Colliers | Columbus
WHAT TO EXPECT IN THE CBD OFFICE SUBMARKET
Written by: Dan Dunsmoor, SIOR
As Brokerage Executive Vice President, Dan Dunsmoor has been involved with over 750 commercial real estate transactions valued in excess of $800,000,000 and accounting for over 5,000,000 square feet. Dan is recognized as a market leader in the Columbus, Ohio commercial real estate market, specializing in the leasing and sales of Class A & B office space. Keep reading to get Dan’s take on what to expect in the CBD office submarket.
3 office towers downtown (150 E Gay St, 21 E State St, 155 E Broad St) are planning to convert or are in the process of converting to mixed-use. Does this surprise you? Do you think we’ll continue to see this happen to other buildings downtown?
This does not surprise me at all. My prediction is that 10 years from now many of the large CBD buildings will have been converted to some form of mixed use project that includes a multi-family component. There are substantial tax credits available for developers that specialize in converting old office buildings. We saw the demand first hand recently as we worked through the process of selecting a buyer for the Key Bank Tower downtown. We had multiple large developers compete for the building. Ultimately, we selected a strong office investor that intends to keep the building as office but the demand was there to convert the building. Large buildings with big blocks of vacancy near the urban core are primary targets for redevelopment for many investors.
Overall asking rates downtown continue to be higher than rates for the overall Columbus market. Do you think we’ll see these rates start to decrease in coming months? Why or why not?
I don’t think we will see rates decrease at all for the Class A buildings. New developments such as the Peninsula, Gravity II, Wasserstrom, etc. will continue to push for rents in the low $20 NNN per square foot range. .
What do you think the CBD can anticipate in leasing activity throughout the rest of 2021?
There will always be substantial demand for the CBD. It is the core of the business community and the ultimate live, work play environment. The fringe of the CBD (Arena District, Grandview, Brewery District, Short North, etc.) has continued to see tremendous demand from tenants. The urban core was negatively impacted by COVID more than any other submarket due to the density. Additionally, the political unrest last year directly impacted the CBD due to the majority of the demonstrations taking place on Capitol Square. We have seen a consistent increase in leasing demand each month this year and expect that this momentum will continue as the year progresses.
For more information on the CBD office submarket, check out our Skyline Review.