Cal Axe

Despite uncertainty regarding the COVID-19 pandemic, the Columbus office market had a strong second quarter, posting 39,011 square feet of net absorption. In eight of the past nine quarters, the region has experienced positive absorption - a true testament to the sustained strength of the office sector. New development and high demand drove activity in the Easton submarket, which recorded 33,546 square feet of absorption this quarter. Although absorption was positive, vacancy increased this quarter to 9.28%, as over 200,000 square feet of completed speculative development was added to the market. The first two phases of the expansion at Easton and the office building at 950 Goodale Blvd. were finalized, providing new spaces for M/I Homes, VanTrust and Carlile Patchen & Murphy. This new first-class space also caused overall asking rates and Class A rates to increase, to $19.12 per square foot and $21.51 per square foot, respectively. In coming months, Columbus can anticipate leasing activity to slowly increase and sublease availability to quickly rise as the country works to recover from the effects of COVID-19.

The Columbus office market started off the year with slightly negative net absorption of 23,110 square feet. However, the market recorded positive absorption in seven of the past eight quarters, demonstrating the overall strength of the office sector. Ongoing investment, development and leasing activity drove positive absorption of 55,094 square feet in the CBD - the highest of any submarket this quarter. Despite overall vacancy increasing to 9.07 percent, the rate is over 40 basis points lower than in the first quarter of last year. Overall asking rates also experienced positive growth, rising to $18.84 per square foot. Rates for Class A and B properties both increased, to $20.99 per square foot and $17.83 per square foot, respectively. Three large-scale construction projects totaling 421,250 square feet broke ground this quarter, including the mixed-use Grandview Crossing development, the second phase of Gravity in Franklinton and the expansion of the Arena District, which will be home to Chipotle’s Columbus headquarters.

The Columbus office market finished the year strong, recording 351,948 square feet of positive net absorption* in the fourth quarter. This brings year-to-date net absorption to over 1.2 million square feet. The fourth quarter is the seventh consecutive quarter of positive absorption and the third consecutive quarter of absorption above six figures, demonstrating the consistent growth of the office market. Strong leasing activity throughout the region contributed to rising absorption and declining vacancy - down to 8.8 percent this quarter. Overall asking rates remain steady at $18.75 per square foot, with Class A rates holding at $20.82 per square foot and Class B rates at $17.59 per square foot. Completed build-to-suit offices were driving forces on the market this quarter, as DHL and White Castle’s new headquarters both completed for a collective 250,000 square feet. According to The Kiplinger Forecast, GDP grew at a 2.1 percent rate this year due to home construction and government spending. GDP is expected to soften slightly to about 1.7 percent in 2020, as it is an election year. Locally, the Columbus unemployment rate remained at 3.7 percent this quarter due to the city being considered at “full employment” compared to the rest of the country. The region can anticipate another strong year in 2020, as national and international firms gain interest in Columbus’ skilled workforce, strategic location and emphasis on development.