Cincinnati OH Industrial Trends Q3 2011

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Cincinnati OH Industrial Trends Q3 2011

  1. 1. Q3 2011 | INDUSTRIAL CINCINNATI, OH THE KNOWLEDGE REPORT Vacancy Up As Industrial Market Sees More Space Hit the Market As predicted three months ago, the Greater Cincinnati industrial market saw the overall vacancy rate in the third quarter of 2011 rise to 9.0%. This increase was 20 basis points more than the second quarter of 2011. As more industrial space came back into the market, the net absorption for the third quarter totaled a negative 398,042 square feet. This increased the year-to-date negative net absorption to more than 1 million square feet. Although this increase was expected, it was disappointingMARKET INDICATORS to see for a market that is trying to rebound from the lingering effects of the economic downturn of 2008. Q3 11 Q4 11* VACANCY The overall weighted asking rate for industrial properties in the third quarter was $3.53 per square foot, a relatively unchanged figure from the second quarter average of $3.54 per square foot. Flex/ NET ABSORPTION R&D space slightly increased to a rate of $6.06 per square foot, while distribution space was $2.87 CONSTRUCTION — — per square foot. General industrial space was recorded at $3.70 per square foot, or a $0.09 decrease from the previous quarter. RENTAL RATE — — The two most active submarkets in the Greater Cincinnati industrial market were the Airport *Projected Change to Following Quarter submarket and the Tri-County/Union Centre submarket. The Airport saw more than 600,000 square feet of negative absorption and Tri-County/Union Centre recorded more than 600,000 square feet of positive absorption. Although the negative absorption was a big hit at the Airport, it was a relief to see Tri-County/Union Centre balance things out with a healthy amount of activity. OVERALL VACANCY RATE COMPLETIONS VS ABSORPTION 9.5% Completions Absorption 1,500,000 The Cincinnati Industrial 9.0% 9.0% Market’s vacancy rate 1,000,000 stands at 9.0%, year-to-date Square Feet 8.5% net absorption totaled 500,000 (1,044,719) SF. 8.0% 0 7.5% 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 -500,000 (398,042) SF -1,000,000 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 Completions Absorptionwww.colliers.com/cincinnati
  2. 2. THE KNOWLEDGE REPORT | Q3 2011 | INDUSTRIAL | CINCINNATI NORTHERN KENTUCKY 248,360 square feet of positive absorption. This helped to lower the overall vacancy rate for this In Northern Kentucky, the Airport submarket saw submarket by 120 basis points to 6.0%. 7575 the biggest increase in vacancy as total net Empire Drive was the largest contributor to the absorption was negative 646,767 square feet for overall vacancy rate. The building is now 100% the third quarter. The overall vacancy rate at the occupied and 128,000 square feet of positive Airport increased by 230 basis points to 9.9%. absorption was recorded in the third quarter as Most of the negative absorption was concentrated a result. to distribution space and a small number of deals AVG. ASKING RATES (PER SF - NET) were accountable for the increase in space given SUBURBAN OHIO MARKETS back to the market. On the north side of the river, the Tri-County/$8 1100 Burlington Pike was one of the largest loss Union Centre submarket led the way in the third$7 leaders in Northern Kentucky. The former Square quarter of 2011. This submarket posted 616,547$6 D building now sits empty and 477,862 square square feet of positive absorption and lowered$5 feet of vacant space was added to our statistics. the vacancy rate from 13.0% to 12.1%.