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.
Despite uncertainty regarding the COVID-19 pandemic, the Columbus office market had a strong second quarter, posting 39,011 square feet of net absorption. In eight of the past nine quarters, the region has experienced positive absorption - a true testament to the sustained strength of the office sector. New development and high demand drove activity in the Easton submarket, which recorded 33,546 square feet of absorption this quarter. Although absorption was positive, vacancy increased this quarter to 9.28%, as over 200,000 square feet of completed speculative development was added to the market. The first two phases of the expansion at Easton and the office building at 950 Goodale Blvd. were finalized, providing new spaces for M/I Homes, VanTrust and Carlile Patchen & Murphy. This new first-class space also caused overall asking rates and Class A rates to increase, to $19.12 per square foot and $21.51 per square foot, respectively. In coming months, Columbus can anticipate leasing activity to slowly increase and sublease availability to quickly rise as the country works to recover from the effects of COVID-19.
The office vacancy rate slightly increased to 9.28 percent this quarter, as Columbus saw positive absorption but also added new availability from completed speculative development. The East submarket saw a substantial vacancy decrease to 10.95 percent, as a tenant signed a large lease at 4601-4671 Hilton Corporate Drive. Vacancy increased to 10.85 percent in the Easton submarket as Phase I and II of the Easton expansion completed, adding 115,000 square feet of vacancy to the area.
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 800,000 square feet– a strong indication that tenants are staying active in the market.
CONSTRUCTION ACTIVITY >>
With steady demand for new office space, Columbus construction activity remains high. There is currently 1,030,224 square feet under construction - up nearly 200,000 square feet from the end of 2019. The first phase of Grandview Crossing is the only 100 percent speculative office property to break ground this year, and will offer 124,250 square feet of prime space in the Arlington/Grandview area. There were three completions this quarter totaling 204,854 square feet. Easton expansions I and II were finalized and were partially pre-leased by M/I Homes and Adtalem Global Education. The 35,000-square-foot office building at 950 Goodale Blvd. also completed near Grandview Yard and is fully leased. Throughout the rest of the year, as many as ten projects are expected to complete around the city.
SALES ACTIVITY >>
This quarter, 11 office properties totaling 97,956 square feet sold around Central Ohio. The total sales volume reached $9 million, with an average price per square foot of $114. Overall, sales activity has slowed due to the global pandemic, but a few major office investment sales are expected to occur in the second half of the year. 9961 Brewster Ln. sold to Minsky Capital Corp. for $1.48 million, or $99 per square foot, making it the largest sale of the quarter. Kelley Companies sold 640 Enterprise Drive for $1.375 million in an investment deal. 90 Hidden Ravines Drive was purchased by Asalut, LLC from Adena Corporation for $1.25 million, or $151 per square foot.