Written by: Jonathan Schuen, SIOR
Jonathan Schuen is a member of the Columbus Industrial Team at Colliers International and specializes in industrial sales and leasing. He brings an exceptional work ethic to a team of seasoned real estate advisors which he works closely with on new business development and prospecting new tenants, buyers, landlords and sellers. Before his career in brokerage, Jon joined Colliers as a Research Analyst: a position that requires extensive knowledge of the Columbus industrial market. Keep reading for Jon’s take on the current state of the industrial market and his prediction for the next 12 months.
What has surprised you most so far about COVID-19’s impact on real estate, specifically industrial?
I have been somewhat surprised by the resiliency of the industrial sector compared to other assets types. E-commerce continues to remain strong as the demand shift to e-commerce for grocery and other consumer products has amplified. It will be interesting to see if this trend continues to gain traction or if it dwindles as social distancing restrictions are lifted and people begin to frequent grocery and brick and mortar retail stores again.
Generally speaking, I have seen a mixed reaction from landlords. Some have been sympathetic and have agreed to short-term rent relief in exchange for an extended lease commitment, which in most cases makes sense. On the other hand, I have been amazed that some landlords continue to remain bullish at the negotiation table and aren’t caving on rents and concessions during these unprecedented times.
There have been more short-term industrial leases being signed in the past month. Why do you think this is?
This is primarily attributed to organizations that are assisting with COVID-19 relief efforts, such as food banks, manufacturers of supplies, e-commerce companies that are at max capacity in their current facilities, etc. On the flip side, uncertainty will cause some companies to be hesitant to commit to longer term leases. With that said, I could see companies willing to pay more to have flexibility in the short-term.
What do you think the next 12 months will bring as far as leasing activity, vacancy, rents, etc.?
Companies are being tasked to adapt to the new normal quickly. Demand for warehouse and distribution space should offset a rise in vacancy from companies unable to alter their business plans. It is likely that there will be renewed awareness in bringing manufacturing back to the United States, which will bode well for the industrial sector and create new opportunities. Some articles that I have been reading suggest that the demand for industrial space will likely grow, as the government will want to increase their safety stock and companies will want to enhance their supply chains locally so that they don’t have to rely on foreign countries and risk disruption by future pandemics. I suspect that long term, these trends will cause industrial rents to remain stable and even rise in some instances.
How do you think Columbus as a region will fare post-coronavirus?
Historically, Columbus has fared well during previous recessions due to their diversified economy. As a state capital, Columbus is an economic engine to the rest of the state and has been a leader in the educational and healthcare sectors. Columbus has a young and talented workforce that I think will be the shining light post-coronavirus.