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2019 Q3 Office Trends Report Columbus Colliers

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Research & Forecast Report
COLUMBUS | OFFICE
Q3 2019


The Columbus office market continued a strong year with 310,789 square feet of positive absorption in the third quarter. This marks the sixth consecutive quarter of positive absorption and the second consecutive quarter of absorption over six figures, proving the strength of the office sector. Due to consistent leasing activity, the vacancy rate continues to decline, dropping from 9.17 percent to 8.91 percent this quarter. Overall asking rates remain stable at $18.60 per square foot, with Class A rates holding at $20.91 per square foot. Internationally recognized occupiers were driving forces on the market this quarter, with Chipotle, Bank of America and WeWork all committing to office space around the region. According to The Kiplinger Forecast, U.S. GDP rose to 2 percent this quarter due to consumer spending and is expected to finish the year at 2.3 percent. With 2020 being an election year, GDP growth is expected to soften, dropping to around 1.8 percent. On a local scale, a tight labor market caused the Columbus unemployment rate to rise slightly from 3.4 percent to 3.7 percent. This rate is forecasted to remain stable in coming months, as the city is considered at “full employment” level. Central Ohio can expect consistent growth throughout the rest of the year, as tenants, investors and developers continue to take note of Columbus’ booming economy and first-class business landscape.

VACANCY >>
In the third quarter, the Columbus vacancy rate decreased from 9.17 percent to 8.91 percent due to significant positive absorption. The Southeast submarket saw the largest vacancy decrease to 4.13 percent, as Impact Community Action and ESC of Central Ohio collectively took 63,000 square feet in the area. The largest vacancy increase occurred in the East submarket with GC Services vacating space at 4689 Hilton Corporate Drive.

MARKET ACTIVITY >>
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 941,409 square feet– a strong indication that tenants are staying active in the market.

CONSTRUCTION ACTIVITY >>
Construction numbers in Columbus remain steady as demand for Class A office space rises. There is currently 1.2 million square feet under construction - the most there has been in six quarters. The CBD is leading activity with 374,000 square feet currently underway, including the new White Castle HQ and The Hayden renovation on Capitol Square. There were two completions this quarter, totaling 87,110 square feet. The new speculative office building at 8200 Walton Pkwy. completed in New Albany, with Bob Evans occupying the entire space. 800 N High St also completed this quarter, adding 45,000 square feet of space to the Short North for WeWork’s first Columbus location. Throughout the rest of 2019, as many as seven projects are expected to complete around Central Ohio.

SALES ACTIVITY >>
This quarter, 11 office buildings totaling 596,039 square feet sold in Columbus for a total sales volume of $52.8 million, or an average of $88 per square foot. This sales volume is $20 million higher than last quarter’s total, demonstrating an increase in investor interest. Angelo, Gordon & Co. sold 3800 Corporate Exchange Drive to Fortress Investment Group for $28.9 million, making it the largest sale of the quarter. Bridgeway Academy bought 1350 Alum Creek Drive from Adtalem Global Education for $7.1 million, or $58 per square foot. 5200 Rings Road was purchased by Northwoods Consulting in an owner occupant deal for $4 million, or $82 per square foot.


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2019 Q3 Office Trends Report Columbus Colliers

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