Q4 2011 - Cincinnati Industrial

THE KNOWLEDGE REPORTCINCINNATI, OH

www.colliers.com/cincinnati

MARKET INDICATORS

*Projected Change to Following Quarter

*Vacancy Rate increased in 4Q 11 due to a historical correction.

Q4 11 Q1 12*

VACANCY

NET ABSORPTION

CONSTRUCTION — —

RENTAL RATE — —

Q4 2011 | INDUSTRIAL

OVERALL VACANCY RATE

STRONG FINISH ENDS THE YEAR ON A POSITIVE NOTE

EXECUTIVE SUMMARYThe Greater Cincinnati industrial market finished the year on a strong note and produced more than 1.1 million square feet of positive absorption in the fourth quarter. This was just enough to send the total year-to-date absorption into positive territory at 120,511 square feet. Most of the absorption came from general industrial properties, not distribution space or flex/R&D properties. This means that several midsize deals were completed, as opposed to one large deal accounting for all of the positive absorption.

For the fourth quarter, the overall vacancy rate was 9.3% and the overall weighted asking rate for industrial properties was $3.53 per square foot. Flex/R&D space slightly increased to $6.17 per square foot, while distribution space came in at $2.88 per square foot. Comparatively, general industrial space was recorded at $3.70 per square foot.

NORTHERN KENTUCKYThe Northern Kentucky submarkets were down slightly in the fourth quarter, as all markets combined for 43,373 square feet of negative net absorption. For 2011 as a whole, the southern side of the river posted 72,458 square feet of total year-to-date absorption and ended on a positive note.

Several lease signings and lease renewals were witnessed in the fourth quarter, including Valassis Inc.’s 140,000 square foot renewal at 10176 Dixie Highway, Johnson Controls’ 135,550 square foot lease at 7575 Empire Drive and Packaging Unlimited’s 48,176 square foot lease at 7130 New Buffington Road.

SUBURBAN OHIO SUBMARKETSOn the northern side of the river, the I-275 East Corridor submarket led the way in the fourth quarter of 2011. This submarket posted 526,137 square feet of positive absorption, and a large portion of this growth was fueled by Global Scrap Management’s takeover of part of the former Ford Transmission Plant in Batavia. The Blue Ash submarket also chipped in to help the cause, and added 267,319 square feet of positive absorption.

8.5%

9.0%

9.5%

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

500,000

1,000,000

1,500,000Quarterly Net Absorption

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

1 000 000

-500,000

0

500,000

1,000,000


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$8General Flex Distribution

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

Quarterly Net Absorption

865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$

$5

$6

$7


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$2

$3

$4

$5

$6

$7

$8

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

General Flex Distribution

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$2

$3

$4

$5

$6

$7

$8

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

Transactions are believed to be accurate but not guaranteed.

CONSTRUCTIONOn the construction side, one large speculative building is under contract and several smaller build-to-suit projects are underway. The speculative building is in Monroe, as IDI continues construction on its 553,338 square foot distribution center at 1100 Logistics Way.This building is expected to be completed in May of 2012. USUI International is still on track to finish their 127,000 square foot facility in Sharonville. Links Unlimited is working on a 60,000 square foot facility in Norwood; Eurostampa is completing a 75,000 square foot facility in Roselawn; and Z.F. Steering Systems has two buildings under construction in Florence.

Additional construction of speculative industrial space is not anticipated anytime soon, but we will continue to see build-to-suit projects hit our market as manufacturing continues to improve.

FORECASTThe strong finish of 2011 was great news for the Greater Cincinnati industrial market. Having 1.1 million square feet of positive net absorption is just what the market needed in its economic recovery. Although we saw a flurry of activity during the past three months, we expect this activity to slow down for most of 2012. There is slight concern with the Tri-County/Union Centre submarket, as over 2 million square feet has already surfaced and will become vacant next year. This includes Avon Products on Progress Place, CEVA Logistics on Windisch Road and the Liz Claiborne Facility on Jacquemin Drive. We are hopeful that industrial companies will continue to expand to help offset this expected negative absorption, making 2012 an overall good year.

UPDATE Recent Transactions

FOURTH QUARTER ACTIVITY

PROPERTY SUBMARKET TENANT/BUYER LANDLORD/SELLER SIZE TYPE

5121 Fishwick Drive Central/Midtown The State of Ohio on Behalf of UC Quality Associates Inc. 210,000 Sale

West Chester Commerce Park Bldg II Tri-County/Un. Ctr. ING Clarion Partners ProLogis 205,920 Sale

9842 International Blvd Tri-County/Un. Ctr. Quality Associates RREEF Americas 204,800 Sale

9756 International Blvd Tri-County/Un. Ctr. Netrada North America RREEF Americas 192,000 Lease

10176 Dixie Highway Florence/Walton Valassis Inc. Paul Hemmer Companies 140,000 Lease Renewal

7575 Empire Drive Florence/Walton Johnson Controls Brendamour Group Realtors 135,550 Lease

1441 Western Avenue Central/Midtown Berman Printing Dyment Co. 101,920 Lease Renewal

10121 Princeton Glendale Road Tri-County/Un. Ctr. ING Clarion Partners ProLogis 90,640 Sale

3997 McMann East Woeste Investments 3M Company 83,000 Sale

7697 Innovation Way I-71 North Malhotra Family LLC Neyer Holdings 52,500 Sale

7130 New Buffington Road Florence/Walton Packaging Unlimited DCT Industrial Trust 48,176 Lease

ProLogis Park Sharonville #2 Tri-County/Un. Ctr. Ferguson Enterprises Inc. ProLogis 44,800 Lease

Corporate Woods Center Blue Ash Construction Software Tamarkin Co. 43,000 Lease

2909-2929 E. Crescentville Road Tri-County/Un. Ctr. Baldor Motors ProLogis 38,400 Lease Renewal

7107 Industrial Row I-71 North Healthwarehouse.com DCT Industrial Trust 34,106 Lease Expansion

419 Northland Blvd Tri-County/Un. Ctr. USA Lamp & Ballast Recycling, Inc. Haueter Properties, Inc. 32,970 Sale

7300 Industrial Road I-71 North M&M Logistics Oldcastle, Inc. 30,000 Sale

100 Commerce Blvd I-71 North Amp Electric Vehicles 100 Commerce Boulevard LLC 24,500 Lease

3143 Western Row Road I-71 North Good Health Properties Singer Contract Group 23,000 Lease

10557 Medallion Drive Lockland/Evendale Scherzinger Pest Control The National Realty Ground, Inc. 22,772 Sale

3965 Virginia Avenue Central/Midtown Tire Discounters Anchor Fluid Power 20,000 Lease

11658 Baen Road I-71 North Cahill Company Agnone-Kelly Properties LLC 17,800 Sale

Union Enterprise Center Tri-County/Un. Ctr. H&Y Cabinet & Granite Depot Neyer Holdings 12,500 Lease

2647 Morgan Lane Hamilton ADPI System Marsh Larry L & Patti A 12,090 Lease

Liz Claiborne Facility

THE KNOWLEDGE REPORT | Q4 2011 | INDUSTRIAL | CINCINNATI

P. 2 | COLLIERS INTERNATIONAL

SUBMARKET Total Inventory Total Vacant SF

Vacancy Rate Quarterly Absorption

YTDAbsorption

Avg. Rate

275 East Corridor 7,914,976 2,213,297 28.0% 526,137 496,743 $3.59

Airport 27,928,875 2,931,474 10.5% (163,305) 42,769 $3.37

Blue Ash 13,912,070 1,212,923 8.7% 267,319 (293,760) $5.20

Campbell County 4,193,730 16,000 0.4% 0 0 N/A

Central/Midtown 55,319,876 3,592,647 6.5% 21,098 (688,274) $3.60

Covington 4,902,449 266,716 5.4% (32,716) (131,716) $3.64

Eastern Outlying 3,993,267 722,076 18.1% 173,629 29,705 $4.83

Florence/Walton 20,736,944 1,107,166 5.3% 152,648 161,405 $3.17

Hamilton 7,321,859 264,300 3.6% (600) 115,400 $3.53

I-71 North Corridor 10,114,916 1,501,734 14.8% 79,677 (66,899) $3.73

Lockland/Evendale 19,178,561 798,530 4.2% (50,067) (235,856) $3.44

Monroe/Middletown 11,076,364 1,302,880 11.8% (328,149) (98,649) $2.92

Outside Metro Area 315,000 40,000 12.7% 0 0 $4.50

Tri-County/Union Centre 64,771,194 7,644,217 11.8% 189,650 619,734 $3.41

Western Outlying 6,433,297 289,300 4.5% 329,909 169,909 $3.52

MARKET TOTALS 258,113,378 23,903,260 9.3% 1,165,230 120,511 $3.53

SUBMARKET DATA

The Cincinnati Industrial Market’s vacancy rate stands at 9.3%, year-to-date net absorption totaled(120,511) SF.

AVG. ASKING RATES (PER SF-FULL SERVICE GROSS)

8.5%

9.0%

9.5%

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

500,000

1,000,000


7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

1 000 000

-500,000

0

500,000

1,000,000


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$

$5

$6

$7


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$2

$3

$4

$5

$6

$7

$8

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

7.5%

8.0%

8.5%

9.0%

9.5%

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1

$2

$3

$4

$5

$6

$7

$8

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1


865,230 SF

QUARTERLY NET ABSORPTION

Squa

re F

eet

0

500,000

1,000,000


-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

3Q 1

1

4Q 1

1



COLLIERS INTERNATIONAL | P. 3

CEO | PRINCIPAL: Shenan P. Murphy, CCIM+1 513 721 4200

512 offices in 61 countries on 6 continentsUnited States: 125Canada: 38Latin America: 18Asia Pacific: 214EMEA: 117

• $1.5 billion in annual revenue

• 979 billion square feet under management

• Over 12,000 professionals

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

Colliers International | Greater Cincinnati 425 Walnut Street, Suite 1200Cincinnati, OH 45202

Industrial Services | Greater Cincinnati

INT’LAIRPORT

I-75 NORTH

TRI-COUNTY/UNION CENTRE

I-71 NORTHBLUEASHLOCKLAND/

EVENDALE

CENTRAL/MIDTOWN EASTERN

CORRIDOR

WESTERNCORRIDOR

KENTONCAMPBELLCOUNTY

COVINGTON

AIRPORT

FLORENCE

HAMILTON

www.colliers.com/cincinnati

Chuck A. Ackerman, CCIM, SIORBrokerage Senior Vice President

[email protected] +1 513 562 2266

John B. Gartner, III, SIORBrokerage Senior Vice President

Principal | Cincinnati


William K. Keefer, SIORBrokerage Senior Vice President



Steve R. MillerBrokerage Vice President


Erin M. Casey, GA-C, MICP™Senior Brokerage Associate


Michael E. Daly, SIORBrokerage Senior Vice President




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Q4 2011 - Cincinnati Industrial