THE KNOWLEDGE REPORTCINCINNATI, OH

www.colliers.com/cincinnati

Industrial Market Activity Picks Up, But

Rising Vacanies Expected

The second quarter of 2011 showed a small amount of positive absorption, as the overall net absorption totalled 47,942 square feet. While this is a good sign for the market, it was not enough to off set the losses from the fi rst quarter of this year. Year-to-date, overall net absorption totaled negative 646,677 square feet. The overall vacancy rate remained unchanged and stands at 8.8 percent.

The overall weighted asking rate is $3.54 per square foot and is up slightly from $3.49 per square foot at the end of the fi rst quarter of 2011. Flex/R&D space led the way with a rate of $6.00 per square foot. Distribution space came in at $2.88 per square foot, while General Industrial space had a rate of $3.79 per square foot. The slight increase in the overall asking rate may be a sign that landlords and owners are trying to recapture some of their losses from the past two years.

The Airport Submarket was this quarter’s biggest gainer, as almost 1,000,000 square feet of positive absorption was reported. This reduced this submarket from an overall vacancy rate of 10.2% to 7.6%.

The Cincinnati Industrial Market’s vacancy rate stands at 8.8%, while net absorption totalled 47,942 SF.

MARKET INDICATORS

*Projected Change to Following Quarter

Q2 11 Q3 11*

VACANCY —

NET ABSORPTION —

CONSTRUCTION —

RENTAL RATE —

Q2 2011 | INDUSTRIAL

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2Q 0

9

3Q 0

9

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

47,942 SF

-1,500,000

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2Q 0

9

3Q 0

9

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

47,942 SF

AbsorptionCompletions

Square

Feet

COMPLETIONS VS ABSORPTIONOVERALL VACANCY RATE

9.0%

9.5%

8.8%

7.5%

8.0%

8.5%

9.0%

9.5%

2Q 0

9

3Q 0

9

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

8.8%

NORTHERN KENTUCKY

The Northern Kentucky Submarkets showed a

tremendous amount of positive activity, as net

absorption totaled 873,751 square feet. The

Airport led the charge in this market with 915,983

square feet of net absorption. This is welcome

news for the overall market, as the airport is a

huge driver for industrial space.

Several large deals helped the Airport Submarket

this quarter. They include the lease signings of

Innotrac at Airpark International Distribution

Center #5 (198,000 square feet), CSN at

Parkwest International Building E (155,370

square feet), Pratt Display at Southpark #4

(166,400 square feet) and Bay Logistics at

Skyport #2 (113,112 square feet). These deals

greater than 100,000 square feet are just what

the Airport Submarket needed to pick itself up

and help our overall market on the road

to recovery.

SUBURBAN OHIO MARKETS

On the north side of the river, the Ohio Submarkets

didn’t fare as well as their counterpart in Northern

Kentucky. The Central/Midtown submarket lost

755,000 square feet and Blue Ash lost another

261,694 square feet. Both of these submarkets

off set the gains provided by the markets on the

south side of the river.

On a positive note, Tri-County/Union Centre saw

a good amount of transactions and posted positive

absorption of 158,780 square feet. The Monroe/

Middletown submarket also posted positive

absorption of 206,500 square feet. While this

news was a step in the right direction, Tri-

County/Union Centre is expecting a hard hit in the

next 18 to 24 months. Liz Claiborne announced

plans to close their facility at 8741 Jacquermin

Drive, which will leave 601,000 square feet

behind. Avon Products is looking to close their

facility 0n Progress Place, placing more than

UPDATE Recent Transactions

LEASING ACTIVITY

PROPERTY SUBMARKET TENANT LANDLORD SIZE TYPE

Airpark Intl Distribution Center #5 Airport Innotrac ProLogis 198,000 Direct Lease

Southpark #4 Airport Pratt Display Duke Realty 166,400 Direct Lease

Parkwest International - Bldg E Airport CSN Distribution Patent Owner 155,370 Direct Lease

