Sure, the Columbus, Ohio, commercial real estate market has seen development and sales activity slow in 2024. But this market didn’t see slowdowns that were as drastic as what many other major markets across the country saw.
And that’s good news for the state of the CRE market in Columbus as 2025 arrives.
We spoke with two CRE professionals, Matt Von Bargen, principal and founder of Columbus’ Rocky Fork Capital, and Grant Fitzgerald, vice president and regional manager for the Columbus and Cleveland markets for Marcus & Millichap, about the reasons for Columbus’ steady performance even during economic challenges.
Here is what they had to say:
How would you describe leasing demand for the multifamily sector in the Columbus market today? Is the market still a resilient one?
Matt Von Bargen: We continue to see robust leasing demand at our communities in Central Ohio. There is a real disconnect between supply and demand for housing units in the Columbus area and as a result we have seen strong conversion at renewal with our existing residents. When vacancies do come available they continue to fill quickly.
Grant Fitzgerald: The market is resilient. Year-to-date net absorption through the third quarter compared to the same period in the prior year is up for both multifamily and retail, flat for office and down slightly for industrial. The only major product type for which absorption is worse than last year, Industrial, comes after many years of a record bull run for the product, so I’m not concerned.
What about investment sales? Have those picked up at all during the last, say, three or four months?
Von Bargen: In the second half of 2024 we have seen nearly as many acquisition opportunities as we did in all of 2022 and 2023 combined. Since this summer we have acquired four communities in the region, and we plan to be opportunistic on the acquisition front in 2025. This year we have seen more activity from institutional sellers who are recycling capital into new projects. Our hope is that smaller private Sellers enter disposition market in 2025 and bring more opportunities to market.
Fitzgerald: Sales are mostly down across the board and it’s not surprising. We had record velocity from late 2020 through 2022 followed immediately by dramatic rate hikes. When so many more buildings than normal trade, it’s reasonable to expect a dip in activity to follow. And when you add in much higher cost of capital you’re guaranteed to see a drop in sales. That said, October showed a noticeable increase in transactions, possibly a sign of good things to come.
Which commercial sectors are still seeing strong leasing activity in the Columbus market?
Fitzgerald: Multifamily continues to be in high demand in Columbus and leasing activity is strong. As Columbus continues to grow in population, it will be difficult to build enough housing fast enough, supporting continued leasing demand and likely rent growth for multifamily.
I know new development activity has slowed throughout the United States. But how about in Columbus? Are commercial developments still being built or at least planned? Has development activity picked up at all during the last three months?
Fitzgerald: Multifamily deliveries remain elevated. We project 6,000 units will be delivered in 2024, slightly fewer than the record 6,500 in 2023. However, an all-time high of 7,500 new units are projected to come online in 2025. Industrial is projected to add 5 million square feet in 2024, which is down 50% from 2023 but in line with averages from 2015-2019. You might not be surprised to hear that office will deliver the lowest amount of new square footage since 2011.
Can you identify any significant commercial developments that are having a positive impact on the Columbus market?
Fitzgerald: There are many projects positively impacting Columbus but the four the stick out to me are Intel, Honda, the new terminal at John Glenn and the Merchant Building at North Market.
What are some of the factors that make Columbus such a strong market for multifamily?
Von Bargen: When you look at migration trends across the state of Ohio, there are significant tailwinds for Central Ohio that have been in place for the past 15 years and are anticipated to continue over the coming decades as a result of significant commercial developments such as the Intel project and other industrial projects that are bringing a meaningful number of new jobs to the area.
In the previous cycle from 2009-2020 annual demand for new housing nearly doubled the new supply and given where interest rates and construction costs are we expect that trend to continue creating an environment conducive to further rent growth in the region.
Fitzgerald: In my mind, business thrives with four key components and Columbus has all four. Those are an extremely educated population, a reasonable cost of living, a generally pro-business political environment and an ideal geographic location for the country’s supply chain. Because of that, I believe the future of Columbus continues to be bright.
