PLUS REVIEW AUGUST 2018Quarterly Economic Indicators 18 Counties of Northeast Ohio

Northeast Ohio has the second-heaviest concentration of headquarters employment

187,000

Northeast Ohio is an ideal location for headquarters and professional services companies, as it offers a low cost of doing business, a robust workforce and world-class educational institutions. Twenty Fortune 1000 companies have roots in this region, and companies such as Progressive Casualty Insurance, Nestle USA, Lubrizol, MCPc Inc. and The J.M. Smucker Company continue to grow and invest here. Employment has grown steadily from 2001 to 2017, as the region maintains the nation’s second-heaviest concentration of headquarters employment among the 20 largest metros in the U.S. This report explores this momentum.

TECHNOLOGY NETWORK continues to flourish

15%EMPLOYMENT GROWTH 2001- 2017

HEADQUARTERS AND PROFESSIONAL SERVICES FIRMS THRIVE IN NORTHEAST OHIO

TOTAL HEADQUARTERS

& PROFESSIONAL

SERVICES EMPLOYEES

The upward momentum in Northeast Ohio’s headquarters employment is projected to continue as the region is supported by financial, legal, insurance and other world-class professional services firms.

Almost 187,000 workers support headquarters and professional services operations including seven

law firms employing 100 or more attorneys, and major banks such as KeyCorp and The Huntington

National Bank. Northeast Ohio is also home to the Fourth Federal Reserve District, one of 12

regional Reserve Banks in the Federal Reserve System.

This region’s robust headquarters environment is significant for a variety of reasons. It helps drive

company innovation, growth and decision-making throughout the globe. Its strong multiplier

effect spurs and sustains a high level of economic activity throughout the region. And it provides

high-wage jobs that reward educational attainment and create opportunities for advancement,

attracting a pool of top-rated talent. Companies located in Northeast Ohio embrace our

headquarters strength as a true business advantage.

NEO HEADQUARTERS EMPLOYMENT SHARE IS SECOND-HIGHEST AMONG MAJOR METROSNortheast Ohio has the second-heaviest concentration of headquarters employment among the 20 largest metros in the U.S., with 68% more than the U.S. average. Proportionately, the region outpaces much larger markets, including Chicago, Atlanta and New York.

Source: Emsi

KEYOur Location Quotient (LQ) compares Northeast Ohio to the 20 largest U.S. metros on the

basis of headquarters employment. An LQ of 1.0 represents the average for the U.S. as a

whole. An LQ of 1.5 represents a 50% higher concentration of employment in any market

relative to the U.S., while an LQ of 0.5 is 50% lower. LQs above 1.0 generally represent sectors

that are exporting goods or services from a region.

Highest Concentration of Headquarters Employment in the Top 20 U.S. Metros

3.00

2.50

2.0

1.50

1.00

0.50

0.00

NEODetro

it

San Francisc

o

Philadelphia

Denver

Tampa

Atlanta

Boston

Chicago

New York

SeattleDalla

s

Houston

Los A

ngeles

Phoenix

Washington DC

Miami

Baltimore

Riversi

de

20

17 L

oc

ati

on

Qu

oti

en

t

Minneapolis

“ It is an exciting time in the digital commerce industry with tremendous opportunity for growth and innovation. We founded the company in Mentor more than a decade ago, and we look forward to continuing to be an important part of the community.” - Mike Keresman, Founder, Chairman, President and CEO, CardinalCommerce

8,000 NEW JOBS PROJECTED BY 2027Professional services and headquarters employment is also projected to grow another 8,000 jobs in the next decade, with marked increases expected for insurance and employee benefit funds (38%), specialized design services (27%), real estate-related activities (21%), computer systems design and related services (19%), and management, scientific and technical consulting services (18%).

Source: Emsi

Projected Growth in Professional Services and Headquarters Employment: 2017 - 2027

2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027

+5%

+4%

+3%

+2%

+1%

1.00

-1%

15% EMPLOYMENT GROWTH 2001 - 2017Northeast Ohio professional services and headquarters employment has grown steadily, from 162,000 workers in 2001 to nearly 187,000 in 2017, representing 15% growth. For example, growth has been remarkable in the area of company management, where employment has nearly doubled (93% growth) as companies recognize the advantages of Northeast Ohio’s supportive business environment. Other segments experiencing notable increases include real estate-related activities (76%); scientific research and development services (44%); management, scientific and technical consulting services (42%); computer systems design and related services (40%); agencies, brokerages and other insurance-related activities (29%); and specialized design services (22%).

