Cincinnati 3Q23
Multifamily Market Report

$1,364

average rent

95.5%

average occupancy rate

$188.7M

ytd sales volume

4.5%

YoY rent change

-1.4 POINT

yoy occupancy change

11 YTD

individual transactions

Supply & Demand

3Q23

275 Units

QUARTERLY DEMAND
YTD: 1,046

832 Units

QUARTERLY COMPLETIONS
YTD: 2,344

Annual Demand vs Completions

2018
3,089
1,651
2019
2,587
1,015
2020
1,733
2,231
2021
3,728
982
2022
-1,342
2,187
2023 YTD
1,046
2,344
  • Planned
    Completions
  • Pre-Planned
    Demand

Demand Trends

  • In the third quarter of 2023, Cincinnati’s apartment market experienced a notable slowdown in demand, absorbing only 275 units. This figure falls significantly short of the 10-year third-quarter average of 820 units absorbed.
  • Among Cincinnati’s nine submarkets, seven reported positive net absorption. However, Central Cincinnati and the Boone County/Erlanger submarkets saw a surge in net move-outs, which offset the overall positive net absorption for the quarter.

Completion Trends

  • Since January, Cincinnati has seen a moderate increase in new apartment completions, with a total of 2,344 units entering the market.
  • Although the five-year average for annual inventory growth has been 1.0%, this year has witnessed a slightly higher rate of 1.4%. North Central Cincinnati and Campbell/Kenton Counties have been the primary contributors to this supply expansion.

Demand Outlook

  • Due to strong population growth in Cincinnati—especially among the crucial 20- to 34-year-old demographic, which significantly drives apartment demand—positive net absorption is anticipated across all but one submarket over the next four quarters.
  • Looking ahead, demand in Cincinnati is forecasted to be most robust in the Central Cincinnati and North Central Cincinnati submarkets, which are collectively expected to see a net absorption of 1,443 units over the next four quarters.

New Supply Outlook

  • Increased supply over the next year is expected to diminish operators’ ability to command robust pricing power, causing rent growth to further align with historical norms.
  • The introduction of additional supply will challenge the resilience of the Class A renter pool, as the absorption of new products generally takes longer in Cincinnati compared to faster-growing markets.

Occupancy & Rent Trends

RENT VS OWN
MONTHLY PAYMENT

$2,244

Average Monthly Mortgage Payment

$1,364

Average Monthly Rent

Occupancy trends

In the third quarter of 2023, Cincinnati’s market-wide occupancy declined by 1.4 percentage points year-over-year to 95.5%. This is notably down from its early 2022 peak of over 98%, yet still ranked within the top 10 performances among the nation’s 50 largest markets. The occupancy landscape differed across product classes: Class A units reported an occupancy rate of 94.8%, Class C units slightly outperformed with a 95.9% occupancy rate, while Class B properties achieved an average occupancy rate of 95.7%. Furthermore, four of Cincinnati’s submarkets exhibited particularly strong performance, recording occupancy rates of 96% or higher in the same period. Despite a mild year-over-year decline, Cincinnati’s market-wide occupancy remains robust, underlining the city’s relative resilience in the multifamily housing sector.

RENTAL TRENDS

In the third quarter of 2023, Cincinnati’s annual change in average rent stood at an elevated 4.5%, a rate that is significantly above the pre-COVID historical norm of roughly 2% annual growth, ranking it second highest among the nation’s 50 largest markets, just behind Newark, NJ. Diverging performance among asset classes was evident, as Class B and Class C units substantially outperformed their long-term averages with annual growth rates of 5.8% and 6.5%, respectively. In contrast, Class A units underperformed, with a 1.6% growth rate compared to a long-term average of 2.9%. Among the city’s nine submarkets, four exceeded a 5% annual rent growth, led by North Cincinnati at 7.1%, while Central Cincinnati trailed with the weakest annual growth at 1.9%. This highlights both Cincinnati’s robust overall rent growth and areas that warrant closer attention.

* The Average mortgage payment is based off a median home sales price of $294,200 as reported by the National Association of Realtors as of Aug 2023.

Submarket Rent & Occupancy

SubmarketAverage OccupancyAnnual Occupancy ChangeAverage Monthly RentAnnual Rent Change
Central Cincinnati93.3%-2.8%$1,7621.9%
North Central Cincinnati93.7%-2.4%$1,4052.5%
West Cincinnati96.2%-1.6%$1,0266.8%
North Cincinnati95.4%-0.6%$1,2277.1%
Butler County95.2%-1.2%$1,3232.8%
Northeast Cincinnati/Warren County96.0%-1.1%$1,5944.6%
Southeast Cincinnati96.4%-1.0%$1,2265.9%
Campbell/Kenton Counties96.9%-0.6%$1,3944.2%
Boone County/Erlanger95.2%-1.7%$1,2595.8%
Cincinnati, OH Metro Area95.5%-1.4%$1,3644.5%

Units by Submarket Delivering in 2023

4,915

Units Under Construction

3,342

Units UC Delivering In the Next 4 Quarters

Number of Units Under Construction

Central Cincinnati - 1,049
0%
North Central Cincinnati - 448
0%
West Cincinnati - 180
0%
North Cincinnati - 266
0%
Butler County - 597
0%
Northeast Cincinnati / Warren County - 807
0%
Southeast Cincinnati - 547
0%
Boone County / Erlanger - 614
0%
North Cincinnati - 266
0%

