Economic and Demographic Update
Population: The population of Cincinnati in the 3Q of 2021 was 2,210,924. This represents a decrease in total population of 449 over the course of the last year. During 2020 Q3, the Cincinnati population stood at 2,211,373. The number of people employed rose to 1,101,976 in 2021 Q3 from 1,083,647 over the last quarter, an increase of 18,329 or 1.69% for the period.
Median Income: The median household income for Cincinnati in the 3Q of 2021 was $75,778. At this time last year, the median household income was $70,771. 2021 Q3 median income represents a quarter-over-quarter increase of 1.19% and a year-over-year increase of 7.07%. Cincinnati has a median household income greater than the U.S. average, which is $74,302.
Current and Historical Data Review (Rates PSF, Vacancy)
Office leasing: Overall office base rent rates have increased by $0.22/SF. Rates went from $14.14/SF in 2021 Q2 to $14.36/SF in this most recent quarter. Office rates grew in 2021 Q3 when compared to last year’s quarter, when office base rent was $13.95/SF.
Vacancy rates also went from 9.80% to 9.90%. They stood at 9.00% this time last year. Throughout 2021 Q4, the vacancy rate is expected to increase from 9.90% to 10.00%.
In the Cincinnati market’s central business district (CBD) specifically, 2021 Q3 base rents stood at $21.47/SF, an increase from $21.40/SF in 2021 Q2. When compared to last year’s quarter, CBD office rates decreased from $21.39.
CBD vacancy rates went from 8.05% to 8.78%. They stood at 6.78% in 2020 Q3.Throughout the next quarter, the CBD vacancy rate is expected to increase slightly to 8.79%.
Office Sales Metrics (Cap Rates, Volume, Average Price PSF)
For investors, the cap rate during 2021 Q3 was 7.00%, compared to the previous quarter’s cap rate of 8.20%. The cap rate was 7.00% this quarter last year.
In terms of transaction volume, there were 59 sales transactions during the period. That’s a decrease compared to the 82 transactions in the previous period. Last year at this time, there were 61 transactions. Office transactions were valued at $55,307,896 in 2021 Q3. That’s a decrease compared to $185,266,960 of transaction value in the previous period. Last year at this time, office transactions were valued at $35,467,288.
Industrial Leasing Metrics (Rates PSF, Vacancy)
Industrial leasing: For the Cincinnati, OH industrial sector, we look at warehouse and distribution spaces specifically. Warehouse and distribution base rent rates have increased by $0.14/SF. Rates grew from $5.51 in 2021 Q2 to $5.65/SF in this most recent quarter. Warehouse and distribution rates grew in 2021 Q3 when compared to last year’s quarter, when industrial base rent was $5.35/SF.
Vacancy rates went from 5.50% to 5.10%. Next quarter, the vacancy rate is expected to reach 5.30%.
Industrial Sales Metrics (Cap Rates, Volume)
For investors, the average industrial cap rate during 2021 Q3 was 8.50%, compared to the previous quarter’s cap rate of 8.50%. The cap rate was 6.80% this quarter last year.
In terms of sales volume, industrial transactions were valued at $152,420,000 during the quarter. That’s an increase compared to $127,645,544 of transaction value in the previous quarter. Last year at this time, industrial sales transactions totaled $63,578,316.
