Now that “Decision 2.0” has been made by “The King” LeBron James, 29, to go back home to the Cleveland Cavaliers, many business people are looking at the ripple effect of what that will mean for the city and its surrounding area's economy. Already, NBA-authorized James merchandise from shirts to shoes are flying off the shelves in Cleveland. But what about the Cleveland real estate market? Can it bounce back?
For background, in case you missed the announcement July 11, the National Basketball Association’s LeBron James, who “defected” to Miami in 2010, made the decision to go back to Cleveland.
Since the disclosure, basketball fans in Cleveland have been partying in the streets, visiting his home in Ohio near Akron and generally enthusiastically awaiting The King's return.
Houses.com and Condo.com Note Rise
in Ohio Real Estate Search Activity
LeBron's relocation back to the Cleveland area translates into bigger returns for commercial property owners such as bars, restaurants, transportation services, gas stations, hotels and even local television advertisement rates.
But Houses.com and Condo.com noticed an equally enticing trend before Decision 2.0 was announced: a surging interest in people searching the real estate portals for information about houses in Cuyahoga County, just outside Cleveland.
That's where James owns a mansion, in Bath Township.
The websites saw was the number of potential home buyers and renters searching the county increase during the first week in July compared to the first week of June. In June, 22 “leads” were recorded and in July there were 40 inquires made -- an 81% growth.
The King's Return Will Make Economic Impact
Could that be part of the power of a major brand at work? Definitely. But one other thing is also for certain: James's return to the place where he grew up and was the sweetheart of the local basketball world will easily become the reason that the Cleveland metro region will grow in terms of more money flowing into the area. Basketball game attendance will escalate, ticket prices will probably go up, employment may surge now that there will be more people going to games, and tourism is likely to spike upward. And remember, the businesses that support all of that activity will also receive a shot in the economic arm, including the real estate industry in one fashion or another.
If the Northeast Ohio real estate market follows suit, the region stands to benefit greatly when you take into consideration the fact that Cleveland and Akron real estate markets have had significant stagnant housing price activity this year.
Black Knight Financial Service for instance reported in late April that Cleveland home prices had increased just 0.1% year over year, and Akron ranked the lowest among 900 metros as house prices there shrunk by 0.2%.
Ironically, while Cleveland had such a slow price growth overall, when you dive into the data by ZIP code, you find wildly different pricing activity. According to real estate data provider Clear Capital for instance, Cleveland had the largest variation in pricing compared to all other major metropolitan areas in the country from May 2013 to May 2014. The top ZIP saw an annual housing price grow by 42.3% while the lowest performing ZIP dipped 23.3% during the same time frame.
LeBron James, the NBA and the Cleveland Cavaliers
“My relationship with Northeast Ohio is bigger than basketball,” the King of Homecomings wrote in a moving essay for Sports Illustrated. “I didn’t realize that four years ago. I do now.” But that relationship is still so much about basketball.
He is the NBA's biggest star.
LeBron helped the Miami Heat to win two championship titles in four years along with his close friends Chris Bosh and Dwayne Wade – collectively the "Big 3."
Love them or hate them, that presence brought Miami a lot of money, scrutiny and popularity. Not just the Miami-Dade County region but to the team itself.
Some estimates have been made that equate that powerful brand to being able to turn the Cleveland Cavs into a $1 billion business, about double of what it is worth without the 6-foot-8, 260-pound megastar who is one of the NBA's best defenders and passers. That's got to weigh heavily on the minds of Cavaliers rookie coach David Blatt and owner Dan Gilbert as they move forward working with James 2.0.
When LeBron was with Cleveland from 2003 to 20910, the average attendance at each game was approximately 20,000.
That number dropped a little more than 20% in 2012 before coming back a bit to a little more than 17,325 in the most recent regular season that ended in April.
Fourteen other franchises in the 30-team NBA had better attendances last season.
Now, there's no doubt that James can sell out nearly every game at Quicken Loans Arena with its 20,562-person capacity next season.
So, yes, while James will certainly continue to make difference in his hometown, working with kids and donating financially to great causes through the LeBron James Family Foundation, his relationship with basketball will be in the spotlight at all times. From real estate to businesses to happy fans, LeBron James will continue to make a difference in everything he touches – especially peoples' hearts.
Video: LeBron James is Coming Home
SI.com makes some good points about LeBron James's big decision to return home to the Cleveland Cavaliers. LeBron has some major challenges ahead of him.
For more details and historical details, visit: http://www.nytimes.com/2014/07/12/sports/basketball/lebron-james-to-return-to-cleveland-cavaliers-leaving-miami-heat.html?_r=0
LeBron James Photos Credit: Keith Allison via photopin cc
Cleveland, OH, Aerial Photo Credit: fusionpanda via photopin cc