An Overview of the Major Office Submarkets
SubMarket: Central Business District
Total Size: 14,750,000 SF
# of Bldgs: 83
% Vacant: 14%
Avg. Rate/SF Class A: $19.33
Avg. Rate/SF Class B: $14.98
’05 Absorption: (118, 500 SF)
SubMarket: Blue Ash, Kenwood, Mason-Montgomery
Total Size: 9,780,500 SF
# of Bldgs: 309
% Vacant: 17%
Avg. Rate/SF: $15.29
’05 Absorption: 224,800 SF
SubMarket: Forest Park, Tri-County/I-275
Total Size: 3,756,400 SF
# of Bldgs: 139
% Vacant: 15%
Avg Rate/SF: $15.40
’05 Absorption: 124,400 SF
SubMarket: Midtown, Clifton
Total Size: 3,054,750 SF
# of Bldgs: 51
% Vacant: 11%
Avg. Rate/SF: $18.02
’05 Absorption: 87,420 SF
SubMarket: Northern Kentucky
Total Size: 5,619,000 SF
# of Bldgs: 189
% Vacant: 23
Avg Rate/SF: $17.28
’05 Absorption: 217,996 SF
SubMarket: Butler County
Total Size: 2,723,475 SF
# of Bldgs: 45
% Vacant: 17%
Avg Rate/SF: $15.48
’05 Absorption: (139,000 SF)
It is my pleasure to present this issue of “The Office Market Report” which reviews the Greater Cincinnati Office Market for 2005. This report includes an overview of the major office submarkets and highlights the larger sales and leases of 2005.
Notable Leases of 2005
Sara Lee Foods announced the relocation of its North American business office, currently located at Hawthorne Center (10151 Carver Road, Blue Ash). While most top executives relocated to Chicago, Sara Lee continues to employee approximately 100 technology employees in Mason and 700 at their meat-packing plant in Camp Washington. The relocation affected approximately 550 high wage earners and could cost the city of Blue Ash $500K in annual income. Sara Lee received tax credits from the State of Ohio in return for their promise to stay for at least 20 years and create 125 new jobs.
In related news, The Coca- Cola Company created a regional headquarters in Cincinnati, in office space formerly occupied by Sara Lee at Hawthorne Center in Blue Ash. Coke will occupy approximately 55,000 square feet in the building.
GE Transportation relocated 350 employees to the Princeton Hill office building (30 Merchant Street, Springdale) leasing 95,000 square feet. The employees had been working in what was described as less than desirable basement space on GE’s Evendale Campus. The loss of jobs cost the city of Evendale an estimated $400,000 per year in tax revenues.
Florence Kentucky based Xanodyne Pharmaceuticals announced the relocation of its headquarters to One Riverfront Place (Newport, Kentucky) where it leased 87,664 square feet. This was a sublease of office space formerly occupied by Shire Pharmaceuticals.
Central Bank of Kentucky leased 26,500 square feet at Turfway Ridge Office Park (Florence, KY) for ten years.
303 Broadway at Queen City Square (CBD) announced the signing of its first tenant, leasing 95,000 SF to IFS. Queen City Square is the first new multi-tenant office building constructed in the CBD since 1992. IFS will relocate from Atrium II, 221 E. Fourth Street (CBD).
VLT Academy (Charter School grades kindergarten thru eighth) leased 35,000 square feet for 5 years at 1100 Sycamore Street, downtown. The building formerly housed Sun Furniture Company.
Deloitte & Touche USA, recommitted to The Chiquita Center (250 E. Fifth Street, CBD), signing a 12 year lease renewal for approximately 75,000 square feet. The building is owned by the Andalex Group, based in New York.
Catholic Health Partners subleased 26,304 at 615 Elsinore Place, located in the Midtown market at the foot of Mt. Adams.
Notable Sales of 2005
Holiday Office Park (Linn Street and W. Eighth Street, Queensgate) consisting of 345,966 square feet was purchased by Premier Office Park LLC, for $14.5 million ($41.91/SF).
Fourth and Walnut Centre (101-105 E 45th Street, CBD) was sold by CINERGY for $31,250,000 ($89/SF) to a private equity investor from Indianapolis.
Wells Real Estate Fund bought 2 office buildings totaling 300,000 SF in Mason, Ohio (8990 Duke Blvd., $11,600,000, $148.26/SF - 4241 Irwin Simpson Road, $29,900,000, $134.08/SF). The strength of its’ largest tenant, Anthem, with 14 years remaining on its lease, weighed heavily on Wells’ decision to purchase the property.
Turfway Ridge Office Park (7300-7310 Turfway Road, Florence, Kentucky) was bought by two New York City investors from Credit Suisse First Boston. The two, five story buildings which total approximately 218,000 SF sold for $18,500,000 ($84.89/SF).
Cincinnati Eye Institute bought Northmark III, (4501 Erskine Road, Blue Ash, 106,580SF) for approximately $9,679,500 ($90.82/SF). CEI will relocate its medical offices from the campus of Bethesda North Hospital in Montgomery. The seller was Scott Street Partners which bought the building earlier this year.
Executive Plazas I, II, and III (Merchant Street, Springdale) were sold by Duke Associates to TIC Properties LLC of Greenville S.C. for $30.4 million ($112.80/SF) Buildings I and II are occupied by GE Aircraft Engines. Building III has a small vacancy.
11300 Cornell Plaza (Blue Ash) was sold by ERI for $4,800,000 ($55.84/SF). This was the last building owned in Greater Cincinnati by this institutional investor.
Landlords…Tenants want service!
A national survey of office tenants showed that tenants asked for and received improvement in the following areas:
• Tenants asked for and received more contact with their leasing representative.
• Tenants asked for and received improved janitorial services.
• Tenants asked for and received improved follow-up to their reported problems.
• Tenants were very pleased with “the courtesy and respect with which they were treated” by landlords and their employees.
The bad news…
The quality of heating and air conditioning, the appearance of elevator cabs, and the availability of convenient visitor parking saw no overall improvement in 2005 according to tenants and continue to be areas that need improvement. |
