Columbus, Ohio

As seen throughout 2008, vacancy rates in the Columbus industrial market continued to increase into 2009. The first quarter direct vacancy rate increased 38 basis points to 11.07% compared to 2008’s year end rate of 10.69%. The highest direct vacancy rate was in the Southeast (17.00%), while the Out-of-County submarket boasted the lowest rate (5.49%). The market’s bulk subsets, which include buildings 100,000 square feet (SF) or larger that were built in the last 10 years, posted a 17 basis point decrease to 17.66%. The bulk subset in the southeast was the only subset to experience any change in direct vacancy as all other subsets had no change in vacancy from the fourth quarter 2008 to the first quarter 2009.

Construction

There is currently 693,834 SF under construction in the Columbus metropolitan area. FedEx’s distribution center on Poth Road, near Port Columbus in Whitehall, accounts for 217,600 SF of that total. The facility is expected to be delivered to the market in April.

A synopsis for Columbus Submarkets follows.

Southeast
The Southeast submarket experienced the largest change in direct vacancy as the rate increased 164 basis points. The direct vacancy rate for the first quarter was 17.00% compared to 15.36% at the end of 2008. The Southeast submarket’s bulk subset had a slight decrease in direct vacancy as the rate dropped to 17.77% from last year’s fourth quarter rate of 18.01%. There was over 1.2 million feet of negative absorption as many smaller distributors and warehouses were forced to close their doors. The total asking rental rate fell from 2008’s year end rate of $3.18 per square foot to 2009’s first quarter rate of $3.00 per square foot. This indicates a lack of tenants in the market place and is a result of increased vacancies.

Southwest
There was little activity in the Southwest submarket as direct vacancy increased by only four basis points from 10.74% at year end 2008 to 10.78% for the first quarter 2009. The Southwest submarket’s bulk subset experienced no change as the vacancy rate remained at 23.13%. There was a small amount of negative absorption as 8,500 square feet came back to the market. Due to the slow leasing velocity, the total asking rate dropped to $3.27 per square foot from the fourth quarter of 2008’s rate of $3.46.

Northeast
The Northeast submarket had a slight increase in vacancy as the direct vacancy rate ended the first quarter at 7.36%. This was an 11 basis point increase from the end of 2008. There was over 45,000 square feet of negative absorption in the northeast and the total asking rate decreased to $2.81 per square foot. Value City’s 410,000 square foot distribution center off of Westerville Road has been placed on the market as a distressed property. This most likely will be the trend as the recession continues to empty buildings and forcing landlords to hand properties back to lenders.

Northwest
The Northwest submarket was one of two submarkets to boast a decrease in direct vacancy, which fell 28 basis points ending the first quarter at 13.72%. Leading to the decrease was over 117,000 square feet of positive absorption. No modern bulk facilities exist in the Northwest; however, it does include 97 buildings that are 100,000 square feet or larger. The total first quarter rental rate was $2.95 a square foot.

Downtown/CBD
In the small Downtown submarket, direct vacancy had no significant movement, but increased slightly by 1.38%. Because the submarket is so small, it does not have a significant impact on the rest of the Columbus Industrial market.

Out-of-County
The Out-of-County submarket experienced the best first quarter of all the submarkets. For the second quarter in a row the direct vacancy rate decreased. The first quarter vacancy rate decreased 29 basis points to 5.49%. There was over 182,000 square feet of positive absorption for the first quarter. The Out-of-County submarket’s bulk subset experienced no change in direct vacancy as the rate remained constant at 13.78%. The total asking rental rate increased slightly from $3.36 to $3.38 per square foot making it the only submarket to post an increase in asking rates.

Outlook
Even with slowing leasing velocity over the past few quarters, there are potential tenants actively searching for space. Kenco Logistics lease of over a million square feet in the Southeast submarket is a prime example of deals being completed in the market.

Full service asking rates have softened slightly, but should continue to hover around their historic level. Owners will offer free rent as a viable option to attract possible tenants.

With the amount of current activity in the Columbus Industrial market, 2009 could turn out to be another mediocre year as the national economy tries to push its way out of the recession. A recovery should start to emerge and become clearer in the third and fourth quarters.

About Colliers Turley Martin Tucker

Colliers Turley Martin Tucker recently completed the consolidation of its ownership structure with Cassidy & Pinkard Colliers, Colliers Pinkard, and Colliers ABR, forming a holding company that is one of the nation’s largest commercial real estate service firms.  The consolidated entity operates in all 50 states, completes more than $13 billion in worldwide transactions annually, and manages more than $30 billion in real estate.  The holding company’s portfolio totals 300 million square feet under property management, 210 million square feet of space for lease, and $5 billion in capital markets transactions annually.  The Corporate Solutions division sustains more than 20,000 locations for Fortune 1,000 companies and delivers a new location “Every 80 Minutes.”  Colliers is the top-ranked real estate firm on the Global Outsourcing 100 companies list, IAOP Top 100.  For more information about Colliers International, a worldwide affiliation of independently owned and operated companies, visit www.colliers.com.

There are 42 associates in the Columbus office including, 27 brokerage team members who specialize in retail, office, industrial, multi-family housing and investment sales. 

Contact Information

Wayne Henry
614-827-1724
WHenry@ctmt.com

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