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Cincinnati Industrial Report | Q4/2022

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Cincinnati Industrial’s Supply Shortage Relief in Sight

The Cincinnati industrial market continued to boast its strength and desirability in Q4, as it nearly matched its record-high yearly absorption to wrap up 2022. Demand in the Cincinnati market remains strong with Q4 posting more positive absorption and 10.5M SF of new supply under construction as we enter the new year. Vacancy rates remain low at 2.3% to close out the year, though the addition of 2.6M SF in new supply contributed to a 60-basis point increase from the previous quarter. Additionally, average rental rates remain high at $5.21/SF, a 10.4% increase year-over-year.

Though absorption remained positive in Q4, it did see a 67.1% drop from Q3. Alongside the typical holiday-season lull, the Cincinnati industrial market is still playing catch-up with the strong demand as new supply trickles in. Activity has been at somewhat of a standstill on the bulk side as users await the completion of 10.5M SF of new supply, with 3.2M SF slated to be complete in Q1 of 2023. Meanwhile, things appear to be business as usual for the rest of the industrial market. Owner-user sale activity remains strong as asking prices continue to rise and owners receive multiple offers on buildings. On the flex side, availability remains very low and rental rates continue to rise. Options are limited for flex users, and many are opting to renew at much higher rates due to lack of availability elsewhere. In sum—the sticker shock is over, and owners/sellers continue to reap the benefits.

The Cincinnati industrial market continues to remain a desirable destination for companies looking to establish roots in the Midwest. The region remains a popular landing site for distribution and manufacturing facilities, boasting an ideal geographical location relative to the U.S. population and access to utilities such as power and water. While the strength of the region has historically subsided in the Airport submarket, there simply isn’t the land or space for companies to establish new services there. Instead, companies are being pushed to build further north. Nestle Purina Petcare Co., which is already constructing a $550M facility in Clermont County, announced in December its plans to build an additional factory next door. For those looking to get their feet in the door, Ohio’s Building Demolition and Revitalization Program is clearing the way by providing the means to clear out vacant, rundown buildings to make room for redevelopment. In Sycamore Township, the former Drake Motel and Carousel Inn are being torn down to make way for a possible manufacturing facility space. In total, Hamilton County has been granted $17.7 million for the demolition of dozens of properties.

While the booming demand and anticipation of new supply has caused a slowdown, relief is expected to come in 2023, and the pathway for new opportunities has become clearer.


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Cincinnati Industrial Report | Q4/2022

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