CINCINNATI—Ever since hitting a low point in 2009 the industrial market in the Cincinnati region has steadily climbed back to health. After a stellar 2014 the vacancy rate in this year's first quarter sank to a historic low, according to a new report by CBRE. Furthermore, the healthy level of positive absorption has convinced several developers to kick off several significant speculative developments.

“Out of the 30 largest US industrial markets we have the second lowest availability rate in the US behind Orange County, CA,” Tim Schenke, vice president in CBRE's Cincinnati office, tells GlobeSt.com. The market just hit a historically low rate of 4.8%, down from the previous record of 5.0% set in the third quarter of 2014. The largest transaction in the first quarter was Gorilla Glue's purchase of the 1.1 million square-foot Gateway 75 building at 2101 E. Kemper Rd. in Sharonville, OH, for $22.4 million. That and several other big deals helped push the quarter's positive absorption to 1.3 million square feet, continuing a positive streak that now goes back five years.

“We are right on pace for five million square feet of net absorption in 2015,” Schenke says. If it seems a bit surprising that a market with such a low vacancy rate could continue absorbing that much, he points out that new construction has returned to the region.

As reported in GlobeSt.com, Opus Development Co. recently started two speculative industrial buildings at Port Union Commerce Park in suburban Fairfield and West Chester that will total more than 800,000 square feet of space. Although the company won't finish the two buildings, one of 260,000 square feet and another of 547,000 square feet until September, potential tenants have already lined up. “We've got several active proposals,” Douglas Swain of Opus told GlobeSt.com. “That shows the level of demand in the market.”

Schenke adds that IDI Gazeley will soon finish a speculative project at Park South in Walton, KY, that will add about 787,000 square feet to the market. “A number of other groups are also ready to put shovels in the dirt.”

And like Swain, he has high hopes that the demand will be there when the new facilities are ready for occupancy. “The last three speculative developments have done really well.” These include: GSI Commerce/eBay taking 631,448 square feet at IDI Gazeley's Park South; UPS taking 273,600 square feet in Hebron, KY; and SSB Manufacturing taking 430,668 square feet at IDI Gazeley's Park North in Monroe, OH.

It took a little longer for new industrial construction to get started in Cincinnati than in a boomtown like Indianapolis. Schenke says that's partly because it's easier for developers to secure land in the latter city due to its flatness. Much of the Cincinnati market, however, especially on the Kentucky side of the river, has a difficult topography and developers sometimes have to work harder to secure sites suitable for industrial construction.

“Everyone was also being cautious because we had a good supply of properties that had not been spoken for,” he adds. And now that demand has become so intense, developers can launch new projects with a great deal of confidence that tenants will be there when buildings open. “I think it was warranted that they took their time.”