Number of Units Delivering Next 4Q

Central Cincinnati - 439
0%
North Central Cincinnati - 391
0%
West Cincinnati - 180
0%
North Cincinnati - 266
0%
Butler County - 576
0%
Northeast Cincinnati / Warren County - 287
0%
Southeast Cincinnati - 547
0%
Boone / Kenton Counties - 322
0%
Boone County / Erlanger - 334
0%

Sales Activity

In Cincinnati, the multifamily transaction landscape for the first three quarters of 2023 presented a nuanced picture. While transaction dollar volumes increased approximately 7% year-over-year to around $188.6 million, the number of transactions significantly declined by 47% within the same period, with only 11 single-asset conventional apartment properties changing ownership. The decline in transaction volume this year appears to be offset by a increase in the average price per unit, which rose to approximately $185,137—a 50% annual growth. This robust escalation in unit pricing suggests that the properties changing hands were of superior quality compared to previous periods.

Although this average price per unit surpasses the Midwest regional norm of $159,400, it remains below the U.S. average of $219,700.

  1. PLK Communities
  2. Living Emerald
  3. Crawford Hoying
  1. Varia US Properties
  2. Capital 8 Group
  3. Nicol Investment Co

TRANSACTION VOLUME


YTD Transaction Volume


Y-O-Y Change


Individual Transaction Count


Price Per Unit


Annual Price Change

* Trailing 4Q average PPU

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

Economy

As of August 2023, Cincinnati’s employment landscape has demonstrated promising growth, outpacing the national average in several sectors. The city witnessed a substantial increase in job creation with 29,900 new positions added, marking a 2.6% employment growth rate. Sector gains were most prominent in Leisure and Hospitality, which saw a robust 10.8% increase, adding 14,000 new jobs. Education and Health Services followed with a 4.4% growth rate, contributing an additional 7,400 jobs. Government and Manufacturing sectors also experienced healthy gains, growing by 2.8% and 2.7%, respectively. Cincinnati’s employment picture for August 2023 suggests a vibrant and growing job market, particularly favorable when compared to national trends.

29.9k

August Annual Jobs Created

2.6%

August 23 Employment growth

2.5%

August 23 Unemployment rate
3.9% us August rate

Top 5 Employment Sector Annual Change

leisure & hospitality

leisure & hospitality

Change from August 2022 to August 2023:
14,000

Percent Change:
10.8%

education & health services

education & health services

Change from August 2022 to August 2023:
7,400

Percent Change:
4.4%

government

government

Change from August 2022 to August 2023:
3,500

Percent Change:
2.8%

manufacturing

manufacturing

Change from August 2022 to August 2023:
3,200

Percent Change:
2.7%

other services

other services

Change from August 2022 to August 2023:
2,300

Percent Change:
5.8%

Hover over icons to view data
SectorChange from Aug 2022 to Aug 2023 Percent Change
Leisure and hospitality14,000 10.8%
Education and health services7,400 4.4%
Government3,500 2.8%
Manufacturing3,200 2.7%
Other services2,300 5.8%
Mining, logging, and construction1,600 3.1%
Trade, transportation, and utilities100 0.0%
Information(100)-0.7%
Financial activities(900)-1.1%
Professional and business services(1,200)-0.6%

Cost of Living Comparison

In a cost-of-living comparison between Cincinnati, OH and Chicago, IL, Cincinnati emerges as the more budget-friendly option for both renters and homeowners. With a Cost of Living Index of 96.9, Cincinnati sits below the national benchmark of 100, offering a generally more affordable lifestyle. Housing costs in Cincinnati are notably 42.5% lower than in Chicago, offering significant savings in a category that usually constitutes the largest portion of an individual’s monthly expenses. Although utilities in Cincinnati are marginally higher by 1.7%, transportation and healthcare are less expensive by 5.9% and 4.2% respectively. Overall, Cincinnati presents a compelling financial advantage in multiple categories of living expenses when compared to Chicago.

Chicago, IL vs. Cincinnati, OH
Cost of Living Comparison
Groceries:

3.4% Less
Housing:

42.5% Less
Utilities:

1.7% More
Transportation:

5.9% Less
Health:

4.2% Less
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Cost of Living Index

96.9

Index Score

Average Mortgage

$2,244

vs Average Rent: $1,364

Housing

86.8

Index Score

Utilities

96

Index Score

Gas

104.6

Index Score

Median Home Sales Price

$294,200

YoY Change: 4.7%

The “Cost of Living” index score provides a comparative assessment of the relative expense involved in maintaining a standard of living in a specific area, benchmarked against a national index score of 100.

Market Outlook

Cincinnati has proven to be resilient, sidestepping the pronounced demand slowdown that plagued many other major U.S. markets in 2022. Furthermore, its annual rent growth climbed to the second-highest rank among the nation’s 50 largest markets in the third quarter of 2023. However, the market is expected to revert to its traditional, measured performance patterns in upcoming quarters. The influx of new supply is likely to curb pricing power and soften rent growth rates to align more closely with historical averages. This heightened inventory will particularly challenge the Class A segment, as the absorption of new products in Cincinnati typically takes longer than in faster-growing markets. Meanwhile, occupancy rates are projected to stabilize but may face pressures in submarkets with significant upcoming supply additions. Nevertheless, the outlook for Cincinnati remains decidedly positive over the next four quarters, anchored by its recent strong performance and the underlying fundamentals of the market.

Sources: RealPage; BLS; MSCI; The Council for Community And Economic Research (C2ER)

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

Picture of Brian Hall

Brian Hall

Senior Director

Evan Lisle

Associate Advisor