Future Cities
2023 North America Industrial Big Box Review & Outlook: Columbus
April 4, 2023 5 Minute Read
The Columbus market continues strong investor and tenant activity. Existing and new tenants have more options in the area due to rising vacancy rates. Occupiable, existing product is still the main driver of leasing activity. New speculative product has also been constructed. This available inventory should spur further activity.
Demographics
More than 2.6 million people live within 50 miles of the market core, with a projected five-year growth rate of 2.1%. Home to one of the U.S.’s largest public universities, nearly 25% of the city’s 50-mile-radius population is within the 18-34 age demographic. The market can reach just over 36 million people within a 250-mile radius, more than DFW, Atlanta or the Inland Empire.
Figure 1: Columbus Population Analysis
Source: CBRE Location Intelligence, Q4 2022.
The region’s warehouse labor force of 50,744 is expected to grow 8% by 2032, according to CBRE Labor Analytics. The average hourly wage for a non-supervisory employee is $17.43 per hour, 3.1% above the national average.
Figure 2: Columbus Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics, Q4 2022.
*Median wage (1 year experience); non-supervisory warehouse material handlers.
Location Incentives
Over the past five years, there have been 247 publicly known economic incentives deals totaling over $626 million for an average of $23,578 per new job in metro Columbus, according to Wavteq.
CBRE’s Location Incentives Group reports that top incentive programs offered in metro Columbus include the Job Creation Tax Credit (JCTC) program. It provides a refundable and performance-based tax credit calculated as a percent of created payroll and applied toward a company’s commercial activity tax liability. JCTC was designed to incentivize companies considering doing business elsewhere.
Another incentive program is the Economic Development Grant. This discretionary cash grant is typically awarded based on companies’ fixed asset and infrastructure investments, as well as substantial job creation.
Figure 3: Columbus Top Incentive Programs
Source: CBRE Location Incentives Group, Q4 2022.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.
Logistics Driver
The Rickenbacker Inland Port is one of the country’s fastest growing inland ports and the epicenter of Columbus air, rail and ground transportation. Rickenbacker International is one of the world’s only cargo-dedicated airports, with direct flights to Europe, Asia and the Middle East. Norfolk Southern and CSX have rail hubs within the port, providing direct rail access to major East Coast seaports. I-70 passes through Columbus, providing direct highway access to a large part of the U.S. population.
The Rickenbacker Inland Port is one of the country’s fastest growing inland ports and the epicenter of Columbus air, rail and ground transportation.
Capital Markets
Like the broader market, Columbus sales activity decreased in H2 2022. Rapidly rising interest rates led to approximately 150 bps increase in core cap rates from the low-4% to mid-5% range. However, Columbus has cemented itself as one of the top distribution markets in the U.S., which will continue attracting investment.
Supply & Demand
In 2022, 14.9 million sq. ft. was leased—25% below 2021 but 27% above 2020. Vacancy rates rose to 3.7% due to lower transaction volume and nearly 12 million sq. ft. of construction completions. While this is 200 bps above 2021, it is 110 bps below 2020. A diverse set of occupiers expanded into or renewed in Columbus, led by general retailers & wholesalers at 35% and 3PLs at 34%. The medical industry is also very active in Columbus, accounting for 12% of big-box transaction volume, North America’s highest percentage of total leasing.
Development continues to rise in Columbus with 15.6 million sq. ft. under construction at year-end, and only 12% pre-leased. This new development will provide more options for occupiers in the coming quarters, especially in the over-750,000 sq. ft. size range. While this will cause vacancy rates to temporarily rise, the anticipated pause in construction starts and continued demand for first-generation will enable the market to absorb the product coming online and significantly decrease any chance of oversupply.
Figure 4: Share of 2022 Leasing by Occupier Type
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 5: Lease Transaction Volume by Size Range
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 6: 2022 Construction Completions vs. Overall Net Absorption by Size Range
Source: CBRE Research, 2022.
Figure 7: Direct Vacancy Rate by Size Range
Source: CBRE Research, 2022.
Figure 8: Under Construction & Percentage Preleased
Source: CBRE Research, 2022.
Figure 9: First Year Taking Rents (psf/yr)
Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Explore Big Box Insights by Market
Cincinnati’s central location makes it ideal for big-box occupiers. Over 2.8 million people live within 50 miles of the market core.
Over 2.6 million people live within a 50-mile radius of the urban core, with a 2.3% expected five-year growth rate.
Nearly 30 million people—24% aged 18-34—live within 250 miles of downtown Louisville, with a 1% projected five-year growth rate.
