Research & Forecast ReportCOLUMBUS | INDUSTRIAL
The Columbus industrial market finished the second quarter strong, posting 2,469,762 square feet of net absorption*. This brings year-to-date net absorption to more than 3.7 million square feet and marks the eighth consecutive quarter that Columbus has experienced absorption greater than 1 million square feet. Steady leasing activity and build-to-suit completions drove vacancy down this quarter, declining from 4.87 percent to 4.62 percent. Overall asking rates slightly increased to $3.51 per square foot, with the largest upticks occurring in the Licking and West submarkets. Rates for warehouse and distribution properties also rose to $3.33 per square foot, due to increased demand for this type of space. Third-party logistics firms and manufacturers were major forces on the industrial market this quarter, with FedEx, Quaker and Optimus occupying warehouse space around Central Ohio. Growing demand has led to consistent construction activity in recent years. There is currently 3.3 million square feet under construction, 11 million square feet planned and 1.3 million square feet completed year-to-date. The Columbus unemployment rate decreased from 4.2 percent to 3.4 percent this quarter– the lowest it has been in 18 years. It isn’t expected to decline any further, as the city is considered at the “full employment” level. Throughout the rest of the year, Central Ohio can anticipate continued positive absorption and increased investment as the area builds its reputation as the logistics core of the Midwest.
This quarter, the vacancy rate substantially decreased from 4.87 percent to 4.62 percent, as absorption climbed over 2.4 million square feet. The Licking submarket saw the largest decrease in vacancy to 4.34 percent, with a tenant leasing space at 167-183 Heritage Drive. The West submarket saw the most significant increase in vacancy this quarter up to 4.88 percent, as Hireko Golf vacated their space at 315 Phillipi 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 5.3 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 >>
Due to high demand for warehouse space, construction numbers remain stable across the region. There is currently 3.3 million square feet of industrial space under construction and over 11 million square feet in the pipeline. The Licking submarket leads development, with 1.2 million square feet underway. Three projects totaling 1.3 million square feet reached completion this quarter. The 975,000-square-foot FedEx build-to-suit completed, making it the largest of the quarter. Hillwood’s speculative warehouse at 3657 TradePort Ct. was finalized, adding 357,000 square feet of space to the Pickaway submarket. With more than 40 projects either underway or in the pipeline, Central Ohio can expect more large completions in coming years.
Sales Activity >>
This quarter, 15 industrial properties totaling 4.7 million square feet sold in Central Ohio for a total sales volume of $199 million, or an average of $67 per square foot.
This sales volume is $70 million higher than last quarter’s total, demonstrating an increase in investor activity. Granite REIT purchased 1901 Beggrow St. for $53.2 million, or $66 per square foot – the largest individual property sale of the year so far. Singerman Real Estate sold a three-property portfolio comprising 1.5 million square feet to Transwestern Investment Group for $46.9 million.