HEARTLAND SNAPSHOT, MAY 2010

Columbus, Ohio Office Market

Columbus is normally insulated to economic downturns, but even it has seen some effect on the commercial real estate market. Class A office vacancy increased from 15.4 to 17.6 percent, an increase of 500,000 square feet to 3.1 million square feet from the beginning of 2009 to the end of the first quarter of 2010, excluding owner-occupied buildings. The Arena District and Easton have the lowest vacancy at 5 percent and 12 percent, respectively.  The average asking rates for all Class A office space in the same period decreased by 1 percent to $19.18 per square foot gross. The lowest Class A rental rates can be found in the Westerville/Corporate Exchange area, which average $16.86 per square foot gross. The highest rates are in the Arena District at $24.88 per square foot gross, and Easton at $21.87 per square foot gross.

Major office leases that closed last year include a 162,357-square-foot renewal in New Albany signed by Aetna; a downtown 132,114-square-foot renewal by the State of Ohio; and 58,137 square feet located in Dublin signed by Butler Animal Health Supply. One major tenant absorbing space is The Ohio State University, which occupied more than 200,000 square feet of new medical space last year in offices scattered throughout Central Ohio.

Despite these negative indicators, Columbus has seen the recent development of new office space, including a 265,000-square-foot expansion of the Grange Insurance building near downtown, a 250,000-square-foot office facility to be occupied by Cardinal Health in Dublin and the Safe Auto Insurance Company’s new 126,00-square-foot building in Easton. While there is little speculative development, the Daimler Group is developing a 139,500-square-foot building in Polaris that is 28 percent leased, and Nationwide Realty Investors is developing Grandview Yard, a 92,000-square-foot office facility that is 29 percent pre-leased. Most new construction in 2010 will be corporate build-to-suits, government, medical and multifamily because these are the easiest projects to finance.

— Brad Kitchen is president of Columbus, Ohio-based Alterra Real Estate Advisors.

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