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  • Writer's pictureColliers | Columbus


Written by: Cade Polter

  • Columbus unemployment rate (3.8%) remains a notch under the national unemployment rate (3.9%).

  • The Fed’s rate cuts continue to be pushed back, as inflation continues to be a thorn in the side of the economy.

  • Consumer spending in 2024 continues to trend up despite inflation hurdles, reflecting a consumer base that is undeterred by price increases.

  • Unrest in the world causes concern following the Francis Scott Key Bridge collapse, as well as Iran launching an attack on Israel.

How This Impacts Commercial Real Estate and the Columbus Market

Unemployment presents a complex problem within the United States and is not directly related to the success of a city’s commercial real estate industry. However, the graphic above shows cities such as Austin, Texas and Columbus, Ohio having unemployment rates slightly below the national average and marginally below that of New York City. A study by Bank of America showed Columbus and Austin as the two fastest growing cities in the U.S. during the back half of 2023. Some of the common threads between these two cities is they are up and coming tech hubs, host a major university and have relatively low cost of living in comparison to a major city like NYC. Intel’s new chip plant under construction just East of Columbus has helped Columbus take a large step forward as a competitor in the tech industry.

The United States’ economy remains in a unique position, causing the Federal Reserve to have to continue holding rates at their current 5.5%. Originally, the Fed hiked rates to cool down inflation from its post-pandemic level of nearly 8%. Thus far, the rate hikes have aided the inflation rate back down but only to just above 3%. The Fed’s target rate for inflation has always been 2%. The general success of cooling caused many to believe rate drops would be coming early in 2024. Four months in, not only have the rate cuts not happened, but inflation has begun to stubbornly rise again. Rate cuts are still expected in 2024, but likely not until at least September. As interest rates reduce, borrowing costs will also be reduced, allowing investors to retain capital for new projects. The same goes for the housing market, which will likely see an uptick in competition once rates are dropped.

Columbus is fairly insulated from the rest of the United States, so world events may not have direct impacts, but a spillover effect can still be seen. The collapse of the Francis Scott Key Bridge in Baltimore not only is a tragedy, but also impacts supply-chain. Other world news, such as Iran launching an attack on Israel, is a reason for feelings of unrest. Global unrest can lead to lower investor and consumer confidence, leading to lessened economic production in cities like Columbus.

Our Take

The unexpected rise of inflation has thrown off many investors who were preparing for rate drops mid-2024. Expect many projects around Columbus to continue to push back their timelines, waiting for a less risky time to build. Despite this, one interesting investment style is not on pause: the wave of obsolete buildings being converted to different uses such as community centers, multifamily buildings and retail centers, just to name a few that have made its way into the Columbus market. The conversions are largely happening in and around the downtown area, hoping to funnel people back into the center of Columbus. The announcement of the “Capital Line” project further backs these conversions and will only increase the attraction of Columbus even more.

Unrest in the Middle East seems likely to be a factor in the rise of gas prices around the United States. Gas prices in Columbus have risen to nearly $3.70 per gallon, which is a bit discouraging after finally being back under $3 in January. An end to these conflicts would almost certainly aid the decrease of gas prices, but until then, the fluctuation will continue.  



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