CINCINNATI—Industrial developers in this metro area remained a bit conservative for several years even as demand intensified and vacancy rates plunged to historic lows. But they now seem ready to break ground on major projects, especially ones for companies involved in e-commerce, whose customers increasingly demand next-day delivery.

Dermody Properties, a Reno, NV-based industrial development and operating company, and Hillwood Investment Properties, for example, have just launched an 898,560 square foot facility here for Wayfair Inc., one of the world's largest online destinations for home furnishings. The companies will locate the facility on a 52-acre site at 1600 Donaldson Rd. in Erlanger, KY, just across the Ohio River and adjacent to the Cincinnati/Northern Kentucky International Airport. Dermody Properties and Hillwood leased the land from CVG earlier this year.

“Dermody Properties is dedicated to serving industrial distribution customers and is highly focused on the e-commerce industry,” Douglas A. Kiersey, Jr., the president of Dermody, tells GlobeSt.com. “Therefore we are also focused on markets where e-commerce is driving demand, such as northern Kentucky. The greater Cincinnati market enables next-day delivery to more than 50% of the US population and therefore attracts many e-commerce companies.”

“There is also a clear need for supply in the market,” he adds. In the second quarter, for example, CBRE reported vacancy rates of 4.4% in Cincinnati and 2% in northern KY. And in its mid-year report, DTZ found that the rate among class A bulk warehouses in the KY submarket had fallen to just 0.5%.

Known as LogistiCenter at 275, Wayfair's new facility will be the largest single development in the history of Dermody Properties. It is its third development in the KY market. DTZ served as the tenant broker, representing Wayfair. Paul Hemmer Co., the general contractor, expects to complete construction in the second quarter of 2016.

“The vision of the CVG team in offering this site for industrial development, and its strategic location, provided an excellent development opportunity,” says Gregory Arnold, a partner with Dermody. “As a company, Wayfair shares our commitment to excellent customer service, and part of that commitment is getting products to their customers as quickly as possible. Dermody Properties' development practices, combined with the logistics advantages of this location, will help them do just that.”

The new fulfillment facility will complement Wayfair's current distribution center in nearby Hebron, KY, allowing the company to increase its distribution capacity.

Hillwood is Dermody's strategic financial partner on the project. This is the second joint venture between the two companies, which are also collaborating on a speculative development in Las Vegas, NV, scheduled for completion in October 2015.

“We are encouraged by the momentum we are seeing in many warehouse markets throughout the country, and specifically the Cincinnati market,” says Chris Brown, senior vice president, Hillwood Investment Properties. “Hillwood is excited to partner again with Dermody Properties on this premier distribution center and to have Wayfair as our customer.”