The Greater Cincinnati office market saw positive absorption of 449,759 square feet in Q1 2012, with the overall vacancy rate falling from 19.6% to 18.7%. The suburban submarkets saw the most activity, producing 458,355 square feet of absorption, while the CBD saw a net loss of 8,596 square feet. Construction activity is also picking up, with several new projects announced or underway, including dunnhumbyUSA's 250,000 square foot headquarters downtown. Overall, the first quarter results indicate the local office market is improving.
1. Q1 2012 | office
cincinnati, oh
the knowledge report
OFFICE MARKET OFF TO A GOOD START
executive summary
The Greater Cincinnati Office Market saw a good amount of activity in the first quarter of 2012,
producing 449,759 square feet of positive absorption. The overall vacancy rate fell from 19.6% to
18.7%, a clear sign that we are headed in the right direction. The overall weighted asking rate for
office properties averaged $18.14 per square foot, up 11 cents from the close of 2011.
central business district
In the Central Business District, the office market saw a great deal of activity, but not enough velocity
market indicators to create any significant absorption. For all property classes, the first quarter net absorption totaled
Q1 12 Q2 12* negative 8,596 square feet and the overall vacancy rate stands at 17.82%. As a follow-up to last year’s
string of larger lease signings in the CBD, this submarket continued to make news as KAO USA
VACANCY relocated to 312 Plum Street. The company signed a 55,000-square-foot lease in the Class A building
and will relocate its operations from Spring Grove Avenue. URS also announced it will relocate from
NET ABSORPTION the URS Tower on 7th Street to 525 Vine after signing a 20,551-square-foot lease. This wave of
larger lease signings and announcements should settle for the balance of 2012.
construction
rental rate — — suburban markets
The Suburban Submarkets saw the most activity this quarter, producing a total of 458,355 square
feet of position absorption. The vacancy rate for all suburban properties averaged 19.2%, down from
*Projected Change to
20.5% in the fourth quarter of 2011. The Tri-County submarket was the biggest gainer, as net
Following Quarter
absorption totaled 333,434 square feet. Humana Right Source contributed the most square footage
to this absorption when it leased all of the 177,184 SF at Executive Centre I at 111 Merchant Street.
The average rental rate for suburban properties was $20.37 per square foot, compared to an average
rental rate for CBD properties of $19.35 per square foot.
overall vacancy rate
Overall Vacancy Rate construction
24% Construction activity is picking up in the office market, as several new projects have come to life in
22% 2012. The most notable is dunnhumbyUSA’s recent announcement to build its headquarters at the
20% long dormant Fifth and Race site downtown. The company is planning up to 250,000 SF of office
18% space to meet its needs of future employment growth. In Mason, Seapine Software announced it will
16% build a 50,000-square-foot headquarters on Western Row. The company will vacate the 38,000 SF
14% space it currently occupies at Triangle Office at Kings Mill. As noted last quarter, several other build-
12% to-suit projects continue to move forward. These projects include the FBI site in Kenwood (109,000
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square feet), Urology Group’s 45,000-square-foot facility in Norwood, and itelligence’s 85,000-square-
foot building in Blue Ash. For the rest of 2012, these smaller projects will continue to be the norm for
the majority of construction activity in the market.
www.colliers.com/cincinnati
2. the knowledge report | Q1 2012 | office | cincinnati
UNEMPLOYMENT employment forecast
The Bureau of Labor Statistics 2012 should to be an interesting year
11.00% announced good news for the market, for commercial real estate. Several
10.50%
Ohio Unemployment Rate
as the U.S. unemployment rate variables at play will affect our
10.00%
US Unemployment Rate
continued to fall. While the validity of market - the overall employment of
these government numbers can be our country’s workforce, the
9.50%
debatable, it’s a good sign that upcoming 2012 elections, and the
9.00%
companies are beginning to hire and record-level maturing commercial
8.50%
put people back to work. The overall real estate debt. With the first quarter
8.00% U-3 unemployment rate came in at recording more than 449,000 square
7.50% 8.2% for March, down from 8.3% in feet of positive absorption, we hope
7.00%
January and February. In comparison, we can continue to capitalize on this
in October of 2010, the rate stood at activity and the market will stay on
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10.0%. Ohio’s unemployment rate is the upswing of the commercial real
at 7.6%, a nice sign that our state is a estate cycle.
little healthier than the other 49
states across the country. As
commercial real estate is tied directly
to job growth, we hope these
numbers continue to push us in a
positive direction.
