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Q1 2012 - Columbus Office

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  • 1. Q1 2012 | OFFICEGREATER COLUMBUS REGIONOFFICE TRENDS REPORT Quiet Start to 2012 COLUMBUS REGION OVERVIEW The Columbus region posted slight negative absorption of 18,000 square feet during the first quarter of 2012 leaving the vacancy rate at 12.1 percent. Westerville made the largest gains with 26,000 square feet were absorbed, while the Arlington/Grandview submarket lost 36,000 square feet. The largest leases were Cott Systems at 2800 Corporate Exchange Drive for 19,000 square feet and ASK Chemicals at 495 Metro Place for 16,000 square feet.MARKET INDICATORS FORECASTS AND REFLECTIONS • NetJets, Inc.’s completed their 140,000-square- • Constructionhas begun at 10 West Nationwide Q1 Q2 foot building at Port Columbus International Boulevard, a 200,000-square-foot office 2012 2012* Airport and have occupied it. They will building, which will house the current completely vacate 4445 and 4349 Easton Way Nationwide employees working at 5900 VACANCY — in Easton in the second quarter. Construction Parkwood Place in Dublin when completed. NET ABSORPTION also continues in New Albany on a 50,000 • Construction has also begun on the parking square foot, single-story facility, which is the garage which is a part of the Columbia Gas- CONSTRUCTION — first phase of the 150,000 square feet planned. anchored, 240 West Nationwide Boulevard. RENTAL RATES The FBI-anchored 425 West Nationwide There will be roughly 35,000 square feet of Boulevard in the Arena District in the CBD has space not leased by Columbia Gas. The *Projected trend for next quarter begun construction. The 51,000 square foot Columbia Gas lease at 200 Civic Center Drive building will have 6,000 square feet of does not run out until 2014. speculative space available when completed. ASKING RATES ANDRENTAL RATES ABSORPTION, COMPLETIONS, AND VACANCY RATES CONSTRUCTION 400,000 20.0% Asking rates have$21.00 18.0% remained stable or$20.00 300,000 increased over the past$19.00 16.0%$18.00 200,000 few quarters. There are$17.00 14.0% only 48 spaces in$16.00 100,000 12.0% Columbus larger than$15.00 30,000 square feet; 7 in$14.00 0 10.0% 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q the CBD and 41 in the 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 08 08 09 09 09 09 10 10 10 10 11 11 11 11 08 08 09 09 09 09 10 10 10 10 11 11 11 11 12 8.0% suburban markets. The (100,000) Class A Rental Rates Class B market will likely see 6.0% (200,000) continued increases in 4.0% asking rental rates, but (300,000) 2.0% not drastically. (400,000) 0.0% Completions Absorption Vacancy Ratewww.colliers.com/columbus
  • 2. RESEARCH & FORECAST REPORT | Q1 2012 | OFFICE | GREATER COLUMBUS REGION EMPLOYMENT DATA 1.9 percent greater than the same months in Delaware 2011. Consistent employment growth leads to County The preliminary unemployment rate for Columbus leasing so these are good signs. in February dipped to 7.2 percent from 7.3 Union County Powell Polaris Westerville percent in January. The unemployment rate MARKET ACTIVITY Licking County through November and December 2011 had Worthington New Dublin Albany Bethel North Central dropped to 6.6 and 6.4 respectively, but has Market interest increased during the fourth quarter. Colliers International attempts to discern Hilliard Easton Gahanna/ Arlington/ Grandview CBD Airport risen due layoffs from what was previously Madison East holiday hiring. Every sector except for demand for office space by tracking tenants in County Southwest government and manufacturing was higher the market. The average number of tenants in Southeast Fairfield through January and February 2012 than year- the market has been lower in first quarter 2012 County ago employment levels. The sectors, which are than in fourth quarter 2011, 83 compared to 78. Pickaway County significant for office leasing, were either steady However, there are many tenants seeking large or increased in the preliminary February spaces. 