western Reserve University and
University Hospitals of Cleveland. Ohio’s
Third Frontier initiative, which is dedi-
cated to providing funding and assistance
for medical and bio projects with com-
mercial promise, provided a $60 million
grant for the GCIC.
Third Frontier isn’t solely limited to
startups, though. Along with a fuel-
cell research at Stark State College of
northeaSt ohio: employees have created bio startups Technology and Case Western Reserve,
tranSforMation fueled worth nearly $1 billion, while the Third Frontier also played an integral
by innovation region’s history as a lighting-industry role in bringing Rolls Royce’s U.S.
by bailey webb hub evolved to include medical imaging fuel cell business to Canton. Similarly,
manufacturing and R&D by companies BioEnterprise, which includes Akron’s
Northeast Ohio’s history of innovation like GE, Philips, Hitachi, M2M Imaging BioInnovation Institute, is a business
and manufacturing expertise combine Corp. and Quality Electrodynamics formation, recruitment and acceleration
with a set of forward-looking incentives (QED). program designed to grow healthcare
to create a perpetual transformation of companies and commercialize biosci-
the area’s economy. Hiroyuki Fujita, who earned a PhD ence technologies in Northeast Ohio,
in physics at Case Western Reserve while the region’s Jump Start Inc. is
The region, which includes Cleveland, University in Cleveland, founded QED a nonprofit partnership that boosts
Akron, Youngtown and Canton, is at the in suburban Cleveland in 2005, and the entrepreneurship and assists startups
crossroads of the steel and auto indus- company, which makes patent-protected with business plans and funding. So
tries, as well as the Midwest and East detectors used in the OEM’s magnetic far, Jump Start has provided expertise
Coast, and boasts corporate and cultural resonance imaging machines, has grown and assistance to more than 200 com-
titans and touchstones such as Goodyear, to 50 employees and $4.7 million in 2008 panies and loans to 40 entrepreneurial
the Cleveland Clinic, Sherwin Williams, revenue. QED has been awarded grants endeavors, including electric car startup
Diebold, the Cleveland Orchestra and the by the National Institute of Health, the Myers Motors and medical device firm
National Football League’s Pro Football State of Ohio and the Cleveland Clinic’s Checkpoint Surgical.
Hall of Fame in Canton. In fact, the Global Cardiovascular Innovation Center
region claims the fourth largest concen- (GCIC), and Forbes magazine recently Northeast Ohio’s burgeoning bio and
tration of headquarters’ jobs in the U.S. named QED one of the top 20 most prom- medical community played a role in land-
ising companies in the U.S. ing MMPI’s Medical Mart & Convention
The region’s existing base, formed over Center (MMCC) in Cleveland’s CBD. A
the past century-plus, plays a big role “Cleveland is a center of excellence for comprehensive marketplace for the medi-
in shaping its future. Northeast Ohio’s the healthcare industry because you have cal and healthcare industries, the $536
63 hospitals and 230,000 bio/medical the major OEMs such as GE, Hitachi and million MMCC will include a 100,000-sq.-
2 0 1 0 th e lea d er 60 january / february

2. right in the Middle: SignS of econoMic thaw acroSS the MidweSt
America comfort knowing that we’re International Airport – as well as the
going to be here next year and five and market’s historical performance – sug-
ft. (9,290-sq.-m.) conference center, 10 years from now.” gest long-term health for the submar-
scheduled to open this year, and 120,000 For its part, Alter Group carries ket. In anticipation, Alter has developed
sq. ft. (11,148 sq. m.) of permanent show- no CMBS debt, recently completed two buildings at Lake Center Corporate
rooms plus 300,000 sq. ft. 27,871 sq. m.) two CBD office developments and Park in Mt. Prospect, Ill., which is
for trade show exhibitors scheduled to has one suburban office building at accessible to both Interstate 90 and
open in 2013. its Corridors office park in Downers O’Hare. The market may be the slow-
Grove, Ill., in predevelopment. Alter’s est Alter Group Senior Vice President
“That combination of having the clini- Dearborn Plaza is 92 percent leased, Pat Gallagher’s seen in his three-decade
cal capabilities, work force and state with Google serving as its largest ten- career, but, through his experience
willing to invest has really made a ant. At 111 West Illinois St., Alter weathering past downturns, he is both
difference,” said Carin Rockind, vice completed a Class-A building at the optimistic and realistic.
