Retailers and Wholesalers Lead Columbus Big-Box Industrial Transactions in 2022

Bucking the growing trend of third-party logistics provider (3PL) leasing dominance in big-box warehouse space (200,000 sq. ft. or larger) across North America, Columbus saw growth in its retailer and wholesaler occupier base, according to a new report from CBRE.

Retailers and wholesalers accounted for 35% of big-box lease transactions in Columbus last year, driven primarily by three leases from Fortune 500 retailers in facilities over one million sq. ft. This runs counter to the growing trend of 3PLs claiming the largest share of big-box leasing throughout North America. 3PLs accounted for 41% of all activity in 2022, taking the majority share for the first time since CBRE began tracking the activity in 2012. However, 3PLs are steadily catching up in Columbus, claiming 34% of the leasing activity. Columbus medical occupiers came in third, accounting for 12.1% and claiming the highest percentage of total leasing for this sector throughout North America.

In 2022, Columbus recorded 14.9 million sq. ft. of big-box space leased, making the metro the tenth highest for lease transaction volume in 2022. With nearly 12 million sq. ft. of construction completions, vacancy rates rose to 3.7% due to a lower transaction volume year-over-year (25% below 2021 but 27% above 2020). Columbus’ taking rent growth for big-box facilities also landed in the top 10 across North America, increasing 20.4% year-over-year.

“Columbus continues to see strong investor and tenant activity,” said Jeff Lyons, Executive Vice President of CBRE’s Columbus office. “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. We anticipate this available inventory will spur further activity.”

Development continues to grow in the metro, with 15.6 million sq. ft. under construction at the end of 2022, with 12% pre-leased. This will provide more options for occupiers in the coming quarters, especially those with requirements over 750,000 sq. ft. While this amount of development will cause vacancy rates to temporarily rise, the anticipated pause in construction starts and continued demand for first-generation facilities will let the market absorb the new product and significantly decrease any chance of oversupply.

“Like the broader market, Columbus sales activity decreased in H2 2022. Rapidly rising interest rates led to an approximately 150 bps increase in core cap rates from the low-4% to mid-5% range,” said Michael Caprile, Vice Chairman of CBRE. “However, Columbus has cemented itself as one of the top distribution markets in the U.S. and will continue to attract investment.”

CBRE analyzed warehouses of 200,000 sq. ft. and larger since they are used for large-scale national and international product distribution. Encompassing the United States, Mexico and Canada, the big-box report found that industrial facilities had record-low vacancy rates and unprecedented rent growth in 2022, despite record new construction deliveries. Demand was driven primarily by a desire to serve markets with growing populations, modernize space for automation and improve supply chain resilience.

To read the full report, click here.