21 tenants are looking for more thanThe Columbus office market consists numbers. The information sector remained flat 50,000 square feet, and there are 45 tenantsof 15 suburban submarkets plus the from December through February at 16,700 looking for 10,000 to 50,000 square feet ofCentral Business District submarket. The workers, which is .6 percent greater than space.Columbus region features a total of 62.6million square feet, 43.5 million of which January and February 2011. Market Activity Volume is the sum of the absoluteis suburban. Employment for financial activities hung between value of each absorption change in the market, 71,400 to 71,600 workers from December to and it tells us how much space was in transition February. This is 2.3 percent and 2.7 percent in the quarter. The total amount of space in higher than finance employment levels in transition was 450,000 square feet. This is January and February levels in 2011. significantly lower than the average of the past six years in which the average was 1.6 million Professional and business services fluctuated square feet in transition. Very little occurred in from 150,000 in December 2011 to 147,500 in the market this quarter as shown by this January to 149.2 in February. Employment levels comparison, but we expect the pace of the in January and February this year were 1.2 and market to pick up as there are still several large MARKET ACTIVITY SALES ACTIVITY PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF BUYER SELLER PRICE / SF TYPE SUBMARKET 1103 Schrock Road Mar-12 $3,775,000 100,108 Schrock Road Holdings LLC Anheuser-Busch, Inc $37.29 B Worthington 3400 Morse Xing Jan-12 $6,100,000 49,250 Vsp Ceres Inc Farbman Group $129.79 B Easton 8720 Orion Place 3/1/2012 $5,150,000 52,005 Pat Kelly Miller $99.03 B Polaris 807 Kinnear Road Feb-12 $1,700,000 29,422 Simon Kenton Nittany Lions LLC $57.78 B Arlington/Grandview LEASE ACTIVITY PROPERTY ADDRESS LEASE SF LANDLORD TENANT ASKING PRICE (NNN) TYPE SUBMARKET 2800 Corporate Exchange Drive 19,448 Corporate Exchange Buildings Cott Systems $8.00 B Westerville Iv & V Lp 530 Spring Street 16,949 Lion-Dov - $11.00 B CBD 495 Metro Place 16,415 TIAA-CREF ASK Chemicals $10.00 A Dublin 2 Easton Oval 13,007 DP Two Easton Oval LLC Insight $12.95 A Easton 600 Lakeview Plaza Boulevard 11,494 Laketech Properties L C Absolute Care $3.00 C Worthington 495 Metro Place 10,432 TIAA-CREF BCD Travel $10.00 A DublinP. 2 | COLLIERS INTERNATIONAL
  • 3. RESEARCH & FORECAST REPORT | Q1 2012 | OFFICE | GREATER COLUMBUS REGIONUPDATE Market ComparisonsOFFICE MARKET Net Absorption Construction Asking Rental RatesSUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Class A ($) Class B ($)CBD 19,091,001 2,107,621 11.0 65,897 161,101 251,000 - $19.82 $16.87ARLINGTON/GRANDVIEW 4,752,155 696,473 14.7 (36,714) (36,714) - $21.22 $15.66DUBLIN 9,501,878 1,279,696 13.5 (25,577) (25,577) - $17.32 $14.95EAST 3,691,158 523,007 14.2 24,811 24,811 140,000 $17.03 $14.32EASTON 2,685,332 167,089 6.2 (455) (455) - $17.90 $22.50GAHANNA/AIRPORT 1,262,031 131,038 10.4 18,276 18,276 - $17.63 $16.34HILLIARD 2,480,456 473,524 19.1 (10,949) (10,949) - $19.95 $15.03NEW ALBANY 1,935,789 182,628 9.4 - - 50,000 - $18.12 $15.00NORTH CENTRAL 1,255,636 72,016 5.7 (2,252) (2,252) - $23.00 $14.16POLARIS 4,419,869 255,686 5.8 (24,160) (24,160) - $18.78 $15.69POWELL 273,719 60,537 22.1 (7,880) (7,880) - - $14.76SOUTHEAST 402,548 61,040 15.2 (815) (815) - - -SOUTHWEST 236,158 44,140 18.7 (6,079) (6,079) - - $7.50WESTERVILLE 4,489,479 624,548 13.9 26,579 26,579 - $16.77 $15.01WORTHINGTON 6,296,402 977,928 15.5 21,011 21,011 - $16.26 $14.42SUBURBAN TOTAL 43,682,610 5,549,350 12.7 (24,204) (24,204) 50,000 - $17.94 $14.86TOTAL 63,040,314 7,651,317 12.1 (18,550) (18,550) 301,000 140,000 $18.79 $15.57 Net Absorption Construction Asking Rental RatesPROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeCLASS A 26,082,781 2,826,363 10.8 (7,068) (7,068) 301,000 - $18.79CLASS B 23,102,511 3,188,319 13.8 (30,639) (30,639) - - $15.57CLASS C 13,855,022 1,636,635 11.8 19,157 19,157 - - $13.14TOTALS 63,040,314 7,651,317 12.1 (18,550) (18,550) 301,000 - $16.53QUARTERLY COMPARISON AND TOTALS Net Absorption Construction Asking Rental RatesQUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeQ4, 2011 63,040,314 7,632,767 12.1 252,351 732,831 190,000 - $18.61 $15.47Q3, 2011 63,040,314 7,885,118 12.5 284,581 480,480 190,000 - $18.58 $15.41Q2, 2011 62,900,314 8,169,699 13.0 202,803 195,899 190,000 - $18.25 $15.25Q1, 2011 63,040,314 8,372,502 13.3 (6,904) (6,904) 190,000 65,000 $18.10 $15.46 COLUMBUS REGION MARKET Colliers International has changed the critieria for inclusion in the office dataset. All 10,000 square foot, class A, B and C buildings, not owned and fully leased by government are included in the dataset. COLLIERS INTERNATIONAL | P. 3
