Newly-released Economic Data Shows Cleveland’s Economy Grew Significantly in 2022, Surpassing Growth Rates of NYC, Chicago, and other Key Cities

Earlier this month the US Bureau of Economic Analysis released its County Estimates for local area gross domestic product (GDP).  Cleveland’s core county, Cuyahoga, grew at 3.3% between 2021 and 2022. A 3.3% annual growth rate is significant, and if constant, would be the equivalent of 38% growth compounded over ten years, and a full doubling of the economy in 22 years.

Comparing Cleveland to other cities we track for economic growth and development, Cleveland surpassed the GDP growth of all of our standard benchmarking cities—Detroit (2.5%), New York (2.3%), Philadelphia (2.3%), Chicago (2.2%), and Pittsburgh (1.0%).  Compared to other cities within the state of Ohio, Cleveland led market growth as well surpassing Cincinnati (1.5%) and Columbus, Ohio (0.6%).  Columbus had the second-lowest growth rate in our study, above only San Francisco (-2.4%), which was the only city with negative growth. The sunbelt cities of Miami (5.8%) and Dallas (5.7%) led the growth of all cities in our analysis, continuing the trend in those cities, and represented the only two cities that surpassed Cleveland growth rates.

The table below depicts the real change in GDP from 2021 to 2022 of 15 economic markets we studied, using data from the US Bureau of Economic Analysis.


Red Line Realignment: A New Subway Plan for Downtown Cleveland

Rail transit is a tool and major catalyst for economic development and private sector investment, and an absolute necessity for major, global cities, which Cleveland should aspire to be once again. After decades of stagnancy, Cleveland needs vision and a transformative project that will truly change its future trajectory.

A short, 1.7-mile realignment of the RTA Red Line between Tower City and East 34 St. to provide three Downtown subway stations—at E. 9-Prospect, E. 17-Euclid, and E. 22-Community College Ave—would transform Cleveland—not just Downtown, but the entire City and Region. With infrastructure a key priority of the Biden administration and with over $4 trillion aimed at economic recovery, the opportunity for construction of the subway is more achievable now than at any time in decades. The project would help the City resume its trajectory of economic and population growth and regain its global significance. 

The benefits are profound and far reaching—well beyond simply improved transportation and air quality. The subway will not only enable, but also induce economic activity and growth. The subway will allow for increased density, enable better uses of constrained land, increase property values, result in stronger demand for real estate near stations, attract a deeper talent pool for companies region-wide, increase local economic competitiveness, produce higher income and property tax revenues for local governments and school districts, and enable a higher quality of life for residents.

Continual rejection since the 1950s of a Downtown Cleveland subway—despite Cuyahoga voters passing a bond issue for one in 1953—has limited development and contributed to continual city and regional population decline, reduction of the city’s economic relevancy and global stature, and decrease of the region’s economic competitiveness. There is certainly a cost of not building the subway.

To that end, please see—and support—our just-released report, Red Line Realignment:  A New Subway Plan for Downtown Cleveland.

Cleveland: A Hotter Real Estate Market than Miami

By Mark Zannoni, The Center for Cleveland
March 13, 2021

This past Friday, March 12th, a remarkable few words about Cleveland appeared in an article on a South Florida real estate news website.  Spider, a real estate investment firm with offices in Miami and throughout Latin America, sold a property in Miami that it had purchased in 2015, scrapping its plans to construct a 12-story, 93-unit condo building.

Here’s the notable part: “Spider’s decision to exit Miami is driven by the city’s high condo inventory and decreasing unit prices, [Spider’s] Goldenberg said. The firm now is focusing on Detroit and Cleveland, which have upside potential and where investors will get a higher return.”

In other words, Cleveland in the eyes of an international real estate investor is hot and, depending on the project type, can provide even higher rates of return than Miami.    

After a decade of a building boom, Miami’s condo market is overbuilt; meanwhile, Cleveland suffers from a profound lack of condos.  Despite all the fine for-rent apartment construction around the city in recent years, the market excludes those who want high-rise and urban-amenities living, but simply do not want to spend $25K-50K per year in rent. Hence, with the lack of high-rise condo offerings, people are forced into low-rise townhomes or single-family homes, or pushed to live in another city where such common housing options are more readily available. Moreover, condos are important for the economic stability of the city as during economic downturns, neighborhoods, such as rental-heavy Downtown, need owner-occupied (and high-rise) residences whose occupants won’t readily split as renters can once the option to not renew a lease comes around.

