Richard Meder Senior Sales Vice President Grubb & Ellis|West Shell Commercial

Developing an office building or an office complex is no longer the goal for area developers and owners of office properties. Instead, today’s office property owner is aiming to stabilize current office inventories by renewing existing tenants leases and signing new leases. “With suburban vacancy rates at all time highs and new sublease space coming to market every day, existing landlords and developers are concentrating their efforts on surviving the current market conditions,” says Richard Meder, senior sales vice president with Cincinnati-based Grubb & Ellis|West Shell Commercial.

According to Meder, there have been no private office developments in the past 18 months that have impacted the marketplace. On the other hand, several notable publicly funded developments have pushed Cincinnati’s infrastructure forward recently. These projects include two new professional ballparks (The Great American Ball Park for the Cincinnati Reds and Paul Brown Stadium for the Cincinnati Bengals), the National Underground Railroad Freedom Center (opening summer 2004), the new Cincinnati Contemporary Art Center and the reconstruction of Fort Washington Way — a federal highway around the central business district (CBD). “Of course, with public investment follows private investment,” Meder says.

The most recent major corridor with significant office development is along Interstate 71 and State Route 562/Norwood Lateral in the central Norwood/Hyde Park area. This part of the Cincinnati office market has performed better than other areas mainly because of its proximity to downtown, Northern Kentucky, the greater Cincinnati/Northern Kentucky International Airport, and some affluent Cincinnati neighborhoods. “The Norwood/Hyde Park area has also had a lot of adaptive re-use of real estate,” Meder says. These pockets surrounding I-71 and SR-562 were previously residential and long-time industrial properties before being rezoned to retail and office uses.

Developers new to the Cincinnati area include Higgins Development, Equis, Vandercar Holdings, Steiner + Associates and Continental.

No major absorption of office space from one tenant has been seen for some time. On the contrary, office space has been put back on the market from some of the larger office users in Cincinnati, such as Mercy Hospital, American Greetings, Fidelity Investments and Cincinnati Milacron.

The lease renewals of Provident Bank for 300,000 square feet at 309 Vine Street and Dinsmore & Shohl for 140,000 square feet in the Chemed Building, both downtown, have highlighted the market.

Class A rental rates in Cincinnati are $21.27 for the CBD, $19.56 for the suburbs and $20.34 for the overall market.

Watch the central city areas of Norwood/Hyde Park where several developments are scheduled and new highway sites are ready for development. “Future national and local economic prosperity, and absorption of available space, holds the key to future office development taking hold in the Cincinnati market,” Meder says.

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