Market indicators showed some slight improvement in the 22.2-million-square-foot community-neighborhood shopping center market in Cincinnati, during the second quarter. The second quarter vacancy rate is 14.0%, down 10 basis points from the prior quarter and down 90 basis points from 12 months earlier. July data show a 10-basis-point decline. Reis reports power center vacancy at 4.9% in the second quarter, down 140 basis points over 12 months. The current community-neighborhood rate remains above the national rate of 9.0% for this property type, according to Reis. The Midwest region rate is 11.2%.
No community neighborhood space completed here in 2011 and only 257,000 square feet completed in 2010. No community-neighoborhood shopping centers are forecast to complete in 2012. The most recent construction data from Reis notes that the U-Square at the Loop neighborhood center, at 80,000 square feet, is under construction for completion in 2013. The Springboro power center, at 236,000 square feet, is also under construction with no completion date. Net absorption is forecast to total 202,000 square feet in 2012, allowing vacancy to fall slightly, to 13.6%.
After absolutely no gains in 2011, rents showed some activity in the second quarter. Reis reports second quarter 2012 average asking and effective rents of $14.71 psf and $12.37 psf, up 0.3% and 0.4% over the quarter and up 0.2% and 0.3% from four quarters earlier. However, July data show asking and effective declines of 0.1% and 0.2%. For 2012, barely notable gains are forecast. Not until the outlying years of the Reis forecast period are rents forecast to have a year when both measures post gains above 2.0%.
According to Marcus & Millichap’s third quarter 2012 report on Cincinnati, “as tax incentives attract businesses to the Cincinnati area, household formation and income growth will drive retail sales,improving the sector’s performance going into 2013.”