THE KNOWLEDGE REPORT CINCINNATI, OH www.colliers.com/cincinnati MARKET INDICATORS *Projected Change to Following Quarter Q1 12 Q2 12* VACANCY NET ABSORPTION CONSTRUCTION — — RENTAL RATE — — Q1 2012 | INDUSTRIAL OVERALL VACANCY RATE ABSORPTION UP AS INDUSTRIAL MARKET CONTINUES TO MOVE IN THE RIGHT DIRECTION EXECUTIVE SUMMARY The Greater Cincinnati industrial market started the year on a strong note, producing 706,211 square feet of positive net absorption for the first quarter of 2012. This positive momentum was carried over from 2011, as the fourth quarter finished on an upswing. The overall vacancy rate stands at 9.2% and the overall weighted asking rate for industrial properties in the first quarter was $3.31 per square foot. NORTHERN KENTUCKY The Northern Kentucky submarkets showed an impressive 438,011 square feet of net absorption. Most of this activity was tied to the Airport submarket, as this area posted 509,805 square feet of positive absorption. Larger deals of note that contributed to this activity include Schwarz Paper leasing 316,000 square feet of space at Airpark International Distribution Center #1; Verst Group Logistics leasing 290,521 square feet of space at 1100 Burlington Pike; and LeanCor Supply Chain leasing 106,920 square feet of space at 2265 Progress Drive. Rental rates at the Airport averaged $3.07 per square foot, while the Florence market was slightly higher at $3.26 per square foot. SUBURBAN OHIO SUBMARKETS On the northern side of the river, Tri-County/Union Centre led the way with 497,710 square feet of positive absorption. General Motors was the largest transaction of note in this submarket, as the company purchased a 394,480-square-foot building at 8752 Jacquemin Drive that they were currently occupying. Most other submarkets on the Ohio side showed modest gains, with the exception of Lockland/Evendale giving back 196,057 square feet of space. Rental rates in the Ohio submarkets ranged from $2.27 per square foot in Hamilton to $4.76 per square foot in the Western Corridor. CONSTRUCTION On the construction side, one large speculative building is still under construction and several smaller build-to-suit projects are continuing to move forward. The speculative building is in Monroe, as IDI continues construction on its 553,338-square-foot distribution center at 1100 Logistics Way. This building is expected to be completed in May of 2012. Additional construction of speculative industrial space is not anticipated anytime soon, but we will continue to see build-to-suit projects hit our market as manufacturing continues to improve. 9 5% 10.0% 10.5% 9.0% 9.5% 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12
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the knowledge reportcincinnati, oh
www.colliers.com/cincinnati
market indicators
*Projected change to Following Quarter
Q1 12 Q2 12*
VacancY
net aBsorPtion
construction — —
rental rate — —
Q1 2012 | industrial
oVerall VacancY rate
ABSORPTION UP AS INDUSTRIAL MARKET CONTINUES TO MOVE IN THE RIGHT DIRECTION
executiVe summarYthe greater Cincinnati industrial market started the year on a strong note, producing 706,211 square feet of positive net absorption for the first quarter of 2012. this positive momentum was carried over from 2011, as the fourth quarter finished on an upswing. the overall vacancy rate stands at 9.2% and the overall weighted asking rate for industrial properties in the first quarter was $3.31 per square foot.
northern kentuckYthe northern kentucky submarkets showed an impressive 438,011 square feet of net absorption. Most of this activity was tied to the Airport submarket, as this area posted 509,805 square feet of positive absorption. larger deals of note that contributed to this activity include Schwarz paper leasing 316,000 square feet of space at Airpark International distribution Center #1; Verst group logistics leasing 290,521 square feet of space at 1100 Burlington pike; and leanCor Supply Chain leasing 106,920 square feet of space at 2265 progress drive. rental rates at the Airport averaged $3.07 per square foot, while the Florence market was slightly higher at $3.26 per square foot.
suBurBan ohio suBmarketson the northern side of the river, tri-County/Union Centre led the way with 497,710 square feet of positive absorption. general Motors was the largest transaction of note in this submarket, as the company purchased a 394,480-square-foot building at 8752 Jacquemin drive that they were currently occupying. Most other submarkets on the ohio side showed modest gains, with the exception of lockland/evendale giving back 196,057 square feet of space. rental rates in the ohio submarkets ranged from $2.27 per square foot in hamilton to $4.76 per square foot in the western Corridor.
constructionon the construction side, one large speculative building is still under construction and several smaller build-to-suit projects are continuing to move forward. the speculative building is in Monroe, as IdI continues construction on its 553,338-square-foot distribution center at 1100 logistics way. this building is expected to be completed in May of 2012. Additional construction of speculative industrial space is not anticipated anytime soon, but we will continue to see build-to-suit projects hit our market as manufacturing continues to improve.
9 5%
10.0%
10.5%
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9
1Q 1
0
2Q 1
0
3Q 1
0
4Q 1
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1
2Q 1
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transactions are believed to be accurate but not guaranteed.
emPloYmentthe Bureau of labor Statistics announced good news for the market, as the U.S. unemployment rate continued to fall. while the validity of these government numbers can be debatable, it’s a good sign that companies are beginning to hire employees and put people back to work. the overall U-3 unemployment rate came in at 8.2% for March, down from 8.3% in January and February. In comparison, in october of 2010, the rate stood at 10.0%. ohio’s unemployment rate is at 7.6%, a nice sign that our state is a little healthier than the other 49 states across the country. As commercial real estate is tied directly to job growth, we hope these numbers continue to push us in a positive direction.
Forecastwhile the first quarter started strong, we expect the industrial market to level off again for the remainder of 2012. As mentioned in previous quarters, there are still large blocks of space in tri-County that have yet to hit the market. these spaces are listed as available for lease/sale, but are still occupied to some degree. the spaces includes Avon products on progress place, CeVA logistics on windisch road and the liz Claiborne Facility on Jacquemin drive. we should start to see those spaces become vacant in the next three quarters, which will increase the overall vacancy rate several basis points.
uPdate recent transactions
First Quarter actiVitY
ProPertY suBmarket tenant/BuYer size tYPe
8752 Jacquemin drive tri-County general Motors 394,480 Sale
11520 Mosteller road tri-County trident Capital 358,386 Investment Sale
Airpark International dC #1 nkY Schwarz paper 316,000 lease renewal
1100 Burlington pike nkY Verst group logistics 290,521 lease