YOUNGSTOWN, Ohio – The Mahoning Valley remains a good bargain for out-of-town commercial investment, according to local real estate agents.
Alan Friedkin, associate broker with Burgan Friedkin Commercial Group, says people continue looking for investment properties in this area, especially triple net properties, which give them more revenue with less upkeep.
“It’s still contingent on interest rates and pricing, but people out of town see that our area is a bargain compared to outside areas and some bigger markets.” Friedkin says.
Don Thomas, managing partner at Platz Realty Group in Canfield, says that a few years ago, investors on the west and east coasts viewed Valley’s cap rate on investment – return for money versus risk – as a positive. Additionally, tax rates were favorable to investors, allowing them to defer capital gains.
Overall it spurred local investment, especially the purchase of apartments and improvements to the properties, which along with a lack of inventory, also meant an increase in rent.
Both Friedkin and Thomas say the commercial market, especially apartments and multifamily housing, is extremely active.
“There’s not a lot out there, but we had a really good July and August is shaping up to be equal to or better,” Thomas says. “There’s just a lot of activity across all segments, but those two [apartments and flex space warehouse and manufacturing] are primarily the ones that are bringing the most inquiries.”
Apartments and Multifamily Housing
Friedkin says he knows of only a few apartment complexes for sale and apartment investment popular when someone can find them. He has been receiving a lot of inquiries for apartments.
Platz primarily serves the corridor from Ashtabula through Columbiana counties and Thomas says that region has a shortage of 22,000 apartment units. A slight population uptick in the same region, as well as the demolition of many blighted homes in Warren and Youngstown, are some of the reasons, says Thomas.
“So now we’ve got a demographic, the 20 to 40 somethings, who doesn’t really want to own a house and all of that demand is pushing on multifamily,” Thomas says, adding about five years ago there were 300 to 400 apartment units for sale.
In mid-August, Platz was listing a 12-unit apartment in Boardman and a 48-unit complex in Cortland, and Thomas did not expect either of them to still be available in a week.
Thomas knows of only a few developments under construction right now and believes the area could use eight to 10 more.
Thomas says he owns 50 apartment units in the Canfield and Boardman area and there is a waiting list of over 20 people for units.
“Nobody moves, once they’re in,” Thomas says. “They typically don’t go anywhere.”
The problem with building additional units, says Friedkin, is the high cost of construction. While there is always a market for luxury rentals, he notes new construction can be very expensive to rent.
Instead, investors may look at existing rental complexes. They can determine whether renovating the buildings will enable them to generate profit through rent, Friedkin adds.
Manufacturing
The other area Thomas sees a big market for is flex space warehouse and manufacturing.
He sees businesses looking for something between 5,000 and 20,000 square feet. And again, there is a shortage of available spaces.
Friedkin says he is getting inquiries in the 20,000 to 50,000 range right now, but not as many as in the past.
“I think there’s a lot of uncertainty with the interest rates going on right now,” Friedkin says. “There are still those people that are cautious, but we do have those that are looking to come into the market.”
Thomas agrees if interest rates change it could create a slow down in commercial investment activity.
After dropping the interest rates 75 basis points spread over three months in 2025, the Federal Reserve has left the interest rate steady at around 3.5% and 3.75% in recent months. There are some analysts, such as JP Morgan Global Research and PNC Capital Advisors, predicting the rate is more likely to edge upward than it is to decline any further this year.
Small Office Space
Vince Hillard, a real estate agent with Berkshire Hathaway HomeServices The Preferred Realty, says he has mostly received calls with interest in small office spaces in recent months.
Hillard offers real estate services mostly for commercial sites in Mercer and Mahoning counties, with some in Trumbull.
“Most of the calls I’ve been getting are for smaller offices,” Hillard says, “not big offices, just smaller, 1,500 square feet and under.”
He says many callers are looking for between 1,000 and 1,500 square feet, even one-room office spaces. He believes that may be driven by people who cannot operate their businesses from home, such as those who need to be state certified.
Hillard, who owns retail book store businesses with his wife, says few people are looking for retail spaces, a trend that has been ongoing since more people got comfortable shopping online during the pandemic. He says it has left a lot of empty spaces in downtowns and strip malls.
“I just think it’s taken years and years. It’s finally evident when you drive down Main Street or anywhere and you see all these vacant buildings,” Hillard says. “It’s the result of years of relentless competition from online shopping and Covid is what really tipped the scale.”
Retail and Restaurants
Friedkin says he has been working with a couple of national coffee chains and food franchises that are considering locating to the Valley.
Many are looking to invest in the commercial business district corridor areas around other retail, he notes.
That proves difficult in some areas. For instance, Thomas says state Route 224 from I-680 to state Route 11 offers few available spaces.
And the Eastwood Mall area in Trumbull County remains busy with little available space.
“The way the Cafaros have redone that area and used their outparcels to bring in national tenants, I mean it’s a great redevelopment story for the area as to what could happen,” Thomas says.
He notes with so many choices, the shoppers are not just local now, but traveling from other counties to the Eastwood Mall complex.
Another area of note is the Belmont corridor in Liberty Township, near the two new Mercy Health centers, according to Friedkin, who has an office located in the same area.
“We’re getting inquiries into the Liberty area as a result of those hospitals,” Friedkin says, “which is drawing a lot more people up to this particular market.
Rite Aid
However, not every investment has worked out well, with former Rite Aids being a prime example.
Thomas says former Rite Aids that were built across the Mahoning Valley and have become available with the closure of the pharmacy chain have primarily three footprints ranging between 11,000 and 15,000 square feet.
“All of those are balloon-style construction and so they can be repurposed to anything,” Thomas says, adding someone looking at one in Columbiana is considering creating five small retail spaces within the Rite Aid.
Some people invested in those buildings as cap rate investments while Rite Aid was there and Thomas says some remain vacant because those investors are unwilling to take a huge loss. Yet with good construction and good location, Thomas says they are starting to move and he believes many will be repurposed.
At least one in the Cornersburg area is slated to be torn down with a Sheetz built in that spot, Thomas says.
