HEARTLAND SNAPSHOT, NOVEMBER 2004

Cincinnati Industrial Market

A major trend in the Cincinnati industrial market is that the larger corporations are beginning to be more active in researching the market, according to Frank Torbeck, CEO of The Everest Real Estate Group. The bulk warehouse market is experiencing larger absorption than it has during the past 4 years.

The majority of the industrial development in Cincinnati is taking place in the Northern Cincinnati corridor and in the Northern Kentucky corridor. “The Cincinnati International airport is located just across the river in Northern Kentucky, enticing companies to locate there,” Torbeck says. “Additionally, the northern Interstate 71 and Interstate 75 corridors are attractive to companies because there is affordable land with exposure and access to the highways.”

Historically, Cincinnati/Northern Kentucky has been a strong manufacturing area. “There also is an attraction for high-tech users because of the strong university base here, such as the University of Cincinnati, Xavier University and Northern Kentucky University,” Torbeck says. “The distribution/warehouse market is growing because of the access to Interstates 71, 75 and 275. Within 600 miles of Cincinnati is 54 percent of the nation’s population; 53 percent of the nation’s purchasing power; 54 percent of the nation’s manufacturing establishment; and 57 percent of the nation’s value by added manufacturing.”

“The new construction/built-to-suit market remains slow due to the large increases in the price of steel and concrete,” Torbeck says. “But, we are seeing the entrepreneur purchasing existing facilities to take advantage of the interest rates.”

There are four major players absorbing space in Cincinnati. UPS Supply Chain Solutions just moved into a 300,000-square-foot building, and Crum & Crum/Safeway moved into a 222,500-square-foot building at Park West International Building K. Cornerstone Brands has moved into a 220,000-square-foot building at 8754-8778 Trade Port Boulevard Building A, and Dell Computer recently moved into a 427,000-square-foot building at Windisch Road in West Chester.

The average rental rates for the Cincinnati area range from $2.60 to $6.78 per square foot, with the overall average rate in Cincinnati being $3.42 per square foot. “This is about $2.40 less than the national rate,” Torbeck says. “Although the real estate market has slowed in recent years, the rental rate in Cincinnati has remained fairly constant, only fluctuating by pennies.” According to the Costar Industrial Market Report, the Cincinnati vacancy rate increased from 9.3 percent to 9.8 percent in the last year.

“Activity is definitely picking up in Cincinnati,” he says. There are two regions that have the most growth potential for the near future: The North I-71 and I-75 corridors and Northern Kentucky. The North I-71 and I-75 corridors are expected to grow, as well as the Northern Kentucky area, which is convenient to the International airport.

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