CRE i Ohio

Three questions with ... Cushman & Wakefield's Mike Sullivan

Three questions with Mike Sullivan,ph01
Mike Sullivan
Three questions with Mike Sullivan,ph02
Mike Sullivan

A member of the capital markets team in Cushman & Wakefield’s Cincinnati office, senior director Mike Sullivan is an industry veteran who understands the ins and outs of the commercial real estate market. A specialist in office, industrial and medical office properties, Sullivan shared his thoughts on the state of the CRE market both nationally and in Cincinnati with us.

When looking at the Cincinnati commercial real estate market, which commercial sectors – multifamily, industrial, office, retail, healthcare – are showing the most strength, and what are the reasons for this strength?

Mike Sullivan: While there are sectors – and certain submarkets within the various sectors – that are performing better than others, in general, Greater Cincinnati is doing well due in large part to our diversified economy. Consumer products, manufacturing, healthcare, advertising/branding and financial services, among many other industries, provide a stable economy and help shelter the region from exposure to drastic shifts.

Within the Greater Cincinnati commercial real estate market, industrial, multifamily and healthcare are the three sectors experiencing significant activity and strength. Our industrial market, a top-20 national market with nearly 300 million square feet, benefits from proximity to significant population and access to major highway corridors. Cincinnati/Northern Kentucky International Airport is a dominant cargo airport, home to one of three global “super hubs” for DHL and DHL Express. Amazon is constructing its first Amazon Prime Air hub, an investment exceeding $1 billion.

The multifamily market is witnessing unprecedented new development and re-development of former Class-B and -C office buildings within the CBD as the desire for urban living and its perks – walkability to dining, entertainment, arts and sports venues– increases across multiple generations, from millennials to empty nesters. Residential units on both a large and small scale are being added from the riverfront to 20 blocks north into Over-the-Rhine, a 360-acre neighborhood rich in history and tradition and home to Music Hall, the recently completed Otto M. Budig Theater for the Cincinnati Shakespeare Company and numerous bars, restaurants and shops.

Cincinnati’s healthcare sector is anchored by several prominent and nationally ranked hospital systems, including Cincinnati Children’s Hospital Medical Center, ranked third in the nation; Bon Secours Mercy Health (headquartered in Cincinnati); Christ Hospital; UC Health; and TriHealth. All are expanding to meet the demands of their respective patient bases.

If you were talking to the decisionmakers of a company that was considering opening a location in Cincinnati, what would you tell them about the city? What reasons would you give them for opening a location in Cincinnati?

Sullivan: Greater Cincinnati is continuing to experience one of the most active renaissances in the Midwest, and it starts with the CBD, where residential, office and entertainment development and re-development have helped create a truly dynamic 18-hour city.

Our cost of living is low, and the amenities are numerous. The urban core provides economical places in which to live and an abundance of entertainment options, from NFL, MLB and MLS franchises to a world-class symphony and arts to countless dining and bar options.

Cincinnati has been recently named one of the Top 50 Best Places to Live by U.S. News & World Report and number 8 of 52 Places to Go by the New York Times. Headquarters to eight Fortune 500 companies and 12 Fortune 1000 companies, the region is diversified, dynamic and business-friendly. With several prominent universities in the region, including University of Cincinnati, Xavier University and Miami University, as well as vocational schools, there is a consistency and abundance of skilled young professionals providing an excellent talent pool for businesses of all types.

What are some of the major trends you see in any of the commercial sectors that you think will play a significant role in Cincinnati in the next several years?

Sullivan: Given the continued increase in online shopping and the demand by consumers to receive their merchandise within a shrinking timeframe from the placement of their order, we fully expect to see an increase in the number of significant warehouse facilities as retailers are forced to position their product closer to their customers.

Coupled with the DHL and Amazon Prime facilities, Cincinnati is well positioned to be a major player in the national warehousing and distribution market as the lines between retail and industrial continue to blur.

In the healthcare sector, hospital networks continue to analyze the best places in which to locate services within the communities they serve. The decentralization of services continues to occur as more specialized buildings are developed in neighborhoods. And with more building, the boundaries of service areas between competing health networks are diminished as they strive to attract a wider patient base.

In addition, many networks are focused on balancing their real estate holdings between company-owned and third-party-owned. As decisions to divest of company-owned real estate – often through a sale leaseback process – opportunities for medical office investors will increase in many markets.