COLUMBUS—The rise of e-commerce has helped make industrial real estate one of the nation's hottest property sectors, but centrally-located cities such as Columbus have seen a disproportionate benefit, and looking ahead, should continue to outperform the national average.
“We view the Columbus industrial market as firing on all cylinders,” Dan Wendorf, a Columbus-based senior vice president and supply chain specialist for JLL, tells GlobeSt.com. The company just put out a special report on the industrial market here and the role it plays in the national distribution network.
According to the new study, 47% of the US population, and 33% of the Canadian, lies within a 10-hour truck drive of Columbus. Although that is comparable to Indianapolis, another giant in the distribution business, Wendorf says “we can service the East Coast and the Southeast more efficiently.”
Partly as a result, “Columbus is starting to be more of a national player,” he adds. At about 216 million square feet of space, the metro region's industrial market is comparable in size to Indianapolis. And roughly 100,000 people already work in a logistics-related field.
Since 2010, the vacancy rate among industrial properties here sank from 12.4% to 6.1%, a decline that far outpaced the national average. Furthermore, in 2014 tenants in the metro area absorbed 4.7 million square feet, also a much faster pace than the US overall.
The accelerating demand has inspired many top developers to launch projects. Prologis, the Opus Group, VanTrust Real Estate and Pizzuti Cos. each put up bulk warehouses with between 400,000 to 700,000 square feet and has sparked tremendous interest from users, Wendorf says. These developers “saw the timing was right to go vertical and have been rewarded.”
Opus, for example, broke ground last May on the eighth building, known as Rickenbacker 8, at its Opus Business Center in suburban Groveport and recently finished the 484,216 square-foot structure. As reported in GlobeSt.com, shortly before that groundbreaking, Opus signed Seattle-based SK Food Group for the remaining 180,000-square-feet of space at the 496,000-square-foot Building 7.
Many developers also find the cost of doing business in Columbus much lower than other portions of the nation “given our tax abatement structure here,” says Steve Kuhr, senior vice president and leasing specialist for JLL. Situated in a Community Reinvestment Area, for example, Opus' Building 8 qualifies for 100% real property tax abatement for 15 years.
These lower costs helps control costs for tenants as well, Kuhr adds. Rents in the Columbus market have grown from $3.16 to $3.63 per square foot since 2010, a 14.8% increase. But this remains cheaper than the national average, which grew from $4.35 to $4.62 in the same period.
“I think we'll see another round of speculative development this year,” Wendorf concludes.
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Brian J. Rogal
Brian J. Rogal is a Chicago-based freelance writer with years of experience as an investigative reporter and editor, most notably at The Chicago Reporter, where he concentrated on housing issues. He also has written extensively on alternative energy and the payments card industry for national trade publications.
