The 31.5-million-square-foot Columbus general purpose, multi-tenant office market posted an 18.4% vacancy rate in the second quarter of 2012, Reis reports. This rate is down 10 basis points over the quarter and 50 year-over-year. Any drop in vacancy is welcome, but Columbus has had high, double-digit vacancy for the past decade. The respective Class A and B/C vacancy rates for the second quarter were 16.2% and 20.4%, down 60 basis points and up 40 basis points, respectively, from the prior quarter. The overall rate for July was 18.5%. After a solid first quarter, demand tapered off in the second. Net absorption for the second quarter was reported at 33,000 square feet, bringing the year-to-date total to 103,000 square feet. Net absorption has not been a consistent player here. Developers added a total of 4.8 million square feet from 2002 to 2010, while net absorption in that time span totaled 1.4 million, with negative total in 2009 and 2010. There were no completions in 2011, and the only completion thus far in 2012 is 140,000-square-foot NetJets Headquarters in the Upper Arlington submarket.
Rents continue to struggle. Reis reports average asking and effective rents of $17.78 psf and $14.13 psf, each up 0.1% from the prior quarter. The year-over-year gain is 0.6% for both measures. Effective rents fell one cent in July. Class A asking rents were unchanged at $20.46 psf for the second quarter, Class B/C rents were $15.29 psf, up four cents from the first quarter. Looking forward, Reis forecasts increases of just 1.0% and 1.2% for asking and effective rents in 2012, down from prior forecasts. Annual gains of more than 2.0% per rental category are not forecast until 2013.
Cushman & Wakefield reports second quarter 2012 vacancy at 16.2%, down 210 basis points over 12 months, and a direct asking rent of $16.93 psf, up 4.4%. “We see landlords being able to hold or increase their asking rates and having additional leverage in negotiating with current tenants,” this source notes.