Research & Forecast Report
COLUMBUS | OFFICE
The Columbus office market saw a third consecutive quarter of negative absorption at the start of 2018, recording 50,658 square feet negatively absorbed. Although negative, this quarter’s absorption is higher than last quarter’s of negative 320,644 square feet absorbed. This signals that the office market is recovering from a low point and abiding by the natural ups and downs of the real estate cycle. There was some positive growth in the market, as overall asking rates increased to $18.76 per square foot compared to last quarter at $18.66. Class C properties experienced the largest growth in rates, increasing by over a dollar to $14.78 per square foot. According to Kiplinger Forecast, GDP is projected to rise to 3 percent this year, up from 2017’s pace of 2.3 percent. Business spending also remains healthy, as numbers are expected to increase by 7 percent in 2018. The Columbus unemployment rate of 4 percent remains lower than the national rate which shows the strength of the market. Central Ohio continues to thrive because of its proximity to other metros, skilled workforce, low cost of living, and emphasis on development.
This quarter the vacancy rate for the office market saw a slight increase to 9.26 percent due to negative net absorption. Large changes in vacancy occurred in the Arlington/Grandview and Gahanna/Airport submarkets, to 6.48 percent and 3.6 percent, respectively. These jumps are a result of Nisource vacating their building at 1600 Dublin Road and AEP leasing 28,341 square feet at 825 Tech Center Drive.
NET ABSORPTION >>
Columbus recorded 50,658 square feet of negative absorption this quarter. Dublin and Arlington/Grandview experienced the largest decrease from last quarter when both submarkets showed positive numbers. Dublin posted negative 51,175 square feet and Arlington/Grandview saw negative 65,182 square feet of absorption, as tenants there moved out or downsized space.
CONSTRUCTION ACTIVITY >>
As demand for office space rises, Columbus continues to add construction projects to the pipeline. Currently there is 1,339,157 square feet of development in the works, and a majority is mixed-use. The CBD leads construction activity with 621,702 square feet underway, including 80 on the Commons at 80 E. Rich St. which will offer 134,000 square feet of office space. Three completions were recorded this quarter. Heartland Bank’s new headquarters completed at 402 N. Hamilton Road, Walton Parkway Phase 1 was finished in New Albany, and a Dublin medical office property completed at 5693-5697 Innovation Drive.
SALES ACTIVITY >>
Eleven office buildings comprising of 694,084 square feet sold this quarter for a total sales volume of $67.7 million and an average of $113 per square foot. There was a boom in sales activity compared to last year, where the final quarter’s sales volume was only $27.6 million. This can be attributed to an increase in business spending that will continue throughout the rest of 2018. HM Investment Partners LLC purchased 5500 New Albany Road from Lexington Realty for $20 million, making it the largest sale of the quarter. 274 E. 1st Ave. was purchased by Wood Stone Columbus First Ave LLC for $12.2 million, or $91 per square foot. Priam Ventures invested in the 101,894-square-foot office building at 425 Metro Place N for $7.9 million.