Research & Forecast Report
COLUMBUS | INDUSTRIAL
Q3 2018


The Columbus industrial market continued a strong year in the third quarter, posting 1,315,526 square feet of positive net absorption. This marks the seventh consecutive quarter of positive absorption and the fifth quarter in a row of absorption above 1 million square feet- a true indication of the market’s overall strength. The vacancy rate decreased significantly from last quarter, dropping to 4.27 percent from 4.65 percent. Vacancy is expected to decline further in coming quarters as leasing activity remains high. Overall asking rates experienced a $0.06 increase this quarter to $3.54 per square foot. Rates for warehouse and distribution properties saw the largest increase, rising from $3.17 to $3.28 this quarter. The most notable influence on the industrial market is logistics and e-commerce firms, as they continue to invest in build-to-suit distribution centers and sign large deals for warehouse space. Construction also remains steady, with over 4.3 million square feet of industrial space under construction in Central Ohio. With a slight shortage of jobs available, the Columbus unemployement rate increased to 4.1 percent, up from 3.5 percent mid-year. On a positive note, economists predict that moving forward, the region will see steady growth and more job opportunities as Columbus solidifies its reputation as an international industrial epicenter.

VACANCY >>
The vacancy rate decreased to 4.27 percent this quarter, with high leasing activity and minimal large move-outs. Vacancy is over 50 basis points lower than it was in the third quarter of 2017, demonstrating continued growth in the industrial sector. The Licking and Southeast submarkets saw the largest decrease in vacancy from last quarter to 5.52 percent and 5.48 percent respectively. The East submarket posted the largest increase to 2.96 percent, due to Veritiv vacating 525 Nelson Road.

NET ABSORPTION >>
For the seventh consecutive quarter, the Columbus industrial market recorded positive net absorption, with 1,315,526 square feet positively absorbed. Due to high leasing activity, total year-to-date net absorption stands at 4.34 million square feet. The largest occupancy gains took place in the Southeast, as 968,495 square feet was positively absorbed this quarter. Medline subleased all of the space at 6500 Adelaide Court, while National Beverage signed a large deal at 3219 Rohr Road.

CONSTRUCTION ACTIVITY >>

High construction numbers signal rising demand for industrial warehouse space in the Columbus market. There is 4.3 million square feet of space underway, with 1.8 million square feet of that being speculative projects. The Southeast submarket continues to maintain the largest developments, as three projects totaling over 2 million square feet are currently under construction there. Five projects were completed this quarter for a total of nearly 1.6 million square feet. Pizzuti’s 802,390-square-foot warehouse at 1901 Beggrow St. and Becknell’s 324,000-square-foot property at 3280 Southpark Pl. were both finalized, making them the largest of the quarter. With 25 development projects either proposed, planned or under construction, the Columbus region can anticipate more large completions over the next few years.

SALES ACTIVITY >>

In the third quarter, ten industrial properties sold in Columbus for a total of 1.5 million square feet. The total sales volume reached $88,127,173, with an average price per square foot of $52. Although sales volume was lower this quarter than last, the market can expect increased activity as investors and corporations becoming increasingly interested in Central Ohio. The largest deal of the quarter occurred when Dream Industrial REIT purchased 9000 Smiths Mill Road and 8860 Smiths Mill Road as a portfolio for $61 million, or $86 per square foot. Agracel Inc. sold 759 Pittsburgh Drive to Gladstone Commercial for $8.3 million, or $53 per square foot.