The Cincinnati general purpose, multi-tenant office market finished the second quarter with a vacancy rate of 20.3%, unchanged from the prior quarter, unchanged from year-end and actually up 40 basis points year-over-year. July data show no change. For Class A space, Reis reports vacancy at 20.4%, unchanged since the second quarter; for Class B/C space, Reis reports vacancy at 20.1%, also unchanged. Despite the market’s small size and minimal construction, Cincinnati has not demonstrated any particular hunger for office space. Reis reports 800,000 square feet of multi-tenant space completed in 2011; net absorption was just over half that amount at 453,000. The construction total for 2002 to 2011 was 4.9 million square feet, or less than 500,000 square feet per year. Yet net absorption during that time span totaled less than 700,000 square feet, creating more or less permanently high vacancy. Thus far in 2012, Reis’ latest construction data show the completion of 70,000 square feet in July in the Blue Ash submarket. Interestingly, July data record a full 198,000 square feet of net absorption, perhaps marking a turnaround.
Reis reports average asking and effective rents were unchanged in the second quarter, at $18.67 psf and $14.85 psf. This brings year-over-year gains to 0.2% and 0.3%, respectively. July data show 0.1% increases by both measures. Class A asking rents were unchanged in the second quarter at $21.86 psf, while Class B/C rents were up 0.1% to $15.39 psf. Rent gains will reach 0.9% and 1.3%, asking and effective, Reis forecasts for 2012. These are not favorable annual rent gains by any standard, and no notable improvement is forecast until 2014.
According to Cushman & Wakefield, Cincinnati second quarter office vacancy is 23.0%, up 170 basis points year-over-year. Direct asking rents are reported at $20.30 psf, down 40 basis points year-over-year.