by Dan Rafter
When it comes to industrial real estate, Columbus is the nation’s hot spot.
Don’t doubt us. That statement isn’t at all inaccurate. Just ask the industrial experts at JLL.
The company recently released its 2015 Columbus industrial report. And these experts are so confident in the industrial market in this Ohio city, that they actually used “Columbus, OH: The nation’s industrial hotspot” as its headline.
Dan Wendorf, senior vice president with JLL and an industrial specialist in the company’s Columbus region, wasn’t about to disagree with that sentiment.
“We are seeing the industrial market firing on all cylinders,” he told Midwest Real Estate News. “Investors have a big appetite for products in the Columbus market. We are seeing record-low vacancy rates. Absorption numbers are strong quarter over quarter. A lot of market factors are elevating Columbus’ industrial market.”
Why so strong?
What’s behind the strong industrial performance in Columbus today? JLL points to several factors, not the least of which is this city’s prime location in the center of the country. As JLL says, Columbus sits within a 10-hour truck drive to 47 percent of the U.S. population and 33 percent of the population of Canada.
That makes it easy for companies to ship their products from Columbus to the most important markets of the United States and Canada.
Columbus is also fortunate enough to be located at the intersection of eight major highways and numerous national rail lines. JLL says that the Columbus region is capable of reaching more Americans within 500 miles than any other major inland or coastal port.
Wendorf said that Columbus has an advantage, too, when it comes to the state and local government. Area governments are pro-business here, Wendorf said.
“Columbus is a very business-friendly place to do business,” he said. “Whether you are a start-up and growing or an established business, the climate of Columbus is favorable. The government has taken steps to cut through the red tape of operating a business. It has made central Ohio a much easier and affordable place in which to do business.”
Businesses have gotten this message. The capital city is located to 15 Fortune 1000 companies and five Fortune 500 ones.
Part of this comes down to low taxes and an affordable labor pool. Columbus has a tax rate on new capital investment of 1.6 percent. And workers here average an hourly wage of $14.50, lower than in many nearby cities of roughly equal size.
Workers like living here, too, because the city is affordable. JLL reports that Columbus’ cost of living is 11 percent below the national average. The city boasts an annual population growth rate of 1.3 percent, growing at a pace nearly double that of the national average of 0.7 percent.
This has all combined to provide a boost to Columbus’ already strong industrial market. According to JLL’s research, Columbus saw its industrial vacancy rate from 2010 through 2014 fall from 12.4 percent to 6.1 percent. During the same period, the overall U.S. industrial vacancy rate fell just 2.8 percentage points.
Industrial rents have risen steadily, too. Between 2010 and 2014, rents in the Columbus industrial market grew 14.8 percent, from $3.16 a square foot to $3.63 a square foot. Even with this increase, Columbus remains a cheaper option for tenants. The national average industrial rent for the same period grew from $4.35 a square foot to $4.62 a square foot, a rise of 6.2 percent.
In further good news, speculative construction has returned to the Columbus industrial market. JLL reports that there are now four spec industrial properties under construction in the market, totaling nearly 1.8 million square feet.
“There is strong activity with all of those spec buildings,” Wendorf said. “There are multiple users circling them. Some of those spec buildings will sign leases as quickly as the next 30 days. Those developers who listened to market dynamics, who saw the need, are being rewarded for their commitments.”
The spec sites might have an advantage because they can offer the modern amenities that industrial users today want.
Wendorf said that today’s industrial users want 36-foot clear heights. They aren’t satisfied with 32-foot heights any longer. They also want more car parking than in the past, Wendorf said.
Wendorf said that he expects the Columbus industrial market to remain a hot one throughout the rest of 2015. The numbers appear to back him up.
According to JLL’s research, construction activity in the Columbus-area industrial market has jumped 236 percent between 2013 and 2014 alone. At the beginning of the fourth quarter of 2014, about 2.8 million feet of industrial space was under construction in the market, about 60 percent of it speculative.