Higher vacancy rates and rental rates that are starting to plateau? That’s what Lee & Associates is predicting for the rest of this year and early 2024 in the Columbus, Ohio, industrial market.
In its third quarter 2023 industrial brief, Lee & Associates pointed to the amount of new industrial product being delivered at the end of this year and sluggish leasing activity as two factors that will combine to boost the admittedly low vacancy rates in the Columbus area’s industrial sector.
Lee & Associates also predicted that rental rates in the industrial market might plateau. That being said, the brokerage also said that developers and owners will still consider raising rates to help make up for the higher costs of construction.
Expect, too, to see vacant industrial space remain on the market longer in the Columbus area. That’s largely because large retailers and 3PLs are taking a break from expanding their footprints.
That all sounds negative, but the Columbus industrial market still remains a strong one, according to Lee & Associates.
The direct vacancy rate in the sector did rise from the low 4.3% it saw in the second quarter of this year. But this rate only jumped to 4.9%, which is still historically low.
Net absorption was down from the 4.4 million square feet the market saw in the second quarter. But the Columbus indusrial market still saw 79,000 square feet of positive absorption in the third quarter. .
As in other markets, expect speculative industrial construction to slow in Columbus. Lee & Associates reported that only one speculative industrial project in excess of 200,000 square feet began construction in the third quarter of this year, CRG’s 250,000-square-foot projectt along Interstate-70 in Licking County, Ohio.
In other big construction news, Becknell Industrial kicked off EASE Logistics’ 308,000-square-foot build-to-suit development in the 33 Innovation Park in Marysville. VanTrust began work on a 1.2-million-square-foot industrial development for DSV in the Intel Supplier Park in New Albany.
Sales activity was down in the third quarter, too. This isn’t surprising, as higher interest rates have slowed commercial real estate sales in all sectors in all markets.
Lee & Associates said that the bulk of industrial sales in the third quarter took place in the Licking County submarket. This included EQT Exeter’s purchase of a three-building portfolio in New Albany from VanTrust and developer Core5’s 698,000-square-foot disposition to Hines Global Income Trust. Longpoint Realty Partners acquired Prologis’ 590,000-square-foot property leased to Cardinal Health south of Rickenbacker International Airport.
