The word that Rob Click uses to describe Columbus is “resilient.”
It’s hard to argue with that choice. And Click should know: As senior managing director of the Columbus office of CB Richard Ellis, Click has watched as Columbus has not only survived the gloomy days of the Great Recession but has shown definite signs of life now that the economy, still sluggish as it is, has entered a modest recovery.
“Columbus has a lot going for it,” Click said. “It has a lot that insulates it a bit from down times. No market is recession-proof. We saw that during this most recent recession. Everyone took a hit. But Columbus has weathered the down economy quite well, all things considered.”
Click is far from alone in this assessment. The commercial real estate pros working the Columbus market agree that their city has shown this much-admired resiliency during even the worst days of the recession.
There are many reasons for this: Columbus is fortunate to serve as the state capital. Government jobs, then, have provided a nice cushion during these days of high unemployment rates across the country. Then there’s the massive The Ohio State University. It, too, is a big employer, and provides an additional buffer from rising unemployment rates.
“I think we are well-positioned now to take advantage of an economy in which it looks like businesses and banks are getting ready to become more active again,” Click said.
And again, Click is far from alone in this optimism.
The relief of increased activity
This hasn’t been the best time to work in the commercial real estate business. It’s an understatement to say that deals have been difficult to close.
Today, though, the brokers working the Columbus market are reporting good news: Their phones are ringing again. E-mail is starting to clutter their in-boxes again.
Kevin James, central region retail chair in the Columbus office of Cassidy Turley, points to that same strength that Click cites: the city’s resiliency.
“Columbus has been pretty resilient during the downturn,” James said. “We have seen during the last six months tenants getting more active in their searches. Some retailers who have been on hold are starting construction again or are starting up their development plans again.”
James cited several examples of retailers tackling big projects in Columbus.
In April, home-improvement giant Menard Inc. opened its first Columbus store. The store opened more than three years after the retailer purchased the land on which it now sits.
In further good news for the city, Menard Inc. is busily preparing for a second Columbus location on the east side of the city.
James said that Menards isn’t the only retailer waking from a slumber in the Columbus region.
“Initially, retailers put on the brakes,” James said. “They were very conservative, and they were right to do that. They probably had been too aggressive in their store growth before the economic crash. The retailers that are still healthy are in expansion mode now. They want to take advantage of historically good pricing on land and sites that we haven’t seen for a while.”
As another sign of an early retail reawakening, Cassidy Turley is handling the leasing and property management duties for the Worthington Place renovation in Columbus. The renovation of the 168,000-square-foot enclosed mall has a budget of $12 million, and construction work is slated to start in the late summer of 2011. Work is expected to wrap up in the spring of 2012.
Tenants include anchor Kroger Fresh Fare — a 67,000-square-foot grocery store — Talbot’s, First Watch, Chico’s and JoS. A Bank.
Retailers are coming to Columbus largely because it is such a healthy city right now economically, James said. The state government and The Ohio State University, of course, play a major role, helping to keep unemployment rates down.
But James also says that Columbus benefits from the high number of businesses that operate headquarters in the city. Nationwide Insurance has a headquarters in Columbus, as does fashion retailer The Limited. Discount retailer Big Lots, too, operates a headquarters building in the city.
“This keeps us relatively healthy,” James said. “We are never down that much in part because of those strong companies being located here.”
The Pizzuti example
Columbus-based Pizzuti provides a good example of a local developer and real estate management company that is seeing business grow as the national and local economies show signs of life.
Pizzuti’s current projects include two major developments for Whirlpool Corporation. The company is developing a new downtown office complex for the corporation in Benton Harbor, Mich., and a 700,000-square-foot Whirlpool factory distribution center in Marion, Ohio.
These jobs represent the 10th and 11th projects that Pizzuti has taken on for Whirlpool.
Joel Pizzuti, president of the company, said that Pizzuti has earned the new jobs for Whirlpool thanks to the work it’s put in on past jobs for the corporation.
“As a team and a company, we’ve done a good job at building trust with Whirlpool,” Pizzuti said. “Our goal is to build long-term relationships with people. We look at every project as an opportunity to perform at a high level. We always want to bring projects in on time and on budget. If we do that, there is a good chance that we will do more work for our clients in the future. Whirlpool is a great example of this.”
This is the key to getting work in today’s competitive industry, Pizzuti said. Companies have to earn the trust of their clients to nab the big projects.
But even with the long history that Pizzuti has with Whirlpool, the company still must compete with others for the corporation’s work, said Jim Miller, executive vice president with Pizzuti.
“We do have to compete for each one of these projects very intensely,” Miller said. “And we have to do so against a number of other very good development companies. We rely on our entrepreneurial spirit here. We have an executive committee of just a few. When someone asks us to do something, we can give a quick answer. And we usually give a positive answer, the right answer from the developer’s point of view. That’s the entrepreneurial spirit of our company. We listen to our clients. We are very quick and adaptable.”
Looking toward a positive future
Like the executives at Pizzuti, Jay Green, leasing manager with the Columbus office of Friedman Integrated Real Estate Services, is excited about the direction in which Columbus is heading. He, too, sees more commercial activity in the city.
Green says that Columbus is fortunate to boast several qualities that help protect it during weak economic times.
“Columbus has a great location. It’s a great place to raise a family,” Green said. “We have a lot of state agencies located in town. We have the university. This all means that a lot of people are attracted to Columbus for the jobs that are available here. Then you look at our freeway system. You are 20 minutes from everywhere, which definitely helps, too.”
Green’s not surprised, then, that he’s seeing more activity in Friedman’s buildings. He’s also seeing – though he didn’t want to name names – a handful of larger deals on the way from tenants that are not currently located in the Columbus market.
“The future here looks good,” Green said. “Based on how things have gone in the first half of 2011 – and all the new activity we have seen – I think that is just going to continue.”
This doesn’t mean, though, that all is rosy in Columbus.
Greg Schenk, president and founder of Columbus’ The Schenk Company, which represents tenants, buyers and investors in commercial real estate properties, said that vacancy rates throughout the city are still too high.
“This is still the biggest tenants’ market that I’ve seen in the 25 years that I’ve been doing business,” Schenk said.
There was a time when Schenk’s business was split equally representing tenants that were moving and those that decided to renew their leases. That has changed as the economy has struggled, with 80 percent of Schenk’s business today centering on restructuring leases.
“Most people aren’t planning far enough ahead,” Schenk said. “They are reacting to the market instead of being proactive. My goal is to help them form a strategic plan. That’s why the amount of clients renewing their leases is so high; they’ve been working too much in the business instead of taking a step back and working on the business.”
But even with the challenges that Columbus, like all major markets today, faces, Schenk says that his city is uniquely qualified to survive this slow economy.
“I’ve been here half my life. I can do this anywhere in the world, but I choose to work here,” Schenk said. “This is an easy place in which to do business. We have a tremendous number of start-up businesses and entrepreneurs here. It’s a pretty neat place.”