$4 2285 Litton Lane (182,000 square feet) became$3 vacant and available and added to the negative SwimOutlet.com was one of the largest$2 absorption total. contributors to the positive news in Tri-County, as 3Q 09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 the company signed a lease for 390,000 square The Florence/Walton submarket helped to offset feet at 4300 Port Union Road. Also in Tri-County General Flex Distribution some of the negative absorption by providing at World Park Building 31, A-T Controls signed a UPDATE Recent Transactions LEASING ACTIVITY PROPERTY SUBMARKET TENANT LANDLORD SIZE TYPE 4300 Port Union Road Tri-County/Union Centre SwimOutlet.com DCT Port Union LLC 390,000 Direct Lease Former Batavia Ford Transmission Plant Eastern Outlying Global Scrap Management IRG Batavia I LLC 300,000 Direct Lease 5443 Duff Drive Tri-County/Union Centre HD Supply Duke Realty 166,000 Direct Lease 1605 Worldwide Blvd Airport Owens & Minor Distribution TRT-DCT LLC 150,100 Direct Lease World Park Bldg 31 Tri-County/Union Centre A-T Controls Duke Realty 122,120 Direct Lease ProLogis Park Sharonville #2 Tri-County/Union Centre hhGregg ProLogis 100,800 Direct Lease 910 Lila Avenue Eastern Outlying 3M Naples Milfield Venture LLC 80,000 Direct Lease 10345 S Medallion Blvd Lockland/Evendale Protective Packaging Solutions Arka Hollywood I LLC 69,720 Direct Lease Enterprise Station B Florence/Walton Magna-Tech Manufacturing Dividend Capital Investments LLC 64,177 Direct Lease Mosteller Distribution Center Tri-County/Union Centre Keebler, Inc. Duke Realty 63,410 Direct Lease 6245 Creek Road Blue Ash CECO Environmental Mandceng LLC 53,210 Direct Lease 11725 Commons Drive Tri-County/Union Centre Full Throttle Indoor Karting, LLC N/A 51,200 Direct Lease 4170 Columbia Road I-71 North Siemens Lebanon Discovery LLC 51,200 Direct Lease Port Union Commerce Park Bldg 2 Hamilton Consentino DCT Port Union LLC 33,600 Direct Lease Airpark Business Center III A Airport Pella Windows Ashley/Hemmer LLC 33,515 Direct Lease SALES ACTIVITY PROPERTY SUBMARKET BUYER SELLER SIZE SALES PRICE 537 Grandin Road I-71 North Hosea Project Movers Sumco Phoenix Corp 200,000 $825,000 1111 Western Row Road I-71 North Rhinestahl Corporation Malhotra Family LLC 120,584 $3,195,000 3650-3680 Kemper Road Tri-County/Union Centre Slate Ridge Holdings Triple D Ohio, LLC 60,900 $2,150,000 6480 Hamilton-Lebanon Road Middletown Housatonic LLC Midwest William R Johns & Carol M Johns 60,000 $1,750,000 7944 Innovation Way I-71 North Steve Ortner J & K Invest Ohio 40,193 $1,800,000Transactions are believed to be accurate but not guaranteed.P. 2 | COLLIERS INTERNATIONAL
  3. 3. THE KNOWLEDGE REPORT | Q3 2011 | INDUSTRIAL | CINCINNATI TOTAL DIRECT SUBLEASE TOTAL TOTAL VACANCY PRIOR QUARTER NET YTD NET AVERAGE INVENTORY VACANT SF VACANT SF VACANT SF RATE VACANCY RATE ABOSRPTION ABSORPTION ASKING RATE275 EAST CORRIDORDistribution 1,382,500 670,000 0 670,000 48.5% 48.5% 0 -19,500 $2.99Flex Space 849,373 160,555 0 160,555 18.9% 18.9% 0 -35,883 $6.74General 5,691,129 135,500 0 135,500 2.4% 2.4% 0 25,989 $3.00TOTAL 7,923,002 966,055 0 966,055 12.2% 12.2% 0 -29,394 $3.52AIRPORTDistribution 19,478,687 2,005,305 182,000 2,187,305 11.2% 7.9% -676,965 -61,795 $3.12Flex Space 2,513,805 379,868 49,400 429,268 17.1% 16.4% 30,198 17,799 $4.78General 5,886,254 151,200 0 151,200 2.6% 3.8% 0 250,070 $2.92TOTAL 27,878,746 2,536,373 231,400 2,767,773 9.9% 7.6% -646,767 206,074 $3.35BLUE ASHDistribution 2,069,634 198,320 0 198,320 9.6% 9.6% 0 -195,215 $2.31Flex Space 2,047,353 339,737 16,500 356,237 17.4% 17.8% 7,790 4,459 $7.38General 9,795,083 925,665 0 925,665 9.5% 6.5% -285,115 -370,323 $3.79TOTAL 13,912,070 1,463,722 16,500 1,480,222 10.6% 8.6% -277,325 -561,079 $4.75CAMPBELL COUNTYDistribution 318,940 0 0 0 0.0% 0.0% 0 0Flex Space 20,000 0 0 0 0.0% 0.0% 0 0General 3,854,790 16,000 0 16,000 0.4% 0.4% 0 0TOTAL 4,193,730 16,000 0 16,000 0.4% 0.4% 0 0CENTRAL/MIDTOWNDistribution 1,324,774 297,726 0 297,726 22.5% 27.3% 63,736 138,736 $2.02Flex Space 1,543,719 85,536 0 85,536 5.5% 5.5% 0 43,555 $8.77General 52,361,383 3,140,483 0 3,140,483 6.0% 6.1% 41,000 -891,663 $3.68TOTAL 55,229,876 3,523,745 0 3,523,745 6.4% 6.6% 104,736 -709,372 $3.58COVINGTONDistribution 776,600 0 0 0 0.0% 0.0% 0 0Flex Space 40,000 0 0 0 0.0% 0.0% 0 0General 4,085,849 198,000 36,000 234,000 5.7% 3.0% -112,000 -99,000 $3.75TOTAL 4,902,449 198,000 36,000 234,000 4.8% 2.5% -112,000 -99,000 $3.75EASTERN OUTLYINGDistribution 107,520 107,520 0 107,520 100.0% 100.0% 0 -27,520 $4.25Flex Space 280,809 110,300 0 110,300 39.3% 39.3% 0 0 $5.96General 3,593,638 666,585 0 666,585 18.5% 18.0% -20,279 -116,404 $4.69TOTAL 3,981,967 884,405 0 884,405 22.2% 0.0% -20,279 -143,924 $4.81FLORENCE/WALTONDistribution 9,262,785 550,803 63,520 614,323 6.6% 9.2% 237,960 3,024 $2.76Flex Space 696,431 146,955 0 146,955 21.1% 22.8% 11,496 64,389 $4.61General 10,754,228 323,336 165,000 488,336 4.5% 4.5% -1,096 -58,656 $3.45TOTAL 20,713,444 1,021,094 228,520 1,249,614 6.0% 7.2% 248,360 8,757 $3.23HAMILTONDistribution 335,000 7,200 0 7,200 2.1% 2.1% 0 0General 6,986,859 256,500 0 256,500 3.7% 3.7% 0 116,000 $4.03TOTAL 7,321,859 263,700 0 263,700 3.6% 3.6% 0 116,000 $4.03I-71 NORTH CORRIDORDistribution 1,939,653 483,614 0 483,614 24.9% 24.9% 0 -145,491 $3.50Flex Space 530,805 104,874 0 104,874 19.8% 15.4% -26,038 53,755 $5.93General 7,611,592 960,057 0 960,057 12.6% 12.3% -27,500 -54,840 $3.70TOTAL 10,082,050 1,548,545 0 1,548,545 15.4% 14.9% -53,538 -146,576 $3.78LOCKLAND/EVENDALEDistribution 521,960 68,000 0 68,000 13.0% 13.0% 0 -68,000 $1.88Flex Space 780,821 108,055 0 108,055 13.8% 14.1% 2,270 45,050 $6.23General 17,897,280 580,608 0 580,608 3.2% 1.7% -283,046 -162,839 $3.70TOTAL 19,200,061 756,663 0 756,663 3.9% 2.5% -280,776 -185,789 $3.86MONROE/MIDDLETOWNDistribution 7,498,392 893,140 0 893,140 11.9% 11.9% 0 135,000 $3.12Flex Space 129,500 40,120 0 40,120 31.0% 31.0% 0 0 $5.00General 3,498,501 91,500 0 91,500 2.6% 3.3% 23,000 94,500 $3.57TOTAL 11,126,393 1,024,760 0 1,024,760 9.2% 9.4% 23,000 229,500 $3.24OUTSIDE METRO AREADistribution 275,000 0 0 0 0.0% 0.0% 0 0General 40,000 40,000 0 40,000 100.0% 100.0% 0 0 $4.50TOTAL 315,000 40,000 0 40,000 12.7% 100.0% 0 0 $4.50TRI-COUNTY/UNION CENTREDistribution 23,216,789 4,606,467 435,150 5,041,617 21.7% 22.7% 234,815 156,769 $2.74Flex Space 5,130,977 1,016,085 13,030 1,029,115 20.1% 21.9% 91,093 -91,474 $6.21General 36,459,352 1,746,709 26,000 1,772,709 4.9% 5.6% 290,639 364,789 $3.71TOTAL 64,807,118 7,369,261 474,180 7,843,441 12.1% 13.0% 616,547 430,084 $3.35WESTERN OUTLYINGFlex Space 218,000 0 0 0 0.0% 0.0% 0 0General 6,215,297 619,209 0 619,209 10.0% 10.0% 0 -160,000 $2.94TOTAL 6,433,297 619,209 0 619,209 9.6% 9.6% 0 -160,000 $2.94MARKET TOTALSDistribution 68,508,234 9,888,095 680,670 10,568,765 15.4% 15.3% -140,454 -83,992 $2.87Flex Space 14,781,593 2,492,085 78,930 2,571,015 17.4% 17.9% 116,809 101,650 $6.06General 174,691,235 9,811,352 227,000 10,038,352 5.7% 5.7% -374,397 -1,062,377 $3.70TOTAL 257,981,062 22,191,532 986,600 23,178,132 9.0% 8.8% -398,042 -1,044,719 $3.53 COLLIERS INTERNATIONAL | P. 3
