COLUMBUS OFFICE Economic Indicators Q1 17 Q1 18 Unemployment 4.1% 3.8% Ohio Unemployment 5.1% 4.6% U.S. Unemployment 4.7% 4.1% Market Indicators (Overall, All Classes) Q1 17 Q1 18 Overall Vacancy 12.2% 13.7% (sf) 88k 63k Construction (sf) 1.5M 1.6M Rent * $20.51 $20.77 Overall /Overall Asking Rent 4-QTR TRAILING AVERAGE Overall Vacancy 12-Month Forecast Q1 2018 data based on the average of January and February, and January 2018 used to represent Q1 2018 for. * Rental rates reflect gross asking $psf/year 325,000 250,000 175,000 100,000 25,000-50,000-125,000 12-Month Forecast -200,000 $15.00 2011 2012 2013 2014 2015 2016 2017 Q1 2018 20% 18% 16% 14% Historical Average = 15.9% Asking Rent, $ PSF 12% 2011 2012 2013 2014 2015 2016 2017 Q1 2018 1 Economy Unemployment in dropped slightly to a rate of 3.8%, and remains the lowest unemployment rate in the state, as well as below the national unemployment rate of 4.1%. For the sixth straight year, has made the top 10 in Site Selection magazine s recently released ranking for corporate investment. ranked No. 7 among metro areas across the nation. Site Selection s annual report tracking new and expanded business facilities put Ohio in the No. 2 spot for total projects for the fourth consecutive year. These strong results demonstrate how our close collaboration with state, regional and local partners helps us to deliver Ohio s valuable assets to help businesses thrive, JobsOhio President John Minor said in a press release. Kenny McDonald, president and chief economic officer of 2020 said in a separate press release, The Region is a place that is attracting business and talent, and building an identity as a place to grow your business and your career. Market Overview The office market had a 12.1% direct vacancy rate in the first quarter of 2018, with a total vacancy rate of 13.7%, improving from the fourth quarter of 2017 by 55 basis points (bps). The 2018 vacancy rates are among the lowest on record, second only to the first quarter of 2017. Net absorption of 63,000 square feet (sf) is slightly above the median amount based on the past 10 years of first quarter records. The asking rental rates improved yearon-year across all submarkets with an average of $20.77 per square foot (psf), compared to last year at $20.51 psf. The Northwest had the lowest vacancy rate among the submarkets at 12.3%, which is 53 bps lower than in the fourth quarter, as well as the lowest on record for that submarket. The Northeast showed the most improvement over the fourth quarter in 2017. The Northeast s total vacancy rate of 16.0% is down 191 bps, and net absorption of 122,000 sf is almost triple the previous quarter s total. Net absorption in the Northeast was led by Aetna and AEP signing new leases. There is 1.6 million square feet (msf) of new office construction currently underway, and if it all delivers in 2018, it will be the largest amount of new product to hit the market in 10 years. All construction is speculative, with 40% located in the Downtown submarket. Preleasing remains healthy with 600,000 sf of space already spoken for including SPACES taking 40,000 sf in the 711 Building and Anthem leasing 35,000 at The Point at Polaris. cushmanwakefield.com 1
