Office i Ohio

You can’t find a commercial sector that’s struggling in Columbus

  
You can't find a commercial sector that's struggling in Columbus,ph01

Jim Garrett admits that he sounds a bit like a broken record when talking about the strength of the commercial real estate market in Columbus, Ohio. But Garrett, managing director of the Columbus office of Colliers International, can’t help it that Columbus has seen a steady rise in sales, leases and new developments for several years.

What’s fueling the CRE market in this key Ohio city? Demand for new apartments is on the rise. It’s on the upswing, too, for new retailers and restaurants as consumers feel more confident as the economy continues to improve. The industrial market is hot as companies seek new locations to make it easier to ship their products to their customers as quickly as possible. And developers in both Columbus and Cincinnati have found that government agencies are willing to work with them to make their new projects a reality.

It’s all added up to busy times in both Cincinnati and Columbus today.

The urban boom

Garrett says that downtown Columbus, especially, has become a hive of commercial activity today, as a growing number of people seek out the urban experience of living within walking distance of public transportation, shops, restaurants, nightlife and parks.

“What is happening in Columbus is being replicated in Indianapolis, in Chicago, Nashville, Austin, Raleigh and Charlotte. The Central Business District is on fire. You have that nice mix of first-floor retail, two or three floors of office space and then residential on top of that, as either multifamily apartments or condominiums.”

This formula is working so well in downtown Columbus that it is actually traveling out of the city limits, as developers bring this mixed-use strategy to the suburbs.

“You traditionally wouldn’t think of that live-work-play arrangement in the suburbs,” Garrett said. “But it is happening there now, too. It’s been such a successful formula, developers are replicating it even in communities where you wouldn’t think you’d see it.”

Developers, of course, have little choice in Columbus. There has been so much new construction in the city’s central business district, that developers here have had little choice but to strike out in the Columbus suburbs.

“They are looking for some alternative sites on which to build,” Garrett said.

And when they are building, developers are focusing first on mixed-use and secondly on stand-alone apartment buildings, Garrett said.

The numbers back this up. In 2016, Columbus had 1,300 apartment units under construction. In 2017, that number stood at a still-strong 1,250. Research shows that Columbus can keep up this pace through 2030 and not outpace the demand for new multifamily units.

Garrett said that the main reason for this growth is Columbus’ diverse employment and industry base. He points to Cincinnati and Cleveland, which had for so long relied so heavily on manufacturing. These two Ohio cities still do need manufacturing, of course, but they are also trying to lure other types of businesses to their limits.

Columbus, though, already has that desirable commercial mix. The city is filled with a mix of banking, insurance, government and manufacturing uses.

“When you look at that mix, you see right away how healthy it is,” Garrett said. “It doesn’t hurt, of course, when you have 60,000 kids signing up to go to Ohio State every year. A lot of them come and they stay.”

This doesn’t mean there aren’t challenges for some doing business in the Columbus area. This is especially true when you look at suburban office product.

Developers and commercial owners doing business in the suburbs are becoming more creative, Garrett said. They know that suburban office buildings built in the 1970s and ‘80s, and sitting in sprawling office parks, will struggle to compete against newer office towers in the center of the central business district.

These suburban owners can sometimes point to a nearby power center with retail and eating options when promoting their office buildings. Others might be able to sell their office space by pointing out apartment communities and single-family homes located not too far away.

But not every suburban office building is located a short walk or drive from these amenities. What do those owners do to compete for tenants? That’s a tough question.

“If I had the answer, I wouldn’t be talking to you,” Garrett said. “I’d be on a private island some place. If we can figure that out, we can make a lot of people a lot of money.”