president of Team Northeast Ohio, an end of 2008 and is marketing 150,000 “In the last big fallout, ’88 to ’90,
economic development organization sq. ft. (13,935 sq. m.) as a single block, while developers had some issues
that markets the 16-county region. “It’s with rooftop signage options. with overbuilding, Corporate America
really having the core infrastructure, With one of the few big blocks of was pretty healthy,” Gallagher said.
work force and supply chain that adds available space, Alter may be well “The past 10 or 12 months, Corporate
to the businesses’ bottom line.” positioned in the CBD market. In America has been on the sidelines,
Chicago’s CBD, 155 N. Wacker deliv- dealing with a double whammy. We are
As with bio, medicine and healthcare, ered in late 2009 73 percent leased, and seeing an uptick in activity and some
Northeast Ohio’s existing knowledge 353 N. Clark and 300 E. Randolph were suggestion that Corporate America is
base and history with high-tech met- under construction, totaling 2 million coming back and re-engaging.”
als, polymers and chemicals create new sq. ft. (185,806 sq. m.) of office space Meanwhile, Chicago’s industrial
opportunities. The region’s expertise that, collectively, is 72 percent pre- market posted 4.9 million sq. ft.
in metalwork and approximately 330 leased, according to Jones Lang LaSalle. 455,224 sq. m.) of negative net absorp-
companies involved in alternative Even as the amount of CBD sublease tion through the third quarter of 2009,
energy also made it an attractive fit for space declines, as well as the average according to CB Richard Ellis, which
Rolls Royce in Canton and wind energy size of sublease blocks, small- and has lead to an 86 percent decline in
component manufacturers and OEMs medium-sized tenants who can pull speculative construction over the past
across the area. NASA’s Glenn Research the trigger are finding unprecedented two years.
Center in Cleveland as well as 2,300 deals, said Keith Knox, managing It’s still Chicago, though, crossroads of
Northeast Ohio firms in the aerospace director in JLL’s Chicago office. In America’s railroads and commerce, and,
sector, including Parker Hannifin and Chicago’s suburbs, where corporate as with its office market, a number of
The Timkin Co., produces R&D and consolidations and concentrations of significant requirements are in the mar-
high-paying jobs across the region. defunct residential lenders have the ket, though they take longer to cross the
For its part, Akron’s concentration of market at 20.8 percent vacant, one finish line these days, said Tim Brauer,
polymers research at the University of tenant recently subleased a block of managing director in CB Richard Ellis’
Akron’s College of Polymer Science and essentially new, turn-key space for $14 Chicago office. Companies that survived
Engineering and Bridgestone’s $100 mil- gross, Knox said. Three years ago, ten- the past two years are starting to look
lion R&D center, as well as Goodyear’s ants typically paid triple that amount. forward, he said.
commitment to keep its headquarters in “Chicago is a bit unique because “There’s an increase in the number
the city, will maintain Akron’s century- we’re still delivering new construction, of companies that a year or 24 months
long status as a global hub for the indus- and we still have huge pressure in the ago would make a short-term com-
try and create new opportunities and marketplace from a vacancy perspec- mitment,” Brauer said. “We’re seeing
transformation, Rockind said. tive” Knox said. “If you have the abil- an improvement in activity, but how
ity, landlords are dying to commit.” significant and sustainable, it’s hard
“The way we’re diversifying our econ- Alter Group’s industrial strategy for to tell. There are a lot of obstacles, but
omy and the heritage of expertise here metro Chicago is similar to its office we’re seeing some encouraging signs.
have led to these new industries sprout- outlook, as the veteran Chicagoland “It’s a tenants’ or buyers’ market,
ing up,” Rockind said. “It’s our job right developer prepares for economic resur- and this is the time to take advantage
now to really leverage that expertise.” gence. Though O’Hare submarket of that,” Brauer said.
availability, at 12.5 percent, essentially
doubles its historical average, modern-
ization and redevelopment at O’Hare
2 0 1 0 th e lea d er 61 january / february