Mid-Year

Market Report
Cincinnati, Ohio 2010
 Dear Colleagues,

We are Cassidy Turley….we are Cincinnati. As residents and business people, we

are dedicated to our region. We don’t just work in our community; we actively belong
to the community. Our associates are actively involved in many charitable and civic
organizations including The FreeStore Foodbank, United Cerebral Palsy of Cincinnati,
United Way and the Cincinnati Museum Center at Union Terminal. We meet regularly with
key business and community leaders and are involved in many professional organizations,
just a few of them include the Urban Land Institute (ULI),The Society for Industrial and
Office Realtors (SIOR), NAIOP Commercial Real Estate Development Association, CCIM
Institute, Building and Owners Management Association (BOMA) and the University of
Cincinnati Real Estate Roundtable. We look for meaningful ways to promote Cincinnati as
a region of opportunity and growth.

Our commitment to the community is the foundation for how we conduct business. We
believe in face-to-face relationships and hands-on problem solving. Whether you are a
Contents firm seeking space or an owner looking to fill space, we have the strategies and skills to
assist you. You can also rely on Cassidy Turley to help manage your properties according
Letter 2 to your individual goals and priorities.

Office Market 3 You don’t simply have to take our word for it. Midwest Real Estate News in its annual
“Best of the Best” rankings recently rated Cassidy Turley the #1 Property Management
Industrial Market 8
firm and the #3 Brokerage firm in the Midwest.
Retail Market 14
These rankings reflect our deep commitment to providing best in class services.
Investment 21 We recognize the importance of focusing on the long-term success of our clients by
consistently being their advocate. Our combination of market intelligence and experience
honed over many years enables us to deliver the integrated, tailored solutions our clients
are seeking. Beyond Cincinnati, Cassidy Turley can be found in 57 other U.S. locations
and globally through our partnership with GVA Grimley.

We look forward to talking with you about our full-range of services spanning Capital
Markets to Corporate Services to Project & Development Services, as well as, Leasing &
Tenant Representation.

In the following pages, we share our independent research and findings about the
Cincinnati market and a forecast of what we believe the future holds.

Sincerely,

James A. Donlin

Managing Principal, Cincinnati/Dayton

2 | Cassidy Turley
Office Market
Market Indicators
Q2 2010
(Available for Lease)
Cincinnati Office Market Vacancy By
Submarket Second Quarter 2010
Treading Water at Midpoint of 2010 outpatient sites and its facilities on the
A sense of uncertainty about the speed Mount Auburn campus.
and depth of the economic recovery
At the end of the second quarter
process pervades the midpoint of 2010.
2010, the overall vacancy rate for the
The Dow Jones Industrial Average
Cincinnati market is 21.3%, a slight
rollercoasted from 10,857 at the end
increase from the previous quarter’s
of Q1 to a high in April of 11,205
21.0% and above the 19.4% seen a
and ended Q2 at 9,774. The national
year ago. The overall net absorption
unemployment rate dipped to 9.5% in
for the quarter is negative 122,000 SF
June from a high of 10.1% in October
and year-to-date is negative 304,700
2009 according to the Bureau of Labor
SF. Available sublease space remains
Statistics. However, the June rate is the
high at 611,000 SF. Taken together with
same seen in June 2009 and more than
direct vacancy the availability rate is
twice the 4.6% in June 2007. Over 8
23.2%. There are 31 existing buildings
million (non-farm) jobs were lost in this
in the market offering 50,000 SF and
period of recession with only about 10%
more of contiguous space for a large
regained since the beginning of the year.
user. A significant portion of these large
Q3 2010
Forecast For the local Cincinnati MSA there blocks of space, 1.5 million SF, is in the
is some good news. The preliminary CBD market. That will increase by over
unemployment rate for May is estimated 400,000 SF in 2011 when the Great
at 9.7%, a noticeable decrease American Tower at Queen City Square is
from the high of 10.9% recorded in completed and begins to draw tenants
February. Private sector payrolls are out of other CBD buildings. Add to that
the permanent jobs driving demand for the 170,000 SF that remains to be filled
commercial real estate. They increased in the new building if no other preleasing
approximately 21,000 since January. takes place.
However, 70,000 more jobs would
Renewals and small leases
need to be regained to reach the high
predominated this quarter’s office
employment levels seen in 2007. The
transactions. Tenants are gaining
Education and Health Services sector
concessions on free rent and tenant
had a preliminary employment figure
improvements from landlords struggling
in May of 149,200, the highest yet
to maintain occupancy. With no major
seen. The ongoing expansion of health
business closings foreseen, the vacancy
facilities are positively contributing to
rate should remain fairly stable. The
the local economy. The 45,000 SF Good
challenge for the Greater Cincinnati
Samaritan Medical Center-Western Ridge
market is attracting out-of-the-area
is opening in fall 2010 and a 67,000 SF
users needing large spaces. The low
medical office building is planned for
cost of living, the vibrant arts scene and
the Good Samaritan Hospital Campus
excellent universities and hospitals are
on Dixmyth Avenue. Christ Hospital
positive inducements. The decline in the
is seeking to expand its number of
number of domestic and international
www.cassidyturley.com | 3
 Building fell through. Then it went
dark when Duke Energy unplugged
the electrical supply forcing the few
remaining tenants to relocate. Fifth Third
Bank is deciding whether to proceed
with foreclosure. The lack of upkeep
and aging mechanics of the physical
structure are viewed as detriments to a
quick turn-around for tenant occupancy.
The 122,000 SF 14-story Fourth &
Race Tower, former home of the Federal
Reserve, won $2.5 million in Ohio
Historic Preservation Tax Credits to offset
part of the $20.2 million cost to convert
the nine upper floors to 88 residential
apartments. Ashley Development is
flights in and out of Cincinnati/Northern negotiating with the owner to purchase
22nd floor in the Chiquita Center at 250
Kentucky International Airport and the the building.Taken together this may
East Fifth Street. Northcreek Mezzanine
loss of major hub status is considered bring some relief to other Class B
Fund I LP subleased 3,700 SF on the
a negative factor by large businesses. property owners and tighten the market
30th floor in the 528,000 SF Chemed
However, in the face of a struggling for this subset of properties.
Center at 255 East Fifth Street.
national economy many companies are Burke, Inc. relocated out of 52,000 SF
The CBD market, and particularly the
putting large real estate decisions on in the 183,000 SF Centennial Plaza II
Class A submarket will experience a
the back burner until a clearer picture at 805-813 Central Avenue to its new
major shift when the 825,000 SF Great
emerges. headquarters at 500 West Seventh
American Tower at Queen City Square
Street. The City of Cincinnati Fire
on Sycamore and East Fourth Street is
CBD Market Department plans to move into 24,000
completed in 2011. This will become
The overall midyear vacancy rate for SF of that space. Veterans Affairs-The
the newest and tallest building in the
the CBD market is 16.4%, up from Offices of Quality & Safety took 7,000
downtown Cincinnati skyline. Great
the 15.8% seen at the end of the first SF in the 235,000 SF Textile Building at
American Insurance will vacate its offices
quarter and 15.9% a year ago. The 205-209 West Fourth Street.
in the 525 Vine and 580 Buildings into
vacancy rate for Class A properties is
540,000 SF, leaving over 400,000 SF of Renovations were finally completed
13.6% relatively unchanged from the
vacant space in the CBD market. Frost on the 36,000 SF former ST Media
previous quarter but above the 12.9% of
Brown Todd preleased 100,000 SF and building at 700 Broadway. KZF
a year ago. The vacancy rate for Class B
will add significant availability to the Design purchased the building in
properties jumped to 18.9% from 17.9%
PNC Center building when it relocates in November 2008 and moved into its new
at the end of the first quarter and is
2011. headquarters in June.
above 18.4% seen a year ago.
The amount of available Class B
Porter Wright Morris & Arthur LLP
downtown product may be shrinking.
expanded to 20,000 SF from 16,700 SF
Plans to sell the 232,000 SF Bartlett
and renewed its lease on space on the