  4. 4. THE KNOWLEDGE REPORT | Q3 2011 | INDUSTRIAL | CINCINNATIlease for 122,120 square feet with Duke foot facility in Roselawn and Z.F. Steering SystemsRealty Group. has two buildings under construction in Florence. 512 offices inIn the Eastern Outlying submarket, a market that Speculative construction of industrial space is not 61 countries onhas not seen much activity recently, Global Scrap anticipated anytime soon, but build-to-suit projectsManagement signed a 300,000 square foot lease like mentioned above will continue to flourish as 6 continentsat the former Batavia Ford transmission plant. This the economy improves. United States: 125transaction was welcome news to the eastside of Canada: 38Cincinnati, as it has not seen a deal of this FORECAST Latin America: 18magnitude in quite some time. Asia Pacific: 214 As 2011 comes to an end, the last quarter should EMEA: 117On the negative side, one of the largest hits to the not provide much variation compared to what we • $1.5 billion in annual revenuemarket was 8701 LeSaint Drive. The building now have witnessed in the first part of the year. We • 979 million square feet undersits vacant and has added 345,600 square feet of hope to see some positive net absorption, but this managementspace to the market from BAE. Graphic Packaging will not offset the 1 million square feet of negative • Over 12,000 professionalsInternational also vacated 10600 Evendale Drive, absorption in the first three quarters of the year.and added 240,000 square feet to the market. Looking ahead to 2012, there is a slight concern with the Tri-County/Union Centre submarket, as INDUSTRIAL TEAM: more than 1 million square feet have already Chuck A. Ackerman, CCIM, SIORCONSTRUCTION +1 513 562 2266 surfaced and will become vacant next year. ThisSeveral projects continue to move forward towards includes Avon Products on Progress Place, CEVA Erin M. Casey, GA-C, MCREcompletion. USUI International is still on track to Logistics on Windisch Road and the Liz Claiborne +1 513 562 2225finish their 127,000 square foot facility in Facility on Jacquemin Drive. We hope otherSharonville. Links Unlimited is working on a Michael E. Daly, SIOR submarkets, including the Airport, can help pull +1 513 562 220660,000 square foot facility in Norwood. Eurostampa their weight and balance out our overall market tois in the process of completing a 75,000 square end the year on a good note. John B. Gartner, III, SIOR +1 513 562 2207 INDUSTRIAL SUBMARKETS William K. Keefer, SIOR +1 513 562 2235 MONROE/ Steven R. Miller HAMILTON MIDDLETOWN +1 513 562 2252 TRI-COUNTY/ CEO/PRINCIPAL | CINCINNATI: UNION CENTRE I-71 CORRIDOR Shenan P. Murphy, CCIM +1 513 721 4200 BLUE DIRECTOR OF RESEARCH: LOCKLAND/ ASH Brian T. Graham, CCIM EVENDALE +1 513 562 2214 GRAPHIC DESIGNER: I-275 EAST CORRIDOR Ricky R. Dennis CENTRAL/ +1 513 562 2213 MIDTOWN Colliers International | Greater Cincinnati INT’L 425 Walnut Street, Suite 1200 AIRPORT Cincinnati, OH 45202 COVINGTON Colliers International AIRPORT statistics are audited annually and may result in revisions to previously FLORENCE/WALTON CAMPBELL reported quarterly and CORRIDOR COUNTY final year-end figures Accelerating success.www.colliers.com/cincinnati

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