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Q4 2011 - Columbus Office
 

Q4 2011 - Columbus Office

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    Q4 2011 - Columbus Office Q4 2011 - Columbus Office Document Transcript

    • Q4 2011 | OFFICEGREATER COLUMBUS REGIONOFFICE TRENDS REPORT Gaining Speed COLUMBUS REGION OVERVIEW The Columbus office market gained 233,000 square feet of positive absorption in the fourth quarter. Except for first quarter, 2011 was a solid year for positive absorption. Construction has remained slow with very few speculative projects in the pipeline. Leasing has been consistent and there is limited opportunity for tenants who are in need of space greater than 50,000 square feet. There are only 12 class A buildings in Columbus with 50,000 square feet of contiguous space available. Chase Bank was the biggest leasing player this quarter leasing all of the vacancy at Westar IV. Duke Realty sold 19 (2.08 million square feet) class A and B properties to Blackstone, and 63 others across theMARKET INDICATORS country for $1.08 billion. Q4 Q1 2011 2012* FORECASTS AND REFLECTIONS • TheColumbus region posted strong positive continues at Water’s Edge II in New Albany. VACANCY results during the fourth quarter of 2011 with Pharmaforce completed construction of their NET ABSORPTION the vacancy rate decreasing to 12.2 percent 110,000-square-foot facility in New Albany. from 12.7 percent. The Central Business • Deals are pressured by high tenant improvement CONSTRUCTION — District (CBD) made the largest gains with costs and lower rates. Landlords are RENTAL RATES — — 144,720 square feet absorbed. experiencing very low net effective returns on • NetJets,Inc.’s construction continues for their deals. Landlords are also finding it difficult to *Projected trend for next quarter 140,000-square-foot building at Port Columbus refinance buildings due to the low lease rates International Airport and construction also affecting the value. EMPLOYMENT DRIVENRENTAL RATES ABSORPTION, COMPLETIONS, AND VACANCY RATES In preliminary numbers, 300,000 20.0% the Columbus MSA 18.0% unemployment rate has 200,000 dipped to a 6.6 during 16.0% November. Total 100,000 14.0% employment levels are 0 12.0% down however, meaning 10.0% that we may not see the 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q (100,000) 08 08 09 09 09 09 10 10 10 10 11 11 11 11 usual causal connection 8.0% between decreased (200,000) 6.0% headline unemployment 4.0% and space leased. (300,000) 2.0% (400,000) 0.0% Completions Absorption Vacancy Ratewww.colliers.com/columbus
    • RESEARCH & FORECAST REPORT | Q4 2011 | OFFICE | GREATER COLUMBUS REGION EMPLOYMENT DATA health services decreased by about 800 jobs and Delaware is down 1.8 percent year over year. County The preliminary unemployment rate for Columbus in November dipped to 6.6 percent from 7.7 Union County Powell Polaris Westerville percent in October, which is the lowest it has MARKET ACTIVITY Licking County been since December 2008. The unemployment Worthington Dublin Bethel New Albany Market interest has increased during the fourth North Hilliard Central Easton rate is determined by the ratio of the number of quarter. Colliers International attempts to discern Arlington/ Gahanna/ Grandview CBD Airport those who have looked for work in the last 4 demand for office space by tracking tenants in Madison County East weeks compared to the total number of workers the market. There was a slight increase over last Southwest Southeast including those searching for employment quarter in the size desired by tenants that have Fairfield County (civilian labor force). This is important to note as toured space and have been in the market. There the civilian labor force has shrunk by 21,000 were roughly 12 tenants seeking more than Pickaway County since June. 25,000 square feet of space. There were 75 tenants in the market to close December, whichThe Columbus office market consists The sectors which are significant for office is down by 20 from September when more thanof 15 suburban submarkets plus the leasing were either steady or increased in the 90 tenants were in the market.Central Business District submarket. The preliminary July numbers. The informationColumbus region features a total of 62.6million square feet, 43.5 million of which sector increased slightly in November over Market Activity Volume is the sum of the absoluteis suburban. October, but is still down 1.8 percent year-over- value of each absorption change in the market, year. Employment for financial activities was flat and it tells us how much space was in transition from November