4 | Cassidy Turley
Suburban Market
Currently the overall vacancy rate for the
Suburban office market is 24.5%, close
to the 24.2% in the previous quarter but
significantly higher than the 21.7% a
year ago. The vacancy rate for Class A
buildings remained flat at 22.9% while
Class B buildings edged higher to 27.2%
from the previous quarter’s 26.5%. The
second quarter contributed a negative
48,000 SF to the total year-to-date net
absorption of negative 189,000 SF.
The Midtown market vacancy rate went
to 24.9% from 22.0% in the previous
quarter. Both Class A and Class B
vacancy rates trended upward to 26.2%
and 23.3% respectively.
Administar moved out of 46,000 SF and
now the 72,800 SF Holiday Office Park
801-A building is completely vacant. The
departure of KZF Design from 30,000 SF
contributed to the 63% vacancy rate for
the 241,000 SF Grand Baldwin on Eden
Park Drive. Renaissance Investment
Management left 14,500 SF in the
216,000 SF Baldwin 200 for 9,700
SF in the 280,000 SF RiverCenter I in
Covington.
On a positive note Strayer University
leased 16,000 SF in the 66,000 SF
Keystone Parke building built two
years ago on Dana Avenue and the
building has reached 50% occupancy.
Burke, Inc. moved into its 100,000 SF
corporate headquarters on a seven-acre
campus at 500 West Seventh Street
in June. The company had acquired
the original 78,000 SF former ADP
building at the end of 2008 for $6.25
million and expanded and renovated it.
Grand opening celebrations were held
for the newly completed 50,000 SF
Headquarters and Disaster Operations
Center for the Cincinnati Region of the
American Red Cross constructed in the
Keystone Parke office complex.
Construction on the 132,000 SF
headquarters for Medpace, Inc.
at Red Bank and Madison Roads
in Madisonville is on schedule for
completion in October. The company
will be vacating approximately 160,000
SF on Wesley Avenue in Norwood at
that time. Renovation of the former
Vernon Manor Hotel at 400 Oak Street
into 156,000 SF for research and
back office operations for Cincinnati
Children’s Hospital Medical Center is
another significant development project
in the submarket. To relieve its space
situation on its main campus on Vine
Street, Veterans Affairs is building a
25,000 SF medical center on Highland
Avenue between Rochelle and Donahue
Streets in Corryville. The Urology Group
Total Class A Class B
is working on the financing needed to
build a new 45,000 SF headquarters in
Norwood. It has already been approved
for $14 million in tax-exempt bonds
for the $15 million project. 4.2 acres
on Section Avenue in Norwood were
acquired in March for $1.5 million.
When completed, the group would be
vacating 40,000 SF on Smith Road in
the Central Parke complex. A 67,000 SF
medical office building is in the planning
stages for the Good Samaritan Hospital
campus on Dixmyth Avenue in Clifton.
The Kenwood market continues to be
the strongest suburban market with an
overall vacancy rate of 8.2% a significant
decrease from the 9.6% in the previous
quarter and 12.6% a year ago.
It remains unclear when the nine-story
270,000 SF office tower portion of
Kenwood Towne Place, a mixed-use
project of 600,000 SF with 300,000 SF
of retail on two floors will be completed.
It is currently in receivership and Kroger
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recently shuttered its supermarket on the
Kenwood Market
ground floor. Plans for the FBI campus
The 46,400 SF Kenwood
on the southeast side of I-71 and Commons II building on
Montgomery Road took a step forward Montgomery Road added
with the naming of a new developer, CarePoint Partners to its
tenant roster.
The Molasky Group of Companies, and
its purchase of the 6.3 acres in June
for $4.7 million. The $50 million project
includes a four-story office building,
a two-story garage and a one-story
maintenance building and should be
finished in the latter part of 2011. This
may give impetus to Neyer Properties’
Kenwood Towers planned for the
adjacent acreage. The mixed-use project
would include a seven-story 160-room and expand into 4,900 SF. Fountain acquired an acre in the Evendale
hotel, a nine-story 266,000 SF office Pointe I, a 95,300 SF office building, had Commons Development on Glendale-
tower and five-story parking garage. Mutual of Omaha Insurance recommit Milford Road for a 10,000 SF build-to-
to its space and Financial Management suit office/lab building. It should be
The 46,150 SF Kenwood Commons I on
Group take 4,900 SF. completed by second quarter 2011.
Montgomery Road saw Atos Origin renew
its lease on 14,000 SF on the first floor. At 30.3% vacancy the Tri-County The East submarket vacancy rate rose
CarePoint Partners took 7,300 SF in the submarket is holding steady from the to 25.0% from the previous quarter’s
Kenwood Commons II building. previous quarter. A year ago the vacancy 24.0%. The 475,000 SF of Class A
rate was 21.0% and the area is still properties had a vacancy rate of 15.4%
The Blue Ash market saw vacancy
reeling from the departure of GE Aviation as compared to 32.0% for the 644,000
decrease from 21.2 % in the first quarter
from 305,000 SF on Merchant Street for SF of Class B properties.
to the current 19.7%. A year ago it
its 413,000 SF campus in West Chester.
was 16.5%. Known for its landscaped Kellogg Sales Co. recommitted to its
campuses of office buildings with easily Devicor Medical Products Inc. recently 14,700 SF in the 120,000 SF Woodside
accessible parking and location near acquired the breast care business of Center on Tri-Ridge Boulevard in
prime residential areas, it remains one of Ethicon Endo-Surgery Inc. and found Loveland. Wellington Orthopaedic &
the prime suburban submarkets. a home for its new company that will Sports Medicine renewed and expanded
operate under the name of Mammotome from 10,900 SF to 18,800 SF in the
Full Service Networking leased 6,700
in Sharonville. It leased 29,900 SF on 54,900 SF Eastgate Commerce Center
SF in The Landings of Blue Ash II, a
the top floor of the 5-story 150,000 on GlenEste-Withamsville Road in
175,000 SF five-story building, on Carver
SF Summit Woods II on E-Business Eastgate. Visiting Physicians Association
Road. In September Sunny Delight will
Way. Staples Commercial & Contract, opened its third office in the Greater
relocate from 22,500 SF in the 42,000
Inc. leased 5,400 SF in the 52,800 Cincinnati region in 3,500 SF in the
SF Lake Forest Pointe I to 36,146 SF
SF Century Office Center on Century 51,800 SF Eastgate Professional
in the 162,000 SF Pfeiffer Place. The
Boulevard in Springdale. Office Park on Aicholtz Drive in Union
100,000 SF Kemper Pointe building saw
Township.
Sorenson Communications, Inc. renew Dynamic Sight dba Kinetic Vision

6 | Cassidy Turley
 Greater Cincinnati Office Market Summary Second Quarter 2010

Submarket Inventory (SF) Vacancy Net Absorption YTD (SF) New Deliveries YTD (SF) Under Construction (SF)

