Research & Forecast Report
COLUMBUS | INDUSTRIAL
The Columbus industrial market continued a strong year in the third quarter, recording 1,605,350 square feet of net absorption. This brings year-to-date net absorption to over 5.3 million square feet - outpacing 2018’s third quarter total by almost 1 million square feet. Due to strong leasing activity and consistent construction, Columbus experienced absorption greater than 1 million square feet for the ninth consecutive quarter. Vacancy continues to decline, dropping from 4.62 percent to 4.34 percent. Overall asking rates remained stable at $3.52 per square foot, but rates for R&D/Flex properties rose slightly from $6.15 to $6.36 per square foot. This quarter, online retailers and logistics companies proved driving forces on the industrial market, with Walker Edison Furniture, ODW Logistics, Spartan Logistics and Startech.com all committing to warehouse space around the region. Growing demand in the Columbus market has led to sustained construction activity in recent years. There is currently 8.8 million square feet of product under construction, 6.9 million square feet in the pipeline and 2.8 million square feet completed year-to-date. Due to a tight labor market, the Columbus unemployment rate rose from 3.4 percent to 3.7 percent this quarter. This rate is forecasted to remain stable in coming months, as the city is considered at “full employment” level. Throughout the rest of 2019, Central Ohio can expect continued growth as large build-to-suit projects reach completion and global companies occupy space in the area.
Due to significant positive absorption, the vacancy rate decreased this quarter from 4.62 percent to 4.34 percent. The Fairfield submarket saw the largest vacancy decrease to 1.94 percent, as an owner/user purchased and occupied 955 Mill Park Drive. The West submarket saw the most significant increase in vacancy to 6.32 percent, as large tenants vacated space at 4401 Equity Drive, 3950 Business Park Drive and 2111 International St.
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 6.3 million square feet – 1 million square feet higher than last quarter, and a strong indication that tenants are continuing to stay active in the market.
CONSTRUCTION ACTIVITY >>
With warehouse space in high demand, construction numbers continue to grow. Development is at an all-time high, with 8.8 million square feet under construction this quarter. The Licking and Madison submarkets alone have a combined 5.3 million square feet currently underway.
Five buildings totaling 588,400 square feet reached completion this quarter. Two speculative projects at 1860 Walcutt Road and 4616 Bridgeway Ave. were finalized, adding 466,600 square feet of space to the industrial market. Build-to-suit warehouses for Nifco, Carr Supply and Hoshizaki also completed, totaling 121,800 square feet. With nearly 40 projects either underway or in the pipeline, Central Ohio can expect more large completions in coming quarters.
SALES ACTIVITY >>
This quarter, 20 industrial properties totaling 1.2 million square feet sold in Central Ohio for a total sales volume of $66.9 million, or an average price per square foot of $56. Five more properties sold this quarter than last, demonstrating ongoing investor interest.
Industrial Logistics Property Trust purchased the Global Drive Portfolio for $31.9 million, or $81 per square foot - the largest sale of the quarter. Plymouth Industrial REIT bought the Orange Point Portfolio for $11 million. 2300 Rickenbacker Industrial Pkwy. sold to Triumph Real Estate Corporation for $5.9 million.