With low vacancy, positive absorption and robust leasing and investment activity, the Columbus industrial sector is positioned to experience a substantial amount of demand to continue throughout 2022 after a record-breaking year in 2021. Last year set the tone for historic construction and absorption and the market is poised to continue its strong momentum.
It is easy to look at the map and see why Columbus is such a great logistics hub given its prime location within a 10-hour drive within 47 percent of the U.S. population, fairly flat topography and direct access to major freeways. There is one big piece of the pie that doesn’t always get noticed, which is the economic development powers that are putting Columbus on the map. Jobs Ohio and OneColumbus have done an incredible job attracting businesses to the state of Ohio.
The biggest investment in the history of Ohio was announced this January when Intel revealed plans on building a new chip factory in New Albany. This $20 billion investment really put all eyes on the Northeast part of Columbus. As it gets tougher to get entitlements and zoning in other industrial submarkets, New Albany seems to be carrying a significant amount of momentum.
The industrial market will likely remain a landlord’s market as the vacancy rate continues its downward trend. With 15 million square feet of industrial product under construction in the Columbus market in 2022, one would think conditions would be in favor of the tenant. However, with demand still outpacing supply, this leaves tenants little negotiating power and limited inventory to choose from.
Timing is everything in this market. With only two or three buildings able to meet tenants’ timing at one given time, the question comes down to delivery. Can developers get construction products on time to maintain their construction schedule? Deciding factors in picking buildings are coming down to the little details — did the developer guess right on the number of dock packages ordered? Did the developer plan on spec office? These are items we are seeing winning and losing deals for landlords, and tenants are having to make do with the options at hand and adjust accordingly.
Tenants will continue to expand their real estate footprints within Columbus to meet client demands with increased inventory levels and expedited shipping requirements. As many tenants try to keep up with demand and continue to move their inventory levels from just in time to just in case, Columbus will be on the winning side of their expansion needs.
With 15 million square feet of new inventory in the pipeline, Columbus is in a good spot to try and keep up with demand as best as possible. From a logistics location, Columbus stands out on its own. Columbus is within a day’s drive of 151 million people and over 42,000 headquarters; that equates to 46 percent of the population and 48 percent of headquarters operations.
None of these stats would mean much if the labor pool wasn’t as strong as it is in Columbus. Columbus has such a diverse economy, being home to 16 Fortune 1000 headquarters and top 10 in millennial concentration, positioning the market as one of the top talent pools and employment hubs.
Tom Miles is an industrial specialist with Avison Young. This article originally appeared in the April 2022 issue of Heartland Real Estate Business magazine.