MARKET SNAPSHOT
$1,273 3Q 2024
94.6% 3Q 2024
1,114 [YTD: 2,788]
2.8% 3Q 2024
-20 BASIS POINTS
848 [YTD: 2,951]
Net absorption increased by 41% year-over-year, outpacing deliveries in the current quarter by 31%. So far this year, demand has generally been in balance with new supply, a trend not seen since 2024.
The development pipeline is shrinking, with only 4,652 units currently under construction in the metro area—the lowest level since early 2021. A 55% decrease in deliveries is forecasted for 2025, indicating further tightening of supply in the market.
Throughout 2024, the market has sustained above-average rent growth, at 3% annually, ranking it 11th among the top 50 rental markets in the U.S.
Rental demand in Cincinnati’s multifamily market—measured by net absorption—surged in 2024, with net absorption exceeding quarterly completions for the first time since early 2022. Over the first three quarters of the year, approximately 2,800 units were absorbed on a net basis. With one quarter still remaining, net absorption in 2024 has already surpassed every annual total from the past decade, except for the record-breaking year of 2021. The current quarter saw a 41% year-over-year increase in net absorption, reflecting a strong recovery in demand.
Demand for multifamily units in Cincinnati is concentrated in its fastest-growing counties. Over the past year, Northern Kentucky contributed to more than 25% of the market-wide net absorption, primarily driven by rapid growth in Boone and Kenton counties. Additionally, areas to the northeast of Downtown Cincinnati, which include important suburban office hubs such as Norwood, Blue Ash, and Springdale, also played a key role in absorbing market demand.
Cincinnati’s apartment development pipeline has steadily declined since peaking in mid-2023. The number of units under construction reached a high of 7,050 in the first quarter of 2022, but by the third quarter of 2024, that number had dropped to 4,652 units, the lowest level since early 2021. While deliveries remain somewhat above the long-term average, the development pipeline is expected to shrink further as developers scale back on breaking ground for new projects. A 55% reduction in deliveries is anticipated for 2025, signaling a more constrained supply environment moving forward.
Over the past 12 months, new apartment deliveries in the Cincinnati area have been heavily concentrated in the Northern Kentucky submarket, which accounted for 39% of the region’s new construction. Additionally, Downtown Cincinnati and nearby northeastern and eastern submarkets contributed significantly, making up 36% of market-wide deliveries. In the eastern submarkets, much of the new development has been focused along State Route 32.
Consistent population growth has helped the Cincinnati multifamily market maintain a stable occupancy rate over the past five years, despite the influx in new construction. According to the latest U.S. Census Bureau estimates, the number of nonfamily households—more likely to rent—have increased by 16% since 2012, outpacing the 11% growth in overall households over the past decade. As a result, the overall stabilized occupancy has only ranged from 94.4% to 96.0% since the beginning of 2019. The current occupancy rate sits above peer markets and the national benchmark (94.0%), keeping the Cincinnati market well-positioned for a recovery in the years ahead.
Nearly all submarkets had occupancy rates near the overall market average. However, the outlying counties of Dearborn and Gallatin are underperforming, with occupancy rates near 90%. Stabilized occupancy rates are relatively consistent across different property tiers, ranging from 94.1% for lower-tier properties to 94.9% for mid-tier developments. This consistency in occupancy across property types suggests a balanced demand across various segments.
Rent growth in Cincinnati has remained stable at or near 3% throughout the first three quarters of 2024, significantly outperforming the national average (1%). This strong performance places Cincinnati among the Top 15 largest apartment markets in the U.S. for rent growth, along with other Midwest markets like Columbus and Northern New Jersey.
The northern submarkets of the Cincinnati metro area have shown the strongest rent growth over the past year, with increases at or above 3%. Notably, there were no submarkets that reported a decline in rents during this period. Specifically, average rents for lower-tier workforce properties rose by 3.2%, while mid-tier properties mirrored the overall average growth. In contrast, upper-tier developments underperformed slightly, with a 2.6% rent increase. This trend indicates heightened competition in the high-end luxury apartment market, as demand shifts towards more affordable options.
Cincinnati’s economy is bolstered by strong non-cyclical sectors like education and healthcare, as well as investments in advanced manufacturing. In August 2024, total nonfarm employment rose by 0.8% year-over-year, adding approximately 9,800 jobs. The most significant job growth occurred in the other services sector, which increased by 4.9% annually. Education and healthcare followed closely with 3.7% growth, while leisure and hospitality reported a 3.5% increase. However, net job growth faced some limitations due to a 7.1% decline in the information sector.
The current unemployment rate stands at 4.2%, which is 70 basis points higher than in August 2023 but aligns closely with the national average of 4.4%. This figure is also 40 basis points above the pre-pandemic level for the same month. According to the Ohio Department of Job and Family Services, employment in the Cincinnati metro area is projected to grow by 6.0% through 2030, translating to an annual increase of about 5,300 jobs.
August 2024 ANNUAL JOBS CREATED
AUGUST 2024 EMPLOYMENT GROWTH
AUGUST 2024 Unemployment rate
4.4% us August rate
Nominal Change
from August 2023
to August 2024: 4,700
Percent Change: 6.1%
Nominal Change
from August 2023
to August 2024: 1,600
Percent Change: 1.8%
Nominal Change
from August 2023
to August 2024: 800
Percent Change: 2.0%
Nominal Change
from August 2023
to August 2024: 700
Percent Change: 2.1%
Nominal Change
from August 2023
to August 2024: 700
Percent Change: 1.4%
| Sector | Nominal Change from August 2023 to August 2024 | Percent Change |
|---|---|---|
| Education and Health Services | 4,700 | 6.1% |
| Government | 1,600 | 1.8% |
| Manufacturing | 800 | 2.0% |
| Mining, Logging, and Construction | 700 | 2.1% |
| Leisure and Hospitality | 700 | 1.4% |
| Trade, Transportation, and Utilities | 700 | 0.6% |
| Information | 400 | 4.2% |
| Financial Activities | 300 | 0.7% |
| Other Services | -100 | -0.3% |
| Professional and Business Services | -2,700 | -3.5% |
Worldpay, a prominent global provider of payment processing solutions, has chosen Cincinnati as the location for its new global corporate headquarters.
Bio-manufacturing company Resilience is currently renovating and expanding its manufacturing facilities in West Chester.
In August 2024, AtriCure Inc., a medical device manufacturer, announced plans to expand its headquarters in Mason, Ohio. This expansion will encompass a 120,000-square-foot facility and aims to double the company’s payroll over the coming years.
Cincinnati’s strong population growth, coupled with a slowdown in construction starts, is anticipated to create tighter market conditions in the coming years. As elevated interest rates and other macroeconomic headwinds continue to suppress construction starts, the fewer deliveries are expected to continue accelerating rent growth over the near term. Average effective rent growth is projected to increase to 4% by the end of 2025. The development pipeline is contracting as absorptions are increasing, which should push occupancy rates higher and maintain Cincinnati’s position as one of the best-performing rental markets in the nation.
Sources: Costar; ESRI; U.S. Census Bureau; Yardi Matrix; U.S. Bureau of Labor Statistics
