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OFFICE TRENDS REPORTGREATER COLUMBUS REGION
www.colliers.com/columbus
Quiet Start to 2012COLUMBUS REGION OVERVIEWThe Columbus region posted slight negative absorption of 18,000 square feet during the first quarter of 2012 leaving the vacancy rate at 12.1 percent. Westerville made the largest gains with 26,000 square feet were absorbed, while the Arlington/Grandview submarket lost 36,000 square feet. The largest leases were Cott Systems at 2800 Corporate Exchange Drive for 19,000 square feet and ASK Chemicals at 495 Metro Place for 16,000 square feet.
FORECASTS AND REFLECTIONS• NetJets, Inc.’s completed their 140,000-square-
foot building at Port Columbus International Airport and have occupied it. They will completely vacate 4445 and 4349 Easton Way in Easton in the second quarter. Construction also continues in New Albany on a 50,000 square foot, single-story facility, which is the first phase of the 150,000 square feet planned. The FBI-anchored 425 West Nationwide Boulevard in the Arena District in the CBD has begun construction. The 51,000 square foot building will have 6,000 square feet of speculative space available when completed.
• Construction has begun at 10 West Nationwide Boulevard, a 200,000-square-foot office building, which will house the current Nationwide employees working at 5900 Parkwood Place in Dublin when completed.
• Construction has also begun on the parking garage which is a part of the Columbia Gas-anchored, 240 West Nationwide Boulevard. There will be roughly 35,000 square feet of space not leased by Columbia Gas. The Columbia Gas lease at 200 Civic Center Drive does not run out until 2014.
ASKING RATES AND CONSTRUCTION
Asking rates have remained stable or increased over the past few quarters. There are only 48 spaces in Columbus larger than 30,000 square feet; 7 in the CBD and 41 in the suburban markets. The market will likely see continued increases in asking rental rates, but not drastically.
MARKET INDICATORS
RENTAL RATES
Q1
2012
Q2
2012*
VACANCY —
NET ABSORPTION
CONSTRUCTION —
RENTAL RATES
*Projected trend for next quarter
Q1 2012 | OFFICE
$14.00
$15.00
$16.00
$17.00
$18.00
$19.00
$20.00
$21.00
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
Class A Rental Rates Class B
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
(400,000)
(300,000)
(200,000)
(100,000)
0
100,000
200,000
300,000
400,000
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
Completions Absorption Vacancy Rate
ABSORPTION, COMPLETIONS, AND VACANCY RATES
EMPLOYMENT DATAThe preliminary unemployment rate for Columbus in February dipped to 7.2 percent from 7.3 percent in January. The unemployment rate through November and December 2011 had dropped to 6.6 and 6.4 respectively, but has risen due layoffs from what was previously holiday hiring. Every sector except for government and manufacturing was higher through January and February 2012 than year-ago employment levels. The sectors, which are significant for office leasing, were either steady or increased in the preliminary February numbers. The information sector remained flat from December through February at 16,700 workers, which is .6 percent greater than January and February 2011.
Employment for financial activities hung between 71,400 to 71,600 workers from December to February. This is 2.3 percent and 2.7 percent higher than finance employment levels in January and February levels in 2011.
Professional and business services fluctuated from 150,000 in December 2011 to 147,500 in January to 149.2 in February. Employment levels in January and February this year were 1.2 and
1.9 percent greater than the same months in 2011. Consistent employment growth leads to leasing so these are good signs.
MARKET ACTIVITYMarket interest increased during the fourth quarter. Colliers International attempts to discern demand for office space by tracking tenants in the market. The average number of tenants in the market has been lower in first quarter 2012 than in fourth quarter 2011, 83 compared to 78. However, there are many tenants seeking large spaces. 21 tenants are looking for more than 50,000 square feet, and there are 45 tenants looking for 10,000 to 50,000 square feet of space.
Market Activity Volume is the sum of the absolute value of each absorption change in the market, and it tells us how much space was in transition in the quarter. The total amount of space in transition was 450,000 square feet. This is significantly lower than the average of the past six years in which the average was 1.6 million square feet in transition. Very little occurred in the market this quarter as shown by this comparison, but we expect the pace of the market to pick up as there are still several large
The Columbus office market consists of 15 suburban submarkets plus the Central Business District submarket. The Columbus region features a total of 62.6 million square feet, 43.5 million of which is suburban.
