HEARTLAND SNAPSHOT, APRIL 2005

Cincinnati Office Market

Activity in Cincinnati’s office market is strongest in the suburbs along Interstate 75 and Interstate 71, according to Jerry Momper, senior vice president with The Staubach Company — Great Lakes. The central business district (CBD) is also seeing a lot of motion with the development of its first new office building, the 180,000-square-foot Queen City Square, in almost 15 years. The riverfront development known as The Banks continues to make slow, positive progress and could see strong activity in 2005 as the financing challenges are met in this public/ private partnership. “The Banks project and the beginning of construction on Queen City Square are the most positive CBD developments,” Momper says. The redevelopment of Fountain Square is also poised to further assist the CBD.

Recent developments in the office market continue to follow the I-75 and I-71 corridors north of the city. On I-71, Cornerstone, which is being developed by The Ackerman Group, has already been deemed a success. The 125,000-square-foot, Class A building, which was completed last October, leased quickly to tenants such as Lincoln Financial and Smith Barney. Construction has already started on the second 125,000-square-foot tower, which is set for completion later this year. Its anchor tenant will be Grant Thornton.

No major tenant is absorbing the majority of Cincinnati’s office space. “There has been a lot of churning with no one tenant dominating,” Momper says. For example, Convergys, Cincinnati Bell and AT&T have all changed space in the CBD with no net absorption.

Cincinnati’s Class A net asking prices range from $15.50 to $24 for the newest building, and vacancy in the CBD may hit approximately 10 percent in 2005. Cincinnati’s vacancy rates in the suburbs average in the mid-teens. “Occupancy rates will continue to increase, especially in the Class A buildings,” Momper says.

Several new developers are looking at projects in the greater Cincinnati market, but none have broken ground yet. After more than 2 years of churn, the market is much more active with corporations now making firm decisions. I-71 will continue to grow, and northern I-75 should continue its expansion.

Additional positive business movement that will encourage the development of office activity are P&G’s purchase of Gillett; Chiquita Brands International Inc.’s purchase of Fresh Express; and Federated’s purchase of Macy’s.

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