Written by: Cade Polter
May’s inflation report showed a better-than-expected 3.3%, down from 3.4% in the previous report.
Recent heat waves in the U.S. are not having immediate effects on the economy, but a continuance could begin to take a toll.
John Glenn Columbus International Airport is aiming to add another $150 million to the construction of the new terminal, which is set to be finished around 2030.
Google added over $2 billion to their investment into Central Ohio data center campuses, now totaling around $7 billion.
Looking at the graphic, it’s clear that Columbus is behind on passenger traffic compared to some significant connecting airports in the United States. However, Columbus doesn’t have an airport now that could accommodate that level of traffic. By 2030, the new state-of-the-art airport expansion in Columbus is expected to be ready. The $2+ billion project could lead to Columbus moving up the ranks in airport traffic. Ohio’s centralized location within the U.S., like Chicago, may provide another popular connecting airport to the already large United States pool once the expansion project is completed. An increase in airport revenue would impact Columbus growth for years to come.
How This Impacts Commercial Real Estate and the Columbus Market
The decline in inflation is a positive indicator for the commercial real estate market. Lower inflation can lead to more favorable borrowing conditions, encouraging investment and development in the CRE sector. The waiting game continues as the Fed doesn’t seem close to being ready to cut rates quite yet, and until then, many investors will continue to watch from the sidelines.
A week of temperatures into the mid-90s had Columbus residents cranking up their air conditioning. Prolonged periods of extreme heat can drastically affect cities in many ways. Labor sectors such as construction and agriculture become more dangerous and less productive, which can increase costs. Energy demand also increases during these scorching times and can lead to a strain on the power grid. Luckily, the heat wave is not here to stay long-term, and typical summer temperatures will resume in Columbus.
Columbus is growing to be a big-time data center in the United States. Google, along with Amazon and Intel, have invested in land near Columbus. Google has spent over $6.7 billion on land near New Albany and South of Columbus near Scioto Downs. They most recently added $2 billion to the South Columbus area and are continuing to show confidence in Columbus, even without great market conditions.
Our Take
Recent economic indicators and local developments paint an optimistic picture for Columbus. While high inflation continues to be a focus, the slight decrease is a step in the right direction. Multiple months of inflation decreases should lead the Federal Reserve towards the first rate cut. If there are any rate cuts in 2024, they will likely occur at the tail end of the year; in that case, look for more investors to be ready to jump in.
Columbus will continue to be one of the most resilient markets post-COVID. Significant infrastructure investments, such as the airport expansion and the Google data center campus, highlight Columbus’ potential for sustained growth. Continued investment should attract more businesses to Columbus, leading to more demand for office and industrial space. By the 2030s, Columbus could jump into the top 10 most populated cities in the U.S.
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