Alot of attention is being paid to the multifamily market in downtown Columbus, Ohio. Mayor Michael Coleman set a goal of developing 10,000 new housing units in the city during the next 10 years. Currently, there are 2,796 units in the development pipeline. The city is trying to make downtown an attractive location for developers through incentives like tax increment financing and other tax savings.

“This is the most competitive rental market we have seen in years,” says Gus Cook, president of Columbus-based Continental Communities. “Owners are offering concessions, such as 1 or 2 months of free rent, and developers are competing head-to-head with the lowest interest rates in 40 years.”

Recently, greenfield development has slowed dramatically. Only premier projects with unmatched locations and external amenities continue to be built in the suburbs.

Prior to September 11, 2001, new projects in the market were aimed at young renters and corporate tenants. Now, however, the corporate tenants (transplant or temporary) are returning to the area and their numbers are expected to increase during the next 12 months. “We also know that younger renters are waiting for positive economic signs to get out on their own,” Cook says.

Columbus has seen a few significant multifamily developments recently. In downtown, Nationwide Realty Investors is developing and Continental Communities is serving as general contractor for the 252-unit Arena Crossing. This project is the first phase of residential units in the Arena District.

Brewers Yard, a 303-unit project located in the downtown Brewery District is being developed by Capital Square Ltd. Another project, Liberty Place, is a 308-unit, downtown project that is being developed by Winther Investments. In the suburbs, Continental Communities is developing Easton Commons, a 493-unit project located across the street from the Easton Town Center off of Interstate 270 and Morris Road.

Vacancy rates are higher in the Class B and Class C properties, which are mostly located in less desirable suburban locations. A conservative estimate for the market is 7 percent to 10 percent vacancy across the board.

The low end of rental rates for Class B and Class C properties range between 60 cents and 70 cents per square foot. The Class A properties range between 80 cents and $1.20 per square foot.

“The path of least resistance today for multifamily development is in downtown Columbus,” Cook says. “As long as the incentives continue, that will be the place to watch.”

Overall, the market has been flat. “Only the most ‘healthy’ developers have gotten quality projects off of the ground,” Cook says. “We have seen very few new projects announced in the suburbs in the last 12 months. There are currently 28 rental and condominium projects under construction in the city and another 13 projects have been proposed.

“When the economy gets better, this market will take off,” Cook says. “We need interest rates to go up, the corporate housing market to ramp up and young people to move out of their parents’ homes. Then, those developers that have quality projects in the pipeline will be rewarded with greater demand and higher rents.”

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