Economic and Demographic Update

Population: The population in Cincinnati in the 4Q of 2020 was 2,204,067. This represents an increase in total population of 3,631 over the course of the last year. During 2019 Q4, the Cincinnati population stood at 2,200,436. The number of people employed rose to 1,064,091 in 2020 Q4 from 1,052,425 over the last quarter, an increase of 11,666 or 1.11% for the period.

Median Income: The median household income for Cincinnati in the 4Q of 2020 was $70,426. At this time last year, the median household income was $66,825. 2020 Q4 median income represents a quarter-over-quarter increase of 1.00% and a year-over-year increase of 5.39%. Cincinnati has a median household income greater than the U.S. average, which is $69,270.

Current and Historical Data Review (Rates PSF, Vacancy)

Office leasing: Overall gross office base rent rates have increased by $0.06/SF. Rates grew from $14.11/SF in 2020 Q3 to $14.17/SF in this most recent quarter. Office rates grew in 2020 Q4 when compared to last year’s quarter when office base rent was $13.89/SF.

Vacancy rates dropped from 9.89% to 9.61%. They stood at 10.03% this time last year. Throughout 2021 Q1, the vacancy rate is expected to change from 9.61% to 10.17%.

In the Cincinnati market’s central business district (CBD) specifically, 2020 Q4 gross base rents stood at $20.39/SF, an increase from $20.18/SF in 2020 Q3. When compared to last year’s quarter, CBD office rates decreased from $21.62. 

CBD vacancy rates went from 10.39% to 9.82%. They stood at 6.78% in 2019 Q3. The CBD vacancy rate is expected to increase to 11.18% throughout 2021 Q1. 

Office Sales Metrics (Cap Rates, Volume, Average Price PSF)

For investors, the average cap rate during 2020 Q4 was 5.85%, compared to the previous quarter’s cap rate of 6.97%. The cap rate was 8.56% this quarter last year.

In terms of transaction volume, there were 65 sales transactions during the period. That’s an increase compared to the 58 transactions in the previous period. Last year at this time, there were 102 transactions. In terms of transaction amounts, office transactions were valued at $62,370,076 in 2020 Q4. That’s an increase compared to $33,838,788 of transaction value in the previous period. Last year at this time, office transactions were valued at $68,144,928

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 $0.01/SF. Rates grew from $5.07 in 2020 Q3 to $5.08/SF in this most recent quarter. Warehouse and distribution rates grew in 2020 Q4 when compared to last year’s quarter when industrial base rent was $4.94/SF.

Warehouse and distribution vacancy rates also decreased from 7.49% to 7.33%. Next quarter, the vacancy rate is expected to drop to 6.72%.

Industrial Sales Metrics (Cap Rates, Volume)

For investors, the average industrial cap rate during 2020 Q4 was 7.65%, compared to the previous quarter’s cap rate of 7.67%. The cap rate was 7.67% this quarter last year.

In terms of sales volume, industrial transactions were valued at $162,319,691 during the quarter. That’s an increase compared to $39,117,680 of transaction value in the previous quarter. Last year at this time, industrial sales transactions totaled $97,433,520.