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2019 Q1 Office Trends Report Columbus Colliers

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Research & Forecast Report
Q1 2019

The Columbus office market started the year strong, recording 64,036 square feet of positive net absorption*. This marks the fourth consecutive quarter of positive absorption numbers, demonstrating the increasing growth of the office sector. The vacancy rate decreased four basis points to 9.51 percent, as many tenants occupied space throughout the city. Overall asking rates held steady from last quarter, down only $0.03 to $18.70 per square foot. However, rates for Class A properties rose to $20.89 per square foot, with the largest upticks occurring in the Easton and Worthington submarkets. According to The Kiplinger Forecast, first quarter GDP growth in the U.S. was weak due to January’s government shutdown, but is expected to pick up to 2.5 percent in the second quarter. Consumer spending is also expected to grow in the new year, at a rate of 2.8 percent. On a local scale, the unemployment rate in Columbus rose from 3.7 percent to 4.2 percent this quarter, due to a tight labor market. 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. With an abundance of young talent, a strategic location for international business and a strong emphasis on new development, Columbus can anticipate continued interest from large firms and
investors throughout 2019.

In the first quarter, the Columbus vacancy rate slightly decreased from 9.55 percent to 9.51 percent due to consistent leasing activity. The Dublin submarket saw the largest increase in vacancy to 12.36 percent, as PCCW vacated space at 5200 Rings Road. The largest decrease occurred in the Arlington/Grandview submarket with Horizon Telecom and Tyler Technologies leasing new space there and Dynamix expanding their offices at 855 Grandview Ave.

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 528,026 square feet– a strong indication that tenants are continuing to stay active in the market place.

Construction numbers in Columbus remain steady as demand for new office space rises. There is currently 1,008,879 square feet of office development underway, with a majority being mixed-use. The CBD continues to lead activity with 513,000 square feet under construction, including the new White Castle HQ and 711 N. High St. There were two completions during the first quarter, totaling 24,000 square feet. The Castle mixed-use project added 12,000 square feet of Class A office space to the market and is now home to SWS Partners. The Brunner Building at 930 N. High
St. also completed this quarter, providing 12,000 square feet of office space in the Short North. Throughout the rest of the year, as many as nine projects are expected to complete around the city.

This quarter, 11 office buildings totaling 386,371 square feet sold in Central Ohio for a total sales volume of $17.6 million, or an average of $125 per square foot. Despite a lower sales volume than last quarter, the office sector can anticipate increased investment in the area in coming months. Sperry Commercial purchased 485 Metro Pl. S for $7 million, or $72 per square foot, as part of a portfolio– the largest sale of the quarter. Shanghai Enterprises sold 1640 W. Lane Ave. to Crawford Hoying for $3.8 million. 5797 Beechcroft Road was purchased by Beechcroft Medical, LLC in an investment deal for $1.98 million, or $146 per square foot.

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2019 Q1 Office Trends Report Columbus Colliers

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