to October, but the growth year- in the quarter. The total amount of space in over-year in November was 5.0 percent. transition was slightly less than 1 million square Professional and business services gained 1,800 feet. This is up 9.3 percent over the average of jobs from October to November, and the growth the past two years and up 53 percent from Q4 year over year is 1.9 percent. Education and 2010. MARKET ACTIVITY SALES ACTIVITY PROPERTY ADDRESS SALES DATE SALE PRICE SIZE SF BUYER SELLER PRICE / SF TYPE SUBMARKET 10 W Broad Street October $27,000,000 407,340 True North Management Invesco Real Estate $66.28 A CBD 4700 Lakehurst Court December $17,744,927 214,458 Blackstone Duke Realty $82.74 B Dublin 5475 Rings Road December $12,040,119 145,512 Blackstone Duke Realty $82.74 A Dublin 5455 Rings Road December $12,003,050 145,064 Blackstone Duke Realty $82.74 A Dublin Two Easton Oval December $10,648,214 128,690 Blackstone Duke Realty $82.74 A Easton 6500 Emerald Parkway December $10,614,289 128,280 Blackstone Duke Realty $82.74 A Dublin 4349 Easton Way December $9,478,060 114,548 Blackstone Duke Realty $82.74 A Easton 4449 Easton Way December $8,860,383 107,083 Blackstone Duke Realty $82.74 A Easton 5500 Glendon Court December $8,606,610 104,016 Blackstone Duke Realty $82.74 A Dublin 4400 Easton Commons December $8,399,255 101,510 Blackstone Duke Realty $82.74 A Easton 5550 Blazer Parkway December $7,062,706 85,357 Blackstone Duke Realty $82.74 A Dublin 5555 Parkcenter Circle December $6,964,241 84,167 Blackstone Duke Realty $82.74 A Dublin 5600 Blazer Parkway December $5,915,389 71,491 Blackstone Duke Realty $82.74 A Dublin 8720 Orion Place December $5,744,890 52,000 Patrick Kelly Miller Investment JV $110.48 B Polaris 250 W Rich Street December $5,200,000 113,309 Genworth Financial Arshot Investment $45.89 A CBD 5500 Frantz Road December $4,736,382 57,242 Blackstone Duke Realty $82.74 B Dublin 6525 W Campus Oval December $4,327,400 66,575 Blackstone Duke Realty $65.00 A New Albany 2400 Corporate December $1,850,000 93,547 Chou Katella Partners Joseph Skilken Company $19.78 B Westerville Exchange LEASE ACTIVITY PROPERTY ADDRESS LEASE SF LANDLORD TENANT ASKING PRICE (NNN) TYPE SUBMARKET 565 Metro Place 30,000 Two Metro Place Partners LLC Metro Park $12.00 A Dublin 445 Hutchinson Avenue 13,621 EOP-Community Corporate Amerassist $10.00 A Worthington Center LLCP. 2 | COLLIERS INTERNATIONAL
    • RESEARCH & FORECAST REPORT | Q4 2011 | OFFICE | GREATER COLUMBUS REGIONUPDATE Market ComparisonsOFFICE MARKET Net Absorption Construction Asking Rental RatesSUBMARKET Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions Class A ($) Class B ($)CBD 19,091,001 2,107,621 11.0 65,897 161,101 - - $19.82 $16.87ARLINGTON/GRANDVIEW 4,752,155 672,459 14.2 22,192 56,871 - - $21.22 $15.66DUBLIN 9,501,878 1,274,119 13.4 (93,877) 28,596 - - $17.32 $14.95EAST 3,555,814 542,166 15.2 (1,510) 41,390 140,000 - $17.03 $14.32EASTON 2,685,332 166,634 6.2 2,626 17,097 - - $17.90 $22.50GAHANNA/AIRPORT 1,262,397 151,172 12.0 8,004 198,217 - - $17.63 $16.34HILLIARD 2,480,456 457,110 18.4 15,700 (157,850) - - $19.95 $15.03NEW ALBANY 1,935,789 182,628 9.4 2,098 52,306 191,000 - $18.12 $15.00NORTH CENTRAL 1,255,636 90,764 7.2 1,732 (22,939) - - $23.00 $14.16POLARIS 4,419,869 231,526 5.2 23,897 39,045 - - $18.78 $15.69POWELL 273,719 65,916 24.1 12,830 15,112 - - - $14.76SOUTHEAST 402,548 60,225 15.0 - (360) - - - -SOUTHWEST 236,158 38,061 16.1 16,486 3,412 - - - $7.50WESTERVILLE 4,489,479 579,949 12.9 97,685 174,464 - - $16.77 $15.01WORTHINGTON 6,496,402 1,022,533 15.7 59,486 37,010 - - $16.26 $14.42SUBURBAN TOTAL 43,747,632 5,535,262 12.7 167,349 482,371 331,000 - $17.94 $14.86TOTAL 62,838,633 7,642,883 12.2 233,246 643,472 331,000 - $18.61 $15.47 Net Absorption Construction Asking Rental RatesPROPERTY TYPE Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeCLASS A 25,676,078 2,819,295 11.0 53,021 245,347 331,000 - $18.61CLASS B 23,102,511 3,140,756 13.6 97,398 373,625 - - $15.47CLASS C 14,060,044 1,682,832 12.0 82,827 24,500 - - $12.94TOTALS 62,838,633 7,642,883 12.2 233,246 643,472 331,000 - $16.35QUARTERLY COMPARISON AND TOTALS Net Absorption Construction Asking Rental RatesQUARTER, YEAR Total SF Vacant SF Vacancy % Current Quarter Year-to-date Current Completions By Product TypeQ3, 2011 62,838,633 7,876,129 12.7 238,414 410,226 331,000 - $18.58 $15.41Q2, 2011 62,838,633 8,114,543 12.9 194,313 171,812 246,500 - $18.25 $15.25Q1, 2011 62,838,633 8,394,042 13.4 (14,500) (14,500) 246,500 65,000 $18.10 $15.46Q4, 2010 40,544,677 7,188,371 17.73 (13,360) (253,648) 65,000 - $18.56 $14.96 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
