Market tightens amid demand gains

Source: JLL Research

Top submarkets by average asking rate

Source: JLL Research

2015 big box leasing activity by use

Source: JLL Research

Vacancy rate continues to fall with addition of new construction

With over 1.3 million square feet of constriction completed during 2015, the

market saw vacancy rates fall to 7.4 percent at end the year. The reduction in

vacancy over the year can be attributed to the success of Steiner + Associates’

mixed-use development, Liberty Center, as well as the construction of multiple

freestanding projects. After beginning the year with negative net absorption in the

first quarter, the market displayed its resilience by posting positive absorption in

each of the final three quarters of 2015. As development in the market continues

to trend towards large freestanding buildings and smaller multi-tenant strip

centers, vacancy rates are projected to continue to decline.

As total market rents level, top submarkets remain on top

While the market has sustained its rebound from the recession, rents have

remained stagnant over the last two years. While rents have failed to increase at

a rapid rate, the top submarkets still sit atop the scale as retailers continue to

look for space in Cincinnati’s most desired submarkets. Mixed-use projects in

Midtown have fueled the submarket’s reign of top tier rents. Retail has gained

prominence in modern development as more owners look to use retail as an

amenity for office and multifamily projects. In addition, new development has

spurred Boone County's rents with large freestanding users entering the

submarket.

Freestanding users drive absorption gains

Over the course of 2015 the market absorbed 942,340 square feet thanks to

large freestanding users in the market. Three big box users were the catalysts

for the significant net absorption seen in the quarter as Menard’s, Kroger, and At

Home occupied space. Freestanding activity was seen in the East, Northeast,

Midtown, Boone County, and North Central submarkets displaying the market’s

strength. In addition to available land opening up for development, former

underperforming spaces saw positive activity as owners have begun to

repurpose their assets. Owners also looked to out lots for strip centers and

restaurants to add value, a trend that is projected to continue throughout 2016.

New construction offers positive outlook for 2016

2,257

Retail Insight

Cincinnati | H1 2016

7.2%

7.7%

8.2%

8.7%

-450,000

0

450,000

2014 Q4 2015 Q1 2015 Q2 2015 Q3 2015

Absorption Vacancy

$6

$12

$18

NorthCentral

KentonCounty

East BooneCounty

Central Midtown

44.3%

30.0%

14.9%

6.0%4.8%

FreestandingRegional CenterNeighborhood CenterCommunity CenterSuper Regional Center

1.9% 2.0%Cincinnati U.S.

2015 EMPLOYMENT GROWTH

1.4% 2.3%Cincinnati U.S.

2015 INCOME GROWTH

2.3% 2.1%Cincinnati U.S.

2015 HH INCOME GROWTH

0.4% 2.3%Cincinnati U.S.

2015 RETAIL RENT GROWTH

All growth rates are year-over-year

©2016 Jones Lang LaSalle IP, Inc. All rights reserved. For more information, contact: Ross Bratcher | ross.bratcher@am.jll.com

Current retail conditions by market Construction activity

Land

lord

leve

rage

Tenant leverage

Peaking

marketFalling

market

Bottoming

market

Rising

market

Inventory (SF) Total Available (SF) Total Vacant (SF) Vacancy Rate (%) Quarterly Net

Absorption (SF)

YTD Total Net

Absorption (SF)

Shopping Centers by Type

Freestanding 18,029,509 622,239 477,239 2.6% 393,897 404,229

Neighborhood Ctr 13,308,233 1,909,591 1,660,294 12.5% -200,818 53,304

Conv/Strip Ctr 10,524,499 897,943 800,628 7.6% 4,884 30,979

Community Ctr 9,730,170 1,081,810 996,958 10.2% 180,824 312,831

Regional Ctr 5,988,212 413,504 350,061 5.8% 39,403 -47,003

Totals 57,580,623 4,925,087 4,285,180 7.4% 418,190 754,340

Inventory (SF) Total Available (SF) Available Sublease (SF) Vacancy Rate (%) Net Absorption (SF)YTD Net

Absorption

Overall trends by submarket

Boone County 4,420,349 225,708 0 3.1% 107,324 28,972

Campbell County 2,935,423 210,438 0 7.0% (4,000) (21,994)

Central 4,137,739 225,626 1,202 5.3% 48,069 38,700

East 7,102,452 710,140 1,425 8.4% 62,169 172,648

Hamilton/Oxford 2,940,884 275,595 0 9.4% (103,417) (113,763)

Kenton County 3,131,356 177,561 45,631 3.9% 30,629 93,180

Middletown 3,169,443 379,888 0 11.9% (33,417) (21,767)

Midtown 2,860,765 95,604 0 3.3% 176,235 194,653

North Central 8,130,758 735,669 1,402 6.8% 43,481 215,903

Northeast 6,340,339 482,835 0 7.6% 159,039 170,205

West Central 7,478,845 981,931 0 12.1% (91,651) (29,004)

West 4,932,270 424,092 1,432 6.4% 23,729 26,607

Grand Total 57,580,623 4,925,087 51,092 7.4% 418,190 754,340

Cincinnati

516,678 s.f.

823,271 s.f.

Under construction

2015 deliveries

Significant sale transactions

Property Submarket Size (s.f.) Buyer Seller Price Price per s.f.

Tri-County Towne Center West Central 280,633 AFC Property Management Charles C. Gilhart $24,300,000 $118

Eastgate Crossing East 175,000 Inland Real Estate CBL & Associates $21,060,000 $120

Colerain Shopping Center West Central 100,539 George Smith Partners Hauck Holdings $16,300,000 $162

Prospect Square West Central 105,533 ACF property Management GDA Real Estate $12,200,000 $115

Significant lease transactions

Tenant Size (s.f.) Lease type Submarket Property Use

Menard’s 162,340 NNN Northeast Menard’s Freestanding

Kroger Marketplace 154,211 NNN Midtown Kroger Marketplace Community Center

At Home 105,000 NNN Boone County At Home Freestanding

Dicks Sporting Goods 80,000 NNN Central Hobby Lobby Regional Center