Ralph Shine, general manager in Cincinnati with NAI Hiffman, knows the ins and outs of his market. That’s why Midwest Real Estate News decided to ask him three key questions about the health of Cincinnati’s real estate market. Here is what Shine had to say:
When looking at the Cincinnati commercial real estate market, which commercial sectors are showing the most strength, and what are the reasons for this strength?
Ralph Shine: The CBD office market has shown great strength in the past two quarters. The biggest news was Western & Southern leasing the top seven floors of Columbia Plaza (approximately 126,000 square feet), which caused Class-A office vacancy in the CBD to drop to approximately 17.3 percent. Meanwhile, Class-B vacancy also dropped to less than 11 percent as the trend of converting older office stock to multifamily or hotel uses continued. These two factors have combined to make CBD vacancy 13.7 percent.
If you were talking to the decisionmakers of a company that was considering opening a location in Cincinnati, what would you tell them about the city? What reasons would you give them for opening a location in Cincinnati?
Shine: While not a native Cincinnatian, I have raised my now college-aged children as natives and have “gone native” myself. The entire family greatly enjoys Cincinnati’s signature Skyline Chili! We are proud Cincinnatians and are very proud of the city’s growth.
In the past 10 years, we have seen marked improvements in the CBD including the addition of a world-class development on the banks of the Ohio River, The Banks Riverfront Entertainment District; two new Class-A office buildings; and considerable freshening of downtown amenities, like the recent $135 million renovation of Cincinnati’s convention center and the $47 million improvement of Washington Park, making it a destination that includes water jets, a performance stage and a dog park.
Cincinnati’s great business climate is driving these changes. With nine Fortune 500 firms in Cincinnati, including Fortune #20 firm Kroger and Fortune #45 firm P&G in the CBD, big business has found a home in Cincinnati. Nationally recognized universities in the area including Miami University, Xavier University, and the University of Cincinnati all provide a conduit for employers to source talent.
Meanwhile, Cincinnati is also very affordable. According to U.S. News & World Report’s “Best Places to Live” rankings, Cincinnati is the 39th best place to live in the United States and offers a better value than similarly sized metro areas when you compare housing costs to median household income.
Cincinnati is also convenient. The average commute time is about 24 minutes, making Cincinnati easy for employees to navigate. Finally, Cincinnati is large enough to have world-class amenities. For instance, according to Livability.com, Cincinnati is one of a few select U.S. cities with professional companies in all the arts such as ballet, opera, symphony and theater. The vibrant art scene combined with two major league sports franchises and University of Cincinnati and Xavier University Division 1 sports programs make the market very compelling to employers for attracting and retaining talent.
NAI Hiffman is very proud to be able to grow into the Cincinnati market in support of the relationships that we have with our world-class investor partners such as Griffin Capital, 90N Real Estate Partners and Agellan Commercial REIT as they reap the benefits that the Cincinnati market provides to businesses.
What are some of the major commercial real estate trends you see that you think will play a significant role in Cincinnati in the next several years?
Shine: As vacancy decreases in the CBD, most analysts are expecting a slight uptick in office rental rates. Meanwhile, Cincinnati’s affordable economy will likely attract additional investment money from the coasts as investors seek to purchase real estate investments at rates that are below replacement value. This is already happening: In Q3 of 2019 alone, five office buildings sold for more than $4 million each. While Cincinnati is inherently a conservative town, and CBD office buildings have traditionally not been built on “spec,” given market dynamics, it would not be surprising to see another Class-A building being built soon in the CBD.