COLUMBUS | OFFICE
During the fourth quarter of 2018, the Columbus office market saw a third consecutive quarter of growth, posting 65,134 square feet of positive net absorption. Despite Cardinal Health and United Healthcare vacating 6000 Parkwood Pl. and 9200 Worthington Road, respectively, large move-ins drove absorption positive. Nexeo Solutions backfilled a large portion of Cardinal Health’s space, OhioHealth purchased 6805 Perimeter Drive in an owner/user sale and Root Insurance moved into 80 on the Commons. Vacancy increased 18 basis points to 9.55 percent, as construction completions added new vacancy to the market. Overall asking rates slightly decreased to $18.73 per square foot but are $0.07 higher than they were at the end of 2017, demonstrating the office sector’s growth year-over-year. The Kiplinger Forecast reports GDP growth of 2.8 percent in the fourth quarter.
In 2019, the U.S. can anticipate less consumer spending due to a lower stock market, but income growth will remain strong as the unemployment rate slightly decreases. Locally, unemployment in Central Ohio declined from 4.1 percent to 3.7 percent in the fourth quarter. Columbus can expect continued growth in the new year as investors and large companies take notice of the region’s high concentration of millennials, emphasis on development and low cost of living.
The Columbus vacancy rate increased from 9.37 percent to 9.55 percent in the fourth quarter. The completion of 80 on the Commons and the first Gravity building added vacancy to the market, and the purchase of 6805 Perimeter Drive did not affect vacancy, despite increasing net absorption. Polaris saw the largest vacancy increase to 8.06 percent, as United Healthcare vacated 9200 Worthington Road. The largest decrease occurred in New Albany with Thirty-One Gifts occupying space at 8111 Smith’s Mill Road, lowering vacancy to 2.57 percent.
NET ABSORPTION >>
This quarter the office market saw 65,134 square feet of positive net absorption. Dublin and Polaris experienced the largest changes in absorption from the third quarter. After negative absorption last quarter, Dublin finished the year strong with 79,477 square feet positively absorbed, due to Nexeo Solutions backfilling at 6000 Parkwood Pl. and OhioHealth purchasing 6805 Perimeter Drive. Polaris recorded 96,097 square feet of negative absorption due to United Healthcare moving out of 9200 Worthington Road.
CONSTRUCTION ACTIVITY >>
Construction numbers remain steady as demand for new office space in Columbus rises. There is currently 949,110 square feet of construction underway, a majority being mixed-use space. The CBD leads activity with 552,000 square feet of development under construction, including 711 N. High St. and The Hayden. In the fourth quarter, there were two completions totaling 184,000 square feet. The highly-anticipated mixed-use 80 on the Commons added 134,000 square feet of office space to downtown Columbus and is home to tenants such as Root Insurance and AEP. The first phase of the Gravity project at 500 W. Broad St. also completed this quarter, with 50,000 square feet of office and a signed lease from BarkBox. In 2019, as many as ten projects are expected to complete around the city.
SALES ACTIVITY >>
Ten office buildings totaling 619,385 square feet sold in Central Ohio this quarter for a total sales volume of $59.29 million, or $99 per square foot. Sales volume is higher than it was in the fourth quarter of 2017, signaling increasing investment activity in the office sector. Thirty-One Gifts purchased 8111 Smith’s Mill Road from Golden Gate Capital for $24 million, or $137 per square foot, making it the largest sale of the quarter. 6805 Perimeter Drive sold to OhioHealth as their new owner/user building for $9.25 million. RSM Development bought Orchard Knoll at 8351 N. High St. for $6.55 million, or $93 per square foot.