HEARTLAND SNAPSHOT, MAY 2009
Columbus, Ohio, Industrial Market
In the Columbus, Ohio, market, the past few years have seen a boom of new industrial development. Places like Rickenbacker Industrial Park have increased the city’s reputation as a regional distribution hub, and new development has followed. However, the current recession has put the brakes on the city’s exponential growth.
According to Colliers Turley Martin Tucker’s (CTMT) January 2009 industrial report, the Columbus market finished last year with 776,000 square feet of negative absorption, almost half of which came as a result of the completion of several speculative bulk warehouse projects in the fourth quarter.
“I think it’s very likely that a substantial amount of that space that was delivered last year is going to be available in 2010, and most people seem to think that we have at least a 2-year backlog of space,” says Rick Trott, principal and senior vice president of industrial services for CTMT’s Columbus office.
The glut of spec space on the market means that the only new construction in Columbus is build-to-suit projects, which are few and far between in the current economy. Construction is finishing up for the new FedEx ground terminal, an approximately 217,000-square-foot facility located near Port Columbus International Airport. Developer KIRCO has leased an approximately 702,000-square-foot warehouse at CenterPoint Business Park to Kenco Logistics. The developer will also begin construction of an approximately 464,000-square-foot addition to the facility, bringing the total space occupied to approximately 1.2 million square feet.
On the sales side, First Industrial Realty Trust recently sold a 307,200-square-foot property, located at 2300 Spiegel Drive, to Trident Capital for $6.65 million. This equates to $21.65 per square foot — a lower amount than what the market is used to seeing — but this can be attributed to a softer market, as well as the fact that the property is not tax abated.
“That’s really the first significant sale that has occurred since the fourth quarter of 2008, and the sales that occurred at the tail-end of 2008 were not really true arms-length transactions,” Trott says, adding that these “arms-length” sales were companies selling properties to their own investment funds or joint venture groups.
According to CTMT’s industrial report, this past year saw increased interest in second-generation industrial space, as four leases were signed totaling 1.2 million square feet. But the economy has had its effect on tenants.
“In general, the deal sizes are smaller and shorter,” Trott says. “We still have decent activity and velocity; however, they are just taking longer and we’re looking at shorter terms.” Trott adds that some of the market’s larger deals are seeing terms of 2 years and less, with some tenants even looking for month-to-month leases.
As many would expect, this upcoming year is poised to be a difficult one. Trott expects another year of negative absorption, with vacancy continuing to creep up. But all forecasts are not negative CTMT’s report notes that at least one company requiring 1 million square feet of space is looking at buildings in the Rickenbacker. This submarket, which is close to an airport and the Norfolk Southern Intermodal Yard, has become one of the market’s most active areas for new construction and new tenants. The report goes on further to say that one to two leases above 500,000 square feet will also be seen, with the remaining leases falling in the 100,000 to 200,000-square-foot range.
— Coleman Wood
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