Is the rent still too high in Cincinnati? Most renters would answer with a resounding yes. However, there's good news on the horizon. With a substantial number of recently opened apartment buildings and more units in the pipeline, the rental market in the Cincinnati metro area is stabilizing.
A Wave of New Apartments
According to Kurt Shoemaker, Senior Vice President at CBRE Group Inc., around 5,000 new apartment units have been introduced in the Cincinnati area over the past two years. Moreover, thousands more are scheduled for 2024, including approximately 1,800 apartments resulting from the adaptive reuse of old office buildings, hotels, warehouses, and other structures.
Despite these additions, the demand for affordable housing remains high, especially considering that around 60% of the metro area's population are renters. However, the increased options for renters have led to a slower pace of rent hikes. Landlords are now offering lower asking rents and move-in incentives to attract residents.
"For years, development activity was slow after the recession," Shoemaker explained. "But the last few years have seen a significant uptick in apartment construction, resulting in more available units and a slight softening in rents."
Rent Trends in Cincinnati
In December of last year, the median asking rent for a one-bedroom apartment in the Cincinnati area dipped by $13 compared to November, amounting to $825. However, on a year-over-year basis, one-bedroom rents increased by approximately 5% compared to December 2022, which is still a marginal rise compared to previous years.
While rental pricing trends differ across regions, Cincinnati, along with other Midwestern cities, hasn't experienced the same rent impact as Southern and Western regions. These areas have seen significant drops in rents due to the large supply of new apartments. Nashville and Austin, for example, have observed a decline in rents attributed to the surplus of available units.
Cincinnati, on the other hand, has returned to more normalized levels, resulting in slower rent growth compared to previous years. However, it's important to note that the Cincinnati market is not as affected as Nashville, according to Shoemaker.
A Promising Future for Renters
Looking ahead, Shoemaker expects rent growth in Cincinnati to continue moderating, projecting a modest increase of only 2% to 3% next year. The rental market in Cincinnati aligns with the national trend, as the overall median U.S. asking rent fell by 0.8% to $1,964 in December 2023 compared to the same month in the previous year, according to Redfin, a national real estate brokerage.
December marked the third consecutive month in which rents declined on a year-over-year basis. Interestingly, the number of completed apartments in the U.S. is near its highest level in over 30 years, with the number under construction just shy of its record high.
Notable Apartment Projects on the Horizon
- Carew Tower: Developers plan to convert Downtown's iconic Carew Tower into 385 apartments at an estimated cost of about $175 million.
- PNC Tower: Detroit-based City Club Apartments intends to develop the $90 million, 281-unit luxury apartment complex at the former PNC Tower in downtown Cincinnati. This project serves as the second phase of development for the company in Cincinnati, following the successful opening of the 294-unit City Club Apartments CBD Cincinnati adjacent to the PNC Tower.
- Arlington School: The current owner has plans to rehabilitate the old Arlington School located at 607 Carthage Ave. in Arlington Heights. The project is expected to result in 15 apartment units, with an estimated cost of around $4 million.
- The Jasper: Developers aim to transform the old R.K. LeBlond Machine Tool Co. factory into a luxury apartment complex with 271 units. This $70 million project presents an exciting addition to the Cincinnati area.
- Pogue: Developers intend to convert the old Pogue's warehouse located at 310 Race St. Downtown into 106 apartments.
With these promising apartment projects on the horizon and a steady influx of new units, Cincinnati's rental market is poised to continue offering renters a more favorable landscape. As the rental market stabilizes, renters can look forward to more reasonable rents and enhanced options for housing in the coming years.