Source: Emsi

Professional Services and Headquarters Employment Northeast Ohio: 2001 – 2017

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

+20%

+15%

+10%

+5%

1.00

-5%

-10%

“ Providing mission-critical healthcare services both domestically and internationally, we were attracted to Cleveland because of the strong labor pool, low cost of living and central geographic location.” - Michael Petras, CEO, Sotera Health

(formerly Sterigenics International)

1.00 = 2001 EMPLOYMENT

1.00 = 2017 EMPLOYMENT

PROFESSIONAL SERVICES SUBSECTORS SUPPORT THE BUSINESS COMMUNITYNortheast Ohio’s professional services segment encompasses a broad range of expertise — insurance, technology, legal, financial, real estate and more — that supports and strengthens companies here. Headquarters operations continue to thrive in this supportive environment, even in manufacturing, where the region and nation have experienced declines. Manufacturing companies see great value in locating their headquarters in Northeast Ohio.

Source: Emsi

Largest Sub-sectors of Professional Services in Northeast Ohio: 2017

50,00040,00030,00020,00010,0000

Lessors of Real Estate

Activities Related to Real Estate

Management, Scientific andTechnical Consulting Services

Architectural, Engineering and Related Services

Accounting, Tax Preparation, Bookkeeping and Payroll Services

Agencies, Brokerages and Other Insurance Related Activities

Computer Systems Design and Related Services

Insurance Carriers

Headquarters

Legal Services

IT Related Employment in Northeast Ohio: 2017

10,0008,0006,0004,0002,0000

Operations Research Analysts

Software Developers, Systems Software

Computer Network Architects

Computer Programmers

Computer Occupations, All Others

Network and Computer Systems Administrators

Computer User Support Specialists

Computer Systems Analysts

Software Developers, Applications

Computer Network Support Specialists

12,000

Average Earnings per Job by Sector in Northeast Ohio: 2017

$100,000$80,000$60,000$40,000$20,000$0

Construction

Manufacturing

Government

Wholesale Trade

Information

Mining, Quarrying, and Oil and Gas Extraction

Finance and Insurance

Headquarters

Utilities

Professional, Scientific and Technical Services

$120,000 $140,000 $160,000

HEADQUARTERS AND PROFESSIONAL SERVICES EARNINGS YIELD ECONOMIC GROWTHThere is a correlation between education attainment and economic growth. Occupations in headquarters and professional services are likely to require an advanced degree, translating into higher wages. For example, head-quarters occupations yield more than $121,000 average earnings while professional, scientific and technical services average $82,000. This is much higher than the regional average earning of $69,024.

Source: Emsi

TECHNOLOGY EMPLOYMENT CONTINUES TO GROWNortheast Ohio boasts a robust network of technology professionals, from software developers and computer systems analysts to support specialists and database administrators. Demand for technology expertise is growing in headquarters operations across industry segments throughout the region, offering these talented professionals outstanding employment opportunities.

Source: Emsi

DEVELOPMENT ACTIVITYBelow is a sampling of recent development projects in Northeast Ohio in the professional services and headquarters segment:

MCPc ADDS 150 POSITIONS, GROWING EMPLOYMENT TO 350MCPc, a growing technology company that works with banks, healthcare providers and other businesses, was looking to expand its operations in two different areas of the company. After considering other locations where it has operations, MCPc chose to expand its cybersecurity operation in Northeast Ohio. The expansion will add 150 positions.

PROGRESSIVE CASUALTY INSURANCE RENEWS COMMITMENT TO NORTHEAST OHIOProgressive, the nation’s fourth-largest auto insurer and a leading seller of other insurance products, has called Northeast Ohio home for 80 years and continues to grow here. In 2017, the company added 900 jobs to its 10,000-employee base and cited a business-friendly environment with a pool of qualified talent as the reason for expanding here. The company opened a 9,000-square-foot building to accommodate the new headquarters.

STERIGENICS U.S. RELOCATES HEADQUARTERS TO NORTHEAST OHIOIn November 2016, Sterigenics, a leading global provider of contract sterilization and lab services for the medical device industry, relocated its global headquarters from suburban Chicago to Broadview Heights, Ohio, bringing 30 key positions to the region.

LUBRIZOL CONTINUES TO GROW Lubrizol Advanced Materials, a leading global producer of advanced specialty polymers, polymer-based additives and chemical additives used in everyday consumer and industrial applications, has been rooted in Wickliffe since 1931. It continues to grow at this headquarter location, as well as operations facilities throughout Northeast Ohio. In late 2017, Lubrizol celebrated the opening of a new warehouse and packing building in Painesville Township.

