It's still tough in certain sectors, but Akron's commercial real estate market saw a solid second half in 2018 and is showing continued strength, area real estate professionals say.

"It's as positive as you can make it, but there are still issues with certain parts of town," said Gary Rickel, a vice president at CBRE in Akron.

Rickel and his firm recently completed a report on the commercial real estate market's performance in Greater Akron for the past six months of 2018. He shared it with Crain's.

The report found a strong market for Class A office space but little appetite for older, Class B and C space. Overall, though, rents are up $1 per square foot from 2017, to $16 per square foot recently, the report found.

Downtown, the vacancy rate for Class A space was 9.5%, compared with 27.4% for Class B space and a 50% vacancy rate for older, Class C space, according to CBRE.

It was a similar situation in parts of the city between the downtown central business district and the outer-ring suburbs in CBRE's research. There, vacancy rates were similar: 16.7% for Class A, 12.7% for Class B and 15.9% for Class C. But unlike downtown, some other parts of the city and close-in suburbs have seen numerous new office buildings come online.

The absorption rate in these areas tells the story, and CBRE's report shows that tenants in places such as Fairlawn and Akron's East End development absorbed more than 200,000 square feet of new Class A space and nearly 27,000 square feet of Class B space, but they left a net 3,450 square feet of Class C space newly vacant.

In other words, when businesses come to town or move, they're buying or leasing modern, new offices and have little to no interest in less fancy digs, real estate professionals say.

Rickel said activity in Akron's East End development, which landed Babcock & Wilcox as a 180,000-square-foot tenant, drove the absorption rates outside of downtown.

One challenging part of town, Rickel and others said, has been the Merriman Valley neighborhood. The same rugged hills, dramatic drops and lack of highways that make it one of Akron's most scenic areas also make it a challenge to traverse, especially in winter.

"It's not an office market because it doesn't have highway access," said Susan Lines, a vice president at CBRE.

In Merriman Valley, the Cedarwood Valley Office Park had been in receivership for most of the past two years and only about 25% of its five buildings and 84,000 square feet of space are now occupied, said Lorin Schultz, who handles the property for Colliers International in Akron.

But that property came out of receivership in February, Schultz said, with the mortgage servicing company LNR Partners of Florida buying it as an investment. That's good news for the property and the area around it, she said.

"We have more money available now for leasing and for tenant improvements. … They felt the property was valuable enough that they wanted to own it. That's a good sign for the valley. They know what they're doing," Schultz said.

She's also seen interest pick up in Lock 22, a retail plaza on the other side of Merriman Road from Cedarwood.

"I've been consistently showing it and have a letter of intent for part of it, so there's definitely still interest in the valley," said Schultz.

Akron's outer-ring suburbs appear to be having the toughest time, according to CBRE's report. There, the overall vacancy rate is 30.2%, the report found, compared with 20.3% downtown and 14.6% overall for the city's neighborhoods and inner-ring suburbs.

The outlying market was buoyed by some strong areas, CBRE found – including Green, with a vacancy rate of 5.1%, and the Fairlawn/Bath area at 10.1%. Green simply has not overbuilt, while Fairlawn has benefited from new offices built for FirstEnergy Corp. and other local companies, Akron's real estate pros said.

Going forward, they expect to see continued strength and many of the same trends, at least in the near term. Areas that are hot now will likely remain so, and Class A space that is either vacated or built will likely be snapped up, they predicted.

"Everyone's telling the same story, that there's a lack of inventory. If you can come up with a building that's been built in the last 20 years with more modern features, it's going to get snapped up by somebody," said Tom Fox, executive vice president of NAI Pleasant Valley on White Pond Drive.

Those bringing new properties online say they're having little to no trouble leasing them.

That includes Fairlawn's John Dellagnese & Associates, which is all but finished leasing its 117,000-square-foot building at 3800 Embassy Parkway in the Embassy Corporate Park. It's now finishing up and leasing another building, with 39,000 square feet of office space above ground and heated parking below next door.

The first building has just one small space left and the new one is nearing completion with a major tenant moving in on May 1, said Lisa Gould, vice president of marketing and leasing. She declined to name the tenant.

"There are some other large tenants that are looking. So, we don't anticipate that it will be empty for very long," she said.

Real estate firms don't expect to see more office space come online downtown, though. That's now thought of as a residential and retail market, at least in terms of new space despite the low vacancy rate in the city's core.

"We do not need any more office space in downtown Akron," said Jerry Fiume, managing director of SVN | Summit Commercial Real Estate Group in Fairlawn.

Fiume and others said that office tenants are less interested in downtown and have little appetite for the construction costs associated with building new Class A space.

Fiume suggested that the low vacancy rates for Class B and C office space indicates the city has more commercial inventory it can convert to residential or retail, where demand downtown is higher.

"Converting this space to other uses, that's what has to happen downtown," he said.