The Cincinnati office market absorbed 63,447 sf in the third quarter of 2013, nearly reversing all of the 67,552 sf that returned to the market in the second quarter. With 96,555 sf of positive absorption year to date, 2013 is poised to be the third consecutive year to see positive absorption. At 22.7% the direct vacancy rate has improved 0.2% quarter to quarter and over 1.1% in the last 12 months. So while large blocks of space are not being taken in bulk, little by little the slow economic recovery continues to improve the fundamentals of the Cincinnati office market.
The strongest sub-markets in the third quarter of 2013, in terms of office demand, were Mason, with 76,576 sf of positive net absorption; the Central Business District, with 13,005 sf; and Tri-County, with 7,304 sf. Conversely, the weakest sub-markets were Northern Kentucky, with -22,683 sf of net absorption; East, with -8,057 sf; and Kenwood with -7,429 sf.
The overall average asking rate (both Class A and B combined) remained unchanged at $18.07 per sf. The average Class A asking rate decreased by 1.1% to $21.07 per sf, due primarily to landlords in the Central Business District continuing to offer aggressive leasing packages. However, if demand continues its positive trend, rents should start to recover and grow.
The strongest sub-markets in terms of rent growth were Mason, with 3% and Blue Ash, with almost 1%. Sub-markets that saw negative rent growth included: the Central Business District, with -1%; Midtown, with -0.5%; and Northern Kentucky with -0.4%. The overall average asking rents in Kenwood, Tri-County, West Chester, East and West remained unchanged.
No new multi-tenant buildings broke ground in the third quarter of 2013. Presently there is 410,390 sf of multi-tenant offi ce space under construction. This includes the Kenwood Collection (270,000 sf) and Rookwood Exchange (140,390 sf).
The Future Looks Bright for the Cincinnati Ofﬁce Market
According to the “2020 Jobs Outlook: A Regional Indicators Report” (produced by Vision 2015, Agenda 360, Partners for a Competitive Workforce and Strive Partnership) employment in the Cincinnati region is expected to reach 1,069,405. At the pace of growth required to hit this number, approximately 1% per year, demand for ofﬁce space will continue to increase for the foreseeable future. According to our forecasting methodology, 2014 will see over 60,000 sf
positively absorbed in the Cincinnati region, with another 120,000 + sf in 2015. Vacancies will continue to trend downward toward 20%. Rents will stabilize, and actual rent growth, albeit slow, will return.
The full report and more information about Cincinnati commercial real estate can be found at http://www.cassidyturley.com/about-us/markets/cincinnati-dayton