CINCINNATI—The downtowns of many US cities have undergone a revival in recent years, with some attracting office tenants that got tired of suburban developments. But Cincinnati may be a bit of an outlier. In the past year, the direct vacancy rate in its top office buildings has increased 2.5 percentage points to 23.5%, according to JLL's new US Skyline Review, which examines the trophy assets in 43 cities and metro areas.
“One of the primary contenders to the Skyline ahead is increased competition from the surrounding suburban submarkets, which have seen a large amount of investment in class A developments recently,” the report states.
The above-average vacancy caused asking rents to go down slightly, dropping to $23.71-per-square-foot. And landlord concessions have also gotten more generous, according to JLL researchers, as “the average number of months of free rent on a 10-year lease increased from four to six.”
The 18 Cincinnati-area properties in JLL's Skyline review include the new 800,000-square-foot Great American Tower and the 534,581-square-foot Fifth Third Center. Each of the Cincinnati properties has to meet one or more of the following criteria: larger than 175,000-square-feet; built or significantly renovated since 1985; a high-profile location; a recognized tenant profile and/or architectural significance.
Leasing was modest during the past year. The 79,000-square-foot lease renewal of the Federal Home Loan Bank at Atrium Two, for example, was one the largest transactions.
There have been some bright spots. “Capital markets activity picked up as Convergys sold its 565,000-square-foot Atrium One building to Smith/Hallemann Partners for $43.4 million.” Furthermore, the 2011 opening of the Great American Tower seems successful. The building is currently 83.2% leased with a rent of $39.90-per-square-foot, the highest among the Skyline properties.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
