Written by: Collin Fitzgerald
Collin specializes in research capabilities, providing support for the Colliers Columbus Office, Industrial, and Retail groups. He is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis, and utilizing statistical information to predict future behavior in the market. Keep reading for his take on market trends in the Columbus retail sector.
Key Takeaways
Over 96 percent of tracked retail properties are leased
Majority of construction deliveries were supermarkets
Q3 vacancy rate increased to 3.87 percent
Regional Summary
The Columbus retail market saw significant negative absorption this quarter, with a slight vacancy rate increase from last quarter to 3.87 percent. Limited availability is a critical factor in the lower absorption trend, especially for smaller spaces (under 2,500 square feet) popular among food service tenants. Tenants need help finding high-quality space following several years of historically low development activity. Consumers are still impacted by macroeconomic headwinds in Columbus, with higher prices of goods and the possibility of another recession all weighing on spending. Higher costs also impact retailers, leading to higher store closures. While demand for retail space has remained healthy in the last few years, it could trail to more typical levels. Leasing activity has remained steady despite macroeconomic conditions affecting other real estate sectors. Just 540,000 square feet of space is under construction, representing 0.5 percent of the total market inventory. With build-to-suit projects driving most of the construction activity in the market, just 25 percent of the space under construction remains available. The biggest leases that were signed this quarter were Lowes, who leased 125,357 square feet at 2888 Brice Rd. in the Reynoldsburg submarket, followed by Hobby Lobby, who leased 56,598 square feet at 1300-1428 River Valley Blvd. in the Lancaster submarket. E-commerce integration continued to be a focal point for retailers. Additionally, prime retail locations in Columbus remained sought after, reflecting sustained investor confidence. Columbus is well-positioned to maintain balanced market conditions. Limited supply-side pressure and a growing consumer base will support retail demand despite the potential risks of high interest rates on consumer spending and new business formations.
Under Construction
Retail development activity in the Columbus market has aligned with broader trends in the retail sector. Development activity has been modest over the past decade, with just 459,535 square feet delivered over the past 12 months. Elevated construction financing costs are weighing on construction activity, leading to the lack of construction. Many of the most significant properties under construction are build-to-suits, such as the new Kroger at 123,000 square feet in Dublin. Mixed-use developments include much of the new space coming online in recent months. Ten percent of current under-construction projects are mixed-use, including developments like Trueman Blvd. and The Blakely, feeding into the national trend of more work-and-play developments.
Check out the full Q3 2024 Retail Trends report here!