Columbus Market Sees Sales Return in Q1

Randy Stephens from Cassidy Turley says there was definitely increased activity from interested office buyers in the first quarter. Two good-sized deals occurred, with Wells Real Estate Funds buying the 322,679-square-foot Sterling Commerce headquarters for $38.1 million in the Northwest submarket, and Brookfield Asset Management purchasing the 363,544-square-foot 800 Brooksedge building in the Northeast submarket for $32.5 million.

Office vacancy in the Columbus area rose to 16.76, and negative absorption continued from 2009. In the past two quarters combined, the office market has given back more than half a million square feet. There is almost 700,000 square feet under construction, but four of the six buildings are 100% leased, including a 300,000-square-foot building for Franklin County Courthouse in the Downtown.

"There is some bargain-hunting going on, and both tenants and landlords are trying to figure out where the price points are right now," Stephens tells GlobeSt.com. "I think people feel that they've survived the worst, and now there's some great deals to be had, or there's tenants who think that now may be a good time to trade up. It's going to be a protracted climb out, however, it may take awhile."

The industrial market outlook is similar, says Rick Trott from Cassidy Turley. There's been no new development and activity is just slowly chipping away at the inventory, he says, though "it can't be as bad as last year. It was the worst market then that I've seen in the past 15 years."

Where only seven investment-grade properties traded in all of 2009, five sites with price tags of more than $1 million traded in Q1, totaling $16.3 million and an average of $8.64 per square foot paid. The biggest of these was Penn National Gaming buying the former Delphi Automotive plant at 200 Georgesville Rd. Penn will demolish the 1.4 million square feet of facilities and move its casino from the Arena District in Downtown to this Westside location.

Industrial vacancy was at 11.34%, only a 50 basis point increase from Q4 2009. It's expected that new construction will remain at nil for the foreseeable future, with too much large contiguous spaces still on the market. However, Trott tells GlobeSt.com that he's hearing chatter about developers planning new spec buildings.

"There is a build-to-suit requirement out there, for more than one million square feet for a distribution center," Trott says. He says because it's still under wraps he can't mention the tenant, though he did say the company is food-related."