CARDINALCOMMERCE BRINGS MORE HIGH-TECH JOBS TO THE REGION One of Ohio’s largest fintech employers and a leader in the e-commerce software industry, CardinalCommerce was growing rapidly and needed to expand. In November 2016,

this leader in digital commerce authentication constructed a new facility, doubling its original footprint and allowing for continued growth and additional high-tech jobs at the global headquarters in Mentor.

HYLAND SOFTWARE EXPANDS R&D CENTERHyland Software, creator of enterprise content management (ECM) software solution OnBase, was founded in 1991 and located its corporate world headquarters in Westlake. The company has become one of the largest independent ECM vendors in the world. Hyland has confirmed its commitment to Northeast Ohio in 2018 with the opening of a 70,000-square-foot addition to its research and development center, allowing for up to 400 more employees and a modern training center for internal and external events. The company boasts more than 2,200 employees globally with about 1,600 at Hyland world headquarters.

DISCOUNT DRUG MART CONTINUES TO THRIVE IN NORTHEAST OHIOOhio-based drug store chain Discount Drug Mart Inc. opened its first store in Elyria, Ohio, in 1969. It now operates 71 stores in more than 20 of Ohio’s 88 counties, with its corporate headquarters and warehouse based in Medina, Ohio. This month the company celebrated the opening of a fulfillment and call center, adding 62 new full-time positions in Avon Lake, further cementing the company’s commitment to the region.

“ Progressive has called Northeast Ohio home for 80 years. We know it’s a great place to live, work and play, and we’re pleased to be adding jobs here. We are committed to attracting and developing the top talent in this area to help us meet our goal of becoming the No. 1 choice and destination for auto and other insurance.” - Lori Niederst, Chief Human Resources Officer, Progressive

NEO STRATEGIC UPDATE:

Employment, Gross Regional Product, Per Capita Income, Productivity

In 2013, the philanthropic and business leadership in the region undertook a strategic planning process to understand Northeast Ohio’s competitiveness with the overall U.S. economy as it relates to four important measures, labeled aspirational metrics: Employment, Gross Regional Product, Per Capita Income and Productivity.

In our previous report, we announced that we would use this Economic Review as a mechanism to continue to track our progress against the regional strategy, featuring one of the four metrics each quarter. For this edition, we are looking at gross regional product, an area of the economy where Northeast Ohio’s performance relative to the U.S. has been better than planned. Looking back to 2013, the starting point of the strategy, the projection was to be at 50% of U.S. growth during the first five years of the strategy. Northeast Ohio’s gross regional product has grown 6% — below the U.S. rate of 9% but exceeding the projected 50%.

The region’s overall slower performance can be attributed in large part to the fact that, although we continue to have a disproportionately strong footprint in manufacturing (which has led to tremendous productivity increases over time), we have not seen enough diversification in non-healthcare-related sectors of the economy to drive growth in gross product. In particular, Northeast Ohio has lagged U.S. growth rates as they relate to finance, information, and professional, scientific and technical services (though as this report shows, we are catching up in the latter).

Gross regional product is an important signal of economic growth, as it measures the final market value of all goods and services produced in the region over the course of a year. It is a key measure of economic prosperity.

Change in Gross Productivity: NEO vs U.S., 2013 - 2017

U.S. NEO

2013 2014 2015 2016 2017

+12%

+10%

+8%

+6%

+4%

+2%

1.0

-2%

-4%

-6%

Gross regional product is an important signal of economic growth

1.00 = 2013 GROSS REGIONAL PRODUCT

US

OHIO

NEO

TOTAL EMPLOYMENT GROWS YEAR-OVER-YEARTotal employment averaged 1.938 million workers in Q4 2017, up more than 3,300 jobs year-over-year.

Source: Quarterly Census of Employment and Wages (QCEW). This is the most current reliable data available for total jobs in Northeast Ohio.

CONSTRUCTION SECTOR SEES YEAR-OVER-YEAR GROWTHThe construction sector added more than 3,200 jobs year-over-year in Q4, exceeding 72,000 workers. The manufacturing sector added just over 1,000 jobs, while the services remained relatively flat.

Source: Quarterly Census of Employment and Wages (QCEW). This is the most current, reliable data available for total jobs in Northeast Ohio.

