The Columbus commercial retail market finished the third quarter of 2015 with a negative net absorption of over 30,000 square feet (SF), according to the third quarter report from the Central Ohio Commercial Information Exchange (COCIE).
“This activity is normal this time of year,” said Brian Irwin, director of client services and sales at Xceligent. “The negative absorption was just timing of a few retailers vacating and the new ones yet to take place. A few large tenants left and relocated. Based on leases we see in the pipeline, the absorption should be positive in fourth quarter.”
Columbus REALTORS® 2015 President Elect John Royer of Kohr, Royer, Griffith said that the winners in retail are big winners and the secondary locations are struggling.
“Hopefully owners will be able to find alternative uses for some of the old store formats and thus stop the negative absorption of retail here in Central Ohio,” Royer said. “But overall we do have a strong vibrant retail market.”
The overall market vacancy rate decreased from 8.14 percent the prior quarter to 7.99 percent the third quarter.
Irwin said the vacancy rate went down because of the adjustments in the previous quarters.
“It actually really stayed flat,” Irwin said.
In the overall market, the Power Center subset performed the best during the third quarter with a positive net absorption of 10,732 square feet and a vacancy rate of 6.9 percent. Power Center buildings are tracked as a single set and consist of a shopping center that typically contains three or more category dominant anchors, such as discount department stores, wholesale clubs and relatively few small tenants.
The positive performance of the power centers can be attributed to the fact that traditional retailers go with strong synergy, according to Irwin.
Irwin said that medical, multi-family, and investments are hot right now in commercial real estate.
“The new retailers tend to follow these trends,” Irwin said. “Additionally service retailers such as spa’s, nails, etc. are on the uptick, as well as new restaurants.”
Royer said he has seen similar trends in the third quarter of commercial real estate as the previous quarter.
“There are a lot of new restaurant concepts are out there, especially in the fast casual business with Pizza and Burgers. Examples include Blaze Pizza and Pizza Cucinova and Bspot Burgers from Iron Chef Mike Simon of Cleveland, Ohio.”
A notable sale transaction was the 129,008 square foot Olentangy Plaza located in the Northwest submarket. The building was sold for $13,150,000.
Fifty-eight leases totaling 176,250 SF of retail space were leased in the tracked data set in the third quarter. The Columbus tracked data set consists of an inventory of buildings considered to be competitive within the brokerage community.
The overall market average asking rate decreased from $11.43 to $11.27 triple net lease per square foot. A triple net lease is a monthly base rent, property taxes, property insurance and maintenance in which the lessee consents to pay.
The North-Northeast submarket’s asking rate increased from $12.00 to $12.59 NNN per square foot; the Southwest’s rate increased from $9.95 to $10.42 NNN per square foot; the Northwest saw a slight increase from $15.86 to $15.88 NNN per square foot; the Southeast’s rate decreased from $8.59 to $8.31 NNN per square foot.
Demand for inventory has been very high in Columbus, according to Irwin. He noted that there are over 20 retail buildings being constructed in Columbus right now.
Irwin said he predicts that absorption should be positive in the fourth quarter because of new leases before the holiday season.
Royer commented that our [commercial] market is healthy.
“All is well in Columbus retail,” Royer said. “We have now had announcement of our third Costco here in town in Northwest Columbus out North and West of Dublin. The new additions of retail at the Easton Gateway have been exciting also and IKEA next year at Polaris will be great.”
“The market is also anxious to see who ends up at the vacant larger tract of land that Waggenbrenner is developing with partners at Grandview Avenue and Route 33.”