2. Large companies are shifting employees to owned buildings
Source: JLL Research
Downtown office deliveries (s.f.)
Source: JLL Research
Startup activity by submarket and building class
Source: JLL Research
Corporations are showing a preference to own vs. lease
A number of large corporations in Columbus are consolidating their operations
and moving into owner-occupied buildings. The financing options for owning are
more flexible for companies with an established cash flow. Owning also fosters
the company culture which has grown in importance to attract and retain talent.
Nationwide recently left 400,000 square feet of leased space at 5100 Rings Road
for a new development it owns in Grandview Yard. This will allow for Cardinal
Health to occupy the building by 2018, consolidating workers from four different
areas. Alliance Data and J.P Morgan have also left leased office space for
owner-occupied buildings. As a result, large blocks of for-lease office space have
become available during a time of high tenant demand.
Developers are answering tenant demand for new office space
Downtown Columbus has experienced a surge of public and private development
in recent years. In the public realm, $185.0 million of funding was secured to
develop the Scioto Mile and three new parks. Tenants continue to embrace the
live-work-play dynamic which has driven up demand for new office space around
these highly sought-after public spaces. The recently developed 250 High is 98.5
percent leased and developers are now jumping at other promising office
opportunities in the area. Two25 Commons, which is about to begin construction,
will bring 135,000 square feet of office space and enclose Columbus Commons,
while a recently proposed Millennial Tower could bring another 180,000 square
feet of office space along the Scioto Mile.
Landlords are embracing the growing startup market
As landlords are more willing to work with new startup companies, Columbus
has positioned itself to foster a healthy startup ecosystem. According to the
Kauffman Index, Columbus is ranked 1st in the country in scaling startups.
Kauffman estimates that 2.7 percent of companies founded in Columbus within
the past 10 years will grow into medium or large size companies. These startups
have been primarily migrating towards office spaces in the CBD and Grandview
areas. Further, 75.9 percent of these startups are leasing space in Class B or C
buildings. With a better understanding of the industry, landlords have become
more accommodating of startups, and with rising interest from venture capitalists,
Columbus’ startup scene is positioned for further growth.
Large users are shifting to owner-occupancy
2,257
Office Insight
Columbus | Q2 2016
28,218,511
Total inventory (s.f.)
-60,368
Q2 2016 net absorption (s.f.)
$19.03
Direct average asking rent
528,000
Total under construction (s.f.)
12.1%
Total vacancy
195,467
YTD net absorption (s.f.)
3.5%
12-month rent growth
76.8%
Total preleased
Corporation Submarket Building/Campus Building s.f.
Alliance Data Easton 3100 Easton Square Place 565,000
Nationwide Grandview 1000 Grandview Yard 500,000
AEP New Albany 8500 Smith's Mill Road 195,000
J.P. Morgan Chase Easton 3401 Morse Crossing 85,000
0%
10%
20%
30%
40%
50%
CBD Grandview Other
Class A Class B Class C
145,000 s.f.
307,240 s.f.
547,348 s.f.
0
150,000
300,000
450,000
600,000
2016 2017 2018
JLL | Columbus | Office Outlook | Q2 2016
4. Office Sales Activity
Columbus | Q2 2016
JLL | Columbus | Office Outlook | Q2 2016
This report analyzes all year-to-date office sales > 50,000 s.f.
$92,896,255
12
$70.64
2.8%
97.2%
6-6.5%
6.5-7.5%
Top sales transactions year-to-date
Size (s.f.) $ p.s.f. Sale date
320,414 $51 Jan-16
56,419 $225 Apr-16
73,465 $174 Feb-16
82,853 $111 Mar-16
53,522 $154 Jan-16The DCB Financial Corp
Top buyers (s.f.)
655 Metro Place Lone Star Funds The Blackstone Group LP $16,250,000
Top sellers (s.f.)
