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Q4 2011 - Cincinnati Office
1. Q4 2011 | OFFICE
CINCINNATI, OH
THE KNOWLEDGE REPORT
OFFICE MARKET FINISHES ON TOP,
AS POSITIVE MOMENTUM EXPECTED
TO CONTINUE
EXECUTIVE SUMMARY
The Greater Cincinnati office market finished the year relatively strong, showing a modest amount of
growth for the fourth quarter. The overall vacancy rate stands at 20.5% for all office property types
in Greater Cincinnati. Net absorption for the quarter totaled 30,261 square feet, bringing year-to-date
MARKET INDICATORS net absorption to 50,163 square feet. Medical tenants led the way, as the top three transactions for
Q4 11 Q1 12* the quarter were all medically related companies. The medical trend is expected to continue into
2012, as the industry fuels the growth of activity in commercial real estate.
VACANCY
For the second quarter in a row, rental rates increased slightly from $17.91 per square foot to $18.03
NET ABSORPTION
per square foot. This increase continues to be welcome news for a market which has not been
CONSTRUCTION — — accustomed to rental growth for the past several years.
RENTAL RATE — —
CENTRAL BUSINESS DISTRICT
The downtown Central Business District pulled back slightly, as the submarket showed negative
*Projected Change to 33,758 square feet of absorption. The average rental rate for Class A space was $23.37 per square
Following Quarter foot, while Class B space was quoted at $15.34 per square foot. This increase from the previous
quarter helped push the overall asking rate for all property types in the CBD to $18.84 per square foot.
OVERALL VACANCY RATE The biggest news in the downtown market this quarter was Chiquita’s announcement it will relocate
out of Cincinnati and move to Charlotte, North Carolina. North Carolina’s $22 million worth of
25%
incentives were too much for Governor John Kasich and the State of Ohio’s package of $6.5 million
24%
to overcome. Chiquita occupies more than 150,000 square feet of space in the Greater Cincinnati
23%
market, so this announcement will have a major affect on Class A office space in 2012. Hopefully, the
22%
21%
former Chiquita Center on Fifth Street will reach an agreement for an 85,000 square foot lease with
20% Nielsen, helping the CBD market backfill some of the negative absorption we will see next year.
19%
18%
SUBURBAN MARKETS
4Q
1Q
2Q
3Q
4Q
1Q
2Q
3Q
4Q
09
10
10
10
10
11
11
11
11
The suburban submarkets saw a good amount of activity in the fourth quarter of 2011, as overall net
absorption totaled more than 64,000 square feet. Year-to-date net absorption totaled more than
113,000 square feet. The hottest submarket for the quarter was the I-71 North Corridor, as this market
produced more than 81,000 square feet of positive absorption.
www.colliers.com/cincinnati
2. THE KNOWLEDGE REPORT | Q4 2011 | OFFICE | CINCINNATI
Governor’s Hill and Deerfield Township led the way in Cincinnati are currently in expansion mode. Christ
the suburbs, as many leases were signed or renewed, Hospital, Mercy Hospital, Children’s Hospital and UC
including Campbell Sales Company, CDM and Dassault Health all have plans for expansion in 2012. Expansions
Systemes. The Blue Ash submarket also saw a good range from new outpatient facilities, an increase in the
amount of activity as GE signed a lease at Lake Forest number of hospital beds on main campuses and a
Place and Devicor Medical Products announced plans demand for office space for back office operations. As
to expand at Summit Woods II. the aging population increases their needs for medical
services, we expect this trend to continue for the next
CONSTRUCTION several years.
As noted in the past three quarters of 2011, construction
of new office space continues to be nonexistent in FORECAST
Greater Cincinnati. Too much office space is on the 2012 looks to be a promising year in regards to
market for our local economy to handle another project commercial real estate activity. As the job market
Chiquita Center of significance. However, there are a few exceptions continues to show improvement and the overall
as midrange build-to-suit projects continue to pop-up. economy gains more traction, we should see an
Build-to-suit projects in development or recently increase in activity and companies beginning to explore
completed include the FBI site in Kenwood (109,000 their growth plans for the next several years. Northern
square feet), Urology Group’s 45,000 square foot Kentucky will look to rebound from a few major losses
facility in Norwood and itelligence’s 85,000 square on the riverfront, including Omnicare and Nielsen,
foot building in Blue Ash. Looking forward, anything in while the downtown Cincinnati market will continue to
terms of a speculative development is two to three see tenants renewing their commitments to the CBD.
years away. Balancing out our market will be the suburban
submarkets, which should continue to hold ground and
In addition, the major hospital groups in Greater provide enough activity for a healthy new year.
