Retail occupancy rates in the Cincinnati market reached a 10-year high, according to the latest research from Marcus & Millichap.
In its third-quarter retail report, Marcus & Millichap predicted that the retail vacancy rate in the Cincinnati market will fall 70 basis points by the time 2016 ends, closing the year with a vacancy rate in this sector of 6.6 percent. That’s the lowest this mark has been in a decade.
This would also mark the second year of a solid drop in the vacancy rate. Marcus & Millichap said that in 2015, the Cincinatti area’s retail vacancy rate dropped by 40 basis points.
When vacancy rates fall, rents tend to increase. That is certainly the case in the Cincinnati area. Marcus & Millichap forecasts that asking rents for Cincinnati-area retail space will increase 6.7 percent to $11.50 a square foot. This is a solid increase from 2015, when owners posted asking rents of $10.78 a square foot.
Inspired by the steady improvement in the Cincinnati retail market, developers are expected to deliver about 530,000 square feet of retail construction this year, according to Marcus & Millichap’s report. The company said that 87 percent of this space is pre-leased. Last year, developers added 818,000 square feet of new retail space to the Cincinnati market.
What new retail projects are coming to the Cincinnati market? Significant build-to-suit projects include plans for a new Aldi’s grocery store, Chick-fil-A restaurant and Menards hardware store. Builders are targeting the Northern Kentucky area and the market just south of downtown Cincinnati for many of the region’s new retail projects, Marcus & Millichap said.