The Columbus office market showed some positivity in the first quarter of 2023 with a slight improvement in net absorption, despite a negative figure of 75,049 square feet; however, this negative absorption increased the vacancy rate to 23.15%, although the average asking rental rate increased to $21.46/SF. In fact, the Columbus office market has experienced negative absorption for three consecutive quarters. Class A properties recorded 114,377 square feet of positive net absorption, while Class B tallied a negative net absorption figure of 191,277 square feet.

The Columbus Central Business District submarket continued a positive trend from last quarter, with 63,234 square feet of net absorption. In the CBD, CoverMyMeds moved into a new, 200,000-square-foot build-to-suit office space at 911 John St. Similarly, the Westerville submarket saw positive absorption, with Education Solutions settling into 41,000 square feet of space at 2231 Schrock Rd., helping pace the positivity.

Tenants seeking space in the Columbus office market have tended towards higher-quality buildings and locations, resulting in a flight-to-quality trend. For example, BMW Financial Services vacated 220,000 square feet at 5550 Britton Pkwy. in the Dublin submarket, moving to a smaller 121,515-square-foot Class A office space at Grandview Crossing in the Grandview submarket. This move helped pace the Grandview submarket’s recording of 109,320 square feet of positive absorption; however, as a result of the move, the Dublin submarket began the year by posting negative net absorption of 259,735 square feet, the most of any submarket.

The trend towards subleasing in the Columbus office market reflected the changing nature of work and the increasing demand for flexible higher-quality office space solutions. As companies continue to reassess their office space needs, subleasing is predicted to grow in popularity into mid-2023. This past quarter, available sublease space hit a new record high of 2.0 million square feet, or 5.0% of the total inventory. Lower.com listed 100,800 square feet for sublease at 8111 Smiths Mill Rd. in the New Albany submarket.

The industrial market in Columbus experienced a slowdown in absorption in the first quarter of 2023 compared with the fourth quarter of 2022, as evidenced by absorption being below 1 million square feet. Despite the slowing trend, this positive absorption still indicates that the industrial market in Columbus continues to move forward. In addition, the positive absorption in the first quarter of 2023 was not directly proportional to a decrease in the vacancy rate due to the completion of 7.7 million square feet of new buildings, of which only 2.1 million square feet were occupied. With this increase in new, largely empty speculative supply, the vacancy rate increased by 234 basis points to 6.24%, while the average asking rental rate increased slightly to $5.31/SF.

The industrial market in Columbus started the year with a positive absorption tally of 905,000 square feet. Positive net absorption occurred as several tenants occupied leases, including: Brooks Running, which occupied 598,754 square feet at 10302 Transport St.; Victory Packaging, which moved into 238,102 square feet at 4023 Raymond Ave., both in the Rickenbacker submarket; and Specialized Bicycle, which occupied 461,700 square feet at 3330 Alum Creek Dr. in the Southeast submarket. Amazon vacated 385,919 square feet at 1120 Morrison Rd. in the East submarket, and Vertiv moved out of 346,681 square feet at 1050 Dearborn Dr. in the Northeast submarket.

2023 began with 7.7 million square feet in new deliveries from 11 projects. Consequently, the number of projects in the construction phase decreased significantly from the last quarter to 9.3 million square feet from 22 projects; 45.0% of those under-construction projects are in the Rickenbacker and Licking County submarkets, categorized as prime areas for industrial development in Columbus.