Posts tagged nai ohio equities
The Industrial Sector in Central Ohio continues to be on a good path again this quarter. Vacancy rates are continually declining to almost record levels, 7.1%. With fewer spaces on the market, rental rates are on the rise. Developers are paying attention and speculative buildings are coming out of the ground.
The 3rd quarter has brought a strong mix of owner/user and investment sales. Loeb Electric, a Columbus-founded electrical company, has made a move from Grandview to the east side. Loeb Electric is reportedly selling its Grandview warehouses at 915 Williams and 906 Burr Ave to Grandview Yard developer Nationwide Realty Investors. The electrical contractor purchased a 264,000/SF facility at 1800 E Fifth Avenue. The new location at 1800 E Fifth Ave was the former Design Center building at East Fifth and Leonard Avenues in Columbus. (more…)
The 3rd quarter of 2013 saw a continuation of trends that have been developing over the previous quarters in the retail sector in central Ohio. With vacancy rates continuing to fall, prime retail space is becoming more and more difficult to find. With limited availability, lease rates on this prime retail space are as well, indicating a stronger market on the investment side.
In central Ohio, the housing market remains strong and new apartment complexes are springing up all over. With the influx of new houses, condos, and apartments, one of the strongest segments within the retail sector continues to be the restaurant industry. (more…)
The Columbus office market continues to improve. For simple proof of this, try renewing a 2008 lease at the same terms today. It’s just not going to happen. Class A & B direct vacancy rates are down to nearly 14.5% as Columbus’ 30 million SF inventory continues to be absorbed with nearly 360,000 SF of positive absorption in the last 12 months.
As vacancy decreases, we are seeing an uptick of rates in select submarkets. For example, in the CBD, Tenants rolling out of recession-era lease deals can expect some sticker shock as overall rates have gone up about $0.65 cents per SF in the last 12 months alone, primarily in the Class A product. Having said this, we are beginning to see a trickledown effect to some extent as higher end Class B buildings have initiated or will soon initiate a rate hike. Typically, this refers to those who are at occupancy levels of 75% or greater.
Notable new developments recently announced include Daimler’s construction of 250 S. High Street, a 160,000 SF Class A building in the CBD to be anchored by Resource. Daimler will also soon begin construction of Westar V, a 103,000 SF spec office building playing off their original four building development in Polaris.
Notable sale transactions include Romanek Properties Ltd. purchase of Two Miranova for $27 Million and Lawyers Development Corp. purchase of 200 Civic Center Drive (Columbia Gas Building) for $15 million. Notable lease transactions include Century Insurance relocating into 60,000 SF at Westar II in Polaris and Hewlett-Packard consolidating two local office operations into 30,000 SF at Atrium II in Dublin.
Class A office rents are on the rise, resulting in several speculative buildings. 250 S High Street will bring 160,000 SF of new Class A office to the downtown market, the first new project near the Square since Fifth Third Center in 1991. Other hot markets – Polaris, Grandview & New Albany boast both speculative and build-to-suit construction. The leading developer in the office sector is Daimler, who is heading up 4 of the 5 current projects. In other news, Ohio University is planning a 120,000 SF Oncology Hospital in Dublin at Post & 33 to be completed by Fall 2014.
Build to suit activity is driving the industrial real estate market. Multiple developers have projects under way, from Duke’s 500,000 SF for Ace Hardware in London to Exxcel’s CenterPoint IV for Avnet. Vacancy rates continue to decline to an overall rate of just above 7%. Large blocks of space are scarce. Although asking lease rates remain flat, actual rates are approaching an all time market high. With rates on the rise, can speculative construction be far behind?
Commercial Real Estate appears to me minimally impacted by the recent Government shutdown. The biggest impact is in Multi Unit Housing sales. The FHA will be approving no new commitments for multi-family financing during the shutdown period. Despite a brief period of uncertainty within the market and with interest rates, the commercial real estate industry appears mostly unaffected, although it could simply still be too early to see any fallout.
Prior to the great recession, retail growth was led by the big box retailers: Category killers WalMart, Target and Meijer and grocers Kroger & Giant Eagle continually built new and bigger stores on sites dictated by the new suburbs being created by the home builders.
As the retailers followed the single family developments, there model was to deliver all products to all consumers, without a lot of differentiation between the needs and wants of differing demographic groups.
