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  • Writer's pictureNorm Khoury SIOR, CCIM

Dayton, Ohio: Poised for Growth

I had the pleasure of attending The Dayton Development Coalition's Annual Meeting a few weeks ago, and there was much to celebrate. Dayton had a record year in 2022 on many levels: jobs committed, new payroll and capital investment being driven by two massive projects—Honda and LG Solution in Fayette County and SEMCORP in Shelby County.

In parallel, the Dayton industrial real estate market is reaching new heights. The once under-the-radar market is getting the attention of developers and users alike thanks to announcements like these, along with the region’s many incentives: highway proximity, the labor market, low cost of living, and its status as one of few places with 100% tax-abated land.

Dayton ended 2022 with a record high net absorption of more than 5.1 million SF. In Q4 alone, Dayton saw 1.4 million SF of net absorption, partly thanks to three major build-to-suit projects being completed and occupied. However, 3.2 million SF remains under construction as we enter the new year, maintaining a near-record low vacancy rate of 3.4%, a drop of 140 basis points year-over-year.

Historically, Dayton has been popular in the build-to-suit market with users seeking warehouse space along the I-75 and I-70 corridors. In recent years, however, the speculative market has been on the come up. Of the 3.2 million SF still under construction, 2.1 million SF is speculative space. Prior to 2022, Northpointe and OPUS were virtually the only two major developers to build a Class-A industrial building in Dayton. Since then, three national developers (Pinchal, Panattoni, and Exeter) and two local private developers have all started to construct speculative buildings in Dayton. Four of the five developments are in the Dayton Airport Submarket. Investors and developers are betting on Dayton.

The influx of speculative development in Dayton has left the industrial market in uncharted waters. Nearly all the speculative space in the market is set to become available in Q1 ’23 —something Dayton has never seen—making it hard to predict what will happen next. Despite this uncertainty, signs point to continued growth.

  • In 2022 Meijer finished its $160 million expansion in Tipp City, part of its commitment to continued growth in the region.

  • The aforementioned $4.4 billion Honda electric vehicle battery plant in Fayette County wasn’t just an investment for the company—it was a statement in its investment in the state of Ohio. Soon after, it was announced that at least three other Honda plants in the Dayton region would be joining forces to spearhead electric vehicle assembly in Ohio.

  • The SEMCORP facility in Shelby County will be America's largest manufacturer of separator film for EV batteries. “SEMCORP chose the Sidney location because of the state's impressive commitment to vocational education, preparedness for a large-scale project like ours, the strong work ethic in the region, and proximity to key customers," said James Shih, SEMCORP Group's Vice President of Global Projects

Overall, moves from institutional developers and notable corporations put the Dayton industrial market on the map in 2022, contributing to its strongest year in recorded history. What’s next is uncertain—in the best of ways.

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