By James Flick, Vice President of Research and Marketing
According to a September 23rd release from the Bureau of Economic Analysis, Cincinnati has the fastest growing economy among major cities in the Midwest. The region experienced a 2.5percent increase in gross domestic product in 2014, which outpaced the U.S. average of 2.3 percent. Within this total retail rose 0.4 percent. The Dayton economy has been slower to recover from the Great Recession and grew just 0.3 percent.
While the economy continues to grow, the Consumer Price Index for all urban consumers (CPI-U) in the Cincinnati and Hamilton area declined 0.4 percent between the first half of 2012 and the fi rst half of 2015 according to the Bureau of Labor Statistics. Within this, the index for grocery related foods rose 1.9 percent and the index for food outside of the home rose 1.4 percent. Energy prices were down a total of 19.2 percent. The index for all items less food and energy increased 1.7 percent with home (shelter) prices rising 2.6 percent, medical costs up 2.7 percent, and clothing up 3.5 percent. Education and communication costs were down 1.8 percent.
The combined retail market of Cincinnati and Dayton has now seen 13 straight quarters of positive net absorption.
During that time, over 4 million square feet of space has become occupied by retailers. This absorption has driven the vacancy rate down 220 basis points from 9 percent in the fourth quarter of 2011 to its present point of 6.8 percent.
Asking rents have remained flat since 2012, fluctuating between $9.56 and $9.90 per square foot NNN. Currently, the average asking rent for the region is $9.69 per square foot. The average asking rent in the Cincinnati market specifically is $9.87 per square foot; in the Dayton market it’s $9.51 per square foot.
In development news, Liberty Center’s grand opening highlighted early fourth quarter activity. The 1.2 million square foot first phase features a 200,000 square foot Dillards, 80,000 square foot Dick’s Sporting Goods, 16-screen movie theater, 240 apartments, a 130-room AC Hotel by Marriott, and 75,000 square feet of office space.
Online shopping continues to reshape the nature of retail and this holiday season is expected to set yet another record in terms of online sales. However, retailers will continue to open brick and mortar operations leading to additional absorption, lower vacancies, and additional retail construction to meet demand.
To read the full report and to get access to all the Third Quarter Cincinnati and Dayton MarketBeats visit http://dtz.cassidyturley.com/markets/us/cincinnati-dayton
James Flick joined the company in 2010. As Vice President, Research and Marketing, he is responsible for overseeing the Marketing and Research activities in our Cincinnati and Dayton offices. This includes the production of presentations, studies, and statistics on topics affecting the regional economy as well as the local office, industrial, retail and multi-family markets.