TOTA

L EM

PLO

YM

ENT

IN M

ILLI

ON

S

1.90

1.95

2.00

2.05

1.85

1.80

1.75

1.70

1.65

Q1 Q4

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q2

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Q3

2015

2016

2014

2007

2008

2009

2010

2011

2012

2013

-40%

-30%

-20%

-10%

0

+10%

MANUFACTURING SERVICES CONSTRUCTION

CHANGE IN EMPLOYMENT BY SECTOR THROUGH DECEMBER 2017

NORTHEAST OHIO UNEMPLOYMENT RATES THROUGH DECEMBER 2017

2008

2007

2009

2010

2011

2012

2013

2014

2015

2017

2016

0 = 2007 AVERAGE

Q1

07Q

2 07

Q3

07Q

4 07

Q1

08Q

2 08

Q3

08Q

4 08

Q1

09Q

2 09

Q3

09Q

4 09

Q1

10Q

2 10

Q3

10Q

4 10

Q1

11

Q1

12Q

2 12

Q2

11Q

3 11

Q4

11

Q3

12Q

4 12

Q1

13Q

2 13

Q3

13Q

4 13

Q1

14

Q1

15Q

2 15

Q3

15Q

4 15

Q1

16

Q2

14Q

3 14

Q4

14

SERVICES

CONSTRUCTION

MANUFACTURING

Q2

16Q

3 16

Q4

16Q

1 17

Q3

17Q

2 17

Q4

17

Q1

09

NEO OHIO US

12%

11%

10%

9%

8%

6%

4%

Q1

07Q

2 07

Q3

07Q

4 07

Q1

08Q

2 08

Q3

08Q

4 08

Q2

09Q

3 09

Q4

09Q

1 10

Q2

10Q

3 10

Q4

10Q

1 11

Q1

12Q

2 12

Q2

11Q

3 11

Q4

11

Q3

12Q

4 12

Q1

13Q

2 13

Q3

13Q

4 13

Q1

14Q

2 14

Q3

14Q

4 14

7%

5%

Q1

15Q

2 15

Q3

15Q

4 15

Q1

16Q

2 16

Q4

16Q

3 16

Q1

17Q

2 17

Q3

17

NEO YEAR-OVER-YEAR UNEMPLOYMENT RATE SEES SLIGHT DECREASEThe unemployment rate for Northeast Ohio averaged 4.8% in Q4 2017, down from 5.1% for the same quarter in 2016. The state of Ohio averaged 4.4%, while the U.S. averaged 3.9%.

Source: Current Population Survey (CPS), a survey of 60,000 households nationwide.

NORTHEAST OHIO TOTAL EMPLOYMENT (NOT SEASONALLY ADJUSTED)

2017

OHIO UTICA WELL ACTIVITY (NON-CUMULATIVE)

GRP PROJECTED TO REACH $236 BILLIONNortheast Ohio’s GRP is projected to grow 2.7% in 2017, as set forth by Moody’s Economy.com. Source: Moody’s Economy.com

INDUSTRIAL AND OFFICE VACANCY CONTINUE TO TREND DOWNIn Q4 2017, the vacancy rate for industrial space is at 4.2% — its lowest rate since Team NEO began tracking in Q1 2008 — while the vacancy rate for office space is at 7.9%. More than 567 million square fee of industrial space and 160 million square feet of office space is available.

Source: CoStar

OHIO UTICA WELL ACTIVITY (NONCUMULATIVE)This graph shows the status of Utica shale wells originally permitted, drilled and in production for each quarter. Since Q4 2012, when tracking began, 2,651 total permits have been issued, of which 1,805 have been drilled. Of those drilled, 1,030 are currently in production in the state.