Sale price ($)
5150 East Dublin Granville Road
110 Riverbend Avenue
300 E Wilson Bridge Road
2405 N Columbus Street
$12,836,400
$12,800,000
$9,200,000
$8,230,000JASS Realty Company
Citadel Partners
Physicians Realty Trust
Broadstone MV Portfolio MedVet
Equity Inc
161 Hamilton LLC
Building address Seller companyBuyer company
Sales volume $ by submarket
Urban sales volume as % of total
Suburban sales volume as % of total
Core Class A suburban
Cap rate range
Core Class A CBD
Average Class A price p.s.f.
Sales activity by building classAt a glance
Total volume YTD
Number of transactions
26%
13%
10%10%
9%
32%
Lone Star Funds Real Capital Solutions, Inc.
Salsa Properties & Valley Equity Group Three Crosswoods LLC
W.P. Carey, Inc Other
26%
13%
10%10%
9%
32%
The Blackstone Group LP Garrison Investment Group
Wells Fargo Three Crosswoods Holdings LLC
Forterra Building Products Other
$2,565,000
$5,016,796
$7,550,000
$8,230,000
$9,200,000
$12,800,000
$22,200,000
$25,334,459
CBD
Outlying
Grandview /
Arglington
Polaris
Northeast
Columbus…
Lancaster
Dublin
Worthington
$31,400,000
$43,151,255
$18,345,000
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
$30,000,000
$35,000,000
$40,000,000
$45,000,000
$50,000,000
A B C
5. Office Statistics
Columbus | Q2 2016
JLL is no longer reporting on Class C properties in the quarterly statistics JLL | Columbus | Office Outlook | Q2 2016
Class Inventory (s.f.)
Total net
absorption
(s.f.)
YTD total net
absorption
(s.f.)
YTD total net
absorption (%
of stock)
Direct
vacancy (%)
Total vacancy
(%)
Average direct
asking rent ($
p.s.f.)
YTD
completions
(s.f.)
Under
construction
(s.f.)
Arena District/Pen West Totals 2,127,794 -2,306 -3,422 -0.2% 7.6% 7.7% $25.95 0 145,000
Brewery District/River South Totals 872,157 5,468 20,120 2.3% 8.6% 8.4% $21.45 0 0
Capitol Square Totals 4,497,686 -29,416 12,996 0.3% 11.9% 12.0% $20.45 0 175,000
Short North/Warehouse District Totals 890,779 2,270 9,073 1.0% 4.3% 4.3% $19.13 0 0
Other Totals 423,547 0 -700 -0.2% 8.4% 8.4% $18.97 0 0
CBD Totals 8,811,963 -23,984 38,067 0.4% 9.6% 9.6% $21.47 0 320,000
Northeast Totals 5,709,505 -105,836 -10,135 -0.2% 13.9% 14.2% $18.03 0 73,000
North Totals 5,668,796 31,127 96,784 1.7% 11.7% 13.4% $17.29 204,400 120,000
Northwest Totals 8,028,247 38,325 70,751 0.9% 12.3% 12.7% $18.83 0 15,000
Suburbs Totals 19,406,548 -36,384 157,400 0.8% 12.6% 13.4% $18.15 204,400 208,000
Columbus Totals 28,218,511 -60,368 195,467 0.7% 11.7% 12.2% $19.01 204,400 528,000
Arena District/Pen West A 1,500,762 -2,306 -2,306 -0.2% 9.1% 9.2% $26.19 0 145,000
Brewery District/River South A 243,547 3,829 7,091 2.9% 7.3% 7.3% $23.98 0 0
Capitol Square A 1,057,010 0 27,954 2.6% 6.1% 6.1% $26.87 0 175,000
Short North/Warehouse District A 60,000 0 0 0.0% 0.0% 0.0% $0.00 0 0
Other A 0 0 0 0.0% 0.0% 0.0% $0.00 0 0
CBD A 2,861,319 1,523 32,739 1.1% 7.6% 7.7% $26.21 0 320,000
Northeast A 2,780,160 -49,057 47,070 1.7% 7.4% 7.6% $22.22 0 47,000
