Office Market Snapshot

Cincinnati First Quarter 2012

Market Tracker
*Arrows = Current Qtr Trend

Vacancy
22.6%

Net Absorption
165,000 SF

Deliveries
0 SF

Asking Rent
$18.47

To Lease or To Own...That is the Question

The office sector appears to be holding steady at the start of 2012 with its overall vacancy rate of 22.6% and modest positive net absorption of 165,000 SF. The musical chairs of office space will continue to play out with the completion of the downtown relocation of Vorys Sater Seymour & Pease from 50,000 SF in Atrium II to 60,000 SF in the Great American Tower at Queen City Square in the second quarter. CINCINNATI OFFICE In June URS will be departing 20,000 SF in its namesake building at 36 West Seventh Street for approximately the same amount of space in the 525 Vine building. Class A space in the CBD has seen its vacancy rate trend downward to 17.3% with the recent defection of Omnicare and Nielsen Company to downtown space. The Northern Kentucky market loss of these large space users has pushed its Class A vacancy rate from 29.8% at the end of 2011 to 33.5%. However, the entire market will be impacted when Chiquita Brands moves out of 152,000 SF for Charlotte at the

Economic Indicators
Q1 11
Cincinnati MSA Employment Cincinnati MSA Unemployment U.S. Unemployment (Seasonally Adjusted) U.S. CCI (Quarterly Average) 965.2K 9.7% 9.0% 66.88

Q1 12
981.9K 8.3% 8.3% 66.15

end of 2012. Corporate growth and new-to-the market tenants are key to declining vacancies. Christ Hospital announced it will move its non-clinical and support functions to 126,034 SF in the former Ohio National Life Insurance building at 237 William Howard Taft Road in Mt. Auburn. KAO USA has opted to move its corporate administrative services from its industrial campus on Spring Grove Avenue and establish its North American headquarters in the central business district. Its recent negotiated 54,907 SF at 312 Plum downtown is one of the largest expansions to hit the downtown commercial real estate sector so far this year. KPMGs 2012 Competitive Alternatives study ranked Cincinnati as one of the least-costly of the United States 27 largest metro areas to do business. With a cost index of 95.9, business costs are 4.1% below the national baseline of 100 and should entice expanding business to look at the Cincinnati region. Build-to-suit construction has seen an uptick in the region. Due to the future realignment of the Brent Spence Bridge impacting it current location on West Third Street and with no alternatives that would fulfill its growth needs of 250,000 SF, dunnhumbyUSA announced it will build its headquarters on the northwest corner of Fifth and Race Streets downtown. This was one of only two available downtown parcels available for immediate construction. In the suburbs where land sites are plentiful and the number of leasable spaces 50,000 SF or more are limited, companies are chosing construction to get

Net Absorption
1,200
Square Feet ('000s)

800 400 0 -400 2006 2007 2008 2009 2010 2011 2012 YTD

the space that suits them. Seapine Software is building a $7 million 50,000 SF two-story headquarters on Western Row in Mason. It will leave 38,000 SF of leasable space in Triangle Offce at Kings Mill when construction is completed. The dilemma for landlords is having the right amount of space, in the right location, at the right rent rate to beat out the build-to-suit alternative.

Direct Vacancy Rate

24% 22% 20% 18% 16% 14% 2006
Historical Average

Forecast
Economic recovery, along with the commercial real estate market, will continue its slow and gradual pace in 2012. Those buildings that can be retrofitted to align with the new work environments favored by the younger workforce will have a greater chance of success in attracting tenants. Landlords will continue to be challenged to maintain high revenue streams for their buildings as leases negotiated at the height of the market are up for renewal.
2007 2008 2009 2010 2011 2012

* Please note: Cassidy Turley in its recent market review has added the 183,936 SF former Comair building in the Northern Kentucky submarket to its tracked inventory while deleting several buildings that no longer offer leaseable space to the market such as One Lytle Place, 2830 Victory Parkway, Vora Innovation Center at 10290 Alliance Road and the Vantiv headquarters at 8500 Governors Hill Drive. www.cassidyturley.com

Cassidy Turley Market Market Cassidy Turley Office Office Snapshot

Cincinnati First Quarter 2012 Cincinnati First Quarter 2012
TOTAL BLDG INVENTORY

Snapshot
DIRECT VACANT DIRECT VACANCY RATE NET ABSORPTION YTD NET ABSORPTION AVERAGE AVERAGE UNDER CONSTRUC- ASKING RENT ASKING RENT (ALL CLASSES) (CLASS A) TION