But getting back to the article, it’s great to see Cleveland being more readily recognized as a strong and desirable city for international real estate investment—and so much so that an investor is scrapping a condo project in Miami and is looking northward to the shores of Lake Erie instead.

Please stop saying “Northeast Ohio”

The following article was published as a “Personal View” in Crain’s Cleveland Business on December 14, 2020 and was penned by The Center for Cleveland’s Board Chair, Mark Zannoni.

Please stop saying “Northeast Ohio” 

Mark Zannoni, December 14, 2020

The "Northeast Ohio" moniker is destroying Cleveland's brand and identity outside the region and, as such, severely impacting our ability to achieve economic development and population growth. Please stop saying "Northeast Ohio" unless referring to the geography that encompasses Cleveland, Akron, Canton and Youngstown.

"Cleveland" or "Greater Cleveland" is the region, which includes Cuyahoga and the six outer counties of Lorain, Medina Summit, Portage, Geauga and Lake. Imagine if people in Chicago started using "Northeast Illinois" when referring to their city and region. That would sound quite silly, but that is exactly what we are doing here.

The "Northeast Ohio" craze can be traced to various origins:

  • The desire for "regionalism," and the pursuit of this vision by name only without any substance;

  • The intention to eliminate the word "Cleveland" and avoid its allusions to bankruptcy, the flames on the Cuyahoga or in Mayor Ralph Perk's hair, the mooning of someone by the president of the Board of Education out a car window on I-271, and other embarrassing, but serious, events like losing 57% of the population between 1950 and 2010;

  • The feelings of people within the seven counties who no longer see themselves as part of "Cleveland," but since most of their capital, customers, members or employees are from Greater Cleveland instead say "Northeast Ohio"; and,

  • The good intentions of people who think saying "Northeast Ohio" will actually help Cleveland without realizing it is doing the opposite.

There is an urgent need to use "Cleveland" instead of "Northeast Ohio." As a market and global center, Cleveland — and the region — has been steadily weakening. And the weaker the city, the more difficult it will be to prosper and grow as our competitors are gaining in strength — particularly as we just regained our title of "poorest city in America" with a 31% poverty rate. The population of the seven-county Cleveland region has actually decreased by 8% since its 1970 peak, when we had surpassed 3 million people, while the U.S. as whole has grown 62%. This means the city's relative importance in the U.S. has been steadily diminishing, and with it, our global influence; our ability to land new jobs and companies in the region; the necessary appeal to attract new talent; the allure for greater investment in new educational, retail and entertainment options; and even our ability to land at least one daily flight to mainland Europe by a major non-low-cost airline, which is essential for the city to compete.

As social media and the internet in general quickly allow users worldwide to gather information about a place, the more people use "Northeast Ohio," then the greater name recognition will be for "Ohio" and at Cleveland's expense. When it comes time to invest in a place, the well-oiled Columbus marketing machine that propagates that Columbus is the largest city in Ohio may benefit instead, even though markets and economies are not restricted to municipal boundaries unless you're a city-state like Singapore. The seven-county Cleveland region is the largest metropolitan economy in the state and has 30% more residents than metro Columbus. But Cleveland's growth potential is giving way to our little sister Columbus — and by our own doing.

Cities, not abstract regions, are what capture the imagination and drive culture, creativity, innovation and economies. Sure, "Northeast Ohio" is not obscure to those in Cleveland, but it is to those outside of it. And in terms of real geographic place names, we are trading "Cleveland" for "Ohio." But the terms bring to mind opposing concepts. Cleveland is an innovative and progressive place. Ohio is far less so. Cleveland had America’s first big city black mayor and 34 years later had the city’s first woman mayor. In the 53 years since Carl Stokes assumed office, Ohio has elected only white men as governors. Cleveland voted for Kennedy and Biden, while Ohio went for Nixon and Trump. (And in the most recent election, Ohio was redder than Texas.) Ohio is often associated by people outside the state as a place of farms; Cleveland is a major American city. So dropping "Cleveland" for an inappropriate term centered on "Ohio" is not only geographically inaccurate, but undermines the very essence and soul of the city.