Leasing activity was particularly strong in the Downtown submarket, highlighted by SPACES preleasing 40,000 sf in the 711 North High Street building which is expected to deliver by the end of the year. At the Huntington Center CoverMyMeds leased 24,000 sf and AVER leased 8,500 sf. Other highlights include Aetna leasing 53,000 sf in the New Albany Center of Technology II in the Northeast as well as AEP leasing 28,000 sf on Tech Center Drive. At Northwoods II, IBI Group leased 15,000 sf and CF Bank leased 8,000 sf. Some significant move-outs impacted the market negatively; NiSource vacated 62,000 sf on Dublin Road in the Northwest as it consolidated operations within other offices throughout the city, and COPC vacated 34,000 sf on Polaris Parkway in the North submarket. In the Northwest, Priam Ventures purchased the 215,000-sf Metro Center V building from Lone Star Funds for $19 million ($89 psf). At Easton, Bailard acquired the 135,000-sf-headquarters building of Lane Bryant from Grammercy Property Trust for $19.5 million ($144 psf). Also at Easton, Gladstone Commercial purchased the 102,000-sf Easton Commons Two for $17 million ($169 psf) from Morgan Stanley. There is 1.6 msf of new office PRELEASING ACTIVITY REMAINS HEALTHY SO MOST OF THE RISK IN THE OFFICE SECTOR IS CONCENTRATED IN BACKFILLING COMMODITY CLASS A AND CLASS B SPACE. product under construction which is all speculative, and all scheduled to be completed in 2018. This amount of space would be an unprecedented amount of square footage to deliver in one year. Even if the office demand measures up to the amount of new product, this new supply will lead to flat-to-rising vacancy as the new construction is delivered. Class A and B Asking Rent CLASS A AND B ASKING RENTS ARE SETTING RECORD HIGHS. $24.00 $23.00 $22.00 Historic Annual Office Supply THE AMOUNT OF DELIVERIES IN 2018 IS PROJECTED TO BE THE HIGHEST IN 10 YEARS. MSF 1.8 1.6 1.4 1.2 1.0 0.8 0.6 0.4 0.2 Class A Class B, $ PSF 10-Year Average = 506,000 square feet Key Buildings Construction Q1 2018 $24.00 $23.00 $22.00 2010 2011 2012 2013 2014 2015 2016 2017 2018 Estimate Outlook The combination of slower absorption and an increase in completed new construction will put upward pressure on vacancy rates. Preleasing activity remains healthy so most of the risk in the office sector is concentrated in backfilling commodity Class A and Class B space. Rental rates will grow at a modest rate as added supply continues to come online in 2018. Property Name Hamilton Crossing Dublin Bridge Park 80 on the Commons Sub- Market Square Feet Developer NE 330,000 Daimler, New Albany Co, Casto NW 235,000 Crawford and Hoying CBD 134,000 Daimler, Kaufman 711 N. High St. CBD 84,000 Wood Co., Schiff Capital The Point at Polaris NTH 70,000 Phase 1 NP Ltd., VanTrust Complete Date Q3 18 Q2 18 Gravity Project CBD 60,000 Kaufman cushmanwakefield.com 2
Downtown Office Market Statistics Q1 2018 Class Buildings Inventory SF Direct Vacant SF Last Q ARENA DISTRICT Current Q Vacancy A 13 1,578,762 17,081 2.6% 1.1% 0.1% 1.2% 24,147 24,147-55,000 $27.04 B 5 258,262 2,789 1.1% 1.1% 0.0% 1.1% - - - - $20.91 18 1,837,024 19,870 2.4% 1.1% 0.1% 1.2% 24,147 24,147-55,000 $26.18 BREWERY DISTRICT B 7 956,240 86,581 8.2% 9.0% 0.0% 9.0% -8,490-8,490 - - $20.61 7 956,240 86,581 8.2% 9.0% 0.0% 9.0% -8,490-8,490 - - $20.61 CENTRAL BUSINESS DISTRICT A 7 2,638,443 608,527 22.5% 23.1% 0.6% 23.7% -14,105-14,105-305,391 $23.35 B 11 2,416,285 394,243 15.6% 16.3% 3.8% 20.2% -18,012-18,012 - $19.61 18 5,054,728 1,002,770 19.2% 19.8% 2.1% 