Skyport #2 Airport Bay Logistics Dugan Financing 113,112 Direct Lease

7410 Union Centre Boulevard Tri-County/ Union Centre Red Bull IDI 55,706 Direct Lease

1087 Janet Way I-71 North Corridor Vistech Manufacturing Solutions Confi dential 40,622 Direct Lease

Beacon Point /Service Center Drive Tri-County / Union Centre Cincinnati Enquirer Gross Beacon Point LLC 32,105 Direct Lease

1261 Aviation Boulevard Airport ZF Boge Cabot 30,000 Direct Lease

SALES ACTIVITY

PROPERTY SUBMARKET BUYER SELLER SIZE SALES PRICE

2 Building Portfolio on Kemper Road Blue Ash Tire Discounters Triple D Ohio, LLC 191,775 $2,150,000

5404 Duff Drive Tri-County/Union Centre BDW Properties Thrivent Financial for Lutherans 110,000 $2,250,000

2130 Tuley Road Hamilton Bondtech Corporation Fifth Third Bancorp 73,400 $750,000

366 Circle Freeway Drive Tri-County/Union Centre Artisan Mechanical Septm Investments Inc 64,132 $1,500,000

2915-2935 Glendale-Milford Road Central/Midtown Nexeo Solutions LLC Ashland Inc. 51,812 $2,630,000

$6

$7

$8

$2

$3

$4

$5

$6

$7

$8

2Q 0

9

3Q 0

9

4Q 0

9

1Q 1

0

2Q 1

0

3Q 1

0

4Q 1

0

1Q 1

1

2Q 1

1

Flex DistributionGeneral

AVG. ASKING RATES (PER SF - NET)

Transactions are believed to be accurate but not guaranteed.

THE KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | CINCINNATI

P. 2 | COLLIERS INTERNATIONAL

TOTALINVENTORY

DIRECTVACANCT SF

SUBLEASEVACANT SF TOTAL VACANT SF

TOTAL VACANCY RATE

PRIOR QUARTER VACANCY RATE

NETABSORPTION

(Q2)YTD NET

ABORPTIONAVERAGE

ASKING RATEUNDER

CONSTRUCTION

275 EAST CORRIDORDistribution 1,382,500 670,000 0 670,000 48.5% 47.1% -19,500 -19,500 $2.57Flex Splace 849,373 160,555 0 160,555 18.9% 13.5% -46,115 -35,883 $6.74General 5,691,129 12,500 123,000 135,500 2.4% 3.0% 34,000 25,989TOTAL 7,923,002 843,055 123,000 966,055 12.2% 11.8% -31,615 -29,394 $3.17

AIRPORTDistribution 19,436,736 1,486,106 49,400 1,535,506 7.9% 11.5% 870,412 823,158 $3.16Flex Splace 2,114,956 341,060 5,040 346,100 16.4% 16.8% 9,901 -12,459 $4.83General 6,327,054 239,400 0 239,400 3.8% 4.3% 35,670 42,142 $3.66TOTAL 27,878,746 2,066,566 54,440 2,121,006 7.6% 10.2% 915,983 852,841 $3.41

BLUE ASHDistribution 2,069,634 198,320 0 198,320 9.6% 2.2% -153,415 -195,215 $2.31Flex Splace 2,047,353 347,527 16,500 364,027 17.8% 15.2% -53,071 -3,331 $7.29General 9,795,083 640,550 0 640,550 6.5% 6.0% -55,208 -85,208 $3.79TOTAL 13,912,070 1,186,397 16,500 1,202,897 8.6% 6.8% -261,694 -283,754 $4.75

CAMPBELL COUNTYDistribution 318,940 0 0 0 0.0% 0.0% 0 0Flex Splace 20,000 0 0 0 0.0% 0.0% 0 0General 3,854,790 16,000 0 16,000 0.4% 0.4% 0 0TOTAL 4,193,730 16,000 0 16,000 0.4% 0.4% 0 0

