HEARTLAND SNAPSHOT, JANUARY 2007

Cincinnati Industrial Market

Industrial development activity in greater Cincinnati is down from last year, but shows sign of positive movement as we begin a new year. Northern Kentucky leads the Cincinnati metro area in new construction of large warehouse facilities, with several new facilities near the Cincinnati/Northern Kentucky International Airport. Cincinnati also has several industrial projects coming out of the ground this year, which are a result of a lower vacancy rate in the northern market and demand for more modern, functional facilities.

“Atlanta-based IDI’s Port Union development, which offers three facilities totaling 950,824 square feet, has been a pleasant surprise,” says Jeff Wolf, vice president of The Everest Group Inc./TCN Worldwide. IDI has added several large users and continue to lease well in the Cincinnati metropolitan market. Also, Union Centre Boulevard in West Chester, Ohio, is continuing to attract companies from the city markets.

Additionally, several developers are building in the airport submarket and attracting large tenants to the area. The airport submarket has been the hottest area for industrial development, Wolf notes, as distribution companies like the close proximity to the airport.

The developments are attracting a varied tenant mix depending on the facility’s size and its capabilities. The bulk facilities are mainly attracting distribution companies, while tax incentives for creating jobs are drawing high-tech companies to the available mid-size facilities.

Major leases recently closed in the Cincinnati area include Cummins Inc.’s deal for a 603,586-square-foot build-to-suit in South Park, Ohio; GSI Commerce’s 543,512-square-foot lease in South Park; TSS Technologies’ 205,000-square-foot lease on Global Way in West Chester; and Standard Textiles Co.’s 105,000-square-foot distribution center lease in the airport submarket.

Rental rates for Cincinnati market range from $3.75 to $3.85 per square foot. Vacancy rates in the market remain low, with general industrial vacancy at 6.5 percent and flex space at 13.5 percent.

“The available land in the airport submarket and Butler County, Ohio, is making these areas prime locations for future developments,” Wolfs adds. “Both markets have also been very aggressive in attracting new companies to the market.”

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