CBD 12,584,000 16.4% (116,000) 0 825,000

Blue Ash 4,019,000 19.7% 14,000 0 0

Kenwood 986,000 8.2% 16,000 0 270,000

Mason 2,641,000 28.3% (190,000) 0 0

Midtown 3,527,000 24.9% (74,000) 0 0

NKY 3,057,000 29.0% (63,000) 0 83,000

Tri-County 2,667,000 30.3% 93,000 0 0

West Chester 1,349,000 12.3% 23,000 0 0

East 1,119,000 25.0% (4,000) 0 0

West 466,000 46.0% (4,000) 0 0

Total 32,415,000 21.3% (305,000) 0 1,178,000

Outlook The appeal of lower rent rates, free rent compounding the synergy of the local
A lack of large user deals on the and increased tenant improvement branding companies and universities,
positive side and further closures on dollars are fueling what leasing is this may be a growth path for the region.
the negative side will keep the market done. Building values continue to be
in neutral this year. Commercial real depressed as a result.
estate is considered a lagging indicator
How the new Financial Accounting
in an economic recovery. Shadow space
Standards Board (FASB) accounting
underutilized by companies must be
rules to be enacted in 2013 concerning
filled first with rehires before expansion
the recording of leases on company
is considered. It is expected that without
balance sheets may affect future leasing
much momentum in the economy
and renewal options and choices
in 2010, the market will face greater
whether to lease or buy is a conundrum
challenges in 2011 as significant office
waiting to be sorted out.
constructions are completed and large
blocks of space become vacant as leases Nevertheless the image of the Cincinnati
come due. MSA as a dynamic and attractive region
reflects the diversity of its businesses,
The growth taking place in the Cincinnati
presence of Fortune 500 company
market is in the specialized subsector
headquarters, cutting edge educational
of medical use properties. As noted,
institutions and lively arts scene. The city
hospitals and medical groups are
of Cincinnati was recently designated a
actively expanding and building and are
“Hub of Innovation and Opportunity” by
a positive factor in regional employment.
the State of Ohio and will receive funding
How this will impact the general office
to position itself as a national leader
market on a broader and deeper basis is
in consumer marketing. Leveraged
unknown.
as opportunities for development by

www.cassidyturley.com | 7
Industrial Market
Maintaining the Progress Made
A slow healing rather than a vigorous
recovery seems to be the fate of
the national economy. The national
unemployment rate dipped to 9.5% in
June from a high of 10.1% in October
2009 according to the Bureau of Labor
Statistics. Yet the rate is the same as a
year ago and more than twice the 4.6%
in June 2007. Layoffs are occurring but
not to the extent seen in 2009. Losing
hope about ever finding a job has led
many to quit searching or go the route
of early retirement. The GDP increased
at an annual rate of 2.7% in the first
quarter of 2010 sustaining positive
growth since the third quarter of 2009.
Market Indicators It has, however, slowed from the 5.6%
seen in the fourth quarter of 2009. The
2 3
Federal Reserve noted that industrial
production advanced 1.2% in May after
an increase of 0.7% in April. There
have been three months of consistent
growth. In the June 2010 Manufacturing
ISM Report on Business, the national
Purchasing Managers Index (PMI) stood
at 56.2, lower than the high of 60.4 in
April. Although the index has been over
50 for the past eleven months indicating
expansion, the fluctuation may warn of a
slowing or uneven rate of growth.
For the local Cincinnati MSA there
is good news. The preliminary
Greater Cincinnati Industrial Market Summary Q2 2010
Quadrant Inventory (SF) Vacancy Net Absorption YTD (SF) New Deliveries YTD (SF)
CENTRAL 78,483,000 10.5% 534,000
NORTHEAST 29,280,000 8.4% 120,000
NORTHWEST 104,587,000 11.2% (24,000)
NORTHERN KY 60,824,000 7.5% 704,000
TOTAL 273,174,000 9.9% 1,334,000
8 | Cassidy Turley
unemployment rate for May is estimated
at 9.7%, a noticeable decrease from the
high of 10.9% recorded in February.The
latest preliminary figures for employment
in manufacturing were at 108,700 in
May, the highest numbers in 13 months.
The Cincinnati PMI for June retreated
to 59.5 from 62.6 in May as reported
by the Applied Research Institute,
Department of Economics, University of
Cincinnati and NAPM-Cincinnati. This
parallels the national trend of continued
but slowing growth of the economy. The
local index has been above 50 for the
sixth consecutive month.
The Cincinnati industrial market
experienced modest improvement in Q2
2010 when it saw its first dip in vacancy
to 9.9% from 10.3% in the previous
quarter. This is still above the 9.5% of
a year ago, but shows movement in the
right direction. Another encouraging
sign was net absorption for the second
quarter at a positive 1.09 million SF
bringing the year-to-date total to 1.33
million SF. Only the Northeast quadrant
saw a slight increase in its vacancy rate
from 7.9% in the first quarter to 8.4%.
Gross absorption for Q2 was 2.2 million
SF.
Closures are still occurring but with
less frequency. At the end of this year
Projected Construction for 2010 (SF)
33,000 58,000
58,000 57,000
31,000 137,000
0 282,000
122,000 534,000
Greater Cincinnati Industrial Market
Zumbiel Packaging will begin moving
out of its 198,000 SF facility on Harris
Avenue in Norwood to a 180,000 SF
newly constructed plant on its 30-acre
campus in Hebron’s Gateway Industrial
Park. The doors are closing for Overhead
Door Corporation’s 128,000 SF plant on
West 43rd Street in Covington later this
year.
State and local financial incentives
have contributed to job retention and
creation and enticements to locate
within the Greater Cincinnati region.
General Electric Company in Evendale
was the recipient of a $1 million Rapid
Outreach Grant for the purchase of new
equipment insuring retention of 5,000
jobs. E-BEAM Services, Inc. received a
45 percent job creation tax credit and
plans to double the size of its plant on
Henkle Drive in Lebanon. Pennsylvania-
based Keystone Foods is searching for a
200,000 SF processing and distribution
site to lease in Northern Kentucky or
Cincinnati. The state of Ohio awarded
the company a $760,149 job creation
tax credit to lure it to the Cincinnati area
since it would create 239 new jobs.
Sugar Creek Packing Co. on Muhlhauser
Road in West Chester is receiving a
$20,000 Rapid Outreach Grant for the
acquisition of new equipment. This will
retain 75 jobs and create 50 new ones.
Improvement in transportation
infrastructure is ongoing. Superstreet
Northeast Quadrant
E-BEAM Services wants
to double its size to
approximately 128,000
SF on Henkle Drive in
Lebanon.
intersections along the State Route 4
Bypass corridor will be constructed
at Tylersville Road, Hamilton Mason
Road and Symmes Road. These are the
first to be built in Ohio and will reduce
travel time up to 90 percent through
the intersections. Norfolk Southern will
extend its Heartland Corridor line from
Columbus to Cincinnati. The Ohio Rail
Development Commission recently
granted permission for improvements
needed for double stack clearance.
The amount of construction has
dwindled tremendously. In 2009 about
1.3 million SF of build-to-suit, spec and
expansions were built. To date in 2010
only 122,000 SF has been completed.
There is approximately 300,000 SF
scheduled for the latter half of the
year. Fiscally strong companies are
taking advantage of lower construction
costs to add more square footage to
already existing facilities or erecting new
buildings that accommodate updated
equipment, procedures and expanding
customer markets. Work on Graeter’s
new 24,600 SF plant in Bond Hill should
www.cassidyturley.com | 9
be completed next quarter. It will allow Greater Cincinnati Bulk Warehouse Market
the company to compete on a national
basis and boost ice cream production
to one million gallons annually. A 9,000
SF addition is under construction on
Dickerson Distributing Co.’s 35,000
SF building in Monroe. Also due to be
completed is the 56,000 SF expansion
of the 150,000 SF Skidmore Sales
& Distributing Company building in
West Chester. The project includes the
construction of 10 additional docks.
Parkway Products Inc. plans to expand
its 55,700 SF facility in Erlanger on
Jamike Avenue to 110,200 SF. U.S.
Worldwide Logistics, Inc. is adding
42,000 SF to its 85,000 SF building in and retail spending is giving momentum Kentucky quadrant fell to 10.8% from
Hebron’s Airpark International Business to bulk space absorption. 12.3% last quarter and 13.6% a year
Park. Southern Graphic Systems Inc. will ago. The lowest vacancy rate in recent
expand its 61,500 SF facility in Florence Most of the major transactions in the
history was 7.2% seen in the first quarter
by 5,000 SF. second quarter were concentrated in
of 2007.
the Northwest and Northern Kentucky
Bulk Warehouse quadrants. They lie on the major north- Expect new bulk construction only after
Bulk vacancy in Q2 2010 was 16.5% south transportation corridor of I-75 significant absorption of the current 2.8
as compared to 17.6% last quarter and making them attractive distribution million SF vacant in the 7.2 million SF
16.8% a year ago. There was positive hubs. The Northwest quadrant saw built in 2007 and later has occurred.
net absorption of 629,000 SF, a positive vacancy drop to 21.4% from 22.4% in
Net effective rates for modern Class A
trend that started in the previous quarter. the previous quarter. A year ago it was
product in the bulk sector at $2.70/SF/
The growth in manufacturing production 20.6%. The vacancy rate in the Northern
NNN continue to be flat. Class B and