  • 4. RESEARCH & FORECAST REPORT | Q1 2012 | OFFICE | GREATER COLUMBUS REGIONCENTRAL BUSINESS DISTRICT In Polaris, Malcom Pirnie and Arcadis moved out of 1900 Polaris Parkway leaving the building anThe CBD showed positive absorption of 65,000square feet. Larger leases occurred at 21 State additional 20,400 square feet vacant. 522 offices inStreet where 21,000 square feet was absorbed. In Westerville, Cott Systems leased 19,400 62 countries onAt 100 East Broad Street Soloman Global and ZCareers combined for 17,800 square feet of square feet at 2800 Corporate Exchange Drive. 6 continents In Worthington, Erie Insurance leased 9,900absorption. One significant vacancy was that of square feet at 445 Hutchinson Avenue and United States: 125OHA at 155 Broad Street for 37,600 square feet. Canada: 38 Absolute Care leased 11,400 square feet at 600 Latin America: 18 Lakeview Plaza Boulevard.Nationwide Insurance began construction on Asia Pacific: 214their 200,000 square foot facility, where they EMEA: 117will house the employees transferring into SOUTH MARKET • $1.8 billion in annual revenuedowntown from 5900 Parkwood Place in Dublin. The south submarkets are the Southwest and • 1.25 billion square feet underHowever, this transition is not expected until the Southeast. management2013. Nationwide Realty also began construction • Over 12,300 professionalson a new 51,300-square-foot, $10 million Very little change occurred in these submarketsproject. Located at 425 W. Nationwide Blvd, the as these are among the smallest, least populated GREATER COLUMBUS REGION:site will be anchored by FBI. submarkets. Richard B. Schuen SIOR CCIM CEO | Principal | ColumbusThe future site of Columbia Gas at 240 West EAST MARKET 8800 Lyra DriveNationwide Boulevard is seeing construction Suite # 150 The east submarkets are the East side, Easton, Columbus, Ohio 43240activity on its parking garage. No construction Gahanna/Airport and New Albany. TEL +1 614 410 5612has begun for the 280,000 square foot officeproperty though. In the East, JCPenney leased space, adding to 15,200 square feet of absorption at 3980 East Leslie HobbsWEST MARKET Marketing & Research Manager 5th Avenue. IAP leased 7,300 square feet at 8800 Lyra DriveThe west submarkets are Arlington/Grandview 2760 Airport Drive, and Aerotek Leased 6,600 Suite # 150and Hilliard. square feet of space at 630 Morrison Road. Columbus, Ohio 43240 TEL +1 614 410 5640Both submarkets saw negative absorption. In Easton, Insight leased 13,000 square feet of 2Significant vacancies occurred in Arlington/ Easton Oval. Next quarter, there will beGrandview from Willis Insurance vacating significant vacancy created by NetJets leaving Jonathan Badgley44,500 square feet of 2245 North Bank Drive, Research Analyst their former location as they will fully occupy 175 South Third Streetas well as Excel vacating 7,500 square feet of their new facility on the ground of the Columbus Suite # 2851650 Watermark Drive. Airport Columbus, Ohio 43201 TEL +1 614 437 4495NORTH COLUMBUS MARKET In New Albany, Daimler will soon begin the nextThe north submarkets are Dublin, Powell, Polaris, phase of Water’s Edge as construction wraps onNorth Central, Worthington and Westerville. phase one.In Dublin, ASK Chemicals took 16,000 square LANDLORD/TENANTfeet of the 35,000 square feet of new positive The types of tenants most seen in the market This document/email has been prepared by Colliers International for advertising purposes. Colliersabsorption at 495 Metro Place. At 4150 Tuller recently have been mortgage, attorneys, and International statistics and data are audited annually andRoad, Sports Ohio Plus leased 10,500 square smaller tenants of 2,000 to 6,000 square feet. may result in revisions to previously reported quarterly and final year-end figures. Sources include Columbusfeet of the 19,600 square feet of positive Larger tenants have been slow to move as they Dispatch, Business First, Xceligent, and the Wall Streetabsorption. Significant vacancy was incurred at have too many options and too large of Journal.4675 Lakehurst Court as Duke opened up expectations, slowing down their ability to make30,300 square feet to sublease. Also occurring decisions.in Dublin were the vacanies of Progressive at5500 Frantz Road for 11,400, Mitel at 260 The largest issue facing landlords is creating aCramer Creek Court for 10,800, IHC solutions at steady cashflow, especially for landlords who4700 Lakehurst Court for 10,600, and New want to renegotiate their debt.Horizon at 6175 Shamrock Court. Accelerating success.www.colliers.com/columbus