For Cincinnati residents and businesses, the ongoing revitalization of the city’s urban core is an exciting example of how the traditional live, work and play dynamic can set in motion a cycle of positive reinforcement whereby new housing spurs new commercial development, which in turn encourages additional residential growth. While the Queen City’s renewed civic connections and commercial synergies are making headlines and garnering justified attention, it is precisely this residential spark that has fanned the retail flame. Like so much development — and redevelopment — it is all about “chasing rooftops,” responding to demographic shifts and finding new ways to meet the needs of a changing urban populous. In today’s rapidly evolving Cincinnati market, those changes are evident, and the resulting development is literally and figuratively altering the Cincinnati cityscape. City Living Cincinnati’s recent urban residential development can be broken down into two categories: downtown development in and around the central business district (CBD), and the development in the first-ring communities just outside of that urban core. Both areas are seeing a great deal of high-end multifamily coming online. Typically, this new housing stock is amenity-driven and priced at a premium. The tight rental market for this product has …
Ohio
Apartment development is currently the driving force in downtown Cleveland’s commercial real estate market, including the conversion of office buildings to residential use and the rehabilitation of existing apartment buildings. Downtown Cleveland’s population stands at more than 12,500, an 88 percent increase since 2000, according to a first-quarter market update from the Downtown Cleveland Alliance. As a result, apartment demand is unrelenting with many properties boasting a long waiting list. The renovated Ameritrust Building that includes “The 9” Apartments is one such development that has a significant waiting list.The strong tenant demand has driven Cleveland’s apartment vacancy to below 5 percent. Corporate Relocations In response to a growing number of young professionals seeking a downtown work/live/play environment, several corporations have relocated from the suburbs to downtown Cleveland. This trend is particularly evident among high-tech companies. The list of companies growing and expanding downtown includes Dakota Software, Dwellworks, National General Insurance, OnShift, BrandMuscle and BrownFlynn. Renewed growth and demand for an efficient workplace has led to the construction of Cleveland’s first multi-tenant office building in decades, the Ernst & Young Tower. Inquiries and occupancy at the Ernst & Young Tower have been so robust that the developer, Fairmount Properties, has broken …
Dayton, Ohio, has had its struggles over the years transitioning from a predominantly automotive manufacturing economy to one with a more diverse base of industries such as transportation and logistics, aerospace technology, medical device manufacturing and unmanned aerial vehicle (UAV) development. Throughout this tumultuous period, Dayton’s industrial commercial real estate market has had to adapt to the evolving needs of the new tenant mix. Part of that adaptation has led to the construction of several build-to-suits over the last 18 months. This construction trend is being driven by companies opting for build-to-suit projects instead of purchasing existing properties due to their age, inadequate size or functional obsolescence such as inadequate ceiling heights. The trend is evident in the large amount of industrial space that has been delivered in recent years or is currently under construction in the Dayton market. The impact of this trend is an elevated vacancy rate when compared to other Midwest markets. Dayton’s overall industrial vacancy rate at the end of the first quarter of 2014 stood at 14.8 percent compared with 5.8 percent for Cincinnati. Drivers of New Construction Like much of the industrial market throughout the country, the transportation and logistics industry is driving development …
Development in urban Cincinnati is rejuvenating the economy, increasing employment opportunities and creating new demand for apartments. The Banks, an 18-acre, mixed use-development project along the Ohio River between the Great American Ball Park, home of the Cincinnati Reds and new Paul Brown Stadium, home of the Cincinnati Bengals, is transforming downtown Cincinnati and supporting economic growth. Atlanta-based Carter and the Harold A. Dawson Co. are developers of The Banks. Phase I, which opened in 2011, created 3,600 permanent jobs and included the Current at The Banks project, a 300-unit apartment building with 96,000 square feet of street-level retail space. The apartments are currently fully leased, and the retail space is approximately 92 percent occupied. The popularity of Current at The Banks has been so great that there is a waiting list for apartments. Work recently began on Phase II of The Banks, which will add more apartments on the western half of the site. Infrastructure is Key Constuction continues on Cincinnati’s new multi-faceted transportation system that will cover nearly four miles around downtown and connect major employment centers. Upon completion, The Banks will be the southern terminus of the light rail system linking Uptown, Over-the-Rhine and Downtown to the …
The vital signs of Cincinnati’s industrial market are collectively the healthiest they’ve been since 2007, including vacancy, absorption, lease rates, property values and investment sales activity. This uptick is particularly encouraging considering that the recovery in the Cincinnati industrial market lagged the top five markets in this property sector nationally coming out of the Great Recession. The historical 20-year average vacancy rate for Cincinnati’s industrial market has ranged between 3 and 5 percent, but rose as high as 10 percent in 2008. With overall industrial vacancy on the decline for the past seven quarters, vacancy now stands at 6.35 percent, a five-year low. Bulk Distribution Space Becomes Scarce Vacancy in the bulk distribution subsector — large warehouse buildings primarily used to accommodate e-commerce, apparel or consumer goods — has been declining for the past eight quarters and now stands at 7 percent. That’s a departure from the usual 10 to 13 percent range. In the 29 million-square-foot bulk warehouse submarket of Northern Kentucky, vacancy is less than 2 percent. Space is so limited that no Class A bulk spaces larger than 200,000 square feet are currently available in Northern Kentucky. VanTrust Real Estate LLC has begun construction on a 273,000-square-foot …