Significant Bulk Transactions in Q2 2010

Quadrant Name of Building SF of Building Tenant Type of Transaction SF of Transaction

NKY Hebron II 598,000 HK Systems Lease 598,000
NW ProLogis Park Fairfield 400,200 Cornerstone Brands Renewal 400,200
NW Sharonville Distribution Center #2 380,000 Palmer-Donavin Manufacturing Co. Lease 234,400
NKY Airpark International Distribution Center 5 396,000 Innotrac Corporation Renewal 198,000
NW Northpark Business Center V 180,000 Intelligrated Lease 81,000
NKY Park West International P 159,440 Exel Logistics Expansion 80,090
NKY Park West International P 159,440 Exel Logistics Renewal 79,350
NW West Chester Commerce Park #3 148,800 Dedicated Logistics Renewal 70,700
NW Williams Transport Logistics 120,000 Diversapack, Inc. Lease 60,400
NE Distribution Center II 176,800 Power & Telephone Supply Renewal 40,000

10 | Cassidy Turley
Class C bulk warehouse are around Greater Cincinnati Office/Warehouse Market
$2.25/SF/NNN*.

Several bulk facilities found new investor

owners in the second quarter. The 1.2
million SF Gateway 75 originally built
as a distribution facility for Montgomery
Ward was acquired by Neyer Properties
for $7.8 million. The building was 84%
vacant at the time of purchase. The
new owner will install solar panels,
new loading docks on the west side as
well as flood control features to attract
new tenants. Two Prologis buildings
on Fairfield Business Drive totaling
196,800 SF were acquired by Road
Bay Investments LLC for $5.2 million. With vacancy rates trending upward of 2010. The vacancy rates range from
Duke Realty sold its 400,000 SF facility for this property type, new construction 2.4% in the Northern Kentucky quadrant
on Hamilton-Lebanon Road to The starts are not anticipated in the near to 9.8% in the Central quadrant.
Hollingsworth Companies for $7.0 future.
This quarter saw the completion of about
million. Xerox has a long-term lease on
Net effective lease rates for the office/ 24,500 SF of new construction. Dynamic
the entire building.
warehouse sector were around $4.25/ Control’s building on Symmes Road in
SF/NNN*. Hamilton doubled in size to 25,400 SF
Office/Warehouse
with its addition. A 12,500 SF build-to-
The vacancy rate for office/warehouse
Freestanding suit was completed for Tramonte and
buildings in Q2 2010 continued to rise
The vacancy rate of 7.1% in Q2 2010 for Sons on Welden Drive in Mason.
to 18.4% from 17.1% last quarter and is
freestanding buildings is the lowest for
above the 17.7% of a year ago. The net Several properties are facing
all property types. This was a slight dip
absorption for the second quarter was redevelopment. XTRA Lease acquired
from 7.4% in the previous quarter but
(188,000) SF. The vacancy rates range the Keidel complex of three buildings
above the 6.6% vacancy rate of a year
from 12.3% in the Central quadrant totaling about 128,000 SF situated on
ago. There was a positive net absorption
to 21.5% in the Northern Kentucky 18.63 acres for $1.7 million. The new
of 648,000 SF in the second quarter and
quadrant. owners intend to demolish the
a total of 776,000 SF for the first half

Significant Office/Warehouse Transactions in Q2 2010

Quadrant Name of Building SF of Building Tenant Type of Transaction SF of Transaction

NKY Airpark Business Center B 146,000 Leslie's Poolmart, Inc. Renewal 146,000
NW The Pointe at Union Centre B 76,800 Ellison Technologies, Inc. Lease 10,800
NKY Airport Business Center-B 57,647 American Power Services Renewal 10,500
NW Capital Center I, Industrial Ctr 10 22,600 Automatic Equipment Corporation Renewal 10,000
NKY Donaldson Rd Center I-B 66,300 Jackson MSC Lease 7,800
NW Capital Center I, Industrial Ctr 7 22,325 Camp Hill Industries Renewal 5,700

www.cassidyturley.com | 11
Greater Cincinnati Freestanding Market In Monroe, Corridor 75, a 429-acre
development, is positioned midway
between Dayton and Cincinnati. The
site can accommodate 6.2 million SF
of industrial buildings. A nearby single-
point urban interchange (SPUI) provides
easy access to I-75, a major truck route.

The 48-acre Sharonville Commerce

Center at Partnership Way in Sharonville
will be home to Kutol Product Company’s
150,000 SF headquarters. There is room
for six additional freestanding or office/
warehouse buildings.

MetroWest is an 18-acre site at Gest and

buildings and use the site for tractor-
trailer parking. An 8,500 SF building
will also be erected. A $3 million Clean
Ohio Revitalization grant will facilitate the
brownfield cleanup of the former Kahn’s
pork processing plant at 3241 Spring
Grove Avenue in Camp Washington. The
568,000 SF plant will be demolished
and the 17-acres site remediated. Micro
Metal Finishing LLC plans to purchase
three acres to construct a $3 million
80,000 SF plant. The company has a
64,742 SF facility at 3448 Spring Grove
Avenue. Hamilton County, the current
owners of the site, will sell the rest of the
acreage to Vestige Development Group
for industrial/office redevelopment.
Land
The volume of land sales geared
to industrial construction has been
minimal since the economic downturn
began. It is expected that once there is
sustainable growth, development will
begin anew. Those sites near improved
infrastructures will be most attractive.
West 8th Street in Lower Price Hill that
can support 250,000 SF of space. The
14 acres at 601 Reading Road are ready
for development into the Reading Life
Sciences Campus.
Florence has 28 acres available at
Vulcan Drive while Erlanger has 54 acres
in its Circleport Park near the Dolwick
Connector Road zoned for industrial
use. IDI’s Park South in Richwood
and Prologis’ Park 275 in Hebron can
accommodate bulk warehouse projects.

Significant Freestanding Transactions in Q2 2010

Quadrant Name of Building SF of Building Tenant/Buyer Type of Transaction SF of Transaction

NW Clark Steel Framing 232,000 McGraw/Kokosing, Inc. Sale 232,000
NW Former Anderson Logistics 140,000 Spartan Logistics Lease 140,000
CEN Former Husman Factory 129,000 Christian Moerlein Brewing Co. Lease 129,000
NW 10121 Princeton-Glendale Road 91,800 Tropicana Renewal 91,800
CEN 4057 Clough Woods Drive 57,351 QC Industries Sale 57,351
NW Weyerhaeuser Co. 48,049 Rudd Equipment Sale 48,049
CEN Hill Floral Products 37,706 Nehemiah Manufacturing Sale 37,706
NW Worthy Cartage Co. 22,618 TNT Trucking Sale 22,618
CEN 500 Kent Road 20,870 Plumb Properties of Clermont County Sale 20,870
CEN 8686 Southwest Parkway 20,250 3S Incorporated Sale 20,250

12 | Cassidy Turley
Outlook
The weakness or strength of the
economy is reflected in commercial real
estate activity. The industrial market
may be starting on the upward portion
of the recovery cycle, mirroring that of
economy. However, there is a realization
that the recovery will be slow and fitful
at best.
Speculative construction will occur
only when a sizeable amount of vacant
space has been backfilled and a vibrant
dynamic economy is reestablished.
*(Note: Rates are based on a sample of
comparable data gathered by Cassidy
Turley. Renewals are not included in the
analysis.)

