CINCINNATI

2014 REVIEW

QUICK FACTS

0.5%

Inventory growth could not keep up with renter demand and employment growth in 2014.
Completions ramped up to a five-year high in the past year, expanding apartment supply
0.6%. Nevertheless, occupied stock increased by 1.3%, while the metros employment base
expanded by 1.8%, with 18,300 jobs created. The 3,700 leisure and hospitality jobs created
was a boost to the metro, supported by the hiring of 800 personnel at Belterra Park Gaming
and Entertainment Center in the Anderson Township. Bolstered by Krogers 1,000 new
hires, the trade, transportation and utilities sector grew by 3,800 positions to lead additions
in 2014. Meanwhile, the professional and business services segment added 3,600 workers.
The information industry was the only employment sector to contract, shedding 100 jobs.

1.8%

POPULATION

2,169,500
EMPLOYMENT

1,046,900

MEDIAN HOME PRICE

$139,000

4.2%

MEDIAN HOUSEHOLD INCOME

$54,200

2.0%

In step with rising completions, absorption surged in Cincinnati. Net absorption

accelerated 274% in the past 12 months, as occupied stock increased by 2,030 units.
Developers were active across the metro, as 1,000 units came on line in 2014. In
comparison, apartment stock increased by an average of 425 rental units annually over
the last five years.
Multifamily permitting activity accelerated 112% to 2,170 units in the past four quarters.
Although not all projects may come online, there are 28 identified developments in the
planning pipeline, comprised of more than 4,400 units.
After three years of year-end vacancy remaining at 5.4%, job creation supported a
70-basis-point decrease in vacancy; the rate reached 4.7% in December.
Operators have whittled away at concessions in recent years. With renter incentives
firmly under one week of free rent, asking-rent gains reignited. Asking rents advanced
2.8% to $870 per month in 2014, compared with a 1% gain in the prior year.

SALES VELOCITY

AVERAGE PRICE PER UNIT

60

$400
$300

40

$60,000

$40,000

$200
20

$100

$0
05

06

TRANSACTIONS

07

08

09

10

11

12

SALES VOLUME (MILLIONS)

13

$20,000

$0
05

14*

06

07

08

09

10

11

12

13

14*
* Estimate

* Estimate

VACANCY & RENT COMPARISON

SUBMARKETS

26

VACANCY
2014
2013

AVERAGE RENT INCREASE

2014
2013

AVERAGE RENT
2014
2013

Blue Ash/Amberley
Butler/Warren Counties
Clermont County
Downtown
Highway 27/127
North
Northeast
Northern Kentucky
Southeast
Southwest

2.3%
4.8%
3.9%
2.1%
8.6%
4.8%
3.5%
5.1%
4.1%
1.6%

1.5%
6.2%
5.0%
4.4%
9.0%
5.6%
3.0%
5.2%
5.2%
2.5%

2.0%
3.1%
3.6%
5.2%
-0.1%
0.1%
1.2%
0.4%
-0.1%
0.0%

1.2%
0.2%
1.0%
5.6%
-1.2%
0.5%
-1.6%
1.9%
1.0%
3.0%

$1,164
$849
$731
$1,360
$685
$774
$909
$797
$1,035
$555

$1,141
$823
$705
$1,293
$686
$773
$898
$794
$1,036
$555

TOTALS

4.7%

5.4%

2.8%

1.0%

$870

$846

FORECAST 2015

VACANCY & RENT

Developers are capitalizing on pent-up demand for new rentals and resurgent asking
rents. Market-rate inventory will grow by 1.9% over the next two years. Construction
output will be spread throughout the metro, though there will be significant levels
of new product in the Downtown, Butler/Warren Counties and Blue Ash/Amberley
submarkets. Employment growth will maintain downward pressure on marketwide
vacancy this year, though vacancies will rise modestly in 2016. General Electrics
global operations center in The Banks will contribute heavily to hiring, as 1,800 jobs
are expected through 2018. Additionally, Cincinnati Childrens Hospital Medical
Center plans to add 300 high-paying jobs in the Liberty Township, while ThyssenKrupp
Bilstein of America will hire 380 workers in Hamilton. By the end of this year, metrowide
employment will rise by 17,600 positions for a 1.7% gain. Businesses will add an
estimated 18,100 personnel in 2016, an incline of 1.7%.
Investors remain active throughout the metro, though there was a notable decline in
banked-owned-asset sales in recent quarters. Persistent activity has kept downward
pressure on marketwide cap rates, declining approximately 30 basis points year
over year and averaging 7.5% at the end of 2014. Acquisitions involving suburban,
1980s-vintage properties are ticking up, though prices varied greatly depending
on quality and location. For larger assets in this segment, prices are between the
mid-$60,000 per-unit and mid-$85,000 per-unit range. Smaller apartment product
can start as low as $30,000 per unit for tertiary submarkets. Nevertheless, values
can rise to approximately $60,000 per unit in more affluent areas with higher
concentrations of employers.

Absorption will ease in each of the next two years, though leasing activity will persist
at a healthy clip. In 2015, occupied stock will expand by an estimated 1,590 units,
followed by net absorption of 1,210 rentals in the subsequent year.
The pace of completions will escalate to 1,470 units over the next four quarters.
Builders will complete another 1,610 apartments in 2016.
Multifamily permitting activity is expected to dip 14% by December, with 1,860 units
requested. Issuance will increase 11% next year to 2,060 units.
Leasing activity will be sufficient to tamp down vacancy over the next 12 months.
The marketwide rate will inch down 10 basis points to 4.6% by year-end. Rental
demand will not keep pace with completions in 2016, with vacancies expected to
tick up 20 basis points to 4.8%. Nevertheless, the rate will remain below the longterm average of 7.1%.
Supported by low concessions and the delivery of new, expensive rental units,
asking rents will advance 3.7% to $902 per month this year. Market rents will
appreciate 2.9% to $929 per month in 2016.

VACANCY

RENT GROWTH

9%

6%

3%

0%

-3%
09

10

11

12

13

Conventional Average Market Rents

14*

15** 16**

$870

$902

$929

* Estimate; ** Forecast

PERMITS & DELIVERIES

PERMITS

2,400

DELIVERIES

1,600

800

0
09

10

11

12

13

14*

15** 16**

* Estimate; ** Forecast

JOB CHANGE
GAINED I LOST
2006

400

2007

12,800

2008

(25,600)

2009

(44,100)

2010

(1,300)

2011

17,700

2012

14,900

2013

15,600

2014*

18,300

2015**

17,600

2016**

18,100

* Estimate; ** Forecast

EMPLOYMENT GROWTH

ABSORPTION

METRO

4%

U.S.

2%

4,000

2,000

0%

0
-2%

-2,000

-4%

-4,000

-6%
09

10

11

12

13

14*

15**

16**

* Estimate; ** Forecast

Data and images pertaining to employment, income, permits, population, rents, single-family housing and vacancy are year-end figures. Absorption, construction and
apartment sales figures are full-year totals. Numbers for 2014 are estimated values, while 2015 and 2016 figures are forecast projections. The sales information represents
transactions of apartment properties with a sales price of $1 million or more. Apartment market data criteria and methodologies vary by market.

09

10

11

12

13

14*

15** 16**

* Estimate; ** Forecast

27