Market Snapshot: Rebirth of Cincinnati’s 9-5s
- Mar 02, 2015
According to DTZ, , which combined with Cassidy Turley under new private equity ownership at the beginning of the year, Cincinnati’s office market has now seen four consecutive years of positive absorption. During the last quarter of 2014, 59,876 square feet was positively absorbed by office users in the area, pushing the total for the year to 23,630 square feet.
Mason and the Central Business District were the region’s top performers in Q4, registering 57,298 and 35,436 square feet of positive net absorption. The CBD was the office market’s main driver of demand in 2014. During the 12 months of the year, the submarket saw 298,761 square feet of positive absorption, the largest amount since 2007.
Midtown and West Chester were the region’s weakest submarkets in Q4. The two registered -59,122 and -7,450 square feet of net absorption. Midtown ended the year with -247,263 square feet of net absorption.
Office vacancy in the Cincinnati metro area reached 19.5 percent at the end of 2014, which is the lowest point since 2011. In spite of this, rents have remained relatively flat, as landlords continue to offer aggressive leasing packages in order to attract tenants. At the end of Q4, the average asking rents for Class A and B space combined was $17.55 per square foot. However, DTZ expects additional positive office market activity to spur actual rent growth in 2015.
Office investment activity saw a resurgence last year. Buyers spent a total of $580 million to acquire office properties in the Cincinnati area in 2014. This was more than 2012 and 2013 combined. One of the most important deals of the year was the $83 million purchase by New-York based American Realty Capital of the Gateway Center buildings in Covington. It was one of the largest real estate deals in Northern Kentucky’s history.
Charts courtesy of DTZ.