Research & Forecast Report
COLUMBUS | OFFICE
As the world continues to feel the effects of the ongoing COVID-19 pandemic, the Columbus office market recorded negative net absorption of 55,939 square feet in the fourth quarter. The negative year-to-date absorption of 717,942 square feet has driven vacancy from 11.8 percent in Q1 2021 to 12.76 percent this quarter. However, Central Ohio is showing signs of recovery, with new development and tenant demand picking up significantly throughout the year. With 1.3 million square feet of product underway and over 140 users searching for office space, Columbus can anticipate increased activity in the new year.
The vacancy rate rose to 12.76 percent this quarter, as various companies consolidated offices and more sublease availability was added to the market. The New Albany submarket saw a substantial vacancy increase to 19.14 percent due to a large tenant subleasing their office space. Vacancy decreased to 4.5 percent in the Arlington/Grandview submarket as various tenants occupied space there this quarter.
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 593,431 square feet– a strong indication that tenants are staying active in the market.
With 1.3 million square feet currently under construction around the region, development remains steady. The highly anticipated Arlington Gateway project is underway and secured 73,000 square feet of preleasing already. The Front and Fulton mixed-use development broke ground and is expected to complete in 2023. The first building of Grandview Crossing will finalize in coming months and will be occupied entirely by BMW Financial Services. There were no completions this quarter in Central Ohio. However, the 167,000-square-foot second phase at Gravity and office building at Hamilton Quarter are expected to finalize next quarter. Throughout the coming year, as many as six projects are expected to complete around the city.
This quarter, 31 office properties totaling 604,000 square feet sold around the Columbus region. The total sales volume reached $46 million, with an average price per square foot of $105. Activity is expected to rise, as 152 office properties totaling 3.8 million square feet are currently on the market. Tempus Real Estate purchased 7575 Huntington Park Drive for $7 million, making it the largest office sale of the quarter. PJP Holdings bought 8900 Smiths Mill Road for $5.95 million in an investment sale. 1233 Dublin Road was sold to Plymouth REIT for $3.6 million, or $147 per square foot. Revah Rivers Edge LLC purchased 7716-7720 Rivers Edge Drive for $3.28 million.