While existing home sales continue to be strong in the Columbus Region, new single family home developments in the farm lands of Dublin, Delaware County and Westerville have yet to catch up to the pace set 10 years ago. Instead, builders are focused on apartment construction in mostly urban areas. With internet sales continuing a steady climb, the huge category killers have all but stopped new store development. And the stores they are opening are about 25% smaller than the pre-recession prototypes.
The result has been opportunity for smaller, nimble, entrepreneurial grocers who know how to exploit the changing demands of consumers opting for healthier lifestyle choices. Examples of these grocers include:
- Fresh Thyme Farmers Markets who plans on opening 47 stores in the Midwest and as many as 6 of their 30,000 SF stores in central Ohio.
- Lucky’s, the Boulder Co based grocer who has opened a 22,000 grocery in Clintonville.
- Hills Market downtown on Grant Street, and an upscale, 30,000 SF Giant Eagle that has been announced for Bexley.
Dense, mixed use and pedestrian friendly are not terms you would use to describe Dublin’s past. In fact, Dublin was a community that defined urban sprawl.
Contrast that with the recent announcement by developer Crawford Hoying of over 1,000 apartments, 136 condos, 140,000 square feet of office, a 200 room hotel with convention space and 40,000 SF of restaurants.
This announcement is the result of the controversial Bridge Street Corridor plan, which rezoned 1,000 acres along Dublin Granville Road from Sawmill Road, across the Scioto River all the way to I-270. The Bridge Street master plan calls for a total 8,000 new residential units and 15 million square feet of mixed use space.
Across the country, healthy real estate fundamentals are driving a new wave of speculative development, especially in large logistics hubs like Columbus. Coming out of this recovery, there is a pent up demand for very large, well-located distribution centers. Nationwide, both big retailers and big manufacturers are driving this recovery. The scarcity across the country is due to a fundamental shift in the way supply chains are managed. Retailers are moving toward omni channel supply chain management – using a single warehouse to supply both their brick & mortar stores and their e-commerce distribution centers. Over the years, warehouse tenants have demanded larger and larger sized bulk-warehouse spaces for reasons such as this. The trend is obvious in the Columbus market. In 1990, the average size of a bulk warehouse was 209,137 SF. A tenant just signed a 766,633 SF lease this quarter for a building to be completed in 1Q 2014.
Build-to-suit activity has been very strong in the industrial arena for the past few years, culminating in the construction of the 7 building 1.3 M SF Personal & Beauty Care Campus near New Albany. The first truly speculative building constructed in the market since 2008 has just come out of the ground. At 478,000 + SF, Centerpoint Business Park V in Obetz, is being developed by Exxcel Project Management and sits in Columbus’ very active SE submarket. The largest contiguous space in the market, its competition includes 6 existing buildings with suites ranging from 100,000 – 200,000 SF available, and 75 – 100% real estate tax abatements in the SE & SW submarkets. Another proposed 1,400,300 SF building with 100% real estate tax abatements is on the drawing boards – but not under construction at this time. (more…)
While the commercial real estate industry continues to try to comeback from recession lows, agents who are able to find a market niche and who are able to find creative solutions to add value and incentive to both buyers and sellers are finding ways to get deals done.
NAI Ohio Equities office agent Peter Merkle has brokered multiple deals in the central business district over the last several months. Peter has done a variety of deals in this area: value add, sale – leaseback, and speculative investment. (more…)
With $17.3 billion in commercial mortgages coming due in 2012, landlords are more motivated than ever to incentivize tenants to renew their existing leases. Landlords are trying to stabilize their buildings and refinance. To do so, they must show a strong rent roll to the bank.
Some incentives such as free rent, reduced rent (blend and extend), upgraded lighting and dock doors have become common concessions offered by landlords to tenants who renew. It’s easier and safer for landlords to provide these concessions and keep their current tenants than try to re-fill the space. (more…)
Just as there were many factors leading to the recent economic recession in the United States, many factors are also leading to the slow economic recovery, none more apparent than the proliferation of online retail stores.
According to a Goldman Sachs research study in 2010, it is estimated that by the year 2019 retailers will see online sales surpass 50% of their dollar growth. As online sales continue to increase, the importance of online stores will only grow. (more…)