Imagine (once again) if someone said, "You want to open a plant in Germany? Come to Southwest Hessen!" Meanwhile another person says, "Come to Berlin!" Berlin may win out here as it is an established and well-known city while "Southwest Hessen" may be instantly dismissed or forgotten as the listener wants to be in a familiar city with an established workforce. But "Southwest Hessen" is where Frankfurt is located. Why wouldn't Frankfurt say Frankfurt? They do. And likewise, we too should use the name of our city, as that is the place that is globally known, not a state name preceded by a modifier. Moreover, it is significantly more common outside the U.S. for individuals to refer to U.S. places as cities, not states.

Some businesses with locations that are only in Cuyahoga County say "Northeast Ohio" as they try to capture customers from neighboring counties and think they must say "NEO" to do so. The solution is simple: use "Greater Cleveland" if afraid to say "Cleveland." Rather than chase market share in a shrinking pool, growing the full region by not killing the brand will result in a larger market for all and greater revenues at the end of the day.

"Northeast Ohio" is not a synonym for "Cleveland" or "Greater Cleveland." If you do not mean the geography spanning Cleveland to Akron/Canton to Youngstown, please stop saying "Northeast Ohio," as its usage is weakening one of the greatest cities in the world, adversely affecting economic development and job growth, fueling the growth of Columbus and other competitor cities, and severely hurting our national and global standing and identity.

Zannoni is board president of The Center for Cleveland, a nonprofit focused on economic and population growth of the city of Cleveland and the region.

 

Estimated Revenue Shortfall for the City of Cleveland from the Covid-19 Recession

by Mark Zannoni/Center for Cleveland
April 17, 2020

How severe of a revenue hit will the City face for FY2021 from the current recession? Revenue shortfalls for the City of Cleveland are expected to be between $187M and $305M for FY2021, calculated for less severe and more severe scenarios. These amounts in percentage terms are 6.4% and 10.4%, respectively, relative to projected revenues without a global health pandemic and resulting recession. 

A detailed financial study of the largest US cities was undertaken to determine the revenue impacts to city budgets from the covid-19 recession. The shortfalls for each city are directly correlated to its type of revenue sources. Cities that rely heavily on sales tax, for example, are hit harder than say, cities that rely more heavily on property tax, as the former relies on retail spending which has been affected deeply in recent months.

The study was conducted by three professors, Andrew Reschovsky at the University of Wisconsin; Howard Chernick, professor emeritus of economics at Hunter College and CUNY; and David Copeland at Georgia State University. The findings of the study—including the numbers on Cleveland, above—will be published next month in the National Tax Journal.  An article in the New York Times this morning covered some national highlights, but did not cover the details on Cleveland that we present here.

It is important to note that the numbers above represent not just City Hall, but the “fiscally standardized city” so that cities across the US could be compared to one another. Notes Prof. Reschovsky, “this includes the municipal government of Cleveland, plus the relevant share of revenues raised for the overlying county government, independent school districts, and special districts that serve the residents and businesses of Cleveland.  Of total general revenue in 2017 of the Cleveland fiscally standardized city, only 35% was attributable to the City of Cleveland municipal government.”

150 cities were analyzed and the average shortfall was 5.5% in the less severe scenario and 9.0% in the more severe scenario. Hence, the impacts in Cleveland at a shortfall of 6.4% to 10.4%, are slightly larger.  While Cleveland is not in the graphic in the New York Times article, if it were, the City would generally fall between San Francisco and Denver in that image.

In the “more severe” scenario, according to the study, the relative importance of the various sources of the projected shortfalls are:

  • State aid cuts:  32.2%

  • General and selective sales taxes: 14.2%

  • Income and other taxes: 19.1%

  • User charges: 23.0%

  • Misc. general revenue: 10.8%

(This is not saying that state aid cuts will be 32.2%, rather, of the full amount of revenue shortfall experienced by the city, 32.2% of it will be from a decrease in aid from the state of Ohio.)

Look for the full study published in the September issue of the National Tax Journal, and we’d like to thank Prof. Reschovsky for sharing the findings and insights on Cleveland before publication.