As more positive signs arise in the

economy, tenants will be pressed to
negotiate the best deals possible before
there is a shift in their bargaining
position.

The amount of tenant incentives will

decrease as the market tightens and
vacancy decreases. Shorter terms are
preferred by landlords hoping to capture
upside growth in the recovery.

Investment groups that have raised

money are entering the market buying
up properties with good potential
or financially strong long term lease
tenants. Cash needy owners may be
forced to sell properties in order to hold
on to their more lucrative holdings.

INDUSTRIAL TERMS AND DEFINITIONS

Inventory: Industrial inventory includes all
multi-tenant, single tenant and owner occupied
buildings.
Industrial Buildings Classifications: Industrial
buildings are categorized as bulk warehouse,
office/warehouse and freestanding based on
their physical characteristics including percent
office build-out, clear height, typical bay depth,
typical suite size, type of loading and typical
uses.
Vacancy and Availability: The vacancy rate is
the amount of physically vacant space divided
by the inventory. The availability rate is the
amount of space available for lease divided by
the inventory.
Net Absorption: The net change in physically
occupied space over a period of time.
Asking Rent: The dollar amount asked by
landlords for available space expressed in
dollars per square foot per year in most parts
of the country, and dollars per square foot per
month in areas of California and selected other
markets. Industrial rents are expressed as triple
net where all costs including but not limited to,
real estate taxes, insurance and common area
maintenance are borne by the tenant on a pro
rata basis. The asking rent for each building
in the market is weighed by the amount of
available space in the building.

www.cassidyturley.com | 13
Retail Market
13

I-75 12

11
I-71

INDIANA
10
8
2
I-74
OHIO
I-75
I-71
4
1
I-275

I-275 5 6
Cincinnati 7 3
21 19 18
Highlights 9

15
• Changes in the
I-75 17
Supermarket Sector 20
14

• Struggling Malls 16 KENTUCKY

Significant Submarkets in the Cincinnati Retail Region

• CBD Dynamics
1. Kenwood
2. Tri-County
• Fast Food Popularity
3. Eastgate/Milford
4. Colerain
• Investment Sales Rise 5. Western Hills
6. Hyde Park
• Retail Outlook 7. CBD/Clifton
8. Fairfield/Forest Park
9. Anderson
10. Mason/Deerfield Twp.
11. Hamilton/West Chester
12. Lebanon
13. Middletown/Springboro
14. Florence
15. Hebron/Burlington
16. Independence
17. Crestview Hills
18. Newport/Bellevue
19. Covington/Ft. Wright
20. Campbell County
21. Southeast Indiana

The Cincinnati retail market is Greater Cincinnati is a growth area with a

comprised of Boone, Campbell and
Kenton counties in northern Kentucky,
Hamilton, Butler, Clermont and Warren
counties in southwestern Ohio and
Dearborn and Franklin counties in
southeastern Indiana. Within this area
are 13 significant submarkets in Ohio, 7
in northern Kentucky and 1 in southeast
Indiana.
total population of over 2 million people
and is the 24th largest MSA in the
nation. It is the headquarters location for
the Fortune 500 retail giants, Procter &
Gamble, Kroger and Macy’s.
Supermarkets
The supermarket sector in greater
Cincinnati saw significant changes

14 | Cassidy Turley
in the first half of 2010. The leading
supermarket company in the region,
Kroger, has embarked on an ambitious
expansion and renovation program. In
Harrison, construction was completed
in March on a 116,432 SF Marketplace
replacing a 56,000 SF building. A
61,000 SF former Thriftway store Kroger
acquired when Winn-Dixie left the
market at The Shops at Harper’s Point
in Symmes Township was expanded to
106,000 SF to include specialty areas
for Murray’s Cheese, a restaurant and
an olive and antipasto bar. The 56,000
SF store anchoring Fort Mitchell’s
Expressway Plaza on Dixie Highway will
be expanded to 104,000 SF and will
reopen with gas pumps in the latter part
of this year. In the planning stages is
a 70,000 SF store, to replace one half
the size, in the Short Vine district of
Corryville.
SUPERVALU, faced with declining
profits with the entry of Meijer and
Wal-Mart’s grocery departments to
the region, opted to close five bigg’s
in Harrison, Colerain Township, West
Chester, Florence and the original store
in Union Township. The remaining
stores in Columbia Township, Westwood,
Anderson Township, Oakley, Mason
and Delhi Township were acquired by
Erlanger-based Remke Markets which is
supplied by SUPERVALU. The purchase
boosted the number of locations for the
local supermarket chain to thirteen. The
Mason store may be scaled back from
157,600 SF to 65,000 SF to match the
size of its sister stores.
As part of its expanding footprint across
the U.S. without merger or acquisition,
bigg’s
The 157,600 SF anchor of
Governor’s Point South on
Mason-Montgomery Road
in Mason was acquired by
Remke Markets.
ALDI plans to open 80 stores in 2010. nearby location, a 40% vacancy rate
Deerfield Township’s Montgomery and contingency clauses in the other
Crossing shopping center at Fields Ertel retailers’ leases requiring the presence
and Montgomery Roads is now anchored of three anchors have factored into
by a 19,200 SF ALDI that opened in the owner’s inability to meet its loan
April. payments.
The Bear Creek developments at
Movie Theatres
Kenwood Towne Place and Newport
In its bid to become the fifth-largest
Pavilion are at a standstill. Default
movie theatre chain in the US by box
judgments are being sought and liens
office sales and number of screens,
surround these projects. Kenwood
Rave Cinemas LLC acquired 29 locations
Towne Place, a mixed-use development
from National Amusements. Locally the
with 336,885 SF of retail space has
purchase included former Showcase
been in limbo since late 2008. Kroger
theatres in Kings Island, Milford and
Fresh Fare shuttered its doors in May.
Western Hills.
Although Kroger did open at Newport
Pavilion, incomplete site preparation
Malls
and non-payment to contractors delayed
Older malls have fallen victim to the
the construction of a Target store. It is
tightened financial atmosphere and have
currently scheduled to break ground in
seen their share join the “distressed
July.
asset” list of properties. The 1.1 million
SF Northgate Mall built in 1972 in The recent closure of Krazy City, a
Colerain Township is in default of its $82 50,000 SF amusement park that
million loan. The closure of its anchor, replaced JC Penney a little over two
Dillard’s, at the end of 2009, earlier years ago as an anchor for the 1.29
relocation of JC Penney to another million SF Tri-County Mall at the I-275
www.cassidyturley.com | 15

