Research & Forecast Report
COLUMBUS | OFFICE
As we publish this report, the U.S. and the world at large are facing a tremendous challenge, the scale of which is unprecedented in recent history. The spread of the novel coronavirus (COVID-19) is significantly altering day-to-day life, impacting society, the economy and, by extension, commercial real estate. The extent, length and severity of this pandemic is unknown and continues to evolve at a rapid pace. The scale of the impact and its timing varies between locations. To better understand trends and emerging adjustments, please subscribe to Colliers’ COVID-19 Knowledge Leader page for resources and recent updates.
The Columbus office market started off the year with slightly negative net absorption of 23,110 square feet. However, the market recorded positive absorption in seven of the past eight quarters, demonstrating the overall strength of the office sector. Ongoing investment, development and leasing activity drove positive absorption of 55,094 square feet in the CBD - the highest of any submarket this quarter. Despite overall vacancy increasing to 9.07 percent, the rate is over 40 basis points lower than in the first quarter of last year. Overall asking rates also experienced positive growth, rising to $18.84 per square foot. Rates for Class A and B properties both increased, to $20.99 per square foot and $17.83 per square foot, respectively. Three large-scale construction projects totaling 421,250 square feet broke ground this quarter, including the mixed-use Grandview Crossing development, the second phase of Gravity in Franklinton and the expansion of the Arena District, which will be home to Chipotle’s Columbus headquarters.
In the first quarter, the Columbus vacancy rate slightly increased to 9.07 percent. However, this rate is 44 basis points lower than a year ago, indicating overall growth in the market. The Worthington submarket saw a substantial vacancy decrease to 12.52 percent, as Choice Recovery and Equitas Health occupied large spaces there. Vacancy increased to 12.68 percent in the Dublin submarket as IBM vacated over 160,000 square feet at 4600 Lakehurst Ct. and 6060 Britton Pkwy.
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 1,026,712 square feet– a strong indication that tenants are staying active in the market.
CONSTRUCTION ACTIVITY >>
With demand for new office space rising, Columbus continues to add construction projects to the pipeline. There is currently 1,235,078 square feet under construction - up nearly 400,000 square feet from the end of last year. The CBD is leading activity with 521,000 square feet currently underway, including the mixed-use Gravity II project and the renovation of the historic Hayden buildings on Capitol Square. There was one completion this quarter totaling 45,000 square feet. The Grandview Mercantile development was finalized in the Short North, adding office, retail and underground parking to the neighborhood. Industrious and Klarna both preleased space in the new property. Throughout the rest of the year, as many as 12 projects are expected to complete around Columbus.
SALES ACTIVITY >>
This quarter, 11 office properties totaling 262,963 square feet sold around Central Ohio. The total sales volume reached $42 million, with an average price per square foot of $100. Transaction volume is $25 million higher now than a year ago, due to high investor interest throughout the region. DHL sold their headquarters at 360 Westar Blvd. to Arch Street Capital Advisors for $33.1 million, making it the largest sale of the quarter. Focus-ed Investment Ventures bought 1880 E. Dublin Granville Road from Prime Investments Ltd. for $1.77 million. 5354 N. Hamilton Road was purchased by Cross Development Acquisition for $1.575 million, or $101.61 per square foot.