Susan Branscome has worked in the commercial real estate industry in Cincinnati for more than three decades. Never has she seen the city as busy at it is today when it comes to new commercial sales, leases and developments.
Branscome, senior vice president and managing director of the Cincinnati office of NorthMarq Capital, said that it isn’t just one commercial sector in the city that’s booming, either. Industrial, multifamily, office and retail are all seeing an increase in sales and leases today.
“It’s probably been one of the best times for Cincinnati in terms of all the markets so close to being in balance as far as demand and supply goes,” Branscome said. “Vacancies are down. Rents are increasing in all the sectors. I’ve been in this market for a long time. This is maybe the best we’ve ever seen Cincinnati in terms of the commercial real estate market.”
Branscome says banks and commercial lenders have played a part in the positive supply-and-demand balance that Cincinnati is now experiencing. She said that banks have become more conservative when it comes to lending money for new commercial developments.
For new apartment buildings, for instance, the highest loan-to-value ratio developers can have and still expect to qualify for commercial financing is in the 70 percent to 75 percent range, Branscome said.
Thanks in part to this conservatism, the supply of new apartments in the Cincinnati area has not outpaced the demand for these units. Unlike other markets in the Midwest and across the country, there are few worries here that the multifamily market is overbuilt.
This same scenario is being played out in the other commercial markets in the Cincinnati market, too, helping to keep that demand-supply balance at a healthy level.
This isn’t to say that apartment buildings here are filling as quickly as they were last year or the year before. Branscome said that the pace of absorption and rent increases has slowed. With all the new apartment projects still coming online, the Cincinnati area might see some softness in rents in the highest end of the multifamily market, she said.
The positive for this market, though, is the diversity of renters. Branscome said that it’s not just Millennials who are renting apartments in the center of Cincinnati, but tenants of all ages.
“We thought it would always be Millennials,” Branscome said. “But we are also seeing Baby Boomers who don’t want to own anymore. We are seeing so much more activity downtown with housing.”
An example of this? The new $52 million, 17-story Encore Urban Living from NorthPointe Group and North American Properties. This building is an example of the kind of high-end apartment projects that are still rising in the Cincinnati market.
The multifamily market, though, isn’t the only sector thriving in Cincinnati. The industrial market here is busy, too. Amazon has helped with its decision to make Cincinnati one of its major hubs. The online retail giant is expected to bring 1,000 new jobs to the Cincinnati market.
Branscome pointed to the coordinated efforts of a host of civic organizations as one reason why Cincinnati’s commercial real estate market is performing so well. She said that the local chamber of commerce, the port authority and other organizations have come together to offer incentives and regulations that make it easier for developers to work in the Cincinnati market.
Cincinnati is also home to several large companies, such as Kroger, Fifth Third Bank and GE. GE, in fact, recently made a major investment in the city, building a new office building about 18 months ago here and bringing 2,000 jobs to the center of Cincinnati.
The opening of the $80 million interchange at Martin Luther King Drive and Interstate-71 has made an impact on the Cincinnati commercial real estate market, too, Branscome said. This public project will spur more growth in the neighborhood known as Pill Hill.
“We are already seeing plans for new hotels and office buildings near that new interchange,” Branscome said.
The Cincinnati commercial real estate market is so strong, it is inspiring out-of-town developers to move into the area, Branscome said. Several developers that normally focus on markets such as Columbus and Indianapolis are now taking on projects in Cincinnati, she said. This is because of the high demand for new commercial buildings here and the ease of developing in this area, Branscome said.
“They are seeing Cincinnati as a vibrant market today,” Branscome said.