Broadway Commons
A 400,00-500,000 SF
casino and entertainment
center will be developed on
23 acres currently used as a
downtown parking lot.*
*Image courtesy of
Downtown Cincinnati, Inc.
and I-75 intersection only added to the
woes of Coventry Real Estate Advisors,
the owners. They are currently in default
on a $153 million CMBS loan on Tri-
County Mall and are in litigation with the
lender and DDR, former managers of
the property. Coventry is in litigation with
DDR on eleven additional properties.
Together with co-tenancy concerns and
a 19% vacancy rate, difficulties are
mounting for the troubled mall.
Built in 2001 and sold in 2005 for $20
million, the 145,800 SF Union Centre
Pavilion in West Chester is facing
foreclosure because the current owner
has defaulted on its $16 million note.
Leasing activity has failed to materialize
at the 1.5 million SF Cincinnati Mall in
Forest Park. It was acquired in March by
Cincinnati Holding Co., LLC at a fire sale
price of $5.9 million. The Guess Factory
Store and Showcase Cinemas were the
latest tenants to close shop. Bass Pro
Shop’s lease is coming up for renewal
and its potential departure would put
the mall’s retail future in jeopardy. Other
16 | Cassidy Turley
commercial uses may be explored to fill
the dark space.
Kenwood
The premiere retail submarket in the
region, Kenwood, continues to be a
hub for suburban activity at I-71 and
Montgomery Road. New additions to
the tenant roster of the 1.2 million SF
Kenwood Towne Centre are Aroma
Sushi and Spencer Gifts. Anthropologie
leased the 11,000 SF former west elm
spot near Nordstrom. Although the
Showcase Cinema closed at Kenwood
Town Centre and the space backfilled
by H&M, a replacement for movie goers
has landed right next door. Opening in
the fall is an eight-screen theatre filling
the 28,000 SF vacated by Henredon and
Drexel Heritage Furniture in the 74,000
SF Kenwood Place on Kenwood Road.
In the 391,000 SF Sycamore Crossing
and Sycamore Plaza, Ulta, a salon and
beauty shop, took the 9,862 SF former
Rack Room space. While Cincinnati
Bell doubled its size to 5,000 SF in
the JoS. A. Bank Center on Kenwood
Road, Verizon Wireless moved into the
7,000 SF freestanding building at 7790
Montgomery Road in front of Trader
Joe’s. Mattress Firm plans to relocate
from Kenwood Place into 4,000 SF
in a strip center anchored by Urban
Active on Montgomery Road. Willie’s
Sports Café moved across the street
into 7,500 SF in the 26,500 SF former
Gentry building on East Galbraith and
the Great American Restaurant opened
in the 5,346 SF space it vacated at 8740
Montgomery Road.
CBD/Uptown
The dynamics of the central business
district retail market will be significantly
enhanced by several major projects
underway.
Michigan-based Rock Ventures LLC
acquired 23 acres in the downtown
area bordered by Reading Road,
Broadway, Court Street and Gilbert
Avenue. The site, Broadway Commons,
will be developed as a casino and
entertainment area. Ground will break on
the $300 to $400 million project in the
fall and should be finished in the latter
part of 2012. Including a 4,000-space
parking garage, the development will
span 400,000 to 500,000 SF. A ring of
restaurants and boutiques around the
perimeter of the casino is part of the
vision for the area which will become a
“hot spot” for both tourists and locals.
Down by the Ohio River, The Banks
project is taking shape on the 18 acres
between Paul Brown Stadium and the
Great American Ball Park reaching
its first milestone with the opening of
the east side of the Intermodal Transit
Facility, a 1,400 space parking garage.
The next phase will include 300
apartments and 80,000 SF of retail
space that are scheduled for completion
in spring 2011. Design and construction
plans are being finalized on the Christian
Moerlein Lager House, a two-story
15,000 SF restaurant with seating for
500 indoors and 600 in its outdoor beer
garden, in the 45-acre adjacent park.
The 825,000 SF Great American Tower
at Queen City Square on Sycamore and
Fourth Streets will add 20,000 SF of
new retail space to the market when
completed in 2011.
Adding to the downtown residential
population will be the conversion of
the top eleven floors of the 122,000 SF
16-story Fourth & Race Tower office
building to apartments. The former home
of the Federal Reserve recently received
$2.5 million in Ohio Historic Preservation
Tax Credits towards the $20.2 million
renovation.
Bartini
A specialty martini bar is
scheduled to open in the
580 building at East Sixth
and Walnut Streets, a
prominent downtown arts
and restaurant intersection.
Entertainment and dining choices
continue to multiply in the area
surrounding Fountain Square, the city’s
gathering place for fun. Mynt Martini
debuted on New Year’s Eve in the Fifth
Third Center on the plaza and features
a 1,200 SF outside patio and a 3,800
SF interior with three bars and live
entertainment. It’s Just Crepes opened
its second downtown location in 2,500
SF on the ground floor of the Fourth &
Elm building. Taqueria Mercado opened
in the 6,000 SF formerly occupied by
Javier’s on Eighth Street. Soho Sushi is a
two-level 5,000 SF restaurant addition in
the Tower Place Mall at Fourth and Race
Streets. Scheduled to open later this
year is Bartini, a specialty martini bar, in
the 8,900 SF former Oceanaire Seafood
Room space in the 580 Building on
Walnut Street. A “Restaurant Row” for
outside dining is envisioned for this area
complementing the Backstage District
anchored by the Aronoff Center for the
Arts.
Bootsy’s, a contemporary restaurant
located across from the theatre, will
reopen in the fall with a new design and
branding. At the corner of Seventh and
Walnut, renovations are taking place on
a two-story 2,000 SF site that will be a
coffee and sandwich shop by day and a
sports bar at night. The lower level will
have a lounge with a DJ. Also set to open
later this year is Jean-Robert’s Table,
an 8,448 SF restaurant on Vine Street.
Fat Cats replaced Game Day Café on
East Pete Rose Way and introduced
the “dueling pianos” entertainment
concept to Cincinnati. On the west side
of downtown The Penguin, a dueling
piano bar chain, is opening its first area
location in the 5,150 SF former Havana
Martini space in the Carew Tower on
Vine Street.
New hotel options are coming for
overnight accommodations in the
downtown area. Renovations have
begun on the 137-unit 12-story Phelps
Apartment building in the Lytle Park
Historic District. It is being converted into
a 134-unit Residence Inn by Marriott.
When it opens in spring of 2011, it will
be the newest downtown hotel stock
since the $25 million renovation of The
Cincinnatian in 1987. The 225-unit
210,700 SF Metropole Apartments on
Walnut Street across from the Aronoff
Center for the Arts was sold to 3CDC. It
will be redeveloped into the 160-suite
21c Hotel featuring a restaurant and
8,000 SF contemporary art museum.
Relocation of the residents as well as
Trattoria Roma, an Italian restaurant, and
Subway Lounge, a bar, will take about
a year before work on the project can
begin. Further north in the Uptown area
the first phase of the $24 million
www.cassidyturley.com | 17
Corryville Crossings is underway at
Martin Luther King Boulevard and Short
Vine. Construction of the five-story 132-
room Hampton Inn and 219-car public
parking garage has reached the midpoint
and should be completed by fall.
Mason/Deerfield Township/Symmes
Township
In the northeast region of Greater
Cincinnati, most of the retail
development has been along the Fields
Ertel Road and Mason-Montgomery
Road corridors radiating from their
intersection with I-71.
Most of the dark space that accumulated
with the departure last year of big box
retailers Sofa Express, Circuit City and
Linens ’n Things in Governor’s Plaza
on Fields Ertel Road has been filled.
Louisville-based Merridian, a home
furnishings store, is preparing for the
grand opening of its third location in the
32,000 SF former Circuit City building.
The 22,900 SF former Linens ‘n Things
space is now home to Big Lots. Keep
It Tight holds exercise classes in the
6,000 SF former Sofa Express site.
Asian Paradise replaced G Bailey in the
6,750 SF restaurant endcap of McCabe
Crossing. Tony’s, an upscale Italian
restaurant, filled the 7,700 SF adjacent
freestanding building Bravo left when it
relocated to Deerfield Towne Center on
Mason-Montgomery Road.
On the north side of Fields Ertel Road,
Salon Concepts took 4,600 SF in Kings
Mall. ALDI opened in the 19,200 SF
former hhgregg space in Montgomery
Crossing.
18 | Cassidy Turley
Façade upgrades were completed at
The Shops at Harper’s Point on Kemper
Road and the newly expanded Kroger
supermarket opened in March.
Along Mason-Montgomery Road, Remke
Markets expanded its footprint across
the Ohio River with its purchase of the
bigg’s supermarket in Governor’s Pointe.
Five Guys Burgers and Fries, ranked
the fastest growing restaurant chain in
the U.S. in 2009 by Technomic, opened
its fifth location in the region in 2,776
SF in an outlot building. Dao Modern
Asian Cuisine took over the 7,560 SF
site formerly occupied by Macaroni
Grill in Deerfield Towne Center. A newly
constructed 110-unit Hilton Garden Inn
opened on Natorp Boulevard while the
92-room Ramada Inn on South Mason-
Montgomery Road was rebranded Best
Western Mason Inn.
Further north the 410,000 SF Prime
Outlets in Jeffersonville gained two new
retailers, Levi’s and Catherines Plus
Sizes.
West Chester/Liberty Township/Monroe
The fastest growing population area
of the Cincinnati market lies in the
northwest area along the I-75 corridor
north of I-275.
West Chester has three new restaurants.
Sultan’s Mediterranean Cuisine is on
Tylers Corner Drive and Grand Ole Pub
is on Princeton-Glendale Road. Stone
Creek Dining Company opened its
second location in the Cincinnati market
in the 8,810 SF former Mesh restaurant
space on Muhlhauser Drive.
The 94-acre site at I-75, Cox Road and
Liberty Way in Liberty Township could
be the site of the largest future retail
development in the area. Liberty Towne
Place is in the planning stages and could
include close to 1 million SF of retail
space. Preliminary site plans include
room for three department stores,
an outdoor sports business, movie
theatre, supermarket, specialty shops
as well as restaurants. Frisch’s recently
acquired two acres at Yankee and
Cincinnati-Dayton Roads in anticipation
of building a smaller prototype 5,000 SF
restaurant. A former 55,000 SF Kroger
on Cincinnati-Dayton Road is now home
to Web Extreme Entertainment featuring
a go-cart track and laser tag arena.
The 400,000 SF Cincinnati Premium
Outlets at I-75 and SR 63 in Monroe
continues to grow its tenant roster. Joe’s
Jeans, New York & Company, Claire’s
Accessories and Under Armour have
already opened their doors for business.
LensCrafters, Lacoste, Ann Taylor Loft
Outlet and True Religion are on the
schedule for later this year and early
2011.
Fairfield/Forest Park
The 66,200 SF once occupied by
AutoNation on Omniplex Court in Forest
Park is now a CarMax Auto Superstore,
the first in the region. Party City leased
an 11,250 SF portion of the former Cost
Plus World Market space in the 74,000
SF Tri-County Marketplace on Princeton
Pike. The 12,700 SF former Just
Saab dealership on Dixie Highway has
become the fifth area location and new
headquarters for USA Collison Centers.

