Q4 2012 Cincinnati Market Trends Industrial


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Q4 2012 Cincinnati Market Trends Industrial

  1. 1. THE KNOWLEDGE REPORTCINCINNATI, OHwww.colliers.com/cincinnatiMARKET INDICATORS*Projected Change to Following QuarterQ4 12 Q1 13*VACANCYNET ABSORPTIONCONSTRUCTIONRENTAL RATEQ4 2012 | INDUSTRIALOVERALL VACANCY RATEANOTHER 4th QUARTER FINISHES STRONGEXECUTIVE SUMMARYThe Greater Cincinnati Industrial Market finished the year strong, posting 856,364 square feet ofpositive absorption for the 4th quarter. Coming into the last three months of the year, the marketstood at 231,887 square feet of year-to-date negative absorption. The turnaround was a welcomesurprise to owners and investors of commercial real estate, and pushed year-end net absorption to624,477 square feet. This finish mimicked what was observed in late 2011, as industrial companiesmade an effort to complete transactions by year-end. The so-called “Fiscal Cliff” probably helpedmotivate several of these companies to close transactions by the end of 2012, in an effort to avoid anypossible tax consequences in 2013. The overall vacancy rate for industrial properties fell to 9.2%,down from 9.5% in the 3rd quarter. Average rental rates came in at $3.37 per square foot overall,$3.22 per square foot for distribution properties and $7.50 per square foot for Flex properties.NORTHERN KENTUCKYThe Northern Kentucky submarkets stole the show for the year, posting 1,048,092 square feet ofpositive absorption for all four quarters combined. In the 4th quarter, net absorption totaled 230,859square feet. The Airport Submarket was the leader in Northern Kentucky, where the majority of thisabsorption occurred. Rental rates in the Airport and the Florence submarkets both averaged $3.42and $3.50 per square foot respectively, while the Covington market was slightly higher at $3.93 persquare foot.SUBURBAN OHIO SUBMARKETSOn the northern side of the river, the Ohio submarkets made up some ground for the past threequarters, posting 625,505 square feet of positive absorption in the final quarter of the year. Year-to-date, the Ohio submarkets produced 423,615 square feet of negative absorption, far short of NorthernKentucky’s year-end totals, but much better than originally forecasted. For the year, most of thenegative absorption was tied to the Tri-County and I-75 submarkets, which produced over two-thirdsof this amount. Avon Products in Tri-County was the main culprit, as it vacated 750,000 square feetof space at 175 Progress Drive. Rental rates in the Ohio submarkets ranged from $2.95 per squarefoot in Hamilton, to $5.34 per square foot in the Western Corridor, with an overall Suburban Ohiorental rate of $3.34 per square foot.CONSTRUCTIONOn the construction side, the industrial market has been very quiet, with the exception of somesmaller build-to-suit projects. Supply of industrial product is very low, as institutional developershave yet to find an appetite for a new speculative development in our area. This is expected to changein the near term, as the demand for bulk product picks up in 2013. If Greater Cincinnati is going tocompete as one of the major industrial markets in the Midwest, product will need to be developed inorder to handle the expected growth we are predicting in the coming year.9.0%9.5%10.0%10.5%4Q101Q112Q113Q114Q111Q122Q123Q124Q12
  2. 2. Transactions are believed to be accurate but not guaranteed.UPDATE YTD TransactionsSALESPROPERTY SUBMARKET TENANT/BUYER SIZE TYPE5568 West Chester Road Tri-County/Union Centre Corner Deal Title Holder LP 970,000 SaleCorridor 75 Industrial Park I-75 North Corridor IDI 652,000 Sale3997 Bach Buxton Road East DFL Group 435,600 Sale8752 Jacquemin Drive Tri-County/Union Centre General Motors 394,480 Sale11520 Mosteller Road Tri-County/Union Centre Trident Capital 358,386 Sale2725 Henkle Drive I-71 North Corridor PFB America Real Estate 346,737 SaleFormer Jim Beam Packaging Plant Central/Midtown Edward Paul 278,000 Sale760 Fujitec Drive I-71 North Corridor Green Bay Packaging 268,614 Sale1701 Made Industrial Drive Monroe/Middletown Metal Matic Inc. 234,500 Sale7100 Dixie Highway Tri-County/Union Centre R&R Honeymoon 226,000 Sale201 Milford Parkway East Lee Holdings 207,040 Sale110 Industrial Lane West Maas Enterprises Ltd. 161,400 Sale7585 Empire Drive NKY Trident Capital 148,365 Sale7910-7920 Kentucky Dr. NKY Corken Steel 131,329 Sale5 Floridian Drive NKY FloCres Properties 114,900 Sale7435 Industrial Road NKY BBMJG Properties 107,806 SaleCentury Business & Service Center Tri-County/Union Centre RGW Development 82,775 Sale6900 Steger Drive Central/Midtown Jet