CINCINNATI—As reported in GlobeSt.com, Dermody Properties and Hillwood Investment Properties recently broke ground on an 898,560 square foot facility for Wayfair Inc. an online retailer, in the Northern Kentucky submarket. And that project helped make the third quarter one of the most active the Cincinnati metro region has seen in years.
“With a 4.9% availability rate, the market has been craving new space especially in the form of modern bulk warehouse,” according to a CBRE report on the latest quarterly data.
The market had more than 2.2 million square feet of new construction starts, more than in any quarter in six years. Furthermore, the data show 1.6 million square feet of gross absorption in third quarter and 5.9 million square feet for the year. Positive absorption for the quarter hit 502,828 square feet. Cincinnati has now had positive absorption every quarter since the start of 2012.
The Dermody project was not the only big Kentucky deal. A packaging supply occupier signed a 448,098 square foot lease at IDI Gazeley's newly completed 787,361 square foot facility in Walton. And Monoprice, an e-commerce retailer of affordable electronics and accessories, leased 103,690 square feet at 2055-2095 Global Way in Hebron.
It has not been just a good quarter when it comes to new construction, it's been a good year. So far, the strong leasing activity coupled with sinking availability spurred developers to start 4.8 million square feet of new construction, according to CBRE. Of that total, 3.5 million is modern bulk warehouse space, and tenants have already pre-leased more than 1.3 million square feet. Developers will deliver about 1.3 million square feet of bulk warehouse space in the fourth quarter. Significantly, all of this new fourth quarter space was done on a speculative basis.
“The market has been waiting for an influx of new space as Greater Cincinnati has a modern bulk vacancy of sub 2.5%,” CBRE says. “By the end of 2015, we expect to have over 6 million square feet of new construction, which will be the most seen in Greater Cincinnati in the last 15 years, topping both 2001 and 2007.”
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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.
