Q1 2012 - Cincinnati Office

overall vacancy rate

the knowledge reportcincinnati, oh

www.colliers.com/cincinnati

OFFICE MARKET OFF TO A GOOD START

executive summarythe greater Cincinnati office Market saw a good amount of activity in the first quarter of 2012, producing 449,759 square feet of positive absorption. the overall vacancy rate fell from 19.6% to 18.7%, a clear sign that we are headed in the right direction. the overall weighted asking rate for office properties averaged $18.14 per square foot, up 11 cents from the close of 2011.

central business districtIn the Central Business district, the office market saw a great deal of activity, but not enough velocity to create any significant absorption. For all property classes, the first quarter net absorption totaled negative 8,596 square feet and the overall vacancy rate stands at 17.82%. As a follow-up to last year’s string of larger lease signings in the CBd, this submarket continued to make news as kAo USA relocated to 312 plum Street. the company signed a 55,000-square-foot lease in the Class A building and will relocate its operations from Spring grove Avenue. UrS also announced it will relocate from the UrS tower on 7th Street to 525 Vine after signing a 20,551-square-foot lease. this wave of larger lease signings and announcements should settle for the balance of 2012.

suburban marketsthe Suburban Submarkets saw the most activity this quarter, producing a total of 458,355 square feet of position absorption. the vacancy rate for all suburban properties averaged 19.2%, down from 20.5% in the fourth quarter of 2011. the tri-County submarket was the biggest gainer, as net absorption totaled 333,434 square feet. humana right Source contributed the most square footage to this absorption when it leased all of the 177,184 SF at executive Centre I at 111 Merchant Street. the average rental rate for suburban properties was $20.37 per square foot, compared to an average rental rate for CBd properties of $19.35 per square foot.

constructionConstruction activity is picking up in the office market, as several new projects have come to life in 2012. the most notable is dunnhumbyUSA’s recent announcement to build its headquarters at the long dormant Fifth and race site downtown. the company is planning up to 250,000 SF of office space to meet its needs of future employment growth. In Mason, Seapine Software announced it will build a 50,000-square-foot headquarters on western row. the company will vacate the 38,000 SF space it currently occupies at triangle office at kings Mill. As noted last quarter, several other build-to-suit projects continue to move forward. these projects include the FBI site in kenwood (109,000 square feet), Urology group’s 45,000-square-foot facility in norwood, and itelligence’s 85,000-square-foot building in Blue Ash. For the rest of 2012, these smaller projects will continue to be the norm for the majority of construction activity in the market.

market indicators

*Projected change to

Following Quarter

Q1 12 Q2 12*

vacancy

net absorPtion

construction

rental rate — —

Q1 2012 | office

ROSS

12%

14%

16%

18%

20%

22%

24%

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

1Q 1

2

Overall Vacancy Rate

emPloyment the Bureau of labor Statistics announced good news for the market, as the U.S. unemployment rate continued to fall. while the validity of these government numbers can be debatable, it’s a good sign that companies are beginning to hire and put people back to work. the overall U-3 unemployment rate came in at 8.2% for March, down from 8.3% in January and February. In comparison, in october of 2010, the rate stood at 10.0%. ohio’s unemployment rate is at 7.6%, a nice sign that our state is a little healthier than the other 49 states across the country. As commercial real estate is tied directly to job growth, we hope these numbers continue to push us in a positive direction.

Forecast2012 should to be an interesting year for commercial real estate. Several variables at play will affect our market - the overall employment of our country’s workforce, the upcoming 2012 elections, and the record-level maturing commercial real estate debt. with the first quarter recording more than 449,000 square feet of positive absorption, we hope we can continue to capitalize on this activity and the market will stay on the upswing of the commercial real

estate cycle.

uPdate recent transactions

First Quarter activity

ProPerty submarket tenant size tyPe

5th & race development Site CBd dunnhumbyUSA 250,000 Build-to-Suit

237 william howard taft Midtown Christ hospital 152,000 lease

312 plum CBd kAo USA 55,000 lease

western row road development Site I-71 north Seapine Software llC 50,000 Build-to-Suit