Source: Ohio Department of Natural Resources

OFFICE INDUSTRIAL

10%

11%

9%

8%

7%

VAC

AN

CY

RA

TE

6%

5%

4%

Q1

08

Q2

16Q

3 16

Q4

16Q

1 17

Q2

17Q

3 17

Q4

17Q

1 18

Q2

18

Q2

08Q

3 08

Q4

08Q

1 09

Q2

09Q

3 09

Q4

09Q

1 10

Q2

10Q

3 10

Q4

10Q

1 11

Q2

11Q

3 11

Q4

11Q

1 12

Q2

12Q

3 12

Q4

12Q

1 13

Q2

13Q

3 13

Q4

13

Q3

14

Q1

14

Q4

14Q

1 15

Q2

15Q

3 15

Q4

15Q

1 16

Q2

14

NEO

REA

L G

RP

IN B

ILLI

ON

S

AVERAGE ANNUAL GROWTH = 1%REAL GRP

$150

$170

$190

$210

$230

$250

$130

1994

1995

1996

3.0%

1997

4.4%

4.0%1.6% 1.3%

-2.0%1.4%

2.1%

2.4% 0.6% -0.8%-0.4%

1998

1999

2000

2002

2003

2004

2010

2011

2001

2006

201

2

2007

2009

201

3

201

4

201

5

201

6

201

7

2005

-1.5%

3.0%

3.3% 1.4% 0.7% 2.2% 0.5%0.9%

2008

3.3%

-5.3%

2.7%

0

DRILLEDPERMITTED PRODUCING WELLS

250 1200

0

200

150

100

50

PER

MIT

TED

/DR

ILLE

D W

ELLS

(N

ON

-CU

MU

LATI

VE)

PRO

DU

CIN

G W

ELLS

(C

UM

ULA

TIV

E)

800

1000

600

400

200

Q4

12

Q1

13

Q2

13

Q3

13

Q4

13

Q1

14

Q2

14

Q3

14

Q4

14

Q1

15

Q2

15

Q3

15

Q4

15

Q1

16

Q2

16

Q3

16

Q4

16

Q1

17

Q2

17

Q3

17

Q41

7

Q1

18

NORTHEAST OHIO INDUSTRIAL AND OFFICE VACANCY

NEO REAL GROSS REGIONAL PRODUCT (GRP) IN BILLIONS

Q2

18

Team Northeast Ohio uses a number of data sources for the Regional Economic Review. One of the primary sources is Moody’s Economy.com (economy.com) data for Northeast Ohio.

Moody’s Economy.com county-level output, employment and payroll historical data are estimated from several publicly available sources and are summarized into the Team NEO regional footprint. It is important to understand data provided by Economy.com are estimates of economic activity.

Team NEO also uses data from federal and state sources as part of this report. We rely heavily on data from the U.S. Bureau of Labor Statistics (bls.gov) and Ohio’s Labor Market Information (lmi.state.oh.us) for information on wages, unemployment and both general and industry-specific employment.

Industrial and office real estate data for this edition were derived from the CoStar Group. Due to market limits within the CoStar database, historic trend data for the Team NEO region are reflective of 14 of the 18 counties forming the regional footprint. These counties include: Ashtabula, Cuyahoga, Erie, Geauga, Huron, Lake, Lorain, Mahoning, Medina, Portage, Richland, Stark, Summit and Trumbull.

SPECIAL THANKS FROM TEAM NEO TO OUR FUNDERS

DATA SOURCES ECONOMIC DEVELOPMENT PARTNERS ACROSS 18 COUNTIES OF NORTHEAST OHIO

Ashland Area Economic Development

Columbiana County Port Authority

Erie County Economic Development Corporation

Geauga Growth Partnership, Inc.

Greater Akron Chamber

Greater Cleveland Partnership

Growth Partnership for Ashtabula County

Huron County Development Council

Lake County Ohio Port & Economic Development Authority

Medina County Economic Development Corporation

Portage Development Board

Richland Community Development Group

Stark Economic Development Board, Inc.

Tuscarawas County Community Improvement Corporation

Youngstown/Warren Regional Chamber

Wayne Economic Development Council

For a complete list of funders, visit clevelandplus.com/teamneo/invest-in-us/funders.

Team NEO is an economic development organization focused on creating jobs for Northeast Ohio’s residents. In collaboration with our partners, it leads the region’s business attraction efforts, supports business retention and expansion work as Northeast Ohio’s JobsOhio affiliate, accelerates the impact of innovation in the region, and aligns strategies and resources within the economic development network to maximize its impact. In addition, Team NEO provides tools to assist employers in attracting talent to the region.

The Northeast Ohio economic development network provides business decision-makers with access to customized solutions that accelerate growth, foster innovation and mitigate risk through a connected and collaborative ecosystem. For more information, visit clevelandplus.com.

ABOUT TEAM NEO AND THE CLEVELAND PLUS 18-COUNTY REGION CONNECT WITH US

AshtabulaLake

Geauga

Portage

Stark

Wayne

SummitMedina

Cuyahoga

Lorain

Ashland

AKRON

CANTON

YOUNGSTOWN

Richland

Huron

Erie

Tuscarawas

Trumbull

Mahoning

Columbiana

CLEVELANDLORAIN

MANSFIELD

Economic Development Board