UPDATE Recent Transactions
FOURTH QUARTER ACTIVITY
PROPERTY SUBMARKET TENANT LANDLORD SIZE TYPE
3900 Olympic Blvd NKY Catholic Health Partners Corporex Companies 75,000 Lease Renewal
Lake Forest Place Blue Ash GE Duke Realty 50,000 Lease
Summit Woods II Blue Ash Devicor Medical Products For 1031 Summit Woods II, LLC 47,000 Lease Renewal
1949 Dixie Highway NKY Christ Hospital N/A 44,000 Lease
150 East Fourth Street CBD Strauss & Troy Federal Reserve Bank of Cleveland 37,000 Lease Renewal
Sharonview Corporate Center Tri-County Quest Global Services Allegiance Realty Corporation 27,234 Lease Renewal
4141 Rosslyn Drive Midtown Vegas Americas, Inc. RRR Properties 26,960 Sale
11370 Reed Hartman Blue Ash Advantech American Small Business Investment Corp. 17,000 Lease
Deerfield Crossing I I-71 Corridor North Dassault Systemes Duke Realty 12,949 Lease
Holiday Office Park CBD Periphery Family Nurturing Premier Office Park LLC 11,500 Lease
Centennial Plaza III CBD TSC Apparel New Boston Citimark 11,191 Lease
8805 Governor’s Hill Drive I-71 Corridor North Campbell Sales Company New York Life Insurance Co. 11,000 Lease
4243 Olympic Blvd NKY Total Quality Logistics Corporex Companies 10,433 Lease
7671 Tylers Place Blvd I-75 Corridor North Dr. Thomas J. Knox Nick & Joyce Ruebel 10,353 Sale
8805 Governor’s Hill Drive I-71 Corridor North CDM New York Life Insurance Co. 10,150 Lease Renewal
6050 Mason Montgomery Road I-71 Corridor North AssureRX Health, Inc. City of Mason 10,000 Lease
4480 Lake Forest Drive Blue Ash Nease Performance Chemicals Corporate Woods I & II, LLC 9,224 Lease Renewal
10101 Alliance Road Blue Ash Qvidian Duke Realty 8,026 Lease
4010 Executive Park Drive Tri-County Infintech Rookwood Properties 7,534 Lease
4700 Duke Blvd I-71 Corridor North Solarsoft Business Systems CORE Realty Holdings LLC 7,256 Lease
625 Eden Park Drive CBD Periphery Smucker Sales Distribution Co. Corporex Companies 5,279 Lease
P. 2 | COLLIERS INTERNATIONAL Transactions are believed to be accurate but not guaranteed.
3. THE KNOWLEDGE REPORT | Q4 2011 | OFFICE | CINCINNATI
SUBMARKET DATA
SUBMARKET Total Inventory Total Vacant Vacancy Rate Quarterly YTD Avg. Rate
SF Absorption Absorption
Blue Ash 4,933,065 847,069 17.2% (52,777) 85,696 $18.53
CBD 18,445,393 3,432,194 18.6% (33,758) (63,819) $18.84
CBD Periphery 3,468,928 990,611 28.6% (12,407) (42,948) $17.41
East 2,387,562 442,091 18.5% 7,538 57,379 $15.48
I-71 Corridor
4,008,092 927,915 23.2% 81,733 130,533 $18.73
North
I-75 Corridor
2,252,800 255,803 11.4% 22,504 11,437 $20.12
North
Kenwood /
2,008,962 284,723 14.2% (342) (55,614) $22.36
Montgomery
Midtown 3,160,104 701,103 22.2% 35,180 34,784 $17.40
Northern
7,101,010 1,387,312 19.5% (51,029) (47,509) $18.25
Kentucky
Tri-County 4,489,144 1,402,653 31.2% (934) (39,820) $15.75
West 763,281 173,978 22.8% 34,553 (19,956) $18.04
MARKET
53,018,341 10,845,452 20.5% 30,261 50,163 $18.03
TOTALS
AVG. ASKING RATES (PER SF-FULL SERVICE GROSS) QUARTERLY NET ABSORPTION
Quarterly Net Absorption
Class A Rent Class B Rent Overall Average Rent
400,000 The Office Market
$22.00
300,000 saw 30,261 square
$21.00 feet of positive
Square Feet
200,000
$20.00 absorption
$19.00 100,000 this quarter.
$18.00
0
$17.00
-100,000
$16.00
$15.00 -200,000
$14.00 -300,000
1Q11
2Q11
3Q11
4Q11
4Q 09
1Q 10
2Q 10
3Q 10
4Q 10
-400,000
4Q 09
1Q 10
2Q 10
3Q 10
4Q 10
1Q 11
2Q 11
3Q 11
4Q 11
COLLIERS INTERNATIONAL | P. 3
4. THE KNOWLEDGE REPORT | Q4 2011 | OFFICE | CINCINNATI
OUTLYING WARREN 512 offices in
COUNTY
61 countries on
I-75 NORTH OF
I-275
6 continents
United States: 125
Canada: 38
I-71 NORTH OF I-275 Latin America: 18
TRI-COUNTY Asia Pacific: 214
WEST BLUE ASH EMEA: 117
• $1.5 billion in annual revenue
KENWOOD/MONTGOMERY
• 979 billion square feet under
management
MIDTOWN
• Over 12,000 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 annually
and may result in revisions to previously reported
Office Services | Greater Cincinnati quarterly and final year-end figures
Brian T. Graham, CCIM Fred A. Macke, Jr., SIOR Richard P. Meder John P. Schenk, CCIM, SIOR
Brokerage Associate and Brokerage Senior Vice President Brokerage Senior Vice President Brokerage Senior Vice President
Director of Research Principal | Cincinnati Principal | Cincinnati Principal | Cincinnati
brian.graham@colliers.com fred.macke@colliers.com richard.meder@colliers.com john.schenk@colliers.com
DIR +1 513 562 2214 DIR +1 513 562 2233 DIR +1 513 562 2253 DIR +1 513 562 2279
Matthew H. Smyth Chris Vollmer, SIOR Chris Vollmer, Jr.
Brokerage Senior Associate Brokerage Senior Vice President Brokerage Vice President
matt.smyth@colliers.com Principal | Cincinnati chrisjr.vollmer@colliers.com
DIR +1 513 562 2260 chris.vollmer@colliers.com DIR +1 513 562 2242
DIR +1 513 562 2244
www.colliers.com/cincinnati