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2019 Q1 Industrial Trends Reports Columbus Colliers

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Research & Forecast Report
Q1 2019

The Columbus industrial market started 2019 on a positive note, recording 1,305,314 square feet of net absorption* in the first quarter. Due to strong leasing activity and continued build-to-suit investment, Columbus experienced absorption greater than 1 million square feet for the seventh consecutive quarter. Vacancy remained stable, rising slightly from 4.85 percent to 4.87 percent as new speculative development added vacant space to the market. Columbus saw a decrease in overall asking rates this quarter from $3.52 per square foot to $3.49 per square foot. However, rates
for warehouse and distribution properties held steady at $3.31 per square foot and flex rates rose by $0.07 to $6.27. Internet retail companies and logistics providers remain major forces in the industrial sector, showing increased interest in prime warehouse space. Growing demand in Central Ohio has led to consistent construction activity, with 3.6 million square feet currently underway, 6.8 million square feet in the pipeline and 866,491 square feet completed year-to-date. Due to a tight labor market, the Columbus unemployment rate rose 5 basis points from last quarter, up to 4.2 percent.

This rate is expected to remain around 4 percent, as the city is considered at “full employment” in relation to the rest of the U.S. In 2019, economists forecast continued growth in the industrial sector, as the region solidifies its reputation as an international logisitcs hub.

Vacancy increased from 4.85 percent to 4.87 percent in the industrial sector this quarter. The completion of a speculative warehouse at I-70 in Etna added 52,000 square feet of new vacancy to the market, slightly affecting the rate. The largest increase in vacancy occurred in the East submarket, with Hino Motors vacating their space at 1015 Taylor Road. The Southwest submarket saw the most significant decrease in vacancy, down to 3.76 percent.

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 4.4 million square feet– 1 million square feet higher than in the first quarter of 2018. This is a strong indication that tenants are continuing to stay active in the market place.

With warehouse product in high demand, construction numbers around Columbus remain high. There is currently 3.6 million square feet of industrial space under construction and nearly 7 million square feet in the pipeline. The Pickaway submarket leads development, with 1.3 million square feet underway. Three projects completed this quarter, totaling 866,491 square feet. Hillwood’s 514,491-square-foot warehouse at 3538 TradePort Ct. completed, making it the largest of the quarter. The Ace Hardware build-to-suit expansion was finalized, accounting for 300,000 square feet of new space. A 52,000-square foot speculative property in Etna also reached completion. With 33 projects either planned or under construction, Central Ohio can expect more large completions throughout the year.

In this first quarter of 2019, 28 industrial buildings sold in Central Ohio, for a total of 2.7 million square feet. The sales volume reached $128,333,595, with an average price per square foot of $69. This is higher than the sales volume from last quarter and the first quarter of 2018, proving that investors recognize the region as a growing industrial epicenter. Dream Industrial REIT purchased a portfolio of 11 Columbus properties for $61 million, making it the largest sale of the quarter. Another portfolio of three buildings on Westbrooke Drive sold to Sperry Commercial for $19,000,000 and Covington Group bought 8355 Highfield Drive from Superior Realty Group for $15,120,000. 

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2019 Q1 Industrial Trends Reports Columbus Colliers

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