Columbus retail saw positive net absorption in 4Q16
The Columbus retail market experienced positive net absorption totaling 192,612 square feet during the 4th quarter of 2016, according to the fourth quarter retail report from the Central Ohio Commercial Information Exchange (COCIE), which uses Xceligent as its vendor.
Director of Analytics for Xceligent Kim Begley said a lot of the positive net absorption activity can be attributed to the delivery of new Kroger stores.
“The new larger Kroger stores delivered 358,000 square feet replacing/closing three former stores of only 193,291 square feet,” Begley said.
Columbus REALTORS® 2017 Secretary Andy Mills said the positive net absorption of the fourth quarter is due to the fact that the Columbus market is growing and very strong.
“There is great activity and interest from lots of service and restaurant tenants and so that continues to drive the activity,” Mills said.
At 5.3 percent, the fourth quarter vacancy rate has slightly declined from 5.6 during the fourth quarter in 2015.
Begley said the delivery of the new Kroger stores that were larger than the stores they replaced was responsible for the slight decrease in vacancy rate.
For the remainder of 2017 Begley highlighted that the new IKEA store will open later this year and she predicts that we will continue to see slight fluctuations in the vacancy rate.
Mills said the market has been active the last several years so vacancy has gradually begun to decrease and there are fewer and fewer options.
“Developers are taking less risk and building more with tenants in hand than speculative, which also helps when projects come out of the ground partially to fully leased,” Mills said.
In the overall market, the freestanding building type performed the best, experiencing positive net absorption of 164,189 square feet and a 3.6 percent vacancy rate at the end of the fourth quarter of 2016.
Begley said the delivery of the three Kroger Stores is responsible for this positive net absorption.
The Columbus regional retail market has over 700,000 square feet under construction during the fourth quarter of 2016.
Begley said current trends in commercial real estate include a number of brick and mortar stores like Macy’s, The Limited and Sears announcing closings.
Companies like Kroger and Walmart are beginning to offer shopping services that allow customers to select items ahead of time and just pick up at store, in an effort to compete with Amazon.
Mills commented that online ecommerce growth is continuing to impact the retail market and forcing retailers to think differently about how big their physical stores should be.
“I think the Polaris submarket, Easton, Grandview, and Short North will all continue to be active and attract new tenants to the market, especially restaurant and service-related tenants,” Mills said.
Additionally, Mills said that tenants and customers want urban, walkable options and the Short North continues to drive strong interest from tenancy.
“The mixed-use nature with residential, hotel and office provides customers all day, every day for a variety of retail users,” Mills said.
Mills said the other trend that he sees continuing is that many tenants are going smaller as the result of so many people shopping online.
The North-Northeast submarket absorbed the highest levels of net demand totaling 101,442 square feet during the fourth quarter of 2016. A large contributor to the high level of demand was the delivery of the new Kroger store at 1745 Morse Rd. Additionally, Aspire Fitness leased 33,530 square feet at Columbus Square Shopping Center.
Over 100 leases and 310,000 square feet of retail space were leased in the tracked data set in the third quarter. The Columbus tracked data set consists of buildings considered to be competitive within the brokerage community.
Begley said demand for inventory looks good for the remainder of 2017.
According to Mills, “There are some great projects in the market that I think will continue to see great activity. This includes multiple Short North projects, all of the campus developments, The Point at Polaris and the Bridge Park development.”
4th Quarter 2016 Retail Overview
4th Quarter 2015 Retail Overview
3rd Quarter 2016 Retail Overview
For vacancy and absorption purposes, COCIE tracks 1,469 existing regional, community, convenience/strip center, neighborhood, grocery anchored strip and Freestanding with a minimum of 10,000 SF in the Franklin, Delaware, Union, Licking, Fairfield, Pickaway and Madison counties with a total inventory of almost 76 million square feet.
The entire database includes 6,383 retail records totaling over 115 million square feet.
To view commercial properties for sale or lease in central Ohio, visit www.COCIE.org.
To view residential properties for sale, visit www.Realtor.com.
To view residential housing reports, visit www.ColumbusRealtors.com/stats.