By Jarrett Hicks
Greater Cincinnati – Industrial Market Overview
In the second quarter of 2015, 430,400 square feet of new construction was delivered to the market, which accounted for one-third of quarterly positive net absorption. 2.91 million SF of industrial space is currently under construction across the region, including build-to-suit projects and four speculative bulk warehouses, three of which will be delivered later this Summer.
Overall vacancy in Greater Cincinnati continues to decrease and currently stands at 4.37%. Quarter-to-quarter vacancy rates dropped or remained flat in all submarkets and product categories, with the exception of Class B bulk warehouse space. While some vacant Class B product returned to the market in the second quarter, Class A bulk warehouse vacancy is just 1.3% (503,000 square feet).
Net absorption was positive in the Cincinnati market for the 16th consecutive quarter, reaching 1.25 million square feet in the second quarter. For the year, net absorption stands at 3.65 million square feet.
More than fifteen sales of $750,000 or more took place in the second quarter of 2015. The largest sale of the quarter was the newly-built 273,000 square foot Aviation Distribution Center in Hebron. The entire bulk warehouse is leased to UPS. Denver-based investor EverWest Real Estate Partners acquired the facility from VanTrust Real Estate for $15 million ($55/SF).
Due to the delivery of new speculative bulk warehouse space, it is unlikely that overall vacancy will fall below 4.3% for the remainder of 2015. Despite record-low vacancy, positive absorption has been significant so far in 2015, and should remain that way in the third or fourth quarter.
To read the rest of the Second Quarter 2015 Cincinnati Industrial Market Snapshot click here.
Greater Dayton – Industrial Market Overview
Five construction projects totaling 111,320 square feet were delivered in Greater Dayton in the second quarter of 2015. A new facility for Koenig Equipment in Greenville and a building addition for SK Tech in Clayton were largest two projects, totaling 40,000 square feet apiece. Nearly 1 million square feet of space is currently under construction across the region, with the majority of activity taking place in the Upper North submarket.
Quarter-to-quarter vacancy fell slightly and currently stands at 9.98%. Net absorption in the second quarter was 158,544 SF, due to a combination of Freestanding building sales, construction deliveries and leases in the South submarket. This is a noticeable change from the first quarter, where no construction deliveries took place and overall absorption was negative.
Net absorption remained positive in the second quarter despite the new vacancy of a 380,000 square foot former GM distribution warehouse in Trotwood.
The largest two leases of the quarter were renewals north of Dayton. Pratt Corrugated renewed its lease and expanded into the remainder of the 162,000 square foot building at 2501 Ross Street in Sidney. Reynolds and Reynolds signed a 154,000 square foot lease renewal at its fulfillment center on McCauley Drive in Vandalia.
Five industrial sales of over $850,000 took place in the second quarter. The largest transaction by far was STAG Capital’s purchase of the 258,680 square foot Bon-Ton Distribution Center in Fairborn for $9.1 million ($35/SF).
Looking ahead, large build-to-suit projects in the north and upper north submarkets should be complete by the third or fourth quarter. These construction deliveries should keep overall absorption in the positive category for the remainder of 2015.
To read the rest of the Second Quarter 2015 Dayton Industrial Market Snapshot click here.