Duke Repositions in Cincinnati Office Market with Big Investments, Dispositions

August 09, 2007
By Barbra Murray, Contributing Editor

The Cincinnati office market is looking up and Duke Realty is positioning itself to take full advantage. The company confirmed that it is shifting its investment in the city with the development of a bevy of new properties on the horizon and the disposition of almost half of its nearly 5 million-square-foot office portfolio in the area.

"Think of this as capital recycling, so that we are invested in the best assets for our customers and shareholders in growing submarkets," Ken Turchi, Duke senior vice president of marketing, told CPN today. "We consider this an ordinary part of our business. We're in the development business; we build, we acquire, we sell and reinvest." Duke currently has an office portfolio in the Cincinnati area totaling approximately five million square feet, and is putting 2.3 million square feet up for grabs; although no broker has yet been tapped for the project.

The dispositions, he reiterated, do not indicate a retreat from the Cincinnati market by any means. "We will still have approximately 2.5 million square feet of office space and 10 million square feet of industrial space, with four more office buildings opening between this fall and April 2008." The two office buildings that will soon deliver, including Centre Pointe VI (pictured) in suburban West Chester, feature 135,000 square feet, each. And there's even more on the horizon for Duke. "We continue to pursue land opportunities in key Cincinnati submarkets--Kenwood, Blue Ash and West Chester. Cincinnati will remain one of our top three among 19 markets across the country." Bob Chapman, Duke senior executive vice president of real estate operations, has just been appointed to the position of chief operating officer and, with his new responsibilities, will play a large role in the acquisition and disposition of properties in Cincinnati, as well as across the United States.

The city's office market fundamentals are getting better and better. Positive absorption during the second quarter resulted in a decrease in the average overall vacancy rate in Greater Cincinnati, which went down to 17.38 percent from 18.57 percent in the first quarter, according to a mid-year report by real estate services firm Colliers International.

Indianapolis-headquartered Duke--which holds the distinction of being the largest publicly-traded, vertically integrated office and industrial real estate company in the country--engages in the ownership, construction, development, leasing and management of office, industrial, healthcare and retail properties. Its portfolio consists of approximately 117 million square feet of leasable space, and 7,500 acres of undeveloped land that can accommodate over 111 million square feet of additional development. Company stock opened at $30.92 today.

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