While institutional investors have primarily invested in suburban office assets over the past six quarters, the downtown office market is expected to see a shift in this trend over the second half of 2016. Several large downtown assets are currently listed for sale, which could attract more institutional investment to the urban core. Large blocks of vacant office space have become available in the northern suburbs due to relocations, shifting leverage towards tenants looking in those areas. However, strong leasing activity is projected to continue filling the space. Speculative development projects are moving from build-to-suit to filling the suburban pipeline, reflecting increased tenant demand outside of the downtown area.

1. Suburban vs. downtown office sales by square feet
Source: JLL Research, Includes sales <50,000 s.f.
Large block availabilities by submarket
Source: JLL Research
Square feet completed: build to suit
Source: JLL Research
Institutional investment most active in the suburbs
Over the past six quarters the downtown office market has seen significant
trading activity among Class B and C buildings as new ownership repurposes the
assets for other uses such as residential or hospitality. While this trend has
played out, institutional investors have been hesitant to invest in the urban core
and have instead acquired assets in the suburbs. The suburbs recently saw
another large trade with the sale of Pictoria Tower I, a 253,000–square-foot
Class A office building in Springdale. With CBD assets such as GE Global
Operations Center and Huntington Center currently listed for sale, that trend is
projected to shift over the course of the second half of 2016.
Large blocks of quality space available in northern submarkets
With recent relocations of large users such as GE and Mercy Health, numerous
quality blocks of space are available for users in the northern submarkets. This
turnaround in availability is projected to shift leverage more in the favor of
tenants looking for space in the northern submarkets. While the increase in
availably will benefit tenants in the short term, the market remains hot with a
number of active tenants in the market, so before long market conditions should
return to a state of balance. The market has seen strong large block leasing
activity over the last 6 quarters, with more than 30 leases signed over 20,000
square feet, a trend that it projected to continue through 2016. The question still
remains, will these vacancies be filled by new-to-market tenants or relocations?
Speculative projects fill up development pipeline
With the recent delivery of the Mercy Health Headquarters and construction on
the GE Global Operations Center wrapping up, the development pipeline shifts
from build-to-suit activity to speculative development. Major speculative projects
currently in the development pipeline include Landings Park, North Pointe Office
A, and 4420 Kemper Road. These suburban developments are a reflection of
increased tenant demand for high-quality office space in the market. In addition,
since the beginning of 2016 there have been four office projects announced in
Over-The-Rhine. These projects will provide large floor plates and creative
parking solutions, both of which have prevented office users from moving to the
neighborhood in the past.
Leasing activity slows, outlook remains positive
2,257
0
300,000
600,000
900,000
1,200,000
1,500,000
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Suburbs CBD
Office Insight
Cincinnati | Q2 2016
39,505,739
Total inventory (s.f.)
99,342
Q2 2016 net absorption (s.f.)
$19.08
Direct average asking rent
778,000
Total under construction (s.f.)
16.0%
Total vacancy
404,971
YTD net absorption (s.f.)
-0.4%
12-month rent growth
59.0%
Total preleased
0
500,000
1,000,000
1,500,000
2013 2014 2015 YTD 2016
0
4
8
12
20,000 - 3,999 35,000 - 49,999 >50,000 s.f.
#ofblocks
West Chester Blue Ash Midtown
For more information, contact: Ross Bratcher | ross.bratcher@am.jll.com ©2016 Jones Lang LaSalle IP, Inc. All rights reserved.

2. Current conditions – submarket Historical leasing activity (s.f.)
Source: JLL Research Source: JLL Research
Total net absorption (s.f.)
Source: JLL Research
Total vacancy rate (%)
Source: JLL Research
Direct average asking rent ($ p.s.f.)
Source: JLL Research
953,267
815,426
-123,487
-38,624
79,469
143,641
290,120
562,970
763,222
404,971
-300,000
0
300,000
600,000
900,000
1,200,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 YTD 2016
$19.16 $19.25
$18.45
$17.39
$17.94
$18.41
$19.68
$19.15 $19.24 $19.08
$16.00
$17.00
$18.00
$19.00
$20.00
2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016
17.3% 18.1%
19.4%
22.7% 22.6% 22.5%
21.3%
19.8%
18.1% 17.4%
16.0%
5.0%
10.0%
15.0%
20.0%
25.0%
2007 2008 2009 2010 2011 2012 2013 2014 2015 Q2 2016
1,700,000 1,800,000
2,200,000
1,897,000
937,122
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2012 2013 2014 2015 YTD 2016
©2016 Jones Lang LaSalle IP, Inc. All rights reserved.
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Rising
market
Blue Ash / Montgomery,
Midtown, Fields Ertel /
Mason, West Chester
CBD Peripheral,
NKY Riverfront
East, West
Northern Kentucky
Kenwood
For more information, contact: Ross Bratcher | ross.bratcher@am.jll.com
Bottoming
market

