High Demand Puts Pressure on Market

Coming off what was deemed a banner year for an already fast growing economy, the Columbus office market rolled into 2016 with strong numbers across all fronts. At the end of the first quarter, Columbus posted 135,179 square feet of net absorption, or the net change occupied square feet, constituting the 16th consecutive quarter
of growth. Regional economic expansion led by healthcare, professional services and tech firms has helped drive down regional unemployment rates and decrease the overall office vacancy to 8.6 percent, an impressive bounce back from the recession-era high of 14.3 percent.

High demand for quality office space coupled with limited supply has placed upward pressure on asking rental rates. Class A rates remain robust in Columbus and now stand at $20.72 per square foot, an increase of 4.2 percent compared to the same period last year. Class B rates slightly bumped to a weighted average of $17.00 per square foot, an increase of 1.4 percent year-over-year. Construction levels are at record highs with Class A projects now
spread throughout multiple submarkets. Nationwide expects to complete the first 320,000-square-foot building of the soon-to-be 500,000-square-foot campus style headquarters at Grandview Yard in Grandview Heights. In Dublin, Crawford Hoying continues construction at Bridge Park’s massive mixed-use development; Phase One, expected for an early 2017 completion, will contain 154,000-square feet of Class A office space. More recently, Alliance Data completed their first 86,000 square foot building in Easton of what will be a 565,000-square-foot campus.

Key Takeaways
> The overall vacancy rate fell 10 basis points to 8.6 percent, and one full percentage point year-over-year. Vacancy rates have been falling since 2010.
> Demand for Class A office space remains robust while posting 180,035 square feet of positive net absorption during the first quarter. Class A asking rates are now at $20.72 per square foot.
> 1,406,834 square feet are currently under construction for office space in Central Ohio. The largest projects include Alliance Data in Easton, Nationwide Headquarters in Grandview and Bridge Park in Dublin.
> Cardinal Health unveiled plans to relocate 2000 employees at 5100 Rings Road in 2017. Nationwide Mutual Insurance will vacant the 401,000 square foot building and relocate to Grandview Yard.