Investors have also shown a lot of interest in the Cincinnati market, giving another boost of confidence to developers. Early in the first quarter, for example, private equity real estate firm DRA Advisors acquired for $1.07 billion a 184-property portfolio from Cabot Properties Inc., and 26 of the buildings were in the Cincinnati area, McCormick says.

Although Cincinnati probably won't ever catch up to a powerhouse such as Indianapolis, which has become a truly national distribution hub, McCormick believes its great fundamentals will continue to keep it growing for the foreseeable future.

CINCINNATI—As reported yesterday in GlobeSt.com, the US industrial market set records for activity in the first quarter, and Cincinnati was one of the stand out regions. According to a market report from Cushman & Wakefield, the metro area saw about four million square feet of absorption, almost as much as the Inland Empire and beating Chicago by a wide margin. By comparison, Cincinnati's cumulative net absorption was five million square feet for all of 2016.

“We are in the midst of a market with strong development activity and strong leasing activity has come together at the same time,” Thomas McCormick, senior vice president of C&W, tells GlobeSt.com. In the past few years, developers have finished about eight million square feet of new space, much of it for the large bulk distribution sector, and tenants have absorbed about 90% already.

Greater Cincinnati has now experienced 23 consecutive quarters of positive net absorption. The vacancy rate fell by nearly 125 bps from 4.2% at the end of the first quarter of 2016, and is now under 3% market-wide for the first time in over 15 years.

The Northern Kentucky submarket has been a tough place for developers, largely due to difficult terrain, but in the first quarter tenants absorbed more than 1.9 million square feet of space. “It's still a somewhat constricted market,” says McCormick, but the airport opened up a chunk of land, and that eased things a bit. Furthermore, rents have grown enough to justify the higher expense of developing property on the Kentucky side of the river. Overall, developers now have 3.75 million square feet of new space underway, compared to 4.6 million square feet at the end of last year's first quarter.

Investors have also shown a lot of interest in the Cincinnati market, giving another boost of confidence to developers. Early in the first quarter, for example, private equity real estate firm DRA Advisors acquired for $1.07 billion a 184-property portfolio from Cabot Properties Inc., and 26 of the buildings were in the Cincinnati area, McCormick says.

Although Cincinnati probably won't ever catch up to a powerhouse such as Indianapolis, which has become a truly national distribution hub, McCormick believes its great fundamentals will continue to keep it growing for the foreseeable future.