Research & Forecast Report
COLUMBUS | OFFICE
The Columbus office market experienced a boom in activity during the second quarter, posting 551,716 square feet of positive net absorption*. This marks the fifth consecutive quarter of positive absorption, demonstrating the growing strength of the office sector. The vacancy rate dropped from last quarter, declining from 9.51 percent to 9.17 percent as many large tenants occupied space around the area. Overall asking rates held steady at $18.71 per square foot. However, asking rates for Class A properties increased to $20.92 per square foot, with the CBD and New Albany submarkets seeing the largest upticks. The Kiplinger Forecast reports that the U.S. GDP grew 3.2 percent during the first half of the year but is expected to cool off throughout the coming months. Consumer spending grew by 2.5 percent in the second quarter, reversing the effects of the first quarter’s government shutdown. The unemployment rate in Columbus decreased from 4.2 percent to 3.4 percent this quarter– the lowest it has been since 2001. This rate isn’t expected to decline any further, as the city is considered around the “full employment” level in relation to the rest of the country. Throughout the rest of 2019, Central Ohio can anticipate continued interest from tenants and investors as the city experiences a period of unprecedented growth and development.
The Columbus vacancy rate dropped in the second quarter from 9.51 percent to 9.17 percent. The Easton submarket saw the largest decrease in vacancy to 6.4 percent, as Sarepta Therapeutics, Root Insurance and Trinity Healthcare collectively took 259,000 square feet. The largest increase in vacancy occurred in Dublin with Nokia downsizing 64,000 square feet at 5475 Rings Road.
Market Activity >>
Market activity is often correlated to positive or negative absorption. However, in cases when a tenant leaves one space for another, the positive and negative absorption cancels out. The Market Activity Volume (MAV), which is the absolute sum of absorption change in the market, gives a better idea of overall activity. This quarter, the MAV was 1,435,122 square feet– almost a million square feet more than last quarter, and a strong indication that tenants are staying active in the market.
Construction Activity >>
Due to high demand for Class A office space, construction numbers remain stable across the city. There is currently 918,879 square feet of office development under construction, with a good combination of mixed-use projects and company headquarters. The CBD leads activity with 423,000 square feet underway, including The Reach on Goodale and The Hayden renovation on Capitol Square. There were two completions this quarter, totaling 360,000 square feet. The new 270,000-square-foot OhioHealth corporate headquarters completed in the North Central submarket, and employees have begun moving in. 711 N High also completed this quarter, adding 90,000 square feet of Class A office space to the Short North. Throughout the rest of the year, as many as eight projects are expected to complete around Central Ohio.
Sales Activity >>
This quarter, 11 office buildings totaling 598,893 square feet sold in Columbus for a total sales volume of $32.5 million, or an average of $89 per square foot. This sales volume nearly doubles last quarter’s total, demonstrating an increase in investor activity. Link Industrial Properties sold 5525 Parkcenter Circle to Group RMC for $14.7 million, making it the largest sale of the quarter. John C. Hanks bought 366 E. Broad St. from CPM Investments for $4.3 million, or $138 per square foot. 735 Taylor Road was purchased by Landmark Property Solutions in an investment deal for $2.54 million, or $79 per square foot.