CENTRAL/MIDTOWNDistribution 1,324,774 361,462 0 361,462 27.3% 31.1% 50,000 75,000 $2.02Flex Splace 1,543,719 85,536 0 85,536 5.5% 8.4% 43,555 43,555 $8.77General 52,361,383 3,181,483 0 3,181,483 6.1% 4.5% -849,127 -932,663 $3.65TOTAL 55,229,876 3,628,481 0 3,628,481 6.6% 5.2% -755,572 -814,108 $3.55

COVINGTONDistribution 776,600 0 0 0 0.0% 0.0% 0 0Flex Splace 40,000 0 0 0 0.0% 0.0% 0 0General 4,085,849 86,000 36,000 122,000 3.0% 3.8% -17,000 -37,000 $3.75TOTAL 4,902,449 86,000 36,000 122,000 2.5% 3.2% -17,000 -37,000 $3.75

EASTERN OUTLYINGDistribution 107,520 107,520 0 107,520 100.0% 74.4% -27,520 -27,520 $4.25Flex Splace 280,809 110,300 0 110,300 39.3% 39.3% 0 0 $5.96General 3,593,638 646,306 0 646,306 18.0% 18.5% 16,875 -96,125 $4.69TOTAL 3,981,967 864,126 0 864,126 21.7% 21.4% -10,645 -123,645 $4.81

FLORENCE /WALTON CORRIDORDistribution 9,262,785 788,763 63,520 852,283 9.2% 8.2% -95,240 -234,936 $2.70Flex Splace 696,431 158,451 0 158,451 22.8% 32.1% 65,008 52,893 $4.45General 10,754,228 322,240 165,000 487,240 4.5% 4.6% 5,000 -57,560 $3.67TOTAL 20,713,444 1,269,454 228,520 1,497,974 7.2% 7.1% -25,232 -239,603 $3.14

HAMILTONDistribution 335,000 7,200 0 7,200 2.1% 2.1% 0 0General 6,986,859 256,500 0 256,500 3.7% 4.7% 70,000 116,000 $4.03TOTAL 7,321,859 263,700 0 263,700 3.6% 4.6% 70,000 116,000 $4.03

I-71 NORTH CORRIDORDistribution 1,939,653 483,614 0 483,614 24.9% 17.4% -145,491 -145,491 $3.50Flex Splace 511,500 78,836 0 78,836 15.4% 28.3% 66,070 79,793 $5.93General 7,611,592 932,557 0 932,557 12.3% 11.9% -27,340 -27,340 $4.43TOTAL 10,062,745 1,495,007 0 1,495,007 14.9% 13.8% -106,761 -93,038 $4.26

LOCKLAND/EVENDALEDistribution 521,960 68,000 0 68,000 13.0% 0.0% -68,000 -68,000 $1.88Flex Splace 780,821 110,325 0 110,325 14.1% 19.6% 42,780 42,780 $6.09General 17,897,280 297,562 0 297,562 1.7% 1.9% 40,628 120,207 $3.67TOTAL 19,200,061 475,887 0 475,887 2.5% 2.6% 15,408 94,987 $3.80

MONROE/MIDDLETOWNDistribution 7,498,392 893,140 0 893,140 11.9% 13.7% 135,000 135,000 $3.12Flex Splace 129,500 40,120 0 40,120 31.0% 31.0% 0 0 $5.00General 3,498,501 114,500 0 114,500 3.3% 5.3% 71,500 71,500 $3.46TOTAL 11,126,393 1,047,760 0 1,047,760 9.4% 11.3% 206,500 206,500 $3.23

OUTSIDE METRO AREADistribution 275,000 0 0 0 0.0% 0.0% 0 0General 40,000 40,000 0 40,000 100.0% 100.0% 0 0 $4.50TOTAL 315,000 40,000 0 40,000 12.7% 12.7% 0 0 $4.50

TRI-COUNTY/UNION CENTERDistribution 23,216,789 4,841,282 435,150 5,276,432 22.7% 23.5% 174,074 -78,046 $2.82Flex Splace 5,121,650 1,088,178 32,330 1,120,508 21.9% 19.9% -99,978 -182,567 $6.04General 36,426,652 2,030,648 0 2,030,648 5.6% 5.8% 84,474 74,150 $3.76TOTAL 64,765,091 7,960,108 467,480 8,427,588 13.0% 13.3% 158,570 -186,463 $3.41

