Colliers Turley Martin Tucker, 2009-07-28
by Wayne Henry
Columbus, OH/USA
COLUMBUS, OH – JULY 28, 2009 – Industrial vacancy has been on a slow, yet steady climb in Columbus since the beginning of 2008 and the second quarter followed the trend. Direct vacancy increased 36 basis points to end the quarter at 11.27% compared to the first quarter rate of 10.91%. The Out-of-County submarket continued to record the lowest direct vacancy rate at 5.36%, while the Southeast submarket produced the highest rate (16.85%) for the second quarter in a row. The industrial market’s bulk subset saw its second straight quarter with a decrease in direct vacancy as the rate fell 74 basis points to end the quarter at 17.69%. The Southeast and Southwest submarkets both experienced decreases in direct vacancy, while the other submarkets experienced no change throughout the quarter.
Absorption
The 2008 trend of negative absorption has continued into the first half of 2009. The market experienced over 766,600 square feet of negative absorption in the second quarter. The Northeast submarket was the only submarket to record positive absorption (101,975 square feet). The midyear absorption total is just less than one million square feet of negative absorption for the entire market. The bulk Industrial market experienced positive absorption of 244,400 square feet, fueled by the Southeast and Southwest submarkets.
Sales
Sales activity picked up in the second quarter from last quarter’s standstill, albeit just slightly. While the three properties that traded this quarter were a welcome sign, this activity still stands well below historical averages. The largest sale of the quarter occurred in the Southeast submarket as First Industrial LP sold 2200 Spiegel Drive to TCG I Groveport, an affiliate of Trident Capital, for $6.65 million, or $21.65 per square foot. The 307,200 square foot building is leased by Funai Electric on a 5-year term and is located in the Rickenbacker area. Also in the Southeast, B&Y Properties LLC sold 2100 Cloverleaf Street to 2100 Cloverleaf LLC, an affiliate of Brown Logistics. The 151,960 square foot distribution center sold for $2.87 million, or $18.92 per square foot. Brown Logistics Solutions will occupy the facility with its In Motion Promotion division. The final transaction occurred in the Out-of-County submarket as Luvata Ohio sold their 160,040 square foot warehouse in Delaware to Sam Dong Ohio Inc. for $1.83 million, or $11.47 per square foot.
New Construction
There were no new construction projects announced during the quarter. In April, Fed Ex completed their new facility, which is located on Poth Road in the Northeast submarket. The 217,627 square foot facility in Whitehall, gives FedEx a distribution center in close proximity to Columbus International Airport. Another large project is Kirco’s expansion for Kenco Logistics at 5235 Westpoint Drive, which is expected to be completed by the end of September. Kirco agreed to a 464,207 square foot expansion at the southeast location when Kenco agreed to lease the 701,800 square foot warehouse in the first quarter, but the project was stalled because of the turmoil in the financial and lending markets.
Outlook
The outlook for the third quarter of 2009 is rather uncertain. Activity levels are healthy, but leases are slow to get signed. While asking rental rates have stayed the same or decreased slightly, contract rental rates are 15%-20% below historic levels.
The difficulties being experienced by some will present opportunities for others. There should be plenty of opportunities for value-add buyers as investors sell off properties that they cannot carry or refinance. Tenants with leases expiring soon should be able to negotiate healthy rent reductions and more advantageous terms. New tenants to the city will be able to lease newer class A industrial space at older class B or C prices.
About Colliers Turley Martin Tucker
Colliers Turley Martin Tucker has consolidated its ownership structure with Cassidy & Pinkard Colliers, Colliers Pinkard, and Colliers ABR, forming a holding company that is one of the largest commercial real estate service firms in the U.S. In 2008, the consolidated entity completed more than $9.2 billion in worldwide transactions, including over $3.5 billion in capital markets transactions, and managed more than 335 million square feet of real estate. The Corporate Solutions division supports more than 22,000 locations for Fortune 1000 companies and delivers a new location “Every 80 Minutes.” Colliers International is ranked as one of the 2009 World’s Top 100 outsourcing service providers by International Association of Outsourcing Professionals, IAOP Top 100. For more information about Colliers International, a worldwide affiliation of independently owned and operated companies, visit www.colliers.com.
Contact Information
Wayne Henry
614.827.1724
WHenry@ctmt.com
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