22.0% -32,117-32,117-305,391 $21.56 DOWNTOWN SOUTH A 2 379,547 31,601 6.3% 8.3% 0.0% 8.3% -7,564-7,564-50,000 $26.03 B 4 474,916 16,991 6.0% 3.6% 0.0% 3.6% 11,400 11,400 - - $21.88 6 854,463 48,592 6.1% 5.7% 0.0% 5.7% 3,836 3,836-50,000 $23.72 GRANT/ WASHINGTON A 0 0.0% 0.0% 0.0% 0.0% - - - B 5 859,366 69,274 7.0% 8.1% 0.3% 8.3% -9,363-9,363 - - $19.50 5 859,366 69,274 7.0% 8.1% 0.3% 8.3% -9,363-9,363 - - $19.50 NORTH HIGH STREET A 1 48,500-0.0% 0.0% 0.0% 0.0% - - 242,300 $26.70 B 1 319,000-0.0% 0.0% 0.0% 0.0% - - - $19.50 2 367,500-0.0% 0.0% 0.0% 0.0% - - 242,300 $20.45 A B 23 4,645,252 657,209 14.2% 14.1% 0.4% 14.5% 2,478 2,478-652,691 $25.81 33 5,284,069 569,878 10.3% 10.8% 1.8% 12.6% -24,465-24,465 - - $20.27 56 9,929,321 1,227,087 12.1% 12.4% 1.1% 13.5% -21,987-21,987-652,691 $22.87 Suburban North Office Market Statistics Q1 2018 Class Buildings Inventory SF Direct Vacant SF Last Q BUSCH B 7 593,198 204,482 32.1% 34.5% 0.0% 34.5% -14,159-14,159 - - $14.39 7 593,198 204,482 32.1% 34.5% 0.0% 34.5% -14,159-14,159 - - $14.39 CROSSWOODS A 1 250,169 12,076 5.7% 4.8% 0.0% 4.8% 2,096 2,096 - - $21.50 B 5 577,214 82,320 11.0% 14.3% 0.0% 14.3% -19,060-19,060 - - $17.56 6 827,383 94,396 9.4% 11.4% 0.0% 11.4% -16,964-16,964 - - $18.75 NORTH HIGH B 4 401,838 25,826 15.8% 6.4% 2.5% 8.9% 37,525 37,525 - - $17.27 4 401,838 25,826 15.8% 6.4% 2.5% 8.9% 37,525 37,525 - - $17.27 POLARIS A 6 744,514 45,458 5.8% 6.1% 0.0% 6.1% -2,338-2,338-70,000 $21.21 B 9 574,958 71,614 15.2% 12.5% 0.0% 12.5% 16,010 16,010 - - $19.40 15 1,319,472 117,072 9.9% 8.9% 0.0% 8.9% 13,672 13,672-70,000 $20.42 WESTAR A 10 1,076,501 108,895 5.4% 10.1% 5.5% 15.6% -50,787-50,787 - - $20.43 B 0 - - 0.0% 0.0% 0.0% 0.0% - - - - - 10 1,076,501 108,895 5.4% 10.1% 5.5% 15.6% -50,787-50,787 - - $20.43 WORTHINGTON A 0 0 0 0.0% 0.0% 0.0% 0.0% - - - - B 10 682,211 54,054 10.1% 7.9% 1.2% 9.1% 14,636 14,636 - - $17.24 10 682,211 54,054 10.1% 7.9% 1.2% 9.1% 14,636 14,636 - - $17.24 A B Current Q Vacancy Current 17 2,071,184 166,429 5.6% 8.0% 2.8% 10.9% -51,029-51,029-70,000 $20.77 35 2,829,419 438,296 16.7% 15.5% 0.6% 16.1% 34,952 34,952 - - $17.27 52 4,900,603 604,725 12.0% 12.3% 1.6% 13.9% -16,077-16,077-70,000 $18.75 cushmanwakefield.com 3
Suburban Northeast Office Market Statistics Q1 2018 Class Buildings Inventory SF Direct Vacant SF Last Q Current Q Vacancy Current AIRPORT/ I-670 A 0 - - 0.0% 0.0% 0.0% 0.0% - - - 50,000 B 3 210,082 28,828 13.7% 13.7% 0.0% 13.7% - - - - $17.32 3 210,082 28,828 13.7% 13.7% 0.0% 13.7% - - - 50,000 $17.32 EASTON A 16 2,288,406 478,163 20.9% 20.9% 0.3% 21.2% 117 117 - - $23.60 B 4 139,363 5,431 0.0% 3.9% 0.0% 3.9% -5,431-5,431 - - $20.19 20 2,427,769 485,594 19.7% 19.9% 0.3% 20.2% -5,314-5,314 - - $23.41 GAHANNA A 1 63,038 15,700 38.7% 24.9% 0.0% 24.9% 8,710 8,710 - - $19.95 B 9 477,183 8,016 9.2% 1.7% 1.4% 3.0% 35,706 35,706 - - $19.01 10 540,221 23,716 12.6% 4.4% 1.2% 5.6% 44,416 44,416 - - $19.12 NEW ALBANY A 10 899,866 101,299 11.0% 11.3% 4.8% 16.0% 12,194 12,194-70,000 $20.81 B 3 150,045 14,500 45.0% 9.7% 0.0% 9.7% 53,000 53,000 - - $20.24 13 1,049,911 115,799 15.8% 11.0% 4.1% 15.1% 65,194 65,194-70,000 $20.73 WESTERVILLE A 1 155,500-0.0% 0.0% 0.0% 0.0% - - 330,000 $17.77 B 20 1,376,781 197,019 16.2% 14.3% 1.2% 15.5% 26,591 26,591 - - $17.03 21 1,532,281 197,019 14.6% 12.9% 1.1% 14.0% 26,591 26,591-330,000 $17.11 A 28 3,406,810 595,162 17.7% 17.5% 1.5% 18.9% 12,311 