Leasing activity remained strong for Class A space to end 2016 as developers continued to fill the pipeline with speculative projects.The historically tight Airport submarket saw more space become available in the fourth quarter thanks to two large users vacating space in addition to speculative projects in the development pipeline. As the market continues to face a tightening market for available land, civic groups are answering the call with the development of infill sites.
2. Property Proposed buillding s.f. Acres
Former Gibson Greeting Card 600,000 56
Aero Hub 550,000 24.6
Nehemiah Manufacturing 172,000 7
JTM Warehousing 78,668 22
Class A leases signed in 2016
Source: JLL Research
Available blocks in the airport submarket
Source: JLL Research
Civic developments underway
Source: JLL Research
0
2
4
6
8
10
0
500,000
1,000,000
1,500,000
2,000,000
Q1 2016 Q2 2016 Q3 2016 Q4 2016
Total s.f. leased Number of leases signed
238,587,997
Market size (s.f.)
4,612,637
YTD total net absorption (s.f.)
$3.78
Average asking rent (p.s.f.)
2,346,546
Total under construction (s.f.)
4.2%
Total vacancy
1.9%
Net absorption (as a % of stock)
1.9%
12-month rent growth
4,776,365
YTD construction completions (s.f.)
Leasing activity finishes the year strong
Throughout 2016 developers have filled the construction pipeline with projects to
meet growing tenant demand for industrial space within the market. The fourth
quarter confirmed developers confidence as Class A leasing heated up,
absorbing over 650,000 square feet of space. As rental rates have risen,
developers have become increasingly confident in speculative buildings smaller
than 200,000 square feet. A trend was reversed from the start of 2016 in which
projects greater than 300,000 square feet accounted for the majority of the
development pipeline. Multiple deals were signed in recently delivered buildings
in the smaller size segment, confirming that higher rental rates can be achieved.
Quality space finally available in the Airport submarket
Over the last two years the airport submarket has become increasingly tight with
the vacancy rate falling below 2 percent to start 2016. Fortunately for tenants,
space have become available due to recently vacated spaces as well as new
construction in the submarket. The fourth quarter saw Innotrac vacate 646,000
square feet at Litton Lane, as well as 194,000 square feet that Dematic vacated
in Airpark West. One building delivered was the 151,800-square-foot Airpark
West # 16. Construction commenced on Hebron Logistics Center, containing two
buildings totaling 718,658 square feet and Dermody continued construction on
the 264,000-square foot LogistiCenter at 275 #2. Recent development activity
reaffirms developers confidence in tenant demand for space in the submarket.
Civic activity opens doors to infill sites in fourth quarter
While Cincinnati’s industrial market has seen continued growth since the Great
Recession, the market is still plagued by a shortage of available land for
industrial development. As our second quarter report touched upon, civic players
have become increasingly more involved preparing infill sites for industrial
development. The fourth quarter was no different as the City of Evendale
announced the purchase of the 24.6-acre “Aero-Hub”, an advanced
manufacturing campus. In addition, the Port Authority began demolition of the
former Gibson Greeting card building to make way for a 56-acre site for new
development. The Port Authority also partnered with JTM Food Group on a
78,668-square-foot freezer-cooler warehouse at 200 Industrial Drive in Harrison.
Market fundamentals strengthen to end year
Industrial Insight
Cincinnati | Q4 2016
0
4
8
100,000 - 249,999 250,000 - 499,999 >500,000 s.f.
#ofblocks
Existing Spec - Recently Delivered Spec - Under Construction
JLL | Cincinnati | Industrial Outlook | Q4 2016
4. This report analyzes all industrial developments under construction & new deliveries > 30,000 s.f.
Total leased at delivery (%) 34.4%
Total speculative at delivery (s.f.) 3,367,805
Total BTS at delivery (s.f.) 1,408,560
Total Owner-User at delivery (s.f.) -
Total # of properties delivered 10
Asking rental rate (low - high) $3.75 - $3.95
Top 5 projects delivered to date
Building RBA (s.f.) Delivery date
Leased at
delivery (%)
Park North at Monroe Bldg 8 993,951 Q3 2016 0%
Wayfair LogistiCenter at 275 898,560 Q2 2016 100%
Park 536 674,500 Q3 2016 0%
2125 Gateway Blvd 520,000 Q1 2016 100%
Union Centre Industrial Park I 446,500 Q4 2016 100%
Total pre-leased (%) 0.0%
Total speculative under construction (s.f.) 2,346,546
Total BTS under construction (s.f.) -
Total Owner-user under construction (s.f.) -
Total # of properties UC 7
Asking rental rate (low - high) $3.75 - $4.50
Top 5 projects currently under construction
Building RBA (s.f.) Delivery date
Pre-leased
(%)
Hebron Logistics Center Bldg 1 589,193 Q2 2017 0%
10900 Kenwood Rd 534,560 Q1 2017 0%
Union Centre Logistics Park Bldg 1 477,360 Q2 2017 0%
LogistiCenter at 275 #2 264,000 Q1 2017 0%
Park North Monroe Bldg 5 143,664 Q2 2017 0%Speculative
Speculative
Owner Construction type
Speculative
IDI Gazeley
Dermody
Northpoint
Citimark
Hillwood
Speculative
Speculative
Monroe / Middletown
Airport
Tri-County
Blue Ash
Airport
Historical deliveries (s.f.)
Construction typeOwnerSubmarket
Tri-County
Airport
Florence / Richwood
Airport
Monroe
Duke
Prologis
Van Trust
Dermody
IDI Gazeley
Speculative
BTS
New deliveries
Completions in-depth
4,776,365
Total delivered YTD (s.f.)
Speculative
Speculative
Speculative
Submarket
Under construction
2,346,546
Under construction (s.f.)
Under construction in-depth
Upcoming deliveries by year (s.f., excludes YTD completions)
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2011 2012 2013 2014 2015 YTD 2016
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
2017
Speculative
Industrial Development Report
Cincinnati | Q4 2016
JLL | Cincinnati | Industrial Outlook | Q4 2016