Research & Forecast Report
COLUMBUS | INDUSTRIAL
As we publish this report, the U.S. and the world at large are facing a tremendous challenge, the scale of which is unprecedented in recent history. The spread of the novel coronavirus (COVID-19) is significantly altering day-to-day life, impacting society, the economy and, by extension, commercial real estate. The extent, length and severity of this pandemic is unknown and continues to evolve at a rapid pace. The scale of the impact and its timing varies between locations. To better understand trends and emerging adjustments, please subscribe to Colliers’ COVID-19 Knowledge Leader page for resources and recent updates.
Despite uncertainty regarding the COVID-19 pandemic, the Columbus industrial market had a strong second quarter, recording 2,768,540 square feet of positive absorption. As a result of sustained demand in the market, Columbus has seen absorption greater than 1 million square feet in 11 of the past 12 quarters. Although absorption was positive this quarter, vacancy remained steady at 4.56%, as over 1.5 million square feet of completed speculative development was added to the market. This prime new space also caused overall asking rates and warehouse/distribution rates to increase, to $3.67 per square foot and $3.50 per square foot, respectively. The second quarter demonstrated the explosive growth of e-commerce, which is booming even more due to coronavirus. Companies like Amazon, Walmart and Sheseido continue to expand in Central Ohio, occupying first-class warehouse space. With nearly 9 million square feet of development under construction and 102 industrial tenants currently looking for space in the market, Columbus can anticipate consistent activity this year as the country works to recover from the effects of COVID-19.
The vacancy rate held steady at 4.56 percent this quarter, as the market posted positive net absorption while also adding new availability from completed speculative projects. The Pickaway submarket saw the largest vacancy decrease to 1.96 percent, as DHL leased the remaining space at Tradeport 3. The Madison submarket saw the most significant increase in vacancy to 11.7 percent, as the Park West 1 project completed, adding 845,280 square feet of vacancy to the area.
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 4.3 million square feet – a strong indication that tenants are continuing to stay active in the market.
CONSTRUCTION ACTIVITY >>
Ten projects broke ground in the second quarter, driving construction activity higher. There is currently nearly 9 million square feet underway, which is 5 million square feet more than in the second quarter of last year. The Licking, Madison and Southeast submarkets lead construction activity, each with over 1.1 million square feet of speculative or build-to-suit development under construction. Nine properties totaling 2,936,952 square feet reached completion this quarter. The 1,200,000-square foot Kohl’s build-to-suit warehouse was finalized in the Licking submarket. The speculative Park West 1 project was also completed in the Madison submarket, adding 845,280 square feet of available space to the market. With 50+ projects comprising of nearly 20 million square feet either planned or underway, Central Ohio can expect more large completions throughout the next year.
SALES ACTIVITY >>
Eight industrial properties totaling 4.1 million square feet sold around Columbus in the second quarter for a total sales volume of $365 million. The average price per square foot reached $85. Oak Street Real Estate Capital purchased a portfolio of two warehouses on Phillipi Road from Big Lots for a total of $352 million, or $93 per square foot - the largest sale of the quarter. LSP Technologies sold 6161 Shamrock Ct. to Agracel, Inc. for $4.5 million, or $69 per square foot. Minerva Ridge bought 1939 Refugee Road for $2.4 million and CRH Limited Company bought 4040 Fondorf Drive for $2.2 million.