High Demand Puts Pressure on Market
Columbus is tracking another solid year in terms of office growth. At the end of the second quarter, the Columbus office market which includes Franklin and Delaware counties posted 119,065 square feet of net absorption, or the net change in occupied square feet, constituting the 17th consecutive quarter of office expansion. Over the past year, local companies involved in healthcare, finance, and professional services (major users of office space) have ramped up hiring and dominated leasing activity. As a result, the overall office vacancy rate fell to 8.4 percent ¬ a 70 basis point drop since the second quarter of 2015.
Generally speaking, a growing office market often translates to growing rental rates. In Columbus, the average rental rate for Class A space now stands at $20.36 per square foot–an increase of 1.5 percent from the same quarter last year. Meanwhile, the average rate for Class B space bumped to $17.01 per square foot–an increase of 1.4 percent year-over-year.
Construction levels saw a pullback this quarter as two major single tenant projects move closer to completion. In Grandview Heights, Nationwide Insurance began moving employees to the first completed building of their soon-to-be 500,000-square-foot campus style headquarters at Grandview Yard. Near Easton, Alliance Data completed their second building of what will become a 565,000-square-foot campus. Projects still in the construction phase include Dublin’s Bridge Park mixed-use development, and the renovation of the Buggyworks building in the Arena District. When completed, this project will add 107,000 square feet of Class A space to downtown Columbus.
> The overall vacancy rate dropped 20 basis points from Q1 2016 to 8.4 percent. Vacancy rates have been falling since 2010.
> After a robust first quarter, Class A properties posted negative 43,583 square feet of net absorption. The average asking rate for Class A space now stands at $20.36 per square foot.
> 806,455 square feet are currently under construction for office space in Columbus. The largest projects include Bridge Park in Dublin and the Buggyworks renovation in the Arena District.