North A 1,892,527 21,766 45,681 2.4% 8.9% 13.5% $20.57 204,400 120,000
Northwest A 4,575,219 37,369 109,013 2.4% 9.2% 9.9% $20.00 0 15,000
Suburbs A 9,247,906 10,078 201,764 2.2% 8.6% 10.0% $20.70 204,400 182,000
Columbus A 12,109,225 11,601 234,503 1.9% 8.4% 9.4% $21.88 204,400 502,000
Arena District/Pen West B 627,032 0 -1,116 -0.2% 4.0% 4.0% $24.65 0 0
Brewery District/River South B 628,610 1,639 13,029 2.1% 9.1% 8.9% $20.67 0 0
Capitol Square B 3,440,676 -29,416 -14,958 -0.4% 13.7% 13.8% $19.58 0 0
Short North/Warehouse District B 830,779 2,270 9,073 1.1% 4.6% 4.6% $19.13 0 0
Other B 423,547 0 -700 -0.2% 8.4% 8.4% $18.97 0 0
CBD B 5,950,644 -25,507 5,328 0.1% 10.5% 10.6% $19.82 0 0
Northeast B 2,929,345 -56,779 -57,205 -2.0% 20.1% 20.5% $16.56 0 26,000
North B 3,776,269 9,361 51,103 1.4% 13.1% 13.3% $16.17 0 0
Northwest B 3,453,028 956 -38,262 -1.1% 16.4% 16.4% $17.97 0 0
Suburbs B 10,158,642 -46,462 -44,364 -0.4% 16.2% 16.4% $16.93 0 26,000
Columbus B 16,109,286 -71,969 -39,036 -0.2% 14.1% 14.3% $17.72 0 26,000
6. Office Employment Update
Columbus | Q2 2016
4.7%U.S. unemployment
1.6%U.S. 12-month job growth
3.9%Columbus unemployment
1.9%Columbus 12-month job growth
5.2%Ohio unemployment
1.3%Ohio 12-month job growth
Industry employment stratification: Columbus
Trade, Transportation
& Utilities
194,100 , 18%
Professional &
Business Services
177,200 ,17%
Government
171,000 ,16%
Educational & Health
Services
155,900 , 15%
Leisure & Hospitality
104,700 , 10%
Financial Activities
80,300 , 8%
Manufacturing
72,700 , 7%
Other Services
43,100 , 4%
Mining, Logging &
Construction
37,700 , 3%
Information
16,700 , 2%
Employment vs. unemployment rate: Columbus
0%
3%
6%
9%
12%
780,000
840,000
900,000
960,000
1,020,000
1,080,000
2006 2008 2010 2012 2014 2016
Nonfarm employment
Unemployment
Job growth (12-month change): United States vs. Columbus
Job growth/loss by sector (12-month change): Columbus
Industrial employment trends (12-month change, 000s): Columbus
-4.0%
-2.0%
0.0%
2.0%
4.0%
2010 2011 2012 2013 2014 2015 2016
Columbus United States
-400
-200
1,300
1,700
1,800
2,000
2,500
3,300
3,400
4,000
Information
Trade, Transportation & Utilities
Manufacturing
Financial Activities
Professional & Business Services
Government
Other Services
Mining, Logging & Construction
Leisure & Hospitality
Educational & Health Services
-25.0
-15.0
-5.0
5.0
15.0
2010 2011 2012 2013 2014 2015 2016
Trade,Transportation & Utilities
Manufacturing
Other Services
Mining, Logging & Construction
JLL | Columbus | Office Outlook | Q2 2016
7. Office Submarket Map
Notable Leases | Q2 2016
800 Tech Center Road
New lease: 54,615 s.f.
Tenant: Zulily
5100 Rings Road
New lease: 410,000 s.f.
Tenant: Cardinal Health
5500 Glendon Court
New lease: 42,798 s.f.
Tenant: CareWorks
4400 Easton Commons
New lease: 55,713 s.f.
Tenant: Citi Group
Route 161 and Hamilton Road
New lease: 300,000 s.f.
Tenant: Big Lots
New construction, design pending
JLL | Columbus | Office Outlook | Q2 2016
