By Jarrett Hicks, Senior Research Analyst
After an especially strong third quarter of construction deliveries, an additional 1.36 million square feet of new construction delivered to the market in the fourth quarter of 2015. Over 900,000 square feet is new speculative bulk warehouse space, including the 520,000 square foot Prologis Gateway International building in Hebron, KY. Overall, 3.8 million square feet of space was delivered to the market in 2015, and another 3.02 million square feet of industrial space is currently under construction across the region. In the fourth quarter, IDI Gazeley broke ground on the 993,787 square foot Park North at Monroe – Building 8.
In 2015, overall vacancy in Greater Cincinnati has been extremely low and fourth quarter was no exception, at 4.59%. The delivery of over two million square feet of bulk warehouse space in the past two quarters has pushed Class A bulk vacancy to 5.1%, up from 1.3% in the second quarter of 2015. Class B bulk vacancy continues to decrease due to leasing in the Central and Northern Kentucky submarkets.
Despite sub-5% vacancy, net absorption remained positive in the Cincinnati market for the 18h consecutive quarter, reaching 1.06 million square feet in the fourth quarter. 2015 net absorption of 5.81 million square feet easily exceeded the 2014 mark of 4.78 million square feet. Overall average asking rent increased from the prior quarter to $3.89 per square foot.
Five bulk warehouse leases of over 100,000 square feet occurred across Greater Cincinnati in the fourth quarter. The largest of these deals was a 120,726 square foot renewal by Patheon at the Lake Forest Distribution Center I in Blue Ash. Verst Group Logistics signed two new fourth quarter leases in Northern Kentucky. Verst took 114,400 square feet at Park West International D in Hebron, and 63,520 square feet at New Buffington – B in Florence. Other major leases in Florence included 109,200 square feet for Aristech Acrylics at the Kentucky Drive Distribution Center, and 105,988 square feet for Averitt Express at the Taylor & Francis warehouse.
Industrial Property Trust (IPT) purchased a 661,300 square foot / 4-building portfolio in the NW submarket from High Street for $35 million ($53/SF). Lincoln Property Co. acquired the 282,466 square foot Park 75 at Union Centre II building in West Chester from Opus Real Estate for $17.1 million ($60/SF). IRG-ICP purchased the 292,500 SF property at 4101 Founders Boulevard in Batavia for $6.9 million ($23/SF). The largest owner-user sale was Saturday Knight Limited’s purchase of the 360,471 square foot distribution center at 4330 Winton Road in Cincinnati for $3.8 million ($11/SF).
Looking ahead, overall vacancy shows no sign of major change, and will remain below 5% for the next 12 months.
To read the rest of the Fourth Quarter 2015 Cincinnati Industrial Market Snapshot click here.