Newport on the Levee
Located on the Ohio River
in Kentucky, its unique mix
of restaurants, shops and
entertainment venues draws
visitors from both sides of
the river.
Newport
At 340,000 SF Newport on the Levee
is the largest entertainment venue in
Northern Kentucky. California-based
Lucky Strike opened a 24,000 SF center,
Star Lanes, on the plaza level. It features
12 public bowling lanes, a party room
with four lanes, billiards and a restaurant
aptly named Toro for its hydraulic bull.
The first area Brothers Bar & Grill, a
Midwest chain known for its special
events, is now located on the exterior
riverwalk level. One can even learn some
circus tricks at the flying trapeze classes
given by the Amazing Portable Circus
on the concourse. The latest new stores
include The Dragon’s Hoard, a fantasy
clothing and accessories boutique, and
Saxbys Coffee.
Crestview Hills/Florence
The largest retail malls in Northern
Kentucky lie in these two communities.
The 500,000 SF Crestview Hills Town
Center at I-275 and Dixie Highway will
be the first area location of Charming
Charlie, dubbed a “Hot Retailer” by
ICSC. It will open by the end of the year
in 14,000 SF formerly occupied by
Entertainment Solutions and Learning
Express. The Learning Express will
reopen in its original 2,945 SF location
after a move to a larger space and
subsequent closing. The 147,000 SF
JC Penney in the 890,000 SF Florence
Mall at I-75 and KY 18 is undergoing
remodeling that includes new flooring,
lighting and wider aisles. A 1,500 SF
portion will be dedicated to Sephora, the
beauty products boutique. The upgrades
are scheduled for completion in July.
Ollie’s Bargain Outlet is expanding into
Kentucky. The surplus retailer leased
33,639 SF and will anchor the 170,270
SF Florence Plaza on Connector Drive.
The Factory Card Outlet in the Florence
Square Shopping Center on Mall Road
is moving into 18,100 SF in the Village
at the Mall across the street. The
additional space at its new location will
accommodate conversion to the Party
City concept.
Several casual food chains found great
locations in the area. A new 6,000 SF
Red Robin that seats 200 opened on
Houston Road. Chili’s plans to construct
a 5,700 SF restaurant at Houston Road
and Spiral Boulevard. This will be the
first location in northern Kentucky for the
chain. Dayton-based Hot Head Burritos
is expanding into the Greater Cincinnati
area with its 1,700 SF eatery on Mount
Zion Road. Future sites include Erlanger
and Fort Wright. City Barbeque will have
its first site in Kentucky on Burlington
Pike ready this fall. The Florence Square
Shopping Center will be the second area
location for J. Gumbo’s.
Investment Sales
The first half of 2010 saw an upswing
in the dollar amount and number of
significant retail sales in the Greater
Cincinnati area.
The largest sale at $35.0 million
($1,521,739/Acre) involved the
acquisition by Rock Ventures of 23 acres
in the downtown area for building a
casino.
Duke Realty sold its portfolio of the
161,100 SF Governor’s Point North
anchored by Lowe’s and the 199,000
SF Governor’s Point South anchored
by Remke Market bigg’s on Mason-
Montgomery Road in Deerfield Township
for $27.5 million ($76/SF) to Dallas-
based Encore Enterprises.
Fairfield’s 1.75 million SF Cincinnati Mall
was sold by NorthStar to New York-
based Cincinnati Holding Co. LLC for
$5.9 million ($3/SF).
AEI Property Corporation made a
www.cassidyturley.com | 19
$5.2 million ($191/SF) NNN leased
investment in the 27,140 SF PetSmart at
245 Rivers Edge Drive in Milford.
SUPERVALU sold the 156,150 SF
building housing its bigg’s supermarket
on New Haven Road in Harrison to
Toebben Cos. for $4.5 million ($29/SF).
The new owner is leasing the building to
Remke Markets which now operates the
grocery. It plans to reduce the footprint
to 71,000 SF within the building.
Louisville-based Merridian Furniture,
looking to expand into the Cincinnati
market, purchased the 33,400 SF former
Circuit City building along the Fields Ertel
Road corridor for $2.2 million ($64/SF).
The 88-room EconoLodge at 11620
Chester Road in Sharonville was sold
to Ambelal for $1.5 million ($17,045/
Room).
The 103,000 SF Cambridge Plaza at
3111 Dixie Highway in Hamilton was
sold by Cambridge Plaza of Ohio LLC to
Cambridge Real Estate Partners LLC for
$1.5 million ($14/SF).
The Itis Group acquired the 20,500 SF
Cornell Crossing strip mall for $1.24
million ($60/SF) with plans to convert it
to medical office space. The only retail
entity remaining is The Melting Pot.
The 18,087 SF retail strip center at 6417
Branch Hill Guinea Road in Loveland
was acquired at a sheriff’s sale by Fifth
Third Bank for $1.2 million ($66/SF).
Outlook
Positive consumer spending trends
resumed in May with a 0.2% increase
20 | Cassidy Turley
over the previous month after a flat in the Eastern time zone when it comes
April reading according to the Bureau to bookings through 2013, according to
of Economic Analysis. Coupled with the Jeff Eastman, CEO of Kansas City-based
positive trending for personal income Trends, Analysis and Projections, which
and disposable personal income, tracks convention booking data for 50
retailers can see some light at the end cities across the U.S. and Canada.
of the tunnel of the current recession.
However, “distressed asset” status is
However, high unemployment continues
throwing a monkey wrench into leasing
to impede a speedy return to previous
at local malls. Who has the authority
high levels of consumer spending.
to transact deals when an owner is in
Locally, the laundry list of fast food and default and co-tenancy clauses are just
casual food restaurants opening in the some of the factors that may inhibit the
Greater Cincinnati market continues to continued health of some malls.
grow. Banking on the consumer need
Uncertainty about the new accounting
to get out of the home kitchen without
rules under consideration by the
breaking the bank, this sector has seen
Financial Accounting Standards Board
success. Chains like Five Guys Burgers
(FASB), is causing consternation in the
and Fries, Red Robin, Frisch’s and
commercial real estate world. Buy or
Chipotle Mexican Grill added several
lease, renewal options, estimating future
new sites in the market in the first half of
sales over the term of an entire lease
2010.
are issues that will affect how deals are
The evolution of the downtown retail transacted in the future.
market will take a giant leap with the
presence of an urban casino and
the ensuing synergies developed in
the surrounding neighborhoods. The
reinforcing ripple effect of The Banks
Project along the Ohio River, the
Fountain Square renaissance radiating
to the Backstage District and Restaurant
Row and the Broadway Commons casino
project cannot be underestimated.
Retail success depends not only on the
local populace but also on the traveling
segment that spends time in the
area. According to the Cincinnati USA
Convention and Visitors Bureau 2009
was the fifth year it has increased future
bookings. Cincinnati, in fact, is a full 11
percentage points ahead of other cities
Investment Market
Overview
In keeping with the overall economy’s
unsteady recovery, the investment
property sector of commercial real
estate is showing signs of incremental
improvement, albeit uneven and
somewhat unpredictable. In this mid-
year report a summary of current
observations about the investment
property market from a variety of sources
is provided. A consistent thread running
throughout our findings: Things continue
to change.
The following is an accumulation
of summary comments, opinions,
observations and predictions about the
current state of the commercial real
estate investment market, grouped into
four main topics:
Economy
• It appears to some that we are on the
path to a “new normal” which will
be a market that suffers from several
cyclical economic obstacles.
• There are many who predict an
economic recovery. However, that
recovery may not benefit everyone
as there will be a dramatic shift in
consumer spending habits that will
negatively impact the upscale sectors
of the economy.
• Historical data shows ongoing up and
down cycles. Indications are that the
US economy is entering a new cycle
of expansion which should be longer
than the previous recessionary cycle.
Values/Deal Flow
• The number of overall transactions
is still limited. The majority of the
deal flow activity is focused on trophy
assets. This is creating widespread
frustration among both investors and
owners over the lack of transaction
traction.
• The Second Quarter 2010 Korpacz
Investor Survey cites a decline in the
average overall cap rate in 17 of the
survey’s 30 markets. This indicates
investors perceive less risk in the
industry now, especially for prime
properties in healthier markets.
• Investors who are able to aggressively
pursue opportunities on an all-cash
basis while waiting to secure debt
post-closing will compete more
favorably in the market.
• Values appear to be near the bottom,
provided there isn’t a second dip in
the economy that would negatively
affect demand factors.
US Capital Trends – Sales of Significant Multifamily and Commercial Properties
Source: Real Capital Analytics US Capital Trends-6/2010
Investment Market Recovery
• A broad based recovery hasn’t yet
taken hold in the market, although
there are signs that it is on a positive
path.
• More capital is coming back to the
market every month, especially to
certain sectors of the market that
are considered “safe”. These sectors
include long term, single tenant, net
leased properties, and well occupied
Class A assets in top tier markets.
• Lenders are seeing their portfolios of
owned property grow substantially.
They are taking a longer term
approach to ownership due to
current low values and are resisting
dispositions until the economic
recovery allows for some lease-up and
increases in cash flows. As pressure
increases on lenders to dispose of
assets, these assets will eventually
be redeployed back to either private
investors or opportunistic funds.
www.cassidyturley.com | 21
 Greater Cincinnati – Total Non-Residential Property Sales has two primary camps:
(Greater than $1 Million)
The “Core” investors looking for
long-term credit leases in either prime
locations or secondary locations with
defendable futures. This sector is
Total Sales (in $100 Million)

