An in-depth look at the Cincinnati office market. Analysis includes leasing, sales, construction and employment.

1. JLL Research
Cincinnati | Q2 2017
Office
Outlook
An in-depth look at the
Cincinnati office market.
Analysis includes leasing,
sales, construction and
employment.
JLL Research

2. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q2 2017
Insight
The office market spent the second quarter working tirelessly to compensate
for a slow beginning to 2017. Leasing activity within downtown office spaces
has slowed, as recent transactions in the Cincinnati market have been
concentrated among areas outside the CBD. Although vacancy experienced a
spike in the first quarter going from 16.1 percent to 18.6 percent, it has begun
trickle back down sitting currently at 17.5 percent. With absorption still
negative year-to-date, developers remain hesitant to break ground on any
new speculative development.
Submarkets in the northern part of Cincinnati anchored absorption gains for
the quarter. Notable transactions included CBTS’s nearly 70,000 square-foot
lease in the Tri County submarket and Mayfield Brain and Spine’s 12,500
square-foot lease in the West Chester submarket. Much of the leasing activity
within the CBD has stemmed from renewals and expansions among the
current tenant profile. Over the course of the year, the CBD has experienced
the effects of several large users vacating and consolidating their current
spaces. With recent announcements such as the Cincinnati Enquirer
consolidating within 312 Elm, large blocks of space within Class A buildings
are beginning to free up, allowing new leasing activity to be brought to the
CBD.
Outlook
After 2017’s rocky start, fundamentals within the office market are starting to
strengthen. Leasing activity continues to be driven by tenants in the market
seeking a range of 10,000-25,000 square feet of space. Due to several large
users vacating and consolidating their space over the course of the year, the
office market has been positioned for increased activity over the remainder of
2017. With this, in addition to little speculative development on the horizon,
vacancy will continue to decrease as users will be forced to occupy space
within the current inventory set.
Fundamentals Forecast
YTD net absorption -235,469 s.f. ▲
Under construction 239,000 s.f. ▲
Total vacancy 17.5% ▼
Average asking rent (gross) $19.51 p.s.f. ▶
Concessions Stable ▶
-500,000
500,000
1,500,000
2013 2014 2015 2016 YTD
2017
Supply and demand (s.f.) Net absorption
Deliveries
Office market attempting to bounce back from a slow
start to 2017
21.3% 19.8% 18.1%
16.1% 17.5%
2013 2014 2015 2016 2017
Total vacancy
$0.00
$20.00
2013 2014 2015 2016 2017
Average asking rents ($/s.f.) Class A
Class B
• Contrary to national trends, recent leasing activity in Cincinnati has been
concentrated in the suburbs.
• Several large tenants vacated space in the CBD, increasing availability
among premier Class A buildings.
• While vacancy is up slightly year-to-date, trends over the past few years
indicate declining rates in the coming quarters.
Cincinnati Office Outlook

3. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
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 12,266,866 12,144 -43,099 -0.4% 15.7% 17.0% $19.88 0 0
CBD Peripheral Totals 1,622,161 97,616 77,147 4.8% 24.8% 24.8% $17.42 0 119,000
Midtown Totals 2,528,123 18,141 7,258 0.3% 11.9% 12.1% $23.32 226,000 0
Urban Totals 16,417,150 127,901 41,306 0.3% 16.0% 17.1% $19.89 226,000 119,000
Blue Ash/Montgomery Totals 4,889,567 -30,740 -288,186 -5.9% 14.0% 17.2% $17.72 0 120,000
East Totals 1,128,534 201 201 0.0% 17.5% 17.5% $15.66 0 0
Fields Ertel/Mason Totals 2,604,432 22,240 28,427 1.1% 10.0% 11.4% $21.59 0 0
Kenwood Totals 1,411,516 7,412 -15,253 -1.1% 10.2% 11.0% $24.75 0 0
Northern Kentucky Totals 2,659,124 1,066 -14,832 -0.6% 14.9% 15.8% $18.86 0 0
Northern Kentucky Riverfront Totals 1,435,604 -1,843 -490 0.0% 31.3% 31.3% $20.87 0 0
Tri-County Totals 3,135,053 -37,539 -3,991 -0.1% 24.7% 25.5% $17.81 0 0
West Totals 156,329 -2,920 3,580 2.3% 7.4% 7.4% $16.08 0 0
West Chester Totals 1,541,789 13,227 13,769 0.9% 14.3% 14.3% $22.59 0 0
Suburbs Totals 18,961,948 -28,896 -276,775 -1.5% 16.6% 17.9% $19.19 0 120,000
Cincinnati Totals 35,379,098 99,005 -235,469 -0.7% 16.3% 17.5% $19.51 226,000 239,000
CBD A 6,905,746 13,990 -29,798 -0.4% 14.0% 14.8% $22.60 0 0
CBD Peripheral A 789,967 97,616 85,119 10.8% 27.5% 27.5% $20.12 0 119,000
Midtown A 1,476,259 22,027 21,243 1.4% 16.8% 16.8% $23.49 226,000 0
Urban A 9,171,972 133,633 76,564 0.8% 15.6% 16.2% $22.37 226,000 119,000
Blue Ash/Montgomery A 2,474,319 -30,429 -237,706 -9.6% 10.1% 16.5% $21.66 0 120,000
East A 741,078 0 0 0.0% 0.1% 0.1% $18.48 0 0
Fields Ertel/Mason A 1,630,862 11,022 -169 0.0% 9.4% 11.0% $25.70 0 0
Kenwood A 996,823 3,117 -3,613 -0.4% 8.3% 9.4% $27.81 0 0
Northern Kentucky A 1,328,310 -6,551 -9,921 -0.7% 13.9% 15.7% $19.26 0 0
Northern Kentucky Riverfront A 1,320,104 0 3,673 0.3% 32.8% 32.8% $21.03 0 0
Tri-County A 1,001,196 34,742 10,898 1.1% 11.6% 11.6% $19.08 0 0
West A 22,472 0 6,500 28.9% 0.0% 0.0% $18.95 0 0
West Chester A 1,329,626 10,573 12,883 1.0% 14.3% 14.3% $23.47 0 0
Suburbs A 10,844,790 22,474 -217,455 -2.0% 13.0% 15.0% $21.98 0 120,000
Cincinnati A 20,016,762 156,107 -140,891 -0.7% 14.2% 15.6% $22.18 226,000 239,000
CBD B 5,361,120 -1,846 -13,301 -0.2% 17.8% 20.0% $17.13 0 0
CBD Peripheral B 832,194 0 -7,972 -1.0% 22.2% 22.2% $14.25 0 0
Midtown B 1,051,864 -3,886 -13,985 -1.3% 5.1% 5.6% $22.54 0 0
Urban B 7,245,178 -5,732 -35,258 -0.5% 16.5% 18.1% $16.92 0 0
Blue Ash/Montgomery B 2,415,248 -311 -50,480 -2.1% 18.0% 18.0% $15.44 0 0
East B 387,456 201 201 0.1% 50.8% 50.8% $15.65 0 0
Fields Ertel/Mason B 973,570 11,218 28,596 2.9% 11.0% 12.1% $15.72 0 0
Kenwood B 414,693 4,295 -11,640 -2.8% 14.8% 14.8% $20.60 0 0
Northern Kentucky B 1,330,814 7,617 -4,911 -0.4% 15.9% 15.9% $18.50 0 0
Northern Kentucky Riverfront B 115,500 -1,843 -4,163 -3.6% 14.2% 14.2% $16.52 0 0
Tri-County B 2,133,857 -72,281 -14,889 -0.7% 30.8% 32.0% $17.58 0 0
West B 133,857 -2,920 -2,920 -2.2% 8.7% 8.7% $16.08 0 0
West Chester B 212,163 2,654 886 0.4% 14.7% 14.7% $17.26 0 0
Suburbs B 8,117,158 -51,370 -59,320 -0.7% 21.3% 21.7% $16.90 0 0
Cincinnati B 15,362,336 -57,102 -94,578 -0.6% 19.0% 20.0% $16.91 0 0
Q2 2017
Statistics
Cincinnati Office Outlook

4. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Q2 2017
Construction
Cincinnati Office Outlook
Est. completion: Q1 2018 Est. completion: Q4 2017
Address: 15 E 14th St
Square feet: 65,000
Tenant: Empower MediaMarketing
Owner: Empower MediaMarketing
Address: 4420 Cooper Road
Square feet: 120,000
Tenant: TBD
Owner: The City of Blue Ash
Est. completion: Q3 2017 Completed: Q2 2017
Address: 2905 Vernon Pl
Square feet: 146,000
Tenant: Cincinnati Children’s
Hospital Medical Center
Owner: The City of Cincinnati
Address: 1425-1437 Vine St
Square feet: 55,000
Tenant: TBD
Owner: 3CDC

5. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
This report analyzes sales over the last 12 months > 50,000 s.f.
$401,014,186
26
$154
8.2%
32.1%
67.9%
5.5-7%
7.5-9%
Notable sales transactions over the past 12 months
RBA (s.f.) $ p.s.f. Sale date
338,533 $316 Oct-16
365,000 $235 May-17
221,215 $148 Sep-16
163,000 $180 Nov-16
253,353 $101 May-16
50,000 $416 Apr-17
67,824 $228 Apr-17
111,355 $119 Jul-16
66,000 $158 Dec-16
75,486 $126 Dec-16
Fairbridge Properties
Matrix Holdings
Cole Capital
Cardinal Funding Verus Partners
Lexington Realty Trust
Casto
New Tower Trust Co.
$85,800,000
$32,700,000
$29,300,000
$25,694,920
Top sellers (s.f.)Top buyers (s.f.)
Three Crowne Pointe Keller Williams Signature Partners Lone Star Funds $9,495,000
Fort Wright Center Everest Medical Core Products Corporex $13,200,000
Evendale Health Center Griffin-American Healthcare REIT IV Equity $10,400,000
8040 Princeton Glendale Rd Bethseda Hospital Inc Duke Realty $20,330,000
3219 Clifton Ave Bethseda Hospital Inc Duke Realty $15,430,000
Rookwood Tower
Pictoria Tower I
Mercy Health Headquarters
Park 50 Bldg 26
GE Building 90 North Real Estate Partners Carter & Associates $107,000,000
Building Buyer Seller Sale price ($)
Average Class A cap rate
Sales volume $ by submarket
Urban sales volume as % of total
Suburban sales volume as % of
total
Cap rate range
Average Class A price p.s.f.
Sales activity by building class12 months at a glance
YTD sales volume
Number of transactions
Transactions details
Core Class A CBD
Core Class A suburban
9.91%
9.19%
6.88%
6.00%
60.40%
Cardinal Funding
90 North Real Estate Partners
Fairbridge Properties
Cole Capital
Matrix Holdings
Bethseda Hospital Inc
Other
9.91%
9.19%
6.88%
6.00%
60.40%
Verus Partners
Carter & Associates
New Tower Trust Co.
Lexington Realty Trust
Casto
Duke Realty
Other
$1,300,000
$3,400,000
$6,250,000
$32,700,000
$44,730,000
$128,703,000
CBD Peripheral
Fields
Ertel/Mason
Tri-County
East
Midtown
CBD
$354,216,186
$22,665,000 $24,133,000
$0
$50,000,000
$100,000,000
$150,000,000
$200,000,000
$250,000,000
$300,000,000
$350,000,000
$400,000,000
A B C
Q2 2017
Sales
Cincinnati Office Outlook

6. © 2017 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
20%
15%
15%12%
11%
11%
7%
Trade, Transportation & Utilities
Professional & Business Services
Educational & Health Services
Government
Leisure & Hospitality
Manufacturing
Financial Activities
Mining, Logging & Construction
Other Services
Information
Q2 2017
Employment
Cincinnati Office Outlook
4.3%U.S. unemployment
1.5%U.S. 12-month job growth
3.7%Cincinnati unemployment
1.7%Cincinnati 12-month job growth
5.0%Ohio unemployment
0.7%Ohio 12-month job growth
0.0%
0.7%
1.4%
2.1%
2.8%
2013 2014 2015 2016 2017
Cincinnati U.S.
-400
200
300
300
300
600
1,900
2,000
3,900
6,600
-2,000 -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000
Other Services
Information
Educational & Health Services
Leisure & Hospitality
Government
Professional & Business Services
Mining, Logging & Construction
Manufacturing
Financial Activities
Trade, Transportation & Utilities
-2.0
3.0
8.0
2013 2014 2015 2016 2017
Professional & Business Services Information
Government Financial Activities
0%
4%
8%
12%
600,000
700,000
800,000
900,000
1,000,000
1,100,000
1,200,000
2013 2014 2015 2016 2017
Employment Unemployment
Employment vs. unemployment rate
Employment by industry Office employment trends (12-month change, 000s)
Job growth by sector (12-month change)
Job growth (12-month change)
Job growth by sector (12-month change)

7. © 2017 Jones Lang LaSalle IP, Inc.
All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.
Andrew Batson
Vice President, Director of Research
+1 216 937 4374
andrew.batson@am.jll.com
Abby Armbruster
Research Analyst
+1 513 252 2148
abby.armbruster@am.jll.com
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In 2016, JLL had revenue of $6.8 billion and fee revenue of
$5.8 billion and, on behalf of clients, managed 4.4 billion
square feet, or 409 million square meters, and completed
sales acquisitions and finance transactions of
approximately $136 billion. At year-end 2016, JLL had
nearly 300 corporate offices, operations in over 80
countries and a global workforce of more than 77,000. As
of December 31, 2016, LaSalle Investment Management
has $60.1 billion of real estate under asset management.
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