CINCINNATI—The vacancy rate among industrial properties in the Cincinnati metro area has hovered between four and six percent for several years, and now stands at 4.8%, even though developers started construction on about nine million square feet of new projects since the beginning of 2015. The market maintained its momentum in 2016 with more than 5.3 million square feet of positive net absorption, the most net absorption since 2005, according to CBRE Research's latest industrial MarketView.
Developers completed 4.6 million square feet of new space in 2016, up 53% from the three million square feet completed in 2015. In a remarkable show of confidence by developers and lenders, 78% of the completions in 2016 were speculative projects. And all the signs point to a healthy 2017.
“There are a lot of groups out there looking for space,” Tim Schenke, first vice president at CBRE's Cincinnati office, tells GlobeSt.com. In fact, he knows of several big deals that were expected to close in late 2016 that got delayed, but should close in the next few months, and take another couple of million square feet off the market.
And the market should remain tight for the foreseeable future. “Cincinnati doesn't get overbuilt,” he says, largely due to its difficult topography. Unlike Indianapolis and many other Midwest metro areas, which are surrounded by open farmland, Cincinnati is a river valley town, and finding proper sites within its hilly terrain can be a challenge. “It helps keep our vacancy rate low.”
Furthermore, “we've always had a strong base of manufacturing,” he says, so even though the rise of e-commerce in the past few years has certainly fueled much of the new construction, the metro economy remains quite diverse. And strong leasing activity has been seen in sectors such as consumer packaging, e-commerce, logistics, food and automotive supplies. “It's been across the board.”
CINCINNATI—The vacancy rate among industrial properties in the Cincinnati metro area has hovered between four and six percent for several years, and now stands at 4.8%, even though developers started construction on about nine million square feet of new projects since the beginning of 2015. The market maintained its momentum in 2016 with more than 5.3 million square feet of positive net absorption, the most net absorption since 2005, according to CBRE Research's latest industrial MarketView.
Developers completed 4.6 million square feet of new space in 2016, up 53% from the three million square feet completed in 2015. In a remarkable show of confidence by developers and lenders, 78% of the completions in 2016 were speculative projects. And all the signs point to a healthy 2017.
“There are a lot of groups out there looking for space,” Tim Schenke, first vice president at CBRE's Cincinnati office, tells GlobeSt.com. In fact, he knows of several big deals that were expected to close in late 2016 that got delayed, but should close in the next few months, and take another couple of million square feet off the market.
And the market should remain tight for the foreseeable future. “Cincinnati doesn't get overbuilt,” he says, largely due to its difficult topography. Unlike Indianapolis and many other Midwest metro areas, which are surrounded by open farmland, Cincinnati is a river valley town, and finding proper sites within its hilly terrain can be a challenge. “It helps keep our vacancy rate low.”
Furthermore, “we've always had a strong base of manufacturing,” he says, so even though the rise of e-commerce in the past few years has certainly fueled much of the new construction, the metro economy remains quite diverse. And strong leasing activity has been seen in sectors such as consumer packaging, e-commerce, logistics, food and automotive supplies. “It's been across the board.”
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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.