MARKET ACTIVITY
SALES ACTIVITY
PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF BUYER SELLER PRICE / SF TYPE SUBMARKET
1103 Schrock Road Mar-12 $3,775,000 100,108 Schrock Road Holdings LLC Anheuser-Busch, Inc $37.29 B Worthington
3400 Morse Xing Jan-12 $6,100,000 49,250 Vsp Ceres Inc Farbman Group $129.79 B Easton
8720 Orion Place 3/1/2012 $5,150,000 52,005 Pat Kelly Miller $99.03 B Polaris
807 Kinnear Road Feb-12 $1,700,000 29,422 Simon Kenton Nittany Lions LLC $57.78 B Arlington/Grandview
Powell Polaris
Worthington
Westerville
NewAlbany
LickingCounty
Fairfield County
Madison County
Union County
Delaware County
Pickaway County
DublinBethel
Easton
East
Gahanna/Airport
CBD
Hilliard
SouthwestSoutheast
Arlington/Grandview
NorthCentral
LEASE ACTIVITY
PROPERTY ADDRESS LEASE SF LANDLORD TENANT ASKING PRICE (NNN) TYPE SUBMARKET
2800 Corporate Exchange Drive 19,448 Corporate Exchange Buildings
Iv & V Lp
Cott Systems $8.00 B Westerville
530 Spring Street 16,949 Lion-Dov - $11.00 B CBD
495 Metro Place 16,415 TIAA-CREF ASK Chemicals $10.00 A Dublin
2 Easton Oval 13,007 DP Two Easton Oval LLC Insight $12.95 A Easton
600 Lakeview Plaza Boulevard 11,494 Laketech Properties L C Absolute Care $3.00 C Worthington
495 Metro Place 10,432 TIAA-CREF BCD Travel $10.00 A Dublin
P. 2 | COLLIERS INTERNATIONAL
RESEARCH & FORECAST REPORT | Q1 2012 | OFFICE | GREATER COLUMBUS REGION
COLUMBUS REGION MARKET
Colliers International has changed the critieria for inclusion in the office dataset. All 10,000 square foot, class A, B and C buildings, not owned and fully leased by government are included in the dataset.
UPDATE Market Comparisons
OFFICE MARKET
Net Absorption Construction Asking Rental Rates
SUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Class A ($) Class B ($)
CBD 19,091,001 2,107,621 11.0 65,897 161,101 251,000 - $19.82 $16.87
ARLINGTON/GRANDVIEW 4,752,155 696,473 14.7 (36,714) (36,714) - $21.22 $15.66
DUBLIN 9,501,878 1,279,696 13.5 (25,577) (25,577) - $17.32 $14.95
EAST 3,691,158 523,007 14.2 24,811 24,811 140,000 $17.03 $14.32
EASTON 2,685,332 167,089 6.2 (455) (455) - $17.90 $22.50
GAHANNA/AIRPORT 1,262,031 131,038 10.4 18,276 18,276 - $17.63 $16.34
HILLIARD 2,480,456 473,524 19.1 (10,949) (10,949) - $19.95 $15.03
NEW ALBANY 1,935,789 182,628 9.4 - - 50,000 - $18.12 $15.00
NORTH CENTRAL 1,255,636 72,016 5.7 (2,252) (2,252) - $23.00 $14.16
POLARIS 4,419,869 255,686 5.8 (24,160) (24,160) - $18.78 $15.69
POWELL 273,719 60,537 22.1 (7,880) (7,880) - - $14.76
SOUTHEAST 402,548 61,040 15.2 (815) (815) - - -
SOUTHWEST 236,158 44,140 18.7 (6,079) (6,079) - - $7.50
WESTERVILLE 4,489,479 624,548 13.9 26,579 26,579 - $16.77 $15.01
WORTHINGTON 6,296,402 977,928 15.5 21,011 21,011 - $16.26 $14.42
SUBURBAN TOTAL 43,682,610 5,549,350 12.7 (24,204) (24,204) 50,000 - $17.94 $14.86
TOTAL 63,040,314 7,651,317 12.1 (18,550) (18,550) 301,000 140,000 $18.79 $15.57
Net Absorption Construction Asking Rental Rates
PROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeCLASS A 26,082,781 2,826,363 10.8 (7,068) (7,068) 301,000 - $18.79
CLASS B 23,102,511 3,188,319 13.8 (30,639) (30,639) - - $15.57
CLASS C 13,855,022 1,636,635 11.8 19,157 19,157 - - $13.14
TOTALS 63,040,314 7,651,317 12.1 (18,550) (18,550) 301,000 - $16.53
QUARTERLY COMPARISON AND TOTALS
Net Absorption Construction Asking Rental Rates
QUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeQ4, 2011 63,040,314 7,632,767 12.1 252,351 732,831 190,000 - $18.61 $15.47
Q3, 2011 63,040,314 7,885,118 12.5 284,581 480,480 190,000 - $18.58 $15.41
Q2, 2011 62,900,314 8,169,699 13.0 202,803 195,899 190,000 - $18.25 $15.25
Q1, 2011 63,040,314 8,372,502 13.3 (6,904) (6,904) 190,000 65,000 $18.10 $15.46
RESEARCH & FORECAST REPORT | Q1 2012 | OFFICE | GREATER COLUMBUS REGION
COLLIERS INTERNATIONAL | P. 3
CENTRAL BUSINESS DISTRICTThe CBD showed positive absorption of 65,000 square feet. Larger leases occurred at 21 State Street where 21,000 square feet was absorbed. At 100 East Broad Street Soloman Global and Z Careers combined for 17,800 square feet of absorption. One significant vacancy was that of OHA at 155 Broad Street for 37,600 square feet.
