2012 Global Market report - NAI Global

Cincinnati, Ohio
Cleveland, Ohio
Contact
NAI Bergman
+1 513 769 1700
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
2,125,952
2,113,487
1,115,297
$72,204
$55,705
36
Slow and steady with a lot of patience is the 2012 mantra.
The Greater Cincinnati economic outlook remains focused
on recovery, anticipating slight increases from the 2011
anemic growth. Housing inventory dropped to a more
market-manageable norm. Low inflation is expected to keep
the local economy improving. The signs of improvement
continue to require a great measure of nurturing. Cincinnati
received significant 2011 recognition being named #10 -
Kiplinger’s Top 10 Value Cities and #5 - List of America’s
Most Affordable Cities.
The 2011 Cincinnati office market witnessed the much
anticipated CBD tenant shuffle. Great American Insurance
Group (563,300 SF); Frost Brown Todd L.L.C. (103,000 SF);
Vorys, Sater, Seymour, & Pease LLP (75,000 SF) moved to
the Great American Tower at Queen City Square, the
825,000 SF downtown centerpiece located at 301 East
Fourth Street. Other large downtown players were
Dunhumby USA, First Financial Bank and Rendigs, Fry, Kiely,
& Dennis. Children’s Hospital Medical Center moved to the
newly renovated Vernon Manor Hotel (156,000 SF). The
largest suburban transaction was Humana RightSource at
the Executive Center I building (173,884 SF). The 2012
office market challenge will be to maintain Cincinnati’s major
economic players, fill the space blocks left vacant by the
Great American Tower opening and create rent stability.
Retail vacancy increased in 2011. Rents were slightly down
year-over-year. We expect vacancy rates to improve overall
in 2012. Target completed two new stores at 9023 Plainfield
Rd (138,568 SF) and 120 Pavilion Parkway (134,500 SF);
and Jungle Jim’s added an Eastgate location (175,000 SF).
Other active retail tenants included Hobby Lobby, Remke,
Dunham’s Sports, Aveda Institute, buybuy Baby, Aldi and
Smashburger.
While the overall industrial vacancy rate is stable, high
vacancy in manufacturing is expected to continue throughout
2012. The rental rates in distribution appear to be stabilizing.
A spec 550,000 SF distribution center by IDI may be a clue
to rising rental rates. Significant sales included 8741
Jacquemin Drive (601,065 SF) at $47/SF, 4520 LeSaint
Court (299,600 SF) at $41/SF and 1700 Carillon Blvd
(335,770 SF) at $49/SF. Significant leases included
Spiraledge (390,000 SF), Southwest Stainless (166,400 SF)
and The Wornick Company (150,000 SF).
Contact
NAI Daus
+1 216 831 3310
Metropolitan Area
Economic Overview
2011
Population
2016 Estimated
Population
Employment
Population
Household
Average Income
Median
Household Income
Total Population
Median Age
2,229,639
2,193,489
1,165,494
$73,099
$57,705
39
The Cleveland marketplace continued to show a general
improvement, but the recovery has been anything but
smooth and characterized by a series of ‘good news bad
news’ scenarios. The over-riding good news included a
noticeable increase in leasing velocity as well as the gradual
loosening in the financing market. But nearly all of the
leasing activity was smaller in terms of square footage and
term, and the number of distressed commercial properties
continued to mount.
The overall office vacancy rate ended the year at 13%.
Leasing rates were flat and net absorption was slightly
positive. But the landscape will change in the next 24
months. Eaton Corporation, Ernst & Young and American
Greetings will all move into new facilities. This will be a boom
for the immediate areas they are moving to, but it could be
a bust to the immediate areas they are leaving behind. The
completion of the new medical mart and Horseshoe Casino
will help increase activity downtown; their collective impact
on the downtown office market will be closely watched.
Cleveland’s economic fortune has been closely tied to the
industrial sector. Bolstered by steady improvement across
the automotive, construction and transportation segments,
the region’s industrial sector was stable. Rents were slightly
softer, overall vacancy was under 10%, which is relatively
unchanged from 2010 and new construction was limited to
a small handful of build-to-suit projects.
The retail sector saw a similar scenario, slowly improving
leasing activity, flat rents and limited new construction.
It also saw good news, bad news. The good news are
large-scale retail development projects announced by First
Interstate in Cleveland Heights & South Euclid and by the
Jacobs Group in Avon. The bad news is the continuing
struggle among many retailers headlined by the bankruptcy
filings of Borders Books and Blockbuster Video.
Looking forward, 2012 will likely look a lot like 2011.
Businesses will exercise caution when making any decision,
particularly with regards to their real estate needs. Lending
will continue to loosen and market rate sales will again
be in short supply. The result will be a sustained slow
improvement that stretches into 2013.
Cincinnati At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
$
$
$
$
N/A
14.00
11.00
N/A
12.46
10.00
$
$
$
$
N/A
27.00
18.00
N/A
20.97
19.86
N/A
$ 20.50
$ 14.50
N/A
$ 17.00
$ 14.50
N/A
18.50%
17.00%
N/A
18.80%
15.00%
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
$
$
2.15
1.00
N/A
$
$
4.25
7.00
N/A
$
$
2.90
2.64
N/A
9.30%
20.50%
N/A
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
9.00
2.30
5.00
12.00
$
$
$
$
12.50
30.00
30.00
24.00
$ 12.11
$ 10.62
$ 12.76
$ 18.77
2.40%
19.10%
11.00%
12.00%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
Retail/Commercial Land
Residential
$
$
$
$
$
$
100,000.00
50,000.00
26,000.00
15,000.00
150,000.00
15,000.00
$
$
$
$
$
$
500,000.00
400,000.00
200,000.00
400,000.00
600,000.00
85,000.00
Cleveland At A Glance
(Rent/SF/YR) low High effective avg. Vacancy
doWntoWn offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
suburban offIce
New Construction (AAA)
Class A (Prime)
Class B (Secondary)
IndustrIal
Bulk Warehouse
Manufacturing
High Tech/R&D
retaIl
Downtown
Neighborhood Service Centers
Community Power Center
Regional Malls
$
$
$
$
$
$
$
$
$
$
$
31.00
17.00
14.00
24.00
16.00
12.00
3.00
2.75
N/A
N/A
5.00
6.00
5.00
$
$
$
$
$
$
$
$
$
$
$
34.00
24.00
18.00
26.00
23.00
16.00
5.50
5.75
N/A
N/A
32.00
30.00
70.00
$
$
$
$
$
$
$
$
$
$
$
33.00
17.90
14.10
22.00
18.40
15.20
4.00
3.75
N/A
N/A
12.00
14.00
25.00
44.00%
13.50%
22.50%
28.20%
12.00%
11.90%
9.20%
9.00%
N/A
N/A
18.30%
16.40%
7.60%
deVeloPment land Low/Acre High/Acre
Office in CBD
Land in Office Parks
Land in Industrial Parks
Office/Industrial Land - Non-park
$
$
$
$
125,000.00
100,000.00
60,000.00
80,000.00
$
$
$
$
300,000.00
400,000.00
125,000.00
150,000.00
Retail/Commercial Land
$ 60,000.00 $ 1,000,000.00
Residential
$ 6,000.00 $ 100,000.00
2012 Global Market Report n www.naiglobal.com 124