Dayton Region Overview
Spotlight on Dayton, Ohio: Rising out of the Recession Stronger, Well-Positioned
By Dave Dickerson, President, Dayton Construction and Development
Struck with something of a “double whammy,” Dayton’s industrial and office real estate market has come through the recession and government-implemented budget sequestration stronger and well-positioned for continued growth.
Reality Check: As Greater Dayton’s dominant employer, the forced spending caps at Wright-Patterson Air Force Base effected not only WPAFB’s impact on our local economy but also had a trickle-down effect on its network of satellite businesses. When the recession led to the exit of General Motors and NCR from our market, jobs were lost and affiliated companies suffered too. Plus, market consolidation within the banking industry has led to a consolidation of the region’s banking sector—the closing of regional offices and consequent loss of employment. The region lost 34,800 jobs from 2007 to 2010. For the real estate community, the office and industrial markets were both hit hard.
The Good News: Dayton has now recovered all of those jobs—just not the same jobs—and is up 16,800 more. Driven by evolving industry needs and new technologies, the rising fortunes of logistics and healthcare-related enterprises, and a community rich with an eager, well-educated workforce, our region is on an upward trajectory. Companies are finding Dayton.
The industrial market is leading the resurgence. Industrial occupancy has been trending up to over 90%, from a low of 75% in 2011. Absorption trends for the region are showing a rapidly improving industrial market, with more than 3 million square feet of space leased since 2012 and nearly 3.5 million square feet of new construction since 2013.
Available Stock: New Users, New Uses
Dayton’s location at the crossroads of the I-70 and I-75 corridors continues to provide the region a marketable advantage. I-70 is the fifth longest system in the country and I-75 the second-longest north/south route. On the upswing, since 2012-2013, the region has seen some fairly dramatic backfill of available properties, fueled by several large “different use/new user” developments.
For example, the connectivity afforded by these interstates to a revived automotive industry in Detroit, Toledo, Northern Kentucky, and Honda plants in Ohio and Indiana, has attracted international attention. China-based Fuyao Glass Industry Group purchased and repurposed the vacated GM facility in Moraine. As the New York Times reported, Fuyao “decided the money was worth spending [in Dayton] to be close to its key customers, the big American-based automakers that buy millions of windshields each year. And it was not alone.”
The University of Dayton Research Institute acquired and now fully occupies the former NCR headquarters. Silfex Inc. has taken over an available Springfield manufacturing plant, bringing in hundreds of technical and production positions and a local investment of more than $200 million. And the fast-paced multifaceted development around the airport is another strong indicator of Dayton’s upturn.
Where is Dayton Trending?
- Due to backfill of industrial property available for lease or sale, we have accelerated new construction and build-for-lease activity, much of it centered around I-70/I-75.
- Coming out of the recession, industrial rental rates are showing significant improvement, and are showing increases in per-square-foot sales prices.
- In a word: Logistics. Thanks to our I-70/I-75 location, Dayton is one of the most competitive mid-sized cities for the booming logistics industry. One example: eCommerce. Fifty-one percent of Americans now prefer to shop online and 95 percent of Americans shop online at least yearly. With the increase in eCommerce, we’ve seen a decline in the retail presence and a growing need for strategically located warehousing space.
- Manufacturing and Health Care will make up the largest portion (65 percent) of projected non-residential construction spending through 2019.
- The growing presence of advanced manufacturing companies requiring specific building features has resulted in more new construction. For example, the emergence of new healthcare and bioscience technologies has created an exciting new market for customized industrial space. One consequence of changes in “how” healthcare is delivered is the significant increase in the construction of smaller-footprint medical care facilities in the suburbs.
- In the office sector, there has also been a turn toward the positive. The acceleration in Defense spending is now fueling a resurgence in satellite businesses dependent on Wright-Patt who require new or expanded space.
- Jobs: Long a technically oriented market for higher-end manufacturing, Dayton is drawing in smaller, regional companies who see our experienced workforce as a good fit for their needs.
- Also trending are residential options attractive to Millennials and Boomer/Empty Nesters looking for more flexibility in where they live. We are seeing activity in the multifamily market, especially in mixed-use developments such as The Greene and Austin Landing, with its companion retail, entertainment and restaurant offerings. Also targeting the Millennial/Boomer audience, growth in the urban core is on the rise. Adaptive reuse ventures like Dayton’s Water Street District, Delco Lofts and the Wheelhouse Lofts and other infill projects offer the simplicity and convenience of living delivered by urban environments that are attracting these residents downtown.
Greater Dayton is achieving a level of growth not seen in a decade. From industrial and office space to this new focus on multifaceted multifamily housing developments, from the emergence of a thriving logistics industry to increased Defense spending, this region has come through some difficult years on the bright side by building on our strengths and embracing new opportunities.
For more information, contact Dave Dickerson, 937.293.0900.