by Dan Rafter
Vacancy rates are down and asking rents are up in the Columbus office market. But that doesn’t mean that Ohio’s capital city doesn’t face challenges in this sector.
Those are the takeaways from the latest research report from JLL.
JLL’s first-quarter office report said that the Columbus market’s office vacancy rate has fallen to 11.8 percent. That’s down from 12.2 percent at the end of 2016. At the same time, average asking rents stood at $19.46 a square foot, up a tick from the end of 2016.
But JLL reports that the Columbus market does have to deal with the aging office space in its city and suburbs. Developers here are expected to deliver at least 1.7 million square feet of new Class-A office space in the next 10 years. This is making existing, older office space less attractive in the Columbus area, JLL said.
JLL said that the Columbus suburb of Dublin is a good example. This community has 1.8 million square feet of aging Class-B office space. Dublin plans to add 373,000 square feet of new-construction Class-A office space.
What will happen with Dublin’s older office inventory? JLL says that the city is focusing on zoning reform as a way to increase the amount of parking available to these older buildings. The city is also providing economic incentives to encourage landlords to invest in energy efficiency programs for these older office buildings.
The goal is to boost the older stock, perhaps attracting tenants who can’t quite afford the newer, Class-A supply.
Despite the challenge posed by older office buildings, the Columbus office market should enjoy a strong end to 2017, JLL said. The Columbus market had already absorbed 197,971 square feet of office space by the end of the first quarter. Much of this came in the form of the leasing of 165,000 square feet at Parkwood II in Dublin.