525 Vine CBd weltman, wineberg & reis 37,365 lease renewal

5300 kings Island drive I-71 north ACt, Inc. 30,014 lease

312 elm CBd USI Midwest 24,600 lease renewal

525 Vine CBd UrS 20,551 lease

8600 governors hill drive I-71 north general electric 20,000 lease

Centre pointe II I-75 north general electric 14,034 lease

riverCenter II nkY tier 1 performance 12,500 lease

northmark Business Center 2 Blue Ash CtI 11,318 lease expansion

wright’s Summit II nkY Indiana Institute of technology 10,767 lease

kenwood Crossing II kenwood/Montgomery St. elizabeth physicians 10,155 lease

6725 Miami Avenue Midtown rSw/US 10,000 lease

4138 hamilton Avenue tri-County/Union Centre Caracole, Inc. 9,600 lease

one riverfront place nkY local tV, llC 8,424 lease

125 east Court Street CBd daymon worldwide 7,938 lease

kenwood executive Center kenwood/Montgomery Care Connections 6,489 lease

600 Vine CBd Fox Sports ohio 6,000 lease

towers of kenwood kenwood/Montgomery Johnson & Johnson 5,880 lease

4555 lake Forest drive Blue Ash Cuni, rust & Strenk 5,835 lease

312 elm CBd Union Security Insurance Co. 5,106 lease renewal

transactions are believed to be accurate but not guaranteed.

7.00%

7.50%

8.00%

8.50%

9.00%

9.50%

10.00%

10.50%

11.00%

Jan-

09

Mar

-09

May

-09

Jul-0

9

Sep-

09

Nov-

09

Jan-

10

Mar

-10

May

-10

Jul-1

0

Sep-

10

Nov-

10

Jan-

11

Mar

-11

May

-11

Jul-1

1

Sep-

11

Nov-

11

Jan-

12

Ohio Unemployment Rate

US Unemployment Rate

unemPloyment

the knowledge report | Q1 2012 | office | cincinnati

P. 2 | colliers international

SUBMARKET Total Inventory Total Vacant SF Vacancy Rate Quarterly

Absorption YTD Absorption Avg. Rate

Blue Ash 4,553,708 768,619 16.88% 78,450 78,450 $17.81

CBD 18,008,286 3,208,790 17.82% (8,596) (8,596) $19.35

CBD Periphery 3,498,638 901,617 25.77% 88,994 88,994 $25.77

East 2,454,545 443,537 18.07% (1,446) (1,446) $15.84

I-71 Corridor North 4,058,537 891,709 21.97% 36,206 36,206 $18.85

I-75 Corridor North 2,247,624 214,250 9.53% 41,553 41,553 $20.11

Kenwood / Montgomery 2,070,071 263,156 12.71% 21,567 21,567 $22.35

Midtown 3,317,554 490,364 14.78% (9,261) (9,261) $15.00

Northern Kentucky 7,366,882 1,498,959 20.35% (111,647) (111,647) $17.83

Tri-County 4,754,848 1,069,219 22.49% 333,434 333,434 $15.57

West 774,742 193,473 24.97% (19,495) (19,495) $15.21

Market Totals 53,105,435 9,943,693 18.72% 449,759 449,759 $18.14

SUBMARKET DATA

avg. asking rates (Per sF-Full service gross)

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

$21.00

$22.00

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q11

2Q11

3Q11

4Q11

1Q12

Class A Rate

Class B Rate

Overall Rate

$12.00

$13.00

$14.00

$15.00

$16.00

$17.00

$18.00

$19.00

$20.00

$21.00

$22.00

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q11

2Q11

3Q11

4Q11

1Q12

Class A Rate

Class B Rate

Overall Rate

Quarterly net absorPtion

squa

re F

eet

-200,000

-100,000

0

100,000

200,000

300,000

400,000

500,000

1Q 10

2Q 10

3Q 10

4Q 10

1Q 11

2Q 11

3Q 11

4Q 11

1Q 12


colliers international | P. 3

ceo | PrinciPal: Shenan p. Murphy, CCIM+1 513 721 4200

522 offices in 62 countries on 6 continentsUnited States: 147Canada: 37latin America: 19Asia: 36AnZ: 165eMeA: 118

• $1.8 billion in annual revenue

• 1.25 billion square feet under management

• over 12,300 professionals

Colliers International statistics are audited annually and may result in revisions to previously reported quarterly and final year-end figures

www.colliers.com/cincinnati

Colliers International | greater Cincinnati 425 walnut Street, Suite 1200Cincinnati, oh 45202

Office Services | Greater Cincinnati

3

8

INT’LAIRPORT

I-75 NORTH OFI-275

OUTLYING WARRENCOUNTY

I-71 NORTH OF I-275TRI-COUNTY

BLUE ASH

KENWOOD/MONTGOMERY

EASTMIDTOWN

CBD-PERIPHERY

NORTHERN KENTUCKY

WEST

Fred A. Macke, Jr., SIorBrokerage Senior Vice president

principal | Cincinnati

[email protected] +1 513 562 2233

richard p. MederBrokerage Senior Vice president



Chris Vollmer, Jr.Brokerage Vice president


John p. Schenk, CCIM, SIorBrokerage Senior Vice president



Chris Vollmer, SIorBrokerage Senior Vice president



Matthew h. SmythBrokerage Senior Associate


Brian t. graham, CCIMBrokerage Associate



Q1 2012 - Cincinnati Office

Business

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