Research & Forecast Report
COLUMBUS | INDUSTRIAL
The Columbus industrial market finished the second quarter of 2018 on a positive note, recording net absorption of 1,535,005 square feet. This marks the sixth quarter in a row of positive absorption, a testament to the consistent strength of the market. Due to significant added inventory and slightly less positive absorption than last quarter, the vacancy rate increased to 4.65 percent. This number is expected to decline throughout the year as leasing activity continues to grow. The market experienced a slight decrease in overall asking rates to $3.48 per square foot from $3.56 per square foot last quarter. However, asking rates for general industrial properties saw a $0.05 increase to $3.84 per square foot. Logistics and e-commerce
firms remain the strongest influence on the market, demonstrating ongoing interest in warehouse space. The growing reputation of Columbus as an industrial hub has caused construction to surge, with over 5.5 million square feet of industrial space currently underway. With more job opportunities and the increased need for skilled labor, the unemployment rate in Columbus stands at 3.5 percent, down from 4.0 percent at the beginning of the year. Looking forward, economists anticipate steady growth for the area as large firms and investors are taking notice of Columbus as a critical link of the industrial supply chain.
Vacancy increased this quarter to 4.65 percent, due to added build-to-suit inventory and slightly less positive net absorption than last quarter. The vacancy rate is 100 basis points lower than in the second quarter of 2017, signifying that the market is indeed getting stronger. The North and Pickaway submarkets posted the largest decrease in vacancy from last quarter to 1.5 percent and 2.5 percent respectively. The Southwest submarket saw the largest increase to 6.82 percent, due to a large move-out at 3900 Gantz Road.
NET ABSORPTION >>
The industrial market experienced another quarter of positive net absorption, with
1,535,005 square feet positively absorbed. Strong leasing activity brings the total
year-to-date net absorption to over 3 million square feet. The Pickaway submarket
saw the largest occupancy gain by far, with 1.6 million square feet absorbed as Sofidel occupied their new building.
CONSTRUCTION ACTIVITY >>
The continuous increase of construction activity in Columbus indicates the high
demand for industrial space. Currently there is over 5.5 million square feet of
space under construction, with 3.2 million square feet of that being speculative
development. The Southeast submarket is home to the largest developments, with
five projects totaling over 3 million square feet under construction. Sofidel’s 1,600,000-square-foot plant on Pittsburgh Road and Taggart’s 259,000-square-foot warehouse at 4712 Poth Road both completed this quarter, totaling 1.8 million square feet. With more than 20 development projects either proposed, planned or under construction, Columbus can expect more large completions over the next few years.
SALES ACTIVITY >>
During the second quarter, 33 properties consisting of 9.9 million square feet sold
in the industrial market. The total sales volume reached $429,919,000, or an
average price per square foot of $62. There were significantly more sales this
quarter than in previous quarters, demonstrating that investors and companies are
becoming increasingly interested in Central Ohio. Granite REIT purchased a 3,806,420-square-foot industrial portfolio from Duke Realty for $232.5 million, making it the largest deal of the quarter. Mapletree Commercial bought a portfolio from Exeter for $133.2 million totaling 3,997,983 square feet. The Daimler Group sold Airside I, II and III to BVK for $28.7 million, or $96 per square foot.