    • RESEARCH & FORECAST REPORT | Q4 2011 | OFFICE | GREATER COLUMBUS REGIONDUKE PORTFOLIO SALE taking 82,000 square feet at 460 Polaris Parkway.Duke Realty announced a change in the targetedcomposition of their holdings to 60 percent in 512 offices inindustrial buildings, 25 percent in office WEST MARKET 61 countries onproperties and 15 percent in medical office real The west submarkets are Arlington/Grandviewestate. To reflect that, they sold 19 office and Hilliard. The Hilliard market saw a slight gain 6 continentsproperties in the Columbus MSA and 63 others in absorption from LAMS Charter School, leasing United States: 125in markets such as Chicago, Dallas, Minneapolis, 15,700 square feet of 3042 McKinley Avenue. Canada: 38Tampa, Orlando and Atlanta. Blackstone Real Latin America: 18Estate Partners VII purchased the portfolio for SOUTH MARKET Asia Pacific: 214$1.08 Billion. In total, 2.08 million square feet of EMEA: 117 The south submarkets are the Southwest andmostly class A office space transferred. • $1.5 billion in annual revenue the Southeast. Very little change occurred in these submarkets as these are among the • 978.6 million square feet underThe properties in the transfer are largely in the management smallest, least populated submarkets.area of the Tuttle Crossing mixed-use • Over 12,500 professionalsdevelopment in northwest Columbus and Dublinand the Easton mixed-use development in EAST MARKET GREATER COLUMBUS REGION:northeast Columbus. Duke will still own about The east submarkets are the East side, Easton, Richard B. Schuen SIOR CCIM44 acres of development land in the Tuttle Gahanna/Airport and New Albany. Construction CEO | Principal | ColumbusCrossing office market, as well as 6 acres in in New Albany has been steady. 8800 Lyra Drivenearby Hilliard and another 10 acres in Easton. Suite # 150 In East, Alvis House and Village Network took Columbus, Ohio 43240 11,900 square feet at 899 Broad Street, and TEL +1 614 410 5612CENTRAL BUSINESS DISTRICT PASS High School took 9,000 square feet atThe CBD showed positive absorption of 65,000 4300 Kimberly Parkway. Leslie Hobbssquare feet. In terms of positive absorption Marketing & Research Managerdeals, there were numerous smaller leases In New Albany, Daimler is developing a 8800 Lyra Driveadding to strong leasing including WSA Suite # 150 3-building, 150,000-square-foot campus atArchitecture, Hunt Law, CBKT and Buckeye Columbus, Ohio 43240 7525 West Campus Road called the New Albanycommunity health. Huntington Bank had TEL +1 614 410 5640 Center of Technology. The center will functionpreviously been scheduled to give back a floor at as a operations center, with internet capabilitya time to 41 S High over the course of three and other technology services. Jonathan Badgleyyears, but they have elected not to do so thisyear. Research Analyst LANDLORD/TENANT 175 South Third Street Suite # 285Nationwide Insurance has been approved for a One of the most difficult issues for landlords in Columbus, Ohio 43201200,000 square foot facility where they will getting deals done is the fierce competition for TEL +1 614 437 4495house the flush of new employees transferring tenants, while also structuring a deal that avoidsinto downtown. Nationwide Realty is also including termination clauses. There is limiteddeveloping a new 51,300-square-foot, $10 pressure to make a deal. The market is tighteningmillion project. Located at 425 W. Nationwide up but not to a point where larger tenants areBlvd, the site will be anchored by FBI. rushing for a decision, so large deals are stillRenovations at 232 North High Street continue. taking a long time. This document/email has been prepared by Colliers International for advertising purposes. Colliers International statistics and data are audited annually andNORTH COLUMBUS MARKET In terms of what tenants are facing, large may result in revisions to previously reported quarterly institutional tenants are growing and starting to and final year-end figures. Sources include ColumbusThe north submarkets are Dublin, Powell, Polaris, Dispatch, Business First, Xceligent, and the Wall Street dive in and take advantage of the market. This in Journal.North Central, Worthington and Westerville. In turn, is creating the positive absorption. Some ofWorthington, AmerAssist took 13,000 square the industries represented by tenants in thefeet of space at 445 Hutchinson Avenue, after market are universities, banking, non-profit andmoving out of 460 Polaris Parkway. Large technology/IT.changes occurred in Westerville with Chase Accelerating success.www.colliers.com/columbus