3. Office Statistics
Cincinnati | Q2 2016
For more information, contact: Ross Bratcher | ross.bratcher@am.jll.com ©2016 Jones Lang LaSalle IP, Inc. All rights reserved.
Class Inventory (s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption (%
of stock)
Direct vacancy
(%)
Total vacancy
(%)
Average direct
asking rent ($
p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
CBD Totals 11,924,031 -15,329 -15,329 -0.1% 17.0% 18.0% $20.35 0 0
CBD Peripheral Totals 1,622,161 14,054 14,054 0.9% 24.9% 25.1% $18.21 0 0
Midtown Totals 2,011,193 38,334 38,334 1.9% 10.8% 11.6% $20.72 0 0
Urban Totals 15,557,385 37,059 37,059 0.2% 17.1% 17.9% $20.05 0 0
Blue Ash/Montgomery Totals 4,889,967 16,592 16,592 0.3% 10.2% 10.2% $17.48 0 263,000
East Totals 1,110,700 11,786 11,786 1.1% 9.9% 9.9% $16.47 0 0
Fields Ertel/Mason Totals 2,526,808 39,575 39,575 1.6% 15.1% 15.4% $19.59 0 0
Kenwood Totals 1,451,516 61,898 61,898 4.3% 11.5% 11.8% $25.43 0 0
Northern Kentucky Totals 2,657,147 39,714 39,714 1.5% 17.3% 17.8% $17.78 0 57,000
Northern Kentucky Riverfront Totals 1,551,284 2,280 2,280 0.1% 31.7% 37.6% $21.52 0 0
Tri-County Totals 3,114,879 81,556 81,556 2.6% 25.5% 25.8% $15.85 0 0
West Totals 156,329 0 0 0.0% 20.3% 20.3% $17.10 0 0
West Chester Totals 1,566,665 -5,078 -5,078 -0.3% 9.9% 10.2% $20.60 0 150,000
Suburbs Totals 19,025,295 248,323 248,323 1.3% 16.2% 16.9% $18.55 0 470,000
Cincinnati Totals 34,582,680 285,382 285,382 0.8% 16.6% 17.4% $19.25 0 470,000
CBD A 7,135,363 -7,560 -7,560 -0.1% 17.9% 18.9% $22.56 0 0
CBD Peripheral A 789,967 2,637 2,637 0.3% 28.4% 28.7% $21.21 0 0
Midtown A 1,358,546 27,234 27,234 2.0% 9.9% 10.7% $22.52 0 0
Urban A 9,283,876 22,311 22,311 0.2% 17.6% 18.5% $22.37 0 0
Blue Ash/Montgomery A 2,907,031 13,489 13,489 0.5% 6.4% 6.5% $20.24 0 263,000
East A 741,078 11,786 11,786 1.6% 2.1% 2.1% $17.82 0 0
Fields Ertel/Mason A 1,986,153 36,285 36,285 1.8% 14.5% 14.7% $20.80 0 0
Kenwood A 1,031,123 63,851 63,851 6.2% 11.8% 12.3% $27.26 0 0
Northern Kentucky A 1,368,910 13,322 13,322 1.0% 13.6% 14.6% $19.29 0 57,000
Northern Kentucky Riverfront A 1,435,784 0 0 0.0% 32.9% 39.4% $21.70 0 0
Tri-County A 1,141,529 -1,648 -1,648 -0.1% 12.9% 13.9% $19.83 0 0
West A 22,472 0 0 0.0% 52.9% 52.9% $18.95 0 0
West Chester A 1,354,502 1,282 1,282 0.1% 8.2% 9.1% $22.00 0 150,000
Suburbs A 11,988,582 138,367 138,367 1.2% 12.9% 14.0% $21.29 0 470,000
Cincinnati A 21,272,458 160,678 160,678 0.8% 14.9% 16.0% $21.84 0 470,000
CBD B 4,788,668 -7,769 -7,769 -0.2% 15.8% 16.8% $16.60 0 0
CBD Peripheral B 832,194 11,417 11,417 1.4% 21.6% 21.6% $14.45 0 0
Midtown B 652,647 11,100 11,100 1.7% 12.7% 13.6% $17.79 0 0
Urban B 6,273,509 14,748 14,748 0.2% 16.2% 17.1% $16.32 0 0
Blue Ash/Montgomery B 1,982,936 3,103 3,103 0.2% 15.7% 15.7% $15.81 0 0
East B 369,622 0 0 0.0% 25.5% 25.5% $16.25 0 0
Fields Ertel/Mason B 540,655 3,290 3,290 0.6% 17.4% 17.8% $15.88 0 0
Kenwood B 420,393 -1,953 -1,953 -0.5% 10.7% 10.7% $20.50 0 0
Northern Kentucky B 1,288,237 26,392 26,392 2.0% 21.2% 21.2% $16.75 0 0
Northern Kentucky Riverfront B 115,500 2,280 2,280 2.0% 16.2% 16.2% $16.95 0 0
Tri-County B 1,973,350 83,204 83,204 4.2% 32.7% 32.7% $14.94 0 0
West B 133,857 0 0 0.0% 14.9% 14.9% $16.00 0 0
West Chester B 212,163 -6,360 -6,360 -3.0% 20.5% 17.5% $17.02 0 0
Suburbs B 7,036,713 109,956 109,956 1.6% 22.0% 21.9% $15.83 0 0
Cincinnati B 13,310,222 124,704 124,704 0.9% 19.2% 19.6% $16.02 0 0