Vacancies continue to compress as nearly all of Cincinnati’s submarkets posted positive net absorption gains across the second quarter.

1. 5 lowest vacancy rates by submarket
Source: JLL Research
Industrial employment trends (12-month change, 000s)
Source: JLL Research, Bureau of Labor Statistics
Notable second quarter leases
Source: JLL Research
Solid absorption gains across nearly all submarkets
Vacancies continue to compress as nearly all of Cincinnati’s submarkets posted
positive net absorption gains across the second quarter. Despite vacancy below
the 1.0 percent mark, the Florence/Richwood submarket enjoyed absorption
gains of roughly 50,000 square feet during the second quarter, further cementing
it’s position as a highly sought-after location for tenants. Meanwhile, the metro’s
highest vacancy can be found in the East submarket, where vacancy currently
stands at 12.9 percent, boasting a number of viable space options for those
tenants in the market.
Industrial employment sectors in expansion mode
Cincinnati’s industrial sectors have been firing on all cylinders as of late, adding
14,600 net jobs year-over-year according to the latest data available from the
Bureau of Labor Statistics. This figure represents the highest annual growth in
jobs since the end of the recession. Employment gains were led largely by the
booming trade, transportation and utilities sector, which added 9,000 net jobs,
annually. Trailing the pack, other services enjoyed a growth of 800 net jobs, its
largest addition in two years. The additions mean good news for the growing
commercial real estate market, as gains in employment will undoubtedly
translate to expansions in company footprints.
Tenants in the market on the rise, quality space options remain limited
As demand continues to rise across the metro, a number of tenants in the market
have generated an increasing amount of touring activity. Across all size
segments, the majority of tenants are seeking roughly 250,000 to 499,999
square feet of space, a growing sweet spot for the market. Those in the market
will see, however, the limited availability of quality space options. We anticipate
that a number of these tenants will wait six to twelve months for the delivery of
multiple construction projects before making any significant lease commitments.
Market continues to tighten, quality space limited
0.9%
2.1%
2.2%
2.8%
3.0%
Florence/Richwood
Airport
West
Blue Ash
Woodlawn Evendale
Industrial Insight
Cincinnati | Q2 2015
822,068
Available for sublease (s.f.)
586,200
YTD completions (s.f.)
838,147
Quarterly absorption (s.f.)
2,984,755
Total under construction (s.f.)
4.4%
Total vacancy
$43.93
Average sales price (p.s.f.)
1,037,843
Leasing activity (s.f.)
0.0%
Total preleased
Tenant name Deal type Size (s.f.)
Levi Strauss & Co. Renewal 248,900
Hayneedle.com Expansion 130,448
Software Packaging Associates Expansion 88,644
-5.0
5.0
15.0
2011
2012
2013
2014
2015
Mining, Logging & Construction Trade,Transportation & Utilities Manufacturing Other Services

2. Overview of rents Average total asking rent ($ p.s.f.)
Source: JLL Research
Overview of demand Demand: Warehouse & distribution tenant requirements
Source: JLL Research
Overview of absorption
Available quality blocks of space: Warehouse & distribution
inventory (includes Class A & B-caliber inventory)
Source: JLL Research
Current conditions – submarket New construction deliveries
Source: JLL Research Source: JLL Research
$3.13 $3.14 $3.10
$3.31
$3.49
$3.58
$2.80
$3.00
$3.20
$3.40
$3.60
$3.80
2010 2011 2012 2013 2014 YTD 2015
578,475
958,254
741,660
1,887,164
586,200
0
500,000
1,000,000
1,500,000
2,000,000
2011 2012 2013 2014 YTD 2015
Airport,
Florence/Richwood,
Monroe/Middletown
Landlordleverage
Tenantleverage
Peaking
market
Falling
market
Bottoming
market
Rising
market
Blue Ash,
Central/Midtown
Hamilton, I-71 Corridor,
Tri-County
Campbell County, Covington, East,
West, Woodlawn/Evendale
©2015 Jones Lang LaSalle IP, Inc. All rights reserved.For more information, contact: Cody Brooks | cody.brooks@am.jll.com and Andrew Batson | andrew.batson@am.jll.com
Competitive leasing pushes rents higher
The Cincinnati metro continued its run of positive absorption across
the second quarter as total net absorption equaled just over 800,000
square feet. Over half of these absorption gains originates from
warehouse and distribution space greater than 250,000 square feet.
YTD total net absorption now sits at roughly 1.5 million square feet. A
number of new development projects are filling the pipeline to
address strong absorption levels. Currently, nearly 3.0 million square
feet of speculative, bulk warehouse space sits under construction, all
of which is expected to deliver by year’s end.
Tenant activity remains hot, vacancy continues to decline
Demand continues to increase across the Cincinnati industrial
market as leasing activity remains hot and vacancy continues to sink.
Total vacancy has fallen 1.7 percent year-over-year to its current
level of 4.4 percent, sparking a number of new development projects.
The Northern Kentucky submarkets have enjoyed soaring levels of
demand as of late, thanks to their close proximity to major
transportation hubs and developable land sites. The
Monroe/Middletown has seen increasing interest, also thanks in part
to the availability of land for new construction.
Competitive leasing pushes rents higher
Landlords are enjoying an increasing amount of leverage as demand
levels surge and the market continually tightens. Currently, the
average total asking rent sits at $3.58, representing an increase of
4.7 percent, or $0.16, year over year. Over the next 12 months we
forecast further increases in asking rents as the amount of quality
space remains limited and the number of tenants in the market
continues to increase.
19
2 1
5
5
4
0
10
20
30
100,000 - 249,999
s.f.
250,000 - 499,999
s.f.
> 500,000 s.f.
#ofblocks
Existing Under construction
4
6
4
0
2
4
6
8
100,000 - 249,999
s.f.
250,000 - 499,999
s.f.
> 500,000 s.f.
#ofblocks