CBD vacancy outpaces suburbs at start of the year

Demand remains strong in the CBD as vacancy continued its slow decline over the start of the year, falling to 12.9 percent, while outpacing the suburban market by over 2.0 percent. Meanwhile, the suburbs saw a slowdown in activity, posting roughly 50,000 square feet of negative absorption. Continued interest in the CBD is also evidenced by the increasing number of construction projects as of late. Columbia Gas recently moved into its newly-constructed, 286,000-square-foot headquarters in the Arena District, development continues on the market’s largest project currently under construction at 250 S. High, while an additional, newly announced project at the Columbus Commons will add roughly 125,000 square feet of Class A office space in the downtown area.

CBD vs. suburban vacancy

Source: JLL Research

Rental rate growth on the horizon

Average direct asking rents in the Columbusmarket continue to stabilize amid slowly declining vacancy rates. The average Class A direct asking rent in the CBD currently stands at $19.23 per square foot, while the average Class A direct asking rent in the suburbs is $19.68 per square foot, a difference of $0.45 per square foot, or 2.3 percent. As demand continues to grow, particularly in conjunction with the delivery of competitive, modern space, incremental rental rate growth will be soon to follow. A number of projects currently under construction will provide tenants with high-class, contemporary options and breathe life into an aging product inventory.

Average direct asking rent by submarket cluster (p.s.f)

Source: JLL Research

Columbus fosters business development

Columbus continue to attract a number of new business, both domestically and internationally, as well as expand existing ones thanks to its highly competitive business environment and well-educated population, among other factors. Currently, there are 38 expansion projects and 86 attraction projects active in the Columbus region. Active expansion projects are comprised of 87.0 percent domestic businesses and 13.0 percent international businesses, while active attraction projects are comprised of 45.0 percent domestic businesses and 55.0 percent international businesses.

Current expansion and attraction projects by sector

Source: JLL Research

14.4%Total vacancy

-53,468Q4 2014 net absorption (s.f.)

-1.1%12-month rent growth

484,000Total under construction (s.f.)

38.2% Total preleased

Office Insight

Columbus | Q1 2015

Construction to breathe life into aging inventory

$16.65

$17.11

$17.40

$17.93

$16.00 $16.50 $17.00 $17.50 $18.00 $18.50

Northeast

North

CBD

Northwest

16.5%

15.2% 15.0%16.0%

14.0%

12.9%

19.4%

17.7% 18.6%

15.5%14.4%

15.1%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

2010 2011 2012 2013 2014 Q1 2015

CBD vacancy Suburban vacancy

0

10

20

30

40

Manufacturing Logistics HQ & BusinessServices

Science andTechnology

Expansion projects Attraction projects

Current conditions – market and submarket Historical leasing activity

Source: JLL Research Source: JLL Research

Total net absorption (s.f.)

Source: JLL Research

Total vacancy rate

Source: JLL Research

Direct average asking rent ($ p.s.f.)

Source: JLL Research

951,999

208,555 237,681

-636,363

-162,798

591,078

119,012

528,439 430,334

-53,468

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

$16.21

$16.61

$15.88 $16.01

$16.83 $17.07

$17.49

$18.01 $17.91

$17.38

$14.50$15.00$15.50$16.00$16.50$17.00$17.50$18.00$18.50

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

18.3%17.5%

16.4%

18.5% 18.7%

17.4% 17.1%

15.7%

14.3% 14.4%

10.0%

12.0%

14.0%

16.0%

18.0%

20.0%

22.0%

2006 2007 2008 2009 2010 2011 2012 2013 2014 Q1 2015

Columbus

Landlord le

verage

Tenant leverage

Peaking market

Falling market

Bottoming market

Rising market

Suburban

CBD

2,200,000

3,000,0002,600,000

1,900,000

100,000

0

1,000,000

2,000,000

3,000,000

4,000,000

2011 2012 2013 2014 Q1 2015

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