The third quarter 2013 Cincinnati Industrial Market Snapshot from Cassidy Turley shows the overall industrial vacancy rate below 7% for the first time in six years. Quarter-to-quarter vacancy fell 52 basis points. The drop in vacancy is thanks to nearly 1.7 million square feet of industrial space being absorbed by area businesses in the third quarter. Total year-to-date absorption is 4.1 million square feet.
The Northern Kentucky sub-market is, by far, the tightest sub-market in terms of available space. It is only 3.2% vacant. The low vacancy has spurred speculative construction, something dormant from the entire Cincinnati industrial market for some time. Industrial Developments International (I.D.I.) is constructing two new buildings totaling 740,000 square feet in Hebron, close to the Greater Cincinnati/Northern Kentucky International Airport (CVG).
Additionally, the overall industrial average asking rental rate experienced 2.4% growth in the third quarter. It is up to $3.89 per square foot.
The majority of quarterly positive absorption can be attributed to the bulk warehouse market, which consists of nearly 65.5 million total square feet. Bulk buildings saw 1.44 million square feet of space absorbed in the third quarter. Thanks, in part, to leases by Cornerstone Brands on 351,000 square feet and Genco Inc. on 346,000 square feet. Bulk vacancy is now down to 7.9% and asking rents grew 2.5 % to $2.92 per square foot.
The Northwest Cincinnati sub-market alone had 1.49 million square feet of positive absorption, while Northern Kentucky had an additional 24,800 square feet. Conversely, the Northeast Cincinnati sub-market saw 76,800 square feet vacated.
The strength of Cincinnati’s bulk market showcases the region’s attractiveness to companies as a destination for warehousing, distribution, and logistics.
Unlike the bulk market, flex buildings are struggling to find positive momentum in 2013. Flex vacancy is up to 16.2% after the region saw move outs totaling 67,840 square feet. Total year-to-date net absorption in flex buildings is -223,811 square feet. Despite the newly vacated spaces, flex buildings were able to see rent growth to the tune of 1.3%. The average asking rental rate is now $5.61 per square foot.
Freestanding Industrial Buildings
Cincinnati’s 194 million total square foot freestanding industrial market, like the bulk market, is having a great 2013. Vacancy is down to 5.6% after nearly 320,000 square feet of positive absorption in the third quarter. Total freestanding net absorption for 2013 is now 1.13 million square feet. The average asking rental rate remained steady at $4.20 per square foot.