It seems that almost daily we hear reports on Utica or Marcellus Shale in the paper or on the news. There is a good reason for all the hype! Utica Shale alone has an estimated worth in the billions of dollars, much of which will go to landowners in Ohio, Pennsylvania, New York and West Virginia. According to the Ohio Environmental Protection Agency, Ohio will likely see an increase in drilling, due to the simple fact that the state sits over the Utica Shale formation, which experts predict holds large natural gas reserves.
Energy companies have taken great interest in the potential supply of natural gas trapped in the shale, and are competing to secure mineral rights and leases in order to harvest the gas. These companies are now engaged in purchasing and leasing land so that they can capitalize on this incredible natural resource.
The buying and leasing frenzy currently taking place in the shale areas has positively affected nearby real estate markets. This is good news for property owners who experienced the difficulties of the recent recession. One region reaping the benefits is the Northeast Ohio/Cleveland area. The Northeast Ohio and Cleveland commercial real estate market has begun to see an upswing in leasing and purchasing due to the Marcellus Shale development, despite being located several counties away from the bulk of Marcellus related activity. Cleveland’s commercial properties and industrial buildings and have seen three straight quarters of positive absorption. More space is being leased/bought than vacated. Rents in Northeast Ohio have also stabilized, and in some sub markets, rents are even on the increase. Cleveland’s office market is also improving, having reached its bottom at the end of 2010. Although vacancy is declining slowly, the most recent quarter saw a revival of investment sales. Real estate absorption is expected to increase as development continues in the Utica and Marcellus shale regions, with energy companies seeking warehouse and office space located nearby their drilling sites.
Although the direct economic benefits to the Utica and Marcellus shale regions will consist primarily of royalties and lease payments, the development of these areas will have a positive impact on the local and national economies. Commercial real estate will benefit as companies seek out office space for their employees, industrial facilities and warehouse space for storage, and land sites for drilling. Northeast Ohio, and the Cleveland area in particular, located near the heart of both Marcellus and Utica Shale activity, stands to benefit greatly as energy companies move into the area.