COLUMBUS INDUSTRIAL MARKET FORECAST
Written by: Joel Yakovac, SIOR
Joel Yakovac is a member of the Columbus Industrial Team at Colliers | Columbus and specializes in industrial sales and leasing. He focuses on new business development and prospecting new tenants, buyers, landlords and sellers. Joel works with local companies throughout Central Ohio as well as large corporations across the United States. Keep reading to get Joel’s take on looking forward in the industrial market.
How does Q4 2022 feel compared to the beginning of the year?
This year has changed and shifted quickly. We’re starting or in a recession (depending on who you ask), and while historically, commercial real estate is a lagging indicator, we’re seeing effects already. This is especially true in the capital markets, as that has dried up almost completely with very few transactions occurring at all as buyers and sellers feel out where the market is at this time. Demand remains strong amongst other fundamentals, but is starting to slow slightly. Owner/user sales are still in high demand and low supply, but values are starting to dip slightly given more adverse to the increased interest rates.
What is the biggest difference you've seen throughout the year?
The increase in interest rates have caused the largest shifts for both investment sales, as well as new construction going forward.
Industrial has had a boom since the pandemic. Will we continue to see that?
The hyper demand and building that we saw will likely slow as the market adjusts to the recessionary environment. More reasonable and traditional levels will likely be seen through 2023.
Colliers National Research team stated that “alternative property types will continue to increase in demand in 2023. With data centers and food and beverage industries taking a higher market share of industrial space, demand for modern data centers and cold storage facilities will increase. Demand has outstripped supply for these product types historically, and the limited availability of these property types should cause an uptick in the development of these facilities.” In addition, this year there is a higher demand in new areas and for new construction. Companies are strongly looking to reshore manufacturing companies in hopes of improving supply chain resiliency.
How does this impact of new alternative property types and new space affect Columbus?
We’ve seen one spec cold storage building go up this year, and it was recently leased. There are a couple others proposed, but we are unsure whether either of the two developers who have them will go speculative at this time. Columbus has been a benefactor of reshoring manufacturing with the Intel plant, their associated suppliers, the battery manufacturing plant recently announced, amongst several other companies. We believe that will continue, and due to such, may soften any steep declines the overall county may see as part of a recession.
What do you think Columbus can expect for the 2023 year in the industrial market?
Given the announced and ongoing projects (Intel, Honda/LG Battery plant, Pharmavite, AmGen, etc.) we believe 2023 will be a good year as it pertains to industrial real estate. While demand will continue to come down from record/generational highs, we believe the market will perform well overall. Naturally, we should see some manifestations of a recession later in the year, or into 2024. We feel speculative construction activity will slow with the slowing demand and capital markets.