After 21 consecutive quarters of positive absorption, the Columbus office market experienced a slow down at the close of the third quarter posting negative net absorption of 10,372 square feet. Leasing activity decreased by nearly half a million to 456,639 square feet. This downturn is a result of large companies downsizing due to the change in demand for creative spaces and the natural flows of the real estate cycle. Overall asking rental rates
remained the same at $18.60 per square foot; however, Class B properties posted a $0.11 increase to $17.59 per square foot. Columbus recorded a rather stagnant quarter, but national economic reports anticipate a strong close to the end of 2017. The national unemployment rate stands at 4.4 percent, and America added 156,000 jobs in the last month according to the Bureau of Labor Statistics. Columbus experienced an uptick in unemployment rate to 4.3
percent; however the city remains optimistic because population continues to surge, and the interest in Columbus is at a record high due to affordable living and job growth opportunities. An increase in construction numbers, specifically downtown, proves demand is still high around the city’s business district.
The Columbus office market increased vacancy by 20 basis points to 8.6 percent during the third quarter. The Easton and New Albany submarkets recorded decreases in vacancy to 9.1 percent and 7.6 percent, respectively. The Worthington submarket vacancy rate rose another 2 percentage points to 13.4 percent, mainly due to Huntington vacating their building at 7575 Huntington Park Drive.
NET ABSORPTION >>
Columbus posted negative 10,372 square feet of net absorption at the close of the third quarter – marking the end of a five-year streak of positive absorption. The Worthington submarket recorded the largest drop in absorption with negative 104,709 square feet. New Albany enjoyed the largest occupancy gains this quarter with 46,016 square feet of positive net absorption. Even though absorption was slightly negative this quarter, the office market remains competitive.
CONSTRUCTION ACTIVITY >>
Construction numbers are growing in Columbus. At the close of the quarter, the metro city posted 855,245 square feet of projects in the pipeline. Mixed-use developments continue to dominate the construction scene with nine projects underway. The CBD recorded the highest activity with 490,000 square feet – a testament to the growing interest in downtown Columbus. The office market posted one completion this quarter at 111 N. Front St. in the CBD.
However, six projects are expected to reach completion by year-end including the highly anticipated mixed-use development at 900 N. High St.
SALES ACTIVITY >>
This quarter seven office buildings totaling roughly 460,000 square feet sold, bringing the total sales volume to $66 million, or an average price per square foot of $72.69. Sales activity for the Columbus market decreased tremendously, further highlighting the overall slowdown that occurred at the close of the third quarter.
The largest transaction by square footage and sales volume was by Spirit Realty Capital, who purchased 4449 Fisher Rd from IBM for $35.5 million. Goodale Office LLC purchased 1400 & 1404 Goodale Blvd for $12.7 million. The Northwest submarket recorded the highest activity this quarter with four deals including 1400 &
1404 Goodale Blvd, 5005 Parkcenter Ave., 1241 Dublin Rd. and 1201 Dublin Rd.