Written by: Brooke Ferman
As a Research Analyst, Brooke specializes in research capabilities, providing support for the Colliers Columbus Office, Industrial and Retail groups. She is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis and utilizing statistical information to predict future behavior in the market. She also assists the marketing and research director on special projects and corporate initiatives. Keep reading for Brooke's take on market trends in the Columbus industrial sector.
The Columbus industrial market had a solid first quarter with ten construction completions and over 1.6 million square feet of net absorption. The vacancy rate is 3.86 percent with asking rates steady at $6.96. Overall construction activity decreased from last quarter. With a total of 5,051,067 square feet completed in the first quarter, 14,725,285 square feet remains under construction. We expect speculative construction to slow but build-to-suit construction to remain steady. The available sublease space has increased compared to last quarter with nearly one percent of inventory available for sublease.
The vacancy rate this quarter is 3.86 percent. The submarkets with the highest vacancy rates are largely in part to construction completions that are not yet leased. The Madison submarket has the highest rate at 9.60 percent. The Licking submarket has the second highest vacancy rate with 9157 Mink Street being delivered this quarter. The CBD and Fairfield submarkets had the lowest vacancy rates both under one percent.
Market activity is often correlated to positive or negative absorption. However, in cases when a tenant leaves one space for another, the positive and negative absorption cancels out. The Market Activity Volume (MAV), which is the absolute sum of absorption change in the market, gives a better idea of overall activity. This quarter, the MAV was over 3.3 million square feet.
Construction activity remains consistent this quarter. Most submarkets are tracking well over 800,000 square feet under construction. The Licking submarket leads with seven projects underway, six of them being modern bulk buildings. Six of these projects are in New Albany near the Intel campus. While speculative construction comprises most of the activity at 74 percent, we anticipate a shift into a build-to-suit market as interest rates remain high.
The market saw approximately five million square feet of completions this quarter. The Pickaway submarket saw the most growth adding 10302 Transport Street, 4023 and 4229 Raymond Ave totaling over two million square feet. The Licking and Southeast submarkets both saw two projects deliver. The East, Madison and North submarkets each came in with one completion.
The first quarter showed strong sales volume for the beginning of 2023. Over 3.8 million square feet sold in the greater Columbus area this quarter alone. The majority of sales were in the Southeast and Southwest submarkets.
Invenergy purchased Red Chip Farms (3600 Etna Parkway) for over $100 million ($92 PSF), coming in as the largest sale of the quarter. Transwestern Investment Group bought 1417 Rail Southern Court with over half a million square feet for $52 million ($89 PSF) near the end of the quarter. Groveport Logistics Center Buildings One and Two traded for $45 million ($92 PSF).
Available Sublease Space Increases
Industrial sublease space has increased over the last quarter. Since the beginning of 2022, available sublease space has increased by almost 46 percent and is projected to continue to rise. Amanda Ortiz, Colliers Director, National Industrial Research, stated that occupiers could have overestimated “the amount of space needed to satisfy a just-in-case inventory strategy.” This could influence the demand for industrial space. The surplus of space leased throughout the pandemic no longer seems essential for some occupants.
*A new statistics set for reporting trends was created at the beginning of 2023. Please note that when comparing current trends to past quarters, there will be discrepancies. Properties Colliers | Columbus tracks are 10,000 square feet and above, industrial and flex properties, single and multi-tenant and now includes owner occupied buildings.
Check out the full Q1 2023 Industrial Trends report here!