Columbus Office Market Sees Robust Growth

COLUMBUS—Experts have repeatedly cited wage growth as the key missing ingredient to the US economic recovery. But according to CNN Money, among metro areas with more than one million residents, Columbus topped them all with a 6.2% increase in wages since last year. And according to a new report on the third quarter from Cushman & Wakefield, the robust economy here has given a big boost to the office market.

The total vacancy rate of 15.36% was a 40 bps drop from the second quarter and the lowest since 2009. Developers delivered about 500,000 square feet of new space year-to-date – of which almost 70% is leased – and new development continues with both build-to-suit and speculative properties. And absorption in the office market totaled 375,000 square feet year-to-date.

“That's more than we absorbed in the entire year of 2014,” Robin Mitchell, research analyst in Cushman & Wakefield's Columbus office, tells GlobeSt.com.

As the home of Ohio State University, one of the nation's largest, a solid mixture of financial services firms such as JPMorgan and Nationwide, and a fashion design industry led by L Brands Inc., the metro area has a very strong economic base, she adds, especially for white-collar jobs.

Downtown led the way in the third quarter with the lowest vacancy rate of 14.66%, absorbing 82,000 square feet, and reaching a new high of $22.31 in rental rates, C&W found. A key milestone for the CBD was the Daimler Group's delivery of the the mixed use Resource Building at 250 S. High St. The 136,000 square foot project was already 80% leased on delivery and helped drive up absorption numbers for downtown. “They were shocked at the level of interest and activity,” says Mitchell.

But Doug Falor, senior vice president of C&W, adds that part of the explanation is certainly the extended period during and after the recession where there was little or no new development in the downtown. All of a sudden, here is some bright, shiny new product.” The design firm NBBJ recently moved in, and Chicago-based Coyote Logistics, which is expanding all over the Midwest, will also occupy space here.

“Currently, Columbus has more than 1.7 million square feet under construction, driven by Amazon.com's two data centers in Hilliard and Dublin at almost 900,000 square feet,” Mitchell says. “Alliance Data Systems is expanding by 350,000 square feet at its Easton headquarters, and Nationwide's new corporate campus will add another 250,000 square feet of office space. Additional projects are in the works as well.”