Cincinnati Commerce Center_Property for Sale

135 West 38th Street

Cincinnati Commerce Center

Asset description

Jones Lang LaSalle Americas, Inc. ("JLL"), as exclusive advisor to ownership, has been retained to market for sale the fee-simple interest in the Cincinnati Commerce Center, a 146,000 square foot distribution facility located in Covington, Kentucky (Cincinnati MSA). Constructed in 2023, this Class A facility provides industrial specifications that modern users require, including 32' clear height, 130' truck court depth, ESFR fire protection, and LED lighting. Additionally, the Asset's construction quality and its TPO roof's 15-year warranty limits future capital requirements. The Property is 100% leased to three tenants with 9.0 years WALT and 3.0% average annual rent increases. 45% of the GLA is leased and guaranteed by Thermo Fisher Scientific (S&P: A-, Moody's: A3), providing credit tenant exposure contractually through 2036. The Cincinnati Commerce Center offers investors an opportunity to acquire highly functional, Class A industrial product, in the tight Covington submarket of Cincinnati, with a stabilized, growing cash flow.

Positioned minutes from the Cincinnati CBD, the Property's proximity to I-275 provides tenants with outstanding access to Cincinnati's major transportation infrastructure. Namely, the Property is twelve miles away from the Cincinnati/Northern Kentucky International Airport, which houses Amazon and DHL air hubs, driving industrial demand in the region. Additionally, the Covington submarket has significant topographical challenges that hinder developers' ability to build, which has resulted in an extremely muted pipeline of oncoming product. The market boasts a sub-3% vacancy rate and is well poised for future rent growth.

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Attributes

Building area net

13,564 sm

Year built

2023

Tenants

WALT

9 years

Parking spaces

273

Media

Investment highlights

Stabilized, Class A Logistics Facility

Delivered in December 2023, Cincinnati Commerce Center offers investors the opportunity to acquire a highly functional asset with modern features, limiting future capital requirements. Totaling 146,000 square feet, this Class A facility features 32' clear height, 130' truck court depth, ESFR fire protection, LED lighting, and a 15-year warranty on its TPO roof.

Investment-Grade Anchor Tenant: Thermo Fisher

45% of the GLA is leased to PPD Global Central Labs, the clinical research business of Thermo Fisher Scientific (S&P: A-, Moody's: A3), through 2036. This Property represents an expansion of the Company's sample management and biorepository operations, enabling further capabilities at its site in nearby Highland Heights. Thermo Fisher reportedly invested $48 million into the expansion of its operations at the Cincinnati Commerce Center.

Tenant-Friendly Real Estate Tax Abatement

Tenants of the Cincinnati Commerce Center benefit from the Industrial Revenue Bond (PILOT) program. Tax payments are reduced through payroll thresholds, which can materially reduce tenant tax loads by up to 75%. The Property currently reports a $6.0M payroll, therefore the 75% abatement is achieved.

High Barrier to Entry, Infill Cincinnati Location

Due to topographical challenges, urban density, and limited developable land, this infill Cincinnati location offers an extremely high barrier to entry and zero competitive inventory in the development pipeline. Since 2018, the Covington submarket of Cincinnati has seen only 186,000 square feet of new deliveries, 146,000 square feet of which is the Cincinnati Commerce Center. Coupled with a 2.6% vacancy rate, rents in the region are well positioned for future growth.

High-Growth Cincinnati Industrial Market

The Property presents an opportunity to join a Cincinnati industrial market which has experienced 36% rent growth since year-end 2021. Rents grew at a compound annual growth rate (CAGR) of 6.81% from YE 2018-YE 2023.