1. Q1 2012 | office cincinnati, oh the knowledge report OFFICE MARKET OFF TO A GOOD START executive summary The Greater Cincinnati Office Market saw a good amount of activity in the first quarter of 2012, producing 449,759 square feet of positive absorption. The overall vacancy rate fell from 19.6% to 18.7%, a clear sign that we are headed in the right direction. The overall weighted asking rate for office properties averaged $18.14 per square foot, up 11 cents from the close of 2011. central business district In the Central Business District, the office market saw a great deal of activity, but not enough velocity market indicators to create any significant absorption. For all property classes, the first quarter net absorption totaled Q1 12 Q2 12* negative 8,596 square feet and the overall vacancy rate stands at 17.82%. As a follow-up to last year’s string of larger lease signings in the CBD, this submarket continued to make news as KAO USA VACANCY relocated to 312 Plum Street. The company signed a 55,000-square-foot lease in the Class A building and will relocate its operations from Spring Grove Avenue. URS also announced it will relocate from NET ABSORPTION the URS Tower on 7th Street to 525 Vine after signing a 20,551-square-foot lease. This wave of larger lease signings and announcements should settle for the balance of 2012. construction rental rate — — suburban markets The Suburban Submarkets saw the most activity this quarter, producing a total of 458,355 square feet of position absorption. The vacancy rate for all suburban properties averaged 19.2%, down from *Projected Change to 20.5% in the fourth quarter of 2011. The Tri-County submarket was the biggest gainer, as net Following Quarter absorption totaled 333,434 square feet. Humana Right Source contributed the most square footage to this absorption when it leased all of the 177,184 SF at Executive Centre I at 111 Merchant Street. The average rental rate for suburban properties was $20.37 per square foot, compared to an average rental rate for CBD properties of $19.35 per square foot. overall vacancy rate Overall Vacancy Rate construction24% Construction activity is picking up in the office market, as several new projects have come to life in22% 2012. The most notable is dunnhumbyUSA’s recent announcement to build its headquarters at the20% long dormant Fifth and Race site downtown. The company is planning up to 250,000 SF of office18% space to meet its needs of future employment growth. In Mason, Seapine Software announced it will16% build a 50,000-square-foot headquarters on Western Row. The company will vacate the 38,000 SF14% space it currently occupies at Triangle Office at Kings Mill. As noted last quarter, several other build-12% to-suit projects continue to move forward. These projects include the FBI site in Kenwood (109,000 2Q 10 1Q 11 3Q 11 4Q 11 2Q 11 1Q 12 1Q 10 3Q 10 4Q 10 square feet), Urology Group’s 45,000-square-foot facility in Norwood, and itelligence’s 85,000-square- foot building in Blue Ash. For the rest of 2012, these smaller projects will continue to be the norm for the majority of construction activity in the market. www.colliers.com/cincinnati
2. the knowledge report | Q1 2012 | office | cincinnati UNEMPLOYMENT employment forecast The Bureau of Labor Statistics 2012 should to be an interesting year11.00% announced good news for the market, for commercial real estate. Several10.50% Ohio Unemployment Rate as the U.S. unemployment rate variables at play will affect our10.00% US Unemployment Rate continued to fall. While the validity of market - the overall employment of these government numbers can be our country’s workforce, the 9.50% debatable, it’s a good sign that upcoming 2012 elections, and the 9.00% companies are beginning to hire and record-level maturing commercial 8.50% put people back to work. The overall real estate debt. With the first quarter 8.00% U-3 unemployment rate came in at recording more than 449,000 square 7.50% 8.2% for March, down from 8.3% in feet of positive absorption, we hope 7.00% January and February. In comparison, we can continue to capitalize on this in October of 2010, the rate stood at activity and the market will stay on May-11 Sep-11 May-09 Mar-10 Sep-09 Jul-10 Nov-10 Mar-11 Mar-09 Jan-09 May-10 Sep-10 Jan-11 Jul-11 Nov-11 Jul-09 Nov-09 Jan-12 Jan-10 10.0%. Ohio’s unemployment rate is the upswing of the commercial real at 7.6%, a nice sign that our state is a estate cycle. 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. update Recent Transactions first quarter activity Property submarket tenant size type 5th & Race Development Site CBD dunnhumbyUSA 250,000 Build-to-Suit 237 William Howard Taft Midtown Christ Hospital 152,000 Lease 312 Plum CBD KAO USA 55,000 Lease Western Row Road Development Site I-71 North Seapine Software LLC 50,000 Build-to-Suit 525 Vine CBD Weltman, Wineberg & Reis 37,365 Lease Renewal 5300 Kings Island Drive I-71 North ACT, Inc. 30,014 Lease 312 Elm CBD USI Midwest 24,600 Lease Renewal 525 Vine CBD URS 20,551 Lease 8600 Governors Hill Drive I-71 North General Electric 20,000 Lease Centre Pointe II I-75 North General Electric 14,034 Lease RiverCenter II NKY Tier 1 Performance 12,500 Lease Northmark Business Center 2 Blue Ash CTI 11,318 Lease Expansion Wright’s Summit II NKY Indiana Institute of Technology 10,767 Lease Kenwood Crossing II Kenwood/Montgomery St. Elizabeth Physicians 10,155 Lease 6725 Miami Avenue Midtown RSW/US 10,000 Lease 4138 Hamilton Avenue Tri-County/Union Centre Caracole, Inc. 9,600 Lease One Riverfront Place NKY Local TV, LLC 8,424 Lease 125 East Court Street CBD Daymon Worldwide 7,938 Lease Kenwood Executive Center Kenwood/Montgomery Care Connections 6,489 Lease 600 Vine CBD Fox Sports Ohio 6,000 Lease Towers of Kenwood Kenwood/Montgomery Johnson & Johnson 5,880 Lease 4555 Lake Forest Drive Blue Ash Cuni, Rust & Strenk 5,835 Lease 312 Elm CBD Union Security Insurance Co. 5,106 Lease Renewalp. 2 | Colliers International Transactions are believed to be accurate but not guaranteed.