Machine & Manufacturing 80,000 Sale620 Shepherd Lane Lockland/Evendale Chromaflo Lockland Holdings LLC 71,541 SaleLEASESPROPERTY SUBMARKET TENANT/BUYER SIZE TYPE10650 Toebben Drive NKY Cengage 835,000 LeaseSkyport #3 NKY Sun Chemical 354,371 LeaseWorld Park Bldg #6 Tri-County/Union Centre Valvoline 321,464 LeaseAirpark International DC #1 NKY Schwarz Paper 316,000 Lease1100 Burlington Pike NKY Verst Group Logistics 290,521 Lease100 Precision Drive NKY GSI 234,000 LeaseParkwest International N2 NKY iHerb 211,200 Lease3720 Langley Drive NKY Levi Strauss & Co. 151,444 Lease2100-2150 Global Way NKY Wayfare LLC 150,095 Lease375 Northpointe Dr. Hamilton/Fairfield Prestige Display & Packing 123,524 LeaseSkyport #3 NKY Heidelberg Distributing 118,629 Lease2265 Progress Drive NKY LeanCor Supply Chain 106,920 Lease5151 Fischer Place Central/Midtown Cadbury Schweppes Bottling Group 93,000 Lease1499 Jamike Ave. NKY Close the Loop 81,200 Lease2101-2301 E Kemper Road Blue Ash Interworkings 75,591 LeaseNorthPark Business Center I Tri-County/Union Centre LEM Products 75,000 Lease3720 Langley Drive NKY GES/Viad 72,000 Lease5141 Fischer Place Central/Midtown Modern Builders Supply 69,300 Lease7850 Foundation Drive NKY Mazak 63,656 Lease7130 New Buffington Road NKY KT Warehouse Solutions 63,520 LeaseConstitution Drive I-75 North Corridor Guest Supply 62,464 LeaseWorld Park Building 9 Tri-County/Union Centre Rite Rug 60,000 LeaseTHE KNOWLEDGE REPORT | Q4 2012 | INDUSTRIAL | CINCINNATIP. 2 | COLLIERS INTERNATIONAL
  3. 3. SUBMARKET Total Inventory Total Vacant SF Vacancy RateQuarterlyAbsorptionYTDAbsorptionAvg. RateAirport 27,423,161 1,807,030 6.6% 605,742 1,147,788 $3.42Blue Ash 12,787,682 892,684 7.0% 59,650 262,528 $3.88Kenton/Campbell County 5,845,329 186,942 3.2% (67,726) (86,042) $3.95Central/Midtown 47,423,206 3,679,413 7.8% 384,042 366,185 $3.40Covington 8,338,550 521,262 6.3% (111,019) (87,012) $3.93Eastern Corridor 12,650,115 2,962,212 23.4% (23,193) (183,135) $3.67Florence 24,447,909 880,205 3.6% (196,138) 73,358 $3.50Hamilton 7,972,378 743,200 9.3% (25,904) (201,831) $2.95I-71 North Corridor 10,980,157 1,406,674 12.8% 243,465 204,818 $3.29Lockland/Evendale 20,650,536 701,189 3.4% 370,902 200,344 $2.97I-75 North Corridor 21,991,003 2,519,167 11.5% (326,154) (570,238) $3.60Tri-County/Union Centre 66,964,416 8,733,804 13.0% (99,923) (543,906) $3.06Western Corridor 7,126,143 277,896 3.9% 42,620 41,620 $5.34MARKET TOTALS 274,600,585 25,311,678 9.2% 856,364 624,477 $3.37INDUSTRIAL SUBMARKET DATAAVG. ASKING RATES (PER SF-FULL SERVICE GROSS)$2$3$4$5$6$7$84Q101Q112Q113Q114Q111Q122Q123Q124Q12Flex General DistributionQUARTERLY NET ABSORPTIONSquareFeet-1,000,000-500,0000500,0001,000,0001,500,0004Q101Q112Q113Q114Q111Q122Q123Q124Q12FORECASTContinuing the wave of activity in the 4th quarter, 2013 should be a year in which the industrial market continues to make significant gains. Asthe direction of the national economy continues to take shape, we expect the industrial market to take off in the coming year. Manufacturing isincreasing, employment is starting to improve and the supply of industrial product is diminishing. These three factors should make for a year ofstrong positive absorption in 2013.THE KNOWLEDGE REPORT | Q4 2012 | INDUSTRIAL | CINCINNATICOLLIERS INTERNATIONAL | P. 3
  4. 4. CEO | PRINCIPAL:Shenan P. Murphy, CCIM+1 513 721 4200Colliers International statistics are audited annuallyand may result in revisions to previously reportedquarterly and final year-end figuresColliers International | Greater Cincinnati425 Walnut Street, Suite 1200Cincinnati, OH 45202Industrial Services | Greater CincinnatiINT’LAIRPORTI-75 NORTHTRI-COUNTY/UNION CENTREI-71 NORTHBLUEASHLOCKLAND/EVENDALECENTRAL/MIDTOWNEASTERNCORRIDORWESTERNCORRIDORKENTONCAMPBELLCOUNTYCOVINGTONAIRPORTFLORENCEHAMILTONwww.colliers.com/cincinnatiChuck A. Ackerman, CCIM, SIORBrokerage Senior Vice Presidentchuck.ackerman@colliers.comDIR +1 513 562 2266John B. Gartner, III, SIORBrokerage Senior Vice PresidentPrincipal | Cincinnatijohn.gartner@colliers.comDIR +1 513 562 2207William K. Keefer, SIORBrokerage Senior Vice PresidentPrincipal | Cincinnatibill.keefer@colliers.comDIR +1 513 562 2235Erin M. Casey, GA-C, MICP™Brokerage Vice Presidenterin.casey@colliers.comDIR +1 513 562 2225Michael E. Daly, SIORBrokerage Senior Vice PresidentPrincipal | Cincinnatimike.daly@colliers.comDIR +1 513 562 2206522 offices in62 countries on6 continentsUnited States: 147Canada: 37Latin America: 19Asia: 36ANZ: 165EMEA: 118• $1.8 billion in annual revenue• 1.25 billion square feet undermanagement• Over 12,300 professionalsTHE KNOWLEDGE REPORT | Q4 2012 | INDUSTRIAL | CINCINNATI