IRR-Cincinnati Mid-Year Viewpoint 2015 Local Market Report - Office
As the nation continues to recover from the 2008-2009 recession, the office sector throughout the Greater Cincinnati area is also recovering but at a slow pace. New construction is occurring on a limited basis in the CBD. The new dunnhumbyUSA office tower in the center of the CBD is currently under construction and nearing completion. Recent development activity has also been ongoing to the north of the CBD in the Over the Rhine district. This is primarily renovation of existing historic buildings with some new construction. To the south within the redeveloping Banks area between Paul Brown Stadium and Great American Ballpark, a new office building was recently announced by GE which will house some 2,000 employees. Office to residential conversions have surfaced as downtown living has become more attractive over the last two years.
New suburban office construction is nearing completion at the Rookwood Exchange where a mixed use structure will contain office plus restaurants and retail.
Further construction is seen in Kenwood at the Kenwood Collection where the stalled office project, along with additional retail, is being completed after years of sitting idle.
The Cincinnati office market will benefit from a stable to slightly growing population base and higher income and education levels. Although the Cincinnati MSA experienced little or no change in the number of jobs over the past decade, job growth turned positive in 2011 and has remained so. The Cincinnati area has maintained a generally lower unemployment rate than Ohio during this time, which is a positive indicator. Moreover, the Cincinnati MSA exhibits both a higher rate of GDP growth and a higher level of GDP per capita than Ohio overall. All of these factors will continue to support the current recovery.
Vacancy has been generally been improving since 2009 in both the CBD and suburban markets although recently, conditions have deteriorated somewhat in the CBD and stagnant in the suburban market. The average effective rental rates for CBD and suburban Class A office space have increased slightly since 2011; however, the increases are minimal. Class B rents have increased as well but at modest rates.
Overall, the office market is improving but at a slow pace and one which is expected to continue into the foreseeable future.
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IRR Mid-Year Viewpoint 2015 comprises a National Overview report and 300+ two-page Local Market Reports for all key property types as well as additional resources, including metrics methodology, graphs, and tables; these free reports may be downloaded from IRR’s site here.