How bad was the commercial construction scene in Columbus during the worst of the pandemic last year? According to Dodge Data & Analytics, there was a 42% drop in projects started compared with 2019.
Colliers International data show that workers have fled offices – at least for the time being – with vacancy growing to 11.2% at the end of 2020, especially as some big companies put their office space on the market for sublease.
The numbers were particularly stark at Easton, but were noticeable at office buildings in Dublin, Worthington, downtown and other areas, too.
Most of the biggest employers say they’re rethinking real estate, and that’s led to a pause in office development in some quarters.
Nationwide, JPMorgan Chase & Co., American Electric Power Company Inc. – all major drivers of office use downtown – have their employees working from home for now and are only beginning to explore a return in the summer.
And some companies are rethinking their office space, sending chills through property managers. More than 1.1 million square feet of local office space has been put up for sublease.
Nationwide has said that as many as half of its 30,000 workers across the country might work from home for good, and Discover put its New Albany building on the market while it considers how many of its 2,000 local workers can do their jobs from their homes.
All this doesn’t mean developers have stopped projects. Many are betting that things will change for the better this year.
Colliers data show construction activity still hit a record at year’s end for office space. The firm tracked more than 1.6 million square feet under development, double the amount from the same time last year.
Single- and multifamily developers also are poised for a suburban explosion with many workers doing their jobs from home looking for new places to live.
M/I Homes had a phenomenal year, with millennials driving the growth in the suburbs, said CEO Bob Schottenstein.
Brian Yeager, CEO of multifamily firm Champion Cos., said apartments, including as part of mixed-use developments, will continue to be built, too.
Although some of the high-end luxury developments have been slower to lease, people want space and locations that let them walk to things from their new home offices, Yeager said, making the location of apartment complexes all the more important.
“You see how resilient the market is in some cities like Columbus,” he said. “What they want now is even more flexibility.”
In the meantime, the industrial real estate market has exploded, too, bolstered by major retailers seeing e-commerce take off as consumers turn to online shopping. L Brands Inc., Big Lots Inc., Abercrombie & Fitch Co. and other local retailers all report big gains in online sales.
As a result, Central Ohio has landed more distribution centers from big names, with Jo Ann Fabrics, Ashley Furniture, Home Depot and Amazon among those growing local delivery capacity.
Industrial real estate had “two bad weeks, then nine record-breaking months,” said CBRE economist Spencer Levy.
Other major projects in Central Ohio are still going forward.
If you drive through Bridge Park in Dublin, the Scioto Peninsula in Franklinton or the Arena District around where the new Columbus Crew Stadium is going up, you will see a lot of cranes, work crews and progress.
Columbus Downtown Development Corp. CEO Guy Worley said the Scioto Peninsula project is moving along, with the development expected to bring 2 million square feet of new office space online over the next decade.
Grandview Crossing’s 250,000-square-foot office complex is on track, too, and so is 80,000 square feet at Arlington Gateway in Upper Arlington, a suburb that is encouraging taller, denser development.
Bob White Jr., president of developer Daimler Group Inc., said the urban and suburban office markets are fundamentally sound, despite the temporary disruptions from the pandemic.
His company is building its biggest-yet speculative office development in a 240,000-square-foot building as part of the Scioto Peninsula project. Daimler is also active in the burgeoning Hamilton Quarter development in north Columbus, near New Albany.
Crawford Hoying is doubling down, too. The developer is finishing one office tower at its Bridge Park development in Dublin while soon to start another that will be Bridge Park’s tallest building yet.
“I can see the headline two years from now, about how work from home is dead,” Principal Brent Crawford said recently. “You can’t get to know an employee or a coworker on Zoom, that’s not how it works. You get to know them around the water cooler, and in the work.”