Nationwide Insurance began construction on their 200,000 square foot facility, where they will house the employees transferring into downtown from 5900 Parkwood Place in Dublin. However, this transition is not expected until 2013. Nationwide Realty also began construction on a new 51,300-square-foot, $10 million project. Located at 425 W. Nationwide Blvd, the site will be anchored by FBI.
The future site of Columbia Gas at 240 West Nationwide Boulevard is seeing construction activity on its parking garage. No construction has begun for the 280,000 square foot office property though.
WEST MARKETThe west submarkets are Arlington/Grandview and Hilliard.
Both submarkets saw negative absorption. Significant vacancies occurred in Arlington/Grandview from Willis Insurance vacating 44,500 square feet of 2245 North Bank Drive, as well as Excel vacating 7,500 square feet of 1650 Watermark Drive.
NORTH COLUMBUS MARKETThe north submarkets are Dublin, Powell, Polaris, North Central, Worthington and Westerville.
In Dublin, ASK Chemicals took 16,000 square feet of the 35,000 square feet of new positive absorption at 495 Metro Place. At 4150 Tuller Road, Sports Ohio Plus leased 10,500 square feet of the 19,600 square feet of positive absorption. Significant vacancy was incurred at 4675 Lakehurst Court as Duke opened up 30,300 square feet to sublease. Also occurring in Dublin were the vacanies of Progressive at 5500 Frantz Road for 11,400, Mitel at 260 Cramer Creek Court for 10,800, IHC solutions at 4700 Lakehurst Court for 10,600, and New Horizon at 6175 Shamrock Court.
In Polaris, Malcom Pirnie and Arcadis moved out of 1900 Polaris Parkway leaving the building an additional 20,400 square feet vacant.
In Westerville, Cott Systems leased 19,400 square feet at 2800 Corporate Exchange Drive. In Worthington, Erie Insurance leased 9,900 square feet at 445 Hutchinson Avenue and Absolute Care leased 11,400 square feet at 600 Lakeview Plaza Boulevard.
SOUTH MARKETThe south submarkets are the Southwest and the Southeast.
Very little change occurred in these submarkets as these are among the smallest, least populated submarkets.
EAST MARKETThe east submarkets are the East side, Easton, Gahanna/Airport and New Albany.
In the East, JCPenney leased space, adding to 15,200 square feet of absorption at 3980 East 5th Avenue. IAP leased 7,300 square feet at 2760 Airport Drive, and Aerotek Leased 6,600 square feet of space at 630 Morrison Road.
In Easton, Insight leased 13,000 square feet of 2 Easton Oval. Next quarter, there will be significant vacancy created by NetJets leaving their former location as they will fully occupy their new facility on the ground of the Columbus Airport
In New Albany, Daimler will soon begin the next phase of Water’s Edge as construction wraps on phase one.
LANDLORD/TENANT The types of tenants most seen in the market recently have been mortgage, attorneys, and smaller tenants of 2,000 to 6,000 square feet. Larger tenants have been slow to move as they have too many options and too large of expectations, slowing down their ability to make decisions.
The largest issue facing landlords is creating a steady cashflow, especially for landlords who want to renegotiate their debt.
GREATER COLUMBUS REGION:
Richard B. Schuen SIOR CCIMCEO | Principal | Columbus8800 Lyra DriveSuite # 150Columbus, Ohio 43240TEL +1 614 410 5612
Leslie HobbsMarketing & Research Manager8800 Lyra DriveSuite # 150Columbus, Ohio 43240TEL +1 614 410 5640
Jonathan BadgleyResearch Analyst175 South Third StreetSuite # 285Columbus, Ohio 43201TEL +1 614 437 4495
522 offices in 62 countries on 6 continentsUnited States: 125Canada: 38Latin America: 18Asia Pacific: 214EMEA: 117
• $1.8 billion in annual revenue
• 1.25 billion square feet under management
• Over 12,300 professionals
This document/email has been prepared by Colliers International for advertising purposes. Colliers International statistics and data are audited annually and may result in revisions to previously reported quarterly and final year-end figures. Sources include Columbus Dispatch, Business First, Xceligent, and the Wall Street Journal.
www.colliers.com/columbus
Accelerating success.
RESEARCH & FORECAST REPORT | Q1 2012 | OFFICE | GREATER COLUMBUS REGION