currently the most active and highly

competitive with target yields in the
8-12% range.

The “Value Add” investors, who are

plentiful but far less active (not by
choice) due to the current gap in
opinions of value between sellers and
buyers. This sector’s target yields are
in the 13-20+% range, depending on
the asset’s amount of risk.
• There are signs financing has become Opportunity
more available for the right borrower • There are opportunities in the • For those willing to buck the current
seeking quality assets in better marketplace for the patient investor trends and who are ready and able
markets. There is steady competition who can provide capital and liquidity to be creative, there are numerous
among well capitalized investors which over the long-term recovery. opportunities to selectively acquire
is helping to elevate sale prices and assets that can provide good returns
• The mainstream investment market over the long term.
lower cap rates for prime properties.

First Half 2010 Investment Sale Activity - Some Greater Cincinnati Major Office Transactions

Property Name Location SF Price $/SF

Terrace Plaza Downtown Cincinnati 300,000 $7,000,000 $23
5900 Building West Chester 28,800 $3,500,000 $122
Corporate Circle Center West Chester 60,000 $1,900,000 $32
308 East 8th Street Downtown Cincinnati 26,919 $1,230,000* $46
7862 Kingland Drive West Chester 11,510 $1,050,000 $91

* Sale price included 6 adjacent parking spaces and 29-space parking lot

First Half 2010 Investment Sale Activity - Some Greater Cincinnati Major Industrial Transactions

Property Name Location SF Price $/SF

Gateway 75 Sharonville 1,150,000 $7,800,000 $7
6500 Hamilton-Lebanon Road Middletown 399,600 $7,000,000 $18
4600 East Tech Drive Union Township 44,439 $4,000,000 $90
Former Ford Plant Batavia 1,860,000 $3,500,000 $2
7150 Paddock Road Roselawn 1,860,000 $1,650,000 $37

22 | Cassidy Turley
 First Half 2010 Investment Sale Activity - Some Greater Cincinnati Major Retail Transactions

Property Name Location SF or # of Rooms Price $/SF or $/Room

Governor’s Pointe N & S Deerfield Township 360,100 $27,500,000 $76
Cincinnati Mall Fairfield 1,750,000 $5,900,000 $3
PetSmart Milford 27,140 $5,180,000 $191
Former bigg’s Harrison 156,152 $4,500,000 $29
Cambridge Plaza Hamilton 103,048 $1,500,000 $14
EconoLodge Sharonville 88 $1,500,000 $17,045/room
6417 Branch Hill Guinea Rd Loveland 18,087 $1,200,000 $66
Goddard School Anderson 6,314 $1,040,000 $164

Conclusion markets and core assets in secondary

At midpoint 2010, the third year of this markets. As this movement progresses,
most recent downturn in the commercial pricing and competition will increase as
real estate investment market was well.
completed. Whether it is the amount
There seems to be little doubt that we
of time this correction has taken or the
are on a positive road to recovery, but
distance fallen in terms of values and
the length of that road and where it leads
market activity, by any measure, the last
are yet to be determined.
three years will be an epic milestone in
the world of investment real estate. (Sources: Cassidy Turley Commercial Real Estate
Services U.S. Forecast Report-6/2010; PIMCO
Although there appear to be a number U.S. Commercial Real Estate Project-6/2010;
of indicators pointing toward a ‘bottom’ Real Capital Analytics US Capital Trends-6/2010;
PriceWaterhouseCoopers’ Korpacz Real Estate
in the commercial real estate investment
Survey-6/2010)
markets, including continued increases
in capital commitments to the sector,
increased numbers of bidders for
properties and increased sales activity,
along with a slowing of the increase in
CMBS delinquencies, only a few of the
major markets around the country seem
to be benefiting from this, and then,
only for Class A properties. The rest of
the country and the majority of the non
Class A product are still struggling to find
a point of equilibrium between sellers,
buyers and lenders. If the cycle follows
its normal course, investors will tire of
competing for core assets in primary
markets and will begin to move towards
more value-add properties in primary

www.cassidyturley.com | 23
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