WESTERN OUTLYINGFlex 218,000 0 0 0 0.0% 0.0% 0 0General 6,215,297 500,540 0 619,209 10.0% 7.4% -160,000 -160,000 $2.87TOTAL 6,433,297 500,540 0 619,209 9.6% 7.1% -160,000 -160,000 $2.87

MARKET TOTALSDistribution 68,466,283 9,905,407 548,070 10,453,477 15.3% 15.8% 720,320 264,450 $2.88Flex Space 14,354,112 2,520,888 53,870 2,574,758 17.9% 17.4% 28,150 -15,219 $6.00General 175,139,335 9,316,786 324,000 9,759,455 5.7% 4.4% -700,528 -895,908 $3.79

TOTAL 257,959,730 21,743,081 925,940 22,787,690 8.8% 8.8% 47,942 -646,677 $3.54

THE KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | CINCINNATI

COLLIERS INTERNATIONAL | P. 3

1,200,000 square feet of space into the market.

CEVA LOGISTICS is also closing its local operations

on Windisch Road, vacating over 400,000 Square

feet. These transactions will produce more than

two million square feet of negative absorption and

have a huge impact on the vacancy rate of this

northern submarket.

CONSTRUCTION

Several construction projects have come to life

over the past quarter, which is great news for the

construction and development industry. USUI

International is still on track to fi nish their 127,000

square foot facility in Sharonville by years end,

Links Unlimited is working on a 60,000 square

foot facility in Norwood, Eurostampa is completing

a 75,000 square foot facility in Roselawn and Z.F.

Steering Systems has two buildings under

construction in Florence. All told, it is great to see

companies starting build-to-suit projects for their

expansion needs. This is something we have not

seen since 2008 and is welcome news to our

overall economy.

FORECAST

The balance of 2011 should remain stable, with

slight gains in net absorption over the next two

quarters. Rental rates should remain fl at as well,

as there is too much space in the market for

landlords and owners to consider raising their

rents to make a notable diff erence. We hope the

Airport Submarket can pick up where it left off at

the end of this quarter and other submarkets will

follow suit for the next two quarters.

CEO/PRINCIPAL | CINCINNATI:

Shenan P. Murphy, CCIM+1 513 721 4200

DIRECTOR OF RESEARCH:

Brian T. Graham, CCIM+1 513 562 2214

GRAPHIC DESIGNER:

Ricky R. Dennis+1 513 562 2213

512 offi ces in 61 countries on 6 continentsUnited States: 125Canada: 38Latin America: 18Asia Pacifi c: 214EMEA: 117

• $1.5 billion in annual revenue

• 979 million square feet under management

• Over 12,000 professionals

Colliers International statistics are audited annually and may result in revisions to previously reported quarterly and fi nal year-end fi gures

www.colliers.com/cincinnati

Accelerating success.

INDUSTRIAL TEAM:

Chuck A. Ackerman, CCIM, SIOR+1 513 562 2266

Erin M. Casey, GA-C, MCRE+1 513 562 2225

Michael E. Daly, SIOR+1 513 562 2206

John B. Gartner, III, SIOR+1 513 562 2207

William K. Keefer, SIOR+1 513 562 2235

Steven R. Miller +1 513 562 2252

INT’LAIRPORT

MONROE/MIDDLETOWN

TRI-COUNTY/UNION CENTRE I-71 CORRIDOR

BLUEASHLOCKLAND/

EVENDALE

CENTRAL/MIDTOWN

I-275 EASTCORRIDOR

CAMPBELLCOUNTY

COVINGTON

AIRPORT

FLORENCE/WALTONCORRIDOR

HAMILTON

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THE KNOWLEDGE REPORT | Q2 2011 | INDUSTRIAL | CINCINNATI

INDUSTRIAL SUBMARKETS