Cincinnati 1Q 2024 Market Report

MARKET SNAPSHOT

AVERAGE RENT

$1,224 1Q 2024

1Q 2024 RENT CHANGE

2.5%

OCCUPANCY RATE

94.1% 1Q 2024

ANNUAL OCCUPANCY CHANGE

-130 BASIS POINTS

TOTAL OPERATING EXPENSE ANNUAL CHANGE

7.8% (FEB 2024)

NET OPERATING INCOME ANNUAL CHANGE

7.4% (FEB 2024)

* Please note that these employment figures have been adjusted for seasonal variations and are based on Moody’s Analytics forecast as of January 1, 2024.

** Please note that these unemployment rates are estimates that have not been adjusted for seasonal variations, and they are derived from Moody’s Analytics forecast as of January 1, 2024.

KEY TAKEAWAYS

  • Resilient Rental Growth: Despite broader market slowdowns, Cincinnati achieved a 2.5% rental growth rate, ranked eighth among the 50 largest U.S. apartment markets in terms of rent growth.

 

  • Narrowing Supply-Demand Gap: Cincinnati experienced a significant reduction in the supply-demand gap in Q1 2024, with the impressive absorption of 224 units, while 479 units were introduced to the market during the same period.

 

  • Demand Remains Vigorous: Cincinnati’s apartment market maintained a strong 94.1% occupancy in Q1 2024, with notable stability and variability across submarkets.

Supply & Demand

1Q 2024

224 Units

QUARTERLY DEMAND

479 Units

QUARTERLY COMPLETIONS

Annual Demand vs Completions

Demand Trends

In the first quarter of 2024, the Cincinnati apartment market exhibited strong demand with over 224 units newly occupied, underscoring the market’s resilience. Notably, the Northeast Cincinnati submarket led this positive trend, with 163 net new units occupied. Following closely was the Outlying East submarket, which absorbed 127 units.

Construction Trends

Cincinnati’s apartment inventory expanded by 479 units over the first quarter period of 2024. The Northern Kentucky submarket was particularly active, contributing 265 units to the new supply. Additional completions were distributed among Northwest Cincinnati, Northeast Cincinnati, and Downtown Cincinnati, with 180, 168, and 56 new units, respectively.

Occupancy & Rent Trends

OCCUPANCY TRENDS

The Cincinnati apartment market exhibited resilience in the first quarter of 2024, maintaining positive net absorption rates and a strong overall occupancy rate of 94.1%, despite a slight decrease of 130 basis points from the previous year. Stability across the market is evident in the performance of various submarkets, with nine out of fourteen achieving occupancy rates exceeding 94%. Notably, Grant County stands out with an impressive occupancy rate of 97.5%, significantly higher than other areas. Conversely, Gallatin County, despite a limited supply pipeline, recorded the lowest occupancy rate at 90.8%. This variability highlights a robust yet diverse apartment market landscape in Cincinnati.

$1,706

Average Monthly Mortgage Payment

RENT TRENDS

Despite a general slowdown in rent growth across the U.S. apartment market, Cincinnati stood out for its robust performance in the first quarter of 2024. As of the most recent quarter, Cincinnati ranked eighth among the top 50 U.S. apartment markets, with a notable 2.5% year-over-year increase in rent growth. This has elevated the average rent for new leases in the city to $1,224. While rent increases have been reported across all of Cincinnati’s submarkets, the performance has varied. Dearborn County has led the way with an impressive 9.6% growth rate over the past year, showcasing the region’s resilience in a nationally challenging environment. On the other hand, East Cincinnati has experienced slower rent growth, partly due to difficulties in absorbing the influx of new units delivered to the submarket over the last year.

$1,224

Average Monthly Rent

Submarket Rent & Occupancy

Submarket Construction Pipeline

Sales Activity

Higher borrowing costs have significantly impacted transaction activity in Cincinnati. In the first quarter of 2024, sales volume totaled $45.1 million, which is only about 46% of the average first-quarter volume seen in the five years before the pandemic. Historically, deals closing between $20 and $40 million were not uncommon over the past decade. However, high interest rates have particularly affected transactions within this range, with only four of the 12 single asset transactions above $20 million recorded over the past 12 months—a 67% decrease from the previous year.

Given the ongoing high interest rates and slowing rent growth, transaction activity in Cincinnati is expected to remain subdued in the coming months. Institutional investors might continue to delay capital deployment, opening a window of opportunity for users and private investors to acquire assets at discounted rates.

TRANSACTION VOLUME


1Q24 Transaction Volume

Y-O-Y Change

1Q24 Individual Transaction Count

Price Per Unit

Annual PPU Change

* Trailing 4Q average PPU

* Preliminary Data from RCA – Individual transaction $2.5M +

Income & Expense Analysis

Please note that the income and expense data presented in this section is sourced from third-party providers. Our firm does not provide any warranty or guarantee as to the accuracy or reliability of this information. We recommend that users exercise their own discretion and professional judgment when interpreting and utilizing this data.

Income & Expenses

Income AssumptionsValue / UnitYear Change (%)
Rental Income / Occupied Unit$1,214.138.1%
Recoverable Expenses / Occupied Unit$69.568.5%
Other Income / Occupied Unit$70.905.3%
Total Income / Occupied Unit$1,354.598.0%
Rental Income$1,156.417.7%
Recoverable Expenses$66.268.1%
Other Income$67.534.9%
Total Income$1,290.197.6%
Operating ExpensesValue / UnitYear Change (%)
Payroll$125.987.4%
Repairs & Maintenance$42.325.7%
Leasing$61.669.5%
General$22.005.3%
Marketing & Advertising$13.932.9%
Repairs & Maintenance$104.19-1.0%
Cleaning$15.901.3%
Roads & Grounds$18.67-2.7%
General$69.62-1.0%
Administrative$27.977.2%
Security$1.9310.1%
General$26.047.0%
Management Fees$54.0112.5%
Utilities$77.667.9%
Electric$11.9521.5%
Gas$9.607.4%
Water/Sewer$56.115.6%
Real Estate & Other Taxes$104.2412.6%
Insurance$32.1819.2%
Other Operating Expensees$1.00
Total Operating Expense$541.157.8%
Value / UnitYear Change (%)
Net Operating Income$749.047.4%

Market Outlook

At the start of 2024, the Cincinnati, OH rental market demonstrated resilience, supported by healthy market fundamentals. Despite a slight dip in the average occupancy rate to 94.1%, demand remains vigorous, fueled by major developments in the Northern and Downtown sectors of the metro area. This growth reflects increasing investor confidence and the potential for further market expansion.

Cincinnati’s diverse economic base, particularly its strong tourism sector with attractions like the Cincinnati Zoo and Botanical Garden drawing over 1.7 million visitors annually, bolsters the city’s appeal. Additionally, the region benefits from a significant industrial presence, notably in aerospace manufacturing with GE Aviation, a major employer responding to increased air travel demand. The presence of major league sports teams and prestigious institutions like the University of Cincinnati’s 1819 Innovation Hub, along with five Fortune 500 companies including Kroger, enhance the city’s economic stability. Collectively, these factors contribute to a healthy demand outlook for Cincinnati’s rental market, emphasizing its potential for continued growth.

Sources: Yardi Matrix; Costar; MSCI.

To Gain Further Insights Into The Cincinnati Market Please Reach Out To Our local Team

Brian Hall

Director

Evan Lisle

Associate Advisor