Mahoning Valley Offers Bargain Commercial Real Estate

The Mahoning Valley continues to draw commercial real estate investors from outside the region, according to local agents. Relatively affordable property prices and sustained high demand for apartment units are generating significant market activity. Businessjournaldaily.com first reported the story.

Alan Friedkin, an associate broker with Burgan Friedkin Commercial Group, says investors are actively seeking properties, particularly triple-net leases which offer higher revenue with lower maintenance. "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 stated.

Don Thomas, managing partner at Platz Realty Group in Canfield, notes that investors from the coasts were attracted to the area's favorable cap rates and tax conditions several years ago. This spurred local investment, especially in apartment purchases and property upgrades. A resulting lack of inventory has contributed to rising rents.

Market Activity and Inventory

Both brokers describe the commercial market, particularly for apartments and multifamily housing, as extremely active. Don Thomas reported a strong July and anticipated an equal or better August. He highlighted apartments and flex space for warehouse and manufacturing as the segments attracting the most inquiries.

Friedkin confirms he knows of only a few apartment complexes currently for sale, yet receives many inquiries for them. Thomas, whose firm serves the corridor from Ashtabula through Columbiana counties, points to a severe shortage. He estimates the region needs 22,000 more apartment units, a gap exacerbated by a slight population increase and the demolition of blighted homes in Warren and Youngstown.

Demand Drivers and Development Challenges

Demographic shifts are fueling demand. "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 explained. He contrasted the current shortage with the market about five years ago, when 300 to 400 apartment units were typically for sale.

In mid-August, Platz Realty Group was listing two apartment properties. Thomas did not expect either to remain available for long.

New construction is limited. Thomas knows of only a few developments underway and believes the area could support eight to ten more. However, Alan Friedkin identifies high construction costs as a major barrier. While a market for luxury rentals exists, he notes that new construction can be too expensive to rent profitably.

Investor Strategies and Market Stability

Given construction costs, investors are often turning to existing rental complexes. Friedkin says they evaluate whether renovations can make these properties profitable through increased rental income. This adaptive approach capitalizes on the strong underlying demand.

Thomas provided a concrete example of the market's strength from his own portfolio. He owns 50 apartment units in the Canfield and Boardman area and maintains a waiting list of over 20 people. "Nobody moves, once they’re in," he said. "They typically don’t go anywhere."