Economic and Demographic Update
Population: The population in Cincinnati in the 1Q of 2021 was 2,204,911. This represents an increase in total population of 3,763 over the course of the last year. During 2020 Q1, the Cincinnati population stood at 2,201,148. The number of people employed rose to 1,072,600 in 2021 Q1 from 1,064,091 over the last quarter, an increase of 8,509 or 0.80% for the period.
Median Income: The median household income for Cincinnati in the 1Q of 2021 was $70,606. At this time last year, the median household income was $67,885. 2021 Q1 median income represents a quarter-over-quarter increase of 0.26% and a year-over-year increase of 4.01%. Cincinnati has a median household income greater than the U.S. average, which is $69,277.
Current and Historical Data Review (Rates PSF, Vacancy)
Office leasing: Overall office base rent rates have increased by $0.20/SF. Rates went from $14.01/SF in 2020 Q4 to $14.21/SF in this most recent quarter. Office rates grew in 2021 Q1 when compared to last year’s quarter, when office base rent was $13.96/SF.
Vacancy rates also went from 9.70% to 10.30%. Throughout Q2 2021, the vacancy rate is expected to decrease to 10.20%.
In the Cincinnati market’s central business district (CBD) specifically, 2021 Q1 base rents stood at $20.67/SF, an increase from $20.63/SF in 2020 Q4. When compared to last year’s quarter, CBD office rates increased from $20.49.
CBD vacancy rates went from 10.00% to 11.41%. The CBD vacancy rate is expected to increase to 10.46% next quarter.
Office Sales Metrics (Cap Rates, Volume, Average Price PSF)
For investors, the cap rate during 2021 Q1 was 10.90%, compared to the previous quarter’s cap rate of 5.85%. The cap rate was 7.50% this quarter last year.
In terms of transaction volume, there were 39 sales transactions during the period. That’s a decrease compared to the 65 transactions in the previous period. Last year at this time, there were 82 transactions. In terms of transaction amounts, office transactions were valued at $46,345,500 in 2021 Q1. That’s a decrease compared to $66,573,576 of transaction value in the previous period. Last year at this time, office transactions were valued at $179,643,536.
Industrial Leasing Metrics (Rates PSF, Vacancy)
Industrial leasing: For the Cincinnati, OH industrial sector, we look at warehouse and distribution spaces specifically. Overall warehouse and distribution base rent rates have increased by $0.08/SF. It went from $5.40 in 2020 Q4 to $5.48/SF in this most recent quarter. Warehouse and distribution rates grew in 2021 Q1 when compared to last year’s quarter, when industrial base rent was $5.33/SF.
In 2021 Q1, the industrial market grew in Cincinnati by 1.40% versus 2020 Q4.
Vacancy rates decreased from 5.90% to 5.20%. Next quarter, the vacancy rate is expected to reach 5.60%.
Industrial Sales Metrics (Cap Rates, Volume)
For investors, the industrial cap rate during 2021 Q1 was 8.00%, compared to the previous quarter’s cap rate of 7.65%. The cap rate was 7.90% this quarter last year.
In terms of sales volume, industrial transactions were valued at $165,218,144 during the quarter. That’s an increase compared to $162,319,691 of transaction value in the previous quarter. Last year at this time, industrial sales transactions totaled $188,743,200.