12,311-450,000 $22.27 B 39 2,353,454 253,794 15.4% 10.8% 1.0% 11.8% 109,866 109,866 - - $18.08 67 5,760,264 848,956 16.8% 14.7% 1.3% 16.0% 122,177 122,177-450,000 $20.56 Suburban Northwest Office Market Statistics Q1 2018 Class Buildings Inventory SF Direct Vacant SF Last Q Current Q Vacancy Current ARLINGTON/ GRANDVIEW A 5 448,120 17,882 1.9% 4.0% 0.0% 4.0% -4,702-4,702-80,000 $24.79 B 12 1,011,993 79,066 8.3% 7.8% 0.2% 8.0% -56,880-56,880 - - $18.64 17 1,460,113 96,948 6.3% 6.6% 0.1% 6.7% -61,582-61,582-80,000 $20.53 DUBLIN A 13 1,220,483 218,513 17.6% 17.9% 2.3% 20.2% -4,103-4,103-370,846 $22.58 B 17 1,220,319 212,356 17.5% 17.4% 6.2% 23.6% 1,132 1,132 - - $17.94 30 2,440,802 430,869 17.5% 17.6% 4.2% 21.9% -2,971-2,971-370,846 $20.26 HILLIARD/ WEST A 2 394,323-2.1% 0.0% 0.0% 0.0% 8,138 8,138 - - $22.35 B 2 146,112 29,430 26.0% 20.1% 1.8% 21.9% 8,609 8,609 - - $19.20 4 540,435 29,430 8.5% 5.4% 0.5% 5.9% 16,747 16,747 - - $21.50 TUTTLE A 20 2,729,972 87,918 3.3% 3.2% 4.2% 7.4% 1,771 1,771 - - $22.27 B 7 431,401 81,943 22.0% 19.0% 0.0% 19.0% 39,589 39,589 - - $18.93 27 3,161,373 169,861 5.8% 5.4% 3.6% 9.0% 41,360 41,360 - - $21.81 SAWMILL A 0 0.0% 0.0% 0.0% 0.0% - - B 3 473,736 46,884 9.3% 9.9% 0.0% 9.9% -2,672-2,672 - - $16.58 3 473,736 46,884 9.3% 9.9% 0.0% 9.9% -2,672-2,672 - - $16.58 A 40 4,792,898 324,313 6.7% 6.8% 3.0% 9.7% -11,159-11,159-450,846 $22.69 B 41 3,283,561 449,679 14.4% 13.7% 2.4% 16.1% -10,222-10,222 - - $18.27 81 8,076,459 773,992 9.8% 9.6% 2.8% 12.3% -21,381-21,381-450,846 $20.89 s Q1 2018 SUBURBAN TOTAL A 85 10,270,892 1,085,904 10.1% 10.6% 2.4% 13.0% -49,877-49,877-970,846 $21.91 B 115 8,466,434 1,141,769 15.5% 13.5% 1.4% 14.9% 134,596 134,956 - - $17.88 200 18,737,326 2,227,673 12.5% 11.9% 2.0% 13.9% 84,719 84,719-970,846 $20.09 COLUMBUS TOTALS A 108 14,916,144 1,743,113 11.4% 11.7% 1.8% 13.5% -47,399-47,399-1,623,537 $22.88 B 148 13,750,503 1,711,647 13.5% 12.4% 1.6% 14.0% 110,131 110,131 - $18.48 256 28,666,647 3,454,760 12.4% 12.0% 1.7% 13.7% 62,732 62,732-1,623,537 $20.77 Office asking rents converted to Full Service cushmanwakefield.com 4
OFFICE SUBMARKETS COLUMBUS / FRANKLIN 42 315 23 33 Dublin 257 270 71 Worthington North 3 Westerville 62 New Albany 42 70 40 Hilliard Northwest Grandview Heights CBD 670 161 Northeast Port International Airport Whitehall 40 Gahanna Reynoldsburg 70 62 270 Grove City 71 Obetz 317 Canal Winchester Rickenbacker National Guard Base Cushman & Wakefield 325 John H. McConnell Blvd. Suite 450, Ohio 43215 cushmanwakefield.com For more information, contact: Robin Mitchell, Research Analyst Tel: +1 614 241 4700 robin.mitchell@cushwake.com About Cushman & Wakefield Cushman & Wakefield is a leading global real estate services firm with 45,000 employees in more than 70 countries helping occupiers and investors optimize the value of their real estate. Cushman & Wakefield is among the largest commercial real estate services firms with revenue of $6 billion across core services of agency leasing, asset services, capital markets, facilities services (C&W Services), global occupier services, investment & asset management (DTZ Investors), project & development services, tenant representation and valuation & advisory. To learn more, visit www.cushmanwakefield.com or follow @CushWake on Twitter. Copyright 2018 Cushman & Wakefield. All rights reserved. The information contained within this report is