3. the knowledge report | Q1 2012 | office | cincinnati SUBMARKET DATA Total Vacant Quarterly SUBMARKET Total Inventory Vacancy Rate YTD Absorption Avg. Rate SF Absorption Blue Ash 4,553,708 768,619 16.88% 78,450 78,450 $17.81 CBD 18,008,286 3,208,790 17.82% (8,596) (8,596) $19.35 CBD Periphery 3,498,638 901,617 25.77% 88,994 88,994 $25.77 East 2,454,545 443,537 18.07% (1,446) (1,446) $15.84 I-71 Corridor 4,058,537 891,709 21.97% 36,206 36,206 $18.85 North I-75 Corridor 2,247,624 214,250 9.53% 41,553 41,553 $20.11 North Kenwood / 2,070,071 263,156 12.71% 21,567 21,567 $22.35 Montgomery Midtown 3,317,554 490,364 14.78% (9,261) (9,261) $15.00 Northern 7,366,882 1,498,959 20.35% (111,647) (111,647) $17.83 Kentucky Tri-County 4,754,848 1,069,219 22.49% 333,434 333,434 $15.57 West 774,742 193,473 24.97% (19,495) (19,495) $15.21 Market Totals 53,105,435 9,943,693 18.72% 449,759 449,759 $18.14 avg. asking rates (per sf-full service gross) quarterly net absorption 500,000 $22.00 $21.00 400,000 $20.00 300,000 $19.00 Square Feet $18.00 200,000 Class A Rate $17.00 $16.00 Class B Rate 100,000 $15.00 Overall Rate 0 $14.00 -100,000 $13.00 $12.00 -200,000 1Q11 1Q 10 3Q11 4Q11 3Q 10 4Q 10 2Q11 1Q12 2Q 10 1Q 10 2Q 10 4Q 10 3Q 10 1Q 11 2Q 11 4Q 11 1Q 12 3Q 11 Class A Rate Class B Rate Overall Rate 1Q11 3Q11 4Q114Q 10 2Q11 1Q12 Colliers International | p. 3
4. the knowledge report | Q1 2012 | office | cincinnati OUTLYING WARREN 522 offices in COUNTY 62 countries on I-75 NORTH OF I-275 6 continents United States: 147 Canada: 37 Latin America: 19 I-71 NORTH OF I-275 Asia: 36 TRI-COUNTY ANZ: 165 WEST BLUE ASH EMEA: 118 • $1.8 billion in annual revenue KENWOOD/MONTGOMERY • 1.25 billion square feet under management MIDTOWN • Over 12,300 professionals CBD-PERIPHERY 3 EAST CEO | Principal: INT’L Shenan P. Murphy, CCIM AIRPORT +1 513 721 4200 Colliers International | Greater Cincinnati NORTHERN KENTUCKY 425 Walnut Street, Suite 1200 8 Cincinnati, OH 45202 Colliers International statistics are audited annuallyOffice Services | Greater Cincinnati and may result in revisions to previously reported quarterly and final year-end figuresBrian T. Graham, CCIM Fred A. Macke, Jr., SIOR Richard P. Meder John P. Schenk, CCIM, SIORBrokerage Associate Brokerage Senior Vice President Brokerage Senior Vice President Brokerage Senior Vice Presidentbrian.firstname.lastname@example.org Principal | Cincinnati Principal | Cincinnati Principal | Cincinnatidir +1 513 562 2214 email@example.com firstname.lastname@example.org email@example.com dir +1 513 562 2233 dir +1 513 562 2253 dir +1 513 562 2279Matthew H. Smyth Chris Vollmer, SIOR Chris Vollmer, Jr.Brokerage Senior Associate Brokerage Senior Vice President Brokerage Vice Presidentmatt.firstname.lastname@example.org Principal | Cincinnati email@example.com +1 513 562 2260 firstname.lastname@example.org dir +1 513 562 2242 dir +1 513 562 2244www.colliers.com/cincinnati