SUBMARKET
CBD Blue Ash Kenwood Mason Midtown NKY Tri-County West Chester East West Class Class A B 53 49 13 29 43 44 32 11 26 6 142 164 13,142,000 3,989,000 1,004,000 2,438,000 3,420,000 3,329,000 2,646,000 1,349,000 1,124,000 466,000 19,177,000 13,730,000 2,853,000 644,000 92,000 654,000 944,000 1,058,000 593,000 52,000 370,000 174,000 3,763,000 3,673,000 21.7 16.1 9.2 26.8 27.6 31.8 22.4 3.9 32.9 37.4 % % % % % % % % % % 79,000 2,000 (3,000) 0 (18,000) 38,000 31,000 24,000 2,000 10,000 141,000 24,000 79,000 2,000 (3,000) 0 (18,000) 38,000 31,000 24,000 2,000 10,000 141,000 24,000 0 0 0 0 0 0 0 0 0 0 0 0 $19.77 $17.21 $24.48 $18.95 $19.99 $18.66 $15.50 $22.25 $18.06 $14.15 $21.45 $16.27 $23.34 $20.65 $27.20 $19.94 $24.83 $18.79 $18.96 $22.25 $19.63 NA

19.6 % 26.7 %

TOTAL

306

32,908,000

7,436,000

22.6 %

165,000

165,000

$18.47

$21.45

Office asking rents converted to Full Service

Key Lease Transactions 1Q 12

PROPERTY SF TENANT TRANSACTION TYPE SUBMARKET

Office Submarkets
Greater Cincinnati
The Christ Hospital KAO USA USI Midwest URS Metropolitan Life Insurance TiER1 Performance CTI Indiana Institute of Technology Amerigas Propane St. Elizabeth Physicians Local TV, LLC Daymon Associates Inc. Steadfast Transport Company Fairway Capital Recovery Care Connection of Cincinnati New New Renewal New Renewal New Expansion New Renewal/Expansion New New New New New Renewal Midtown CBD CBD CBD CBD NKY Blue Ash NKY NKY Kenwood NKY CBD Blue Ash Tri-County Kenwood
1. 2. 3. 4. 5. West Chester Mason West Tri-County/Sharonville Blue Ash 6. 7. 8. 9. 10. Kenwood East Midtown CBD Northern Kentucky

237 William Howard Taft Road 312 Plum Street 312 Elm Street 525 Vine 312 Elm Street RiverCenter II Northmark Business Center 2 Wright's Summit II Florence Executive Center II Kenwood Crossing II One Riverfront Place 125 E. Court Street Malsbary Office Park Executive Park Building Kenwood Executive Center

126,034 54,907 24,600 20,000 13,982 12,575 11,318 10,767 10,512 10,155 8,424 7,938 6,918 6,840 6,489

Don Murphy, CCIM, SIOR

don.murphy@cassidyturley.com 513-763-3008

Key Sales Transactions 1Q 12

PROPERTY SF SELLER/BUYER PRICE SUBMARKET

Scott Abernethy, CCIM, SIOR

scott.abernethy@cassidyturley.com 513-763-3013

237 William Howard Taft Road

143,000

Hamilton County Board of Commissioners/Al. Neyer Inc. Neyer East Pointe 200, LLC/East Pointe 200 Office Fortis Property Group & JFR Global Inc./Top Gun Sales Performance

$6,200,000

Midtown

Peter Snow
peter.snow@cassidyturley.com 513-763-3007

East Pointe 200

50,000

$6,000,000

West Chester

www.cincyofficesolutions.com
$3,600,000 Mason

5155 Financial Way

68,000

About Cassidy Turley

Cassidy Turley is a leading commercial real estate services provider with more than 3,500 professionals in more than 60 offices nationwide. The company represents a wide range of clientsfrom small businesses to Fortune 500 companies, from local non-profits to major institutions. The firm completed transactions valued at $22 billion in 2011, manages 455 million square feet on behalf of institutional, corporate and private clients and supports more than 28,000 domestic corporate services locations. Cassidy Turley serves owners, investors and tenants with a full spectrum of integrated commercial real estate servicesincluding capital markets, tenant representation, corporate services, project leasing, property management, project and development services, and research and consulting. Cassidy Turley enhances its global service delivery outside of North America through a partnership with GVA, giving clients access to commercial real estate professionals across the globe. Please visit www.cassidyturley.com for more information about Cassidy Turley.

221 East Fourth Street 26th Floor Cincinnati, OH 45202 Tel: 513.421.4884 Fax: 513.421.1215
The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. Copyright 2011 Cassidy Turley. All rights reserved.

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