update Recent Transactions
first quarter activity
Property submarket tenant size type
5th & Race Development Site CBD dunnhumbyUSA 250,000 Build-to-Suit
237 William Howard Taft Midtown Christ Hospital 152,000 Lease
312 Plum CBD KAO USA 55,000 Lease
Western Row Road Development Site I-71 North Seapine Software LLC 50,000 Build-to-Suit
525 Vine CBD Weltman, Wineberg & Reis 37,365 Lease Renewal
5300 Kings Island Drive I-71 North ACT, Inc. 30,014 Lease
312 Elm CBD USI Midwest 24,600 Lease Renewal
525 Vine CBD URS 20,551 Lease
8600 Governors Hill Drive I-71 North General Electric 20,000 Lease
Centre Pointe II I-75 North General Electric 14,034 Lease
RiverCenter II NKY Tier 1 Performance 12,500 Lease
Northmark Business Center 2 Blue Ash CTI 11,318 Lease Expansion
Wright’s Summit II NKY Indiana Institute of Technology 10,767 Lease
Kenwood Crossing II Kenwood/Montgomery St. Elizabeth Physicians 10,155 Lease
6725 Miami Avenue Midtown RSW/US 10,000 Lease
4138 Hamilton Avenue Tri-County/Union Centre Caracole, Inc. 9,600 Lease
One Riverfront Place NKY Local TV, LLC 8,424 Lease
125 East Court Street CBD Daymon Worldwide 7,938 Lease
Kenwood Executive Center Kenwood/Montgomery Care Connections 6,489 Lease
600 Vine CBD Fox Sports Ohio 6,000 Lease
Towers of Kenwood Kenwood/Montgomery Johnson & Johnson 5,880 Lease
4555 Lake Forest Drive Blue Ash Cuni, Rust & Strenk 5,835 Lease
312 Elm CBD Union Security Insurance Co. 5,106 Lease Renewal
p. 2 | Colliers International Transactions are believed to be accurate but not guaranteed.
3. the knowledge report | Q1 2012 | office | cincinnati
SUBMARKET DATA
Total Vacant Quarterly
SUBMARKET Total Inventory Vacancy Rate YTD Absorption Avg. Rate
SF Absorption
Blue Ash 4,553,708 768,619 16.88% 78,450 78,450 $17.81
CBD 18,008,286 3,208,790 17.82% (8,596) (8,596) $19.35
CBD Periphery 3,498,638 901,617 25.77% 88,994 88,994 $25.77
East 2,454,545 443,537 18.07% (1,446) (1,446) $15.84
I-71 Corridor
4,058,537 891,709 21.97% 36,206 36,206 $18.85
North
I-75 Corridor
2,247,624 214,250 9.53% 41,553 41,553 $20.11
North
Kenwood /
2,070,071 263,156 12.71% 21,567 21,567 $22.35
Montgomery
Midtown 3,317,554 490,364 14.78% (9,261) (9,261) $15.00
Northern
7,366,882 1,498,959 20.35% (111,647) (111,647) $17.83
Kentucky
Tri-County 4,754,848 1,069,219 22.49% 333,434 333,434 $15.57
West 774,742 193,473 24.97% (19,495) (19,495) $15.21
Market Totals 53,105,435 9,943,693 18.72% 449,759 449,759 $18.14
avg. asking rates (per sf-full service gross) quarterly net absorption
500,000
$22.00
$21.00 400,000
$20.00
300,000
$19.00
Square Feet
$18.00 200,000
Class A Rate
$17.00
$16.00 Class B Rate 100,000
$15.00 Overall Rate 0
$14.00
-100,000
$13.00
$12.00 -200,000
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Class A Rate
Class B Rate
Overall Rate
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Colliers International | p. 3
4. the knowledge report | Q1 2012 | office | cincinnati
OUTLYING WARREN 522 offices in
COUNTY
62 countries on
I-75 NORTH OF
I-275
6 continents
United States: 147
Canada: 37
Latin America: 19
I-71 NORTH OF I-275 Asia: 36
TRI-COUNTY ANZ: 165
WEST BLUE ASH EMEA: 118
• $1.8 billion in annual revenue
KENWOOD/MONTGOMERY
• 1.25 billion square feet under
management
MIDTOWN
• Over 12,300 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
Office Services | Greater Cincinnati
and may result in revisions to previously reported
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 Brokerage Senior Vice President Brokerage Senior Vice President Brokerage Senior Vice President
brian.graham@colliers.com Principal | Cincinnati Principal | Cincinnati Principal | Cincinnati
dir +1 513 562 2214 fred.macke@colliers.com richard.meder@colliers.com john.schenk@colliers.com
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