The Toledo industrial market remained stuck in a bit of a soft patch through most of the second half of 2013. Transaction activity was tepid until mid to late fourth quarter when deal flow began to increase. Consequently, the overall market vacancy rate and average asking rental rate have been essentially flat since mid-2013. With the delivery of the newly built and fully occupied FedEx building in Perrysburg Township contributing materially, the market did absorb more than 316,000 square feet during the last six months of 2013. Encouraging Signs There are a number of factors suggesting that real estate fundamentals in Toledo’s industrial market will start moving in a positive direction this year, in some cases quite dramatically. The first is a new construction boom, which we have been anticipating for some time. With the groundbreaking for the new 1.6 million-square-foot Home Depot warehouse in Troy Township, there is now more space under construction than at any time since before the recession. Several other build-to-suit projects are already in the works and poised to launch in 2014. Secondly, a rebound in demand from users at the end of 2013 year suggests there will be more transaction activity in the coming …
As predicted, the Columbus industrial market saw a wild end to 2013 with more than 1 million square feet of leasing activity in the final weeks. During the first two months of 2014, the market continued this aggressive pace, as Denver-based DCT Industrial Trust leased its final block of 500,000 square feet. Several other prospective tenants for both existing big-box spaces and build-to-suit facilities are ready to ink deals. The perfect storm is now brewing in Columbus for speculative construction as tenant demand remains strong and vacancy rates continue to fall. Only one Class A bulk warehouse and one Class B bulk warehouse currently remain vacant in the market for existing available product. Flurry of a Finish The Columbus market was feverish with activity near the end of 2013, resulting in Almo Corp. leasing 240,000 square feet, food safety innovator Handgards leasing 312,000 square feet and Government Liquidation leasing 516,000 square feet. When you combine that last-minute rush with several other deals that were signed during the final months of the year, Columbus recorded more than 2 million square feet of positive absorption during the fourth quarter of 2013. This final burst of activity for the year resulted in just …
If the recession is truly over in Cincinnati and the nation, we are thankful. Still, the pace of deal and development activity is exceedingly slow. Projects started before the Great Recession are proceeding at a cautious speed. Retail leasing, which has always had a long deal cycle, now seems to take forever. But there are some bright spots in Cincinnati. The downtown market is thriving. Steiner + Associates and Bucksbaum Retail Properties recently announced that they will soon break ground on Liberty Center, a 1.1 million-square-foot, $325 million mixed-use development on 64 acres in West Chester, located about 18 miles north of downtown. And in an interesting twist on new development, college campus mixed-use projects are one of the few ways developers can develop in this risky environment. The Banks Hits A Home Run Our retail update begins on Cincinnati’s riverfront. Located on the Ohio River between Great American Ballpark and Paul Brown Stadium, the 18-acre mixed-use development known as The Banks continues to add new housing, offices, dining and entertainment. A few more restaurants opened this past year including The Yard House, The Wine Guy Bistro, Ruth’s Chris Steakhouse and Tin Roof, which serves up lunch, dinner and music. …
The Columbus industrial real estate market has continued down a path of decreased vacancy and increased build-to-suit activity. Many developers and tenants are trying to determine if this space tightening is going to continue or diminish in the coming months. Industrial real estate experts who had their pulse on the market accurately predicted a year ago that absorption would be taking place at a healthy clip at the end of 2012 heading into 2013. This change in the market has resulted in limited options for tenants seeking space above 100,000 square feet. Meanwhile, developers are considering the possibility of building warehouses on a speculative basis and tenants are seeing a change in economics and concessions from previous years. Pendulum Swings The current 7.6 percent industrial vacancy rate in the Columbus market is at an all-time low. You have to go back to the late 1990s and early 2000s to find a period when the vacancy rate was nearly as low as it is today. The recent lack of space availability is starting to impact tenant choices. A tenant that used to have six or seven options for a 400,000-square-foot warehouse space is now finding that it only has two to …
Another positive quarter in the Cleveland industrial market has developers asking themselves, “If you build it, will they come?” Due to a frenzy of leasing activity and positive net absorption in the second quarter, Cleveland’s industrial vacancy rate fell to 8.2 percent, with sub-7 percent vacancy rates in the Class A, high-bay warehouse submarkets. The turnaround has been dramatic. Saturated with more than 1 million square feet of vacant speculative space three years ago, the Cleveland industrial real estate market today is unable to support the continued growth of companies without some new construction. Space commitments from Newell Rubbermaid (650,000 square feet), ShurTech Brands (182,000 square feet) and National Business Furniture (100,000 square feet) indicate that although Columbus continues to supply the demand for e-commerce, Cleveland will once again be home to value-add manufacturing, assembly and local distribution companies. GOJO Industries (205,000 square feet) and Glazer’s (200,000 square feet) not only expanded, but also absorbed the last available big-box space in Cuyahoga County. Summit County will be the new focus of companies looking to expand or shift into more efficient space following the recent vacancies left behind by Suarez Corp. (350,000 square feet) and Mid-America Packaging (300,000 square feet), both …