Cincinnati Industrial Group

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Q1 2019 Industrial Knowledge Report 

Slowing Deman - A Break in the Action or a Troubling Trend?   

During the first quarter of 2019, negative net absorption of 313,199 square feet, along with the delivery of vacant new inventory, pushed the overall market vacancy rate up 30 basis points (bps) to 4.1% as the Cincinnati industrial market took a breather from the torrid pace of activity recorded over the past six years.

During that six-year timeframe, the market posted positive net absorption in excess of 32 million square feet. The recent slow-down in demand, coupled with some newly vacated large blocks of space, drove the negative performance, yet it remains to be seen if this is the beginning of a trend or an aberration in the new normal.

The bulk warehouse sector contributed heavily to the loss in occupancy, posting negative net absorption of 840,000 square feet, while the warehouse-distribution and manufacturing asset classes recorded a combined gain of 557,000 square feet to offset a portion of the loss.

Construction activity continues to pick up, although only 861,000 square feet of new supply (of which approximately half was speculative product) was delivered during the quarter. However, it is forecast that an additional 8.1 million square feet of industrial product will be delivered by the end of 2019. Of that total, nearly 5.5 million square feet, comprised of buildings ranging from 103,000 to 1.1 million square feet, is speculative.

Even with the loss in occupancy, the bulk warehouse market remains tight with a vacancy rate of 5.7% for this asset class. Only 21 blocks of space in excess of 100,000 square feet are available in existing buildings with an additional 10 buildings under construction that can accommodate occupiers in this size range.

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