Q4 2022 WRAP UP
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 insight on market trends in the Columbus industrial and office sectors.
The end of the year marks the completion of the fourth quarter and signals the beginning of the first quarter. The Columbus industrial market had a strong Q4 regarding new development and velocity. The market had nearly one million square feet of net absorption for the quarter, bringing the year-to-date net absorption to just under 8.9 million square feet. The vacancy rate decreased from 2.20% to 2.09%, with asking rates steady at $6.26 NNN. Construction remains strong, only slowing slightly with nine new projects breaking ground in Q4 alone, totaling over 2,457,688 square feet. Moving into the beginning of 2023, new construction is expected to slow significantly when compared to 2022. However, with more companies interested in reshoring and relocating to the US, this could decrease vacancy and pressure developers to consider new projects.
Looking Forward: Reshore and Relocate
The discussion of reshoring in the industrial market is present now more than ever. The COVID-19 pandemic altered ways of life for everyone in every industry. Since then, US manufacturers have raised interest in lowering the cost of operating expenses by reshoring their business back to the states. One of the largest benefits in returning work to the US would be the quicker and simpler management of supply chains. The challenge would be determining the new supply chain and the efficiency of it. With space seeming to be harder to acquire, the question of location for reshoring would be another challenge companies need to solve for.
The Columbus office market continues to face challenges amidst the post-pandemic shift. For the first time since the Q4 2021, absorption is negative. The vacancy rate increased to 13.0% after Q3 2022's drop. Development remains strong, with five projects comprising of 787,625 square feet underway. The Columbus office market continues to see sublease inventory increasing as companies decide to minimize their space needs. For the next year, the market can anticipate more opportunities through subleases while landlords look to create new routes in order to rebound and adapt in a post pandemic world.
Looking Forward: Sublease Gains
Effects from the COVID-19 pandemic continue to shift and influence the office market. With companies deciding to minimize their space needs, sublease inventory rises in Central Business Districts and suburbs. Sublease space has increased significantly since the last greatest increase in Q3 2019. Within those last three years, Columbus has increased sublease space by 196%. Prior to 2020, the majority of markets had little-to-no sublease inventory in the market. There is close to two million square feet of sublease space in the Columbus office market. This makes Columbus, Ohio the eighth market with the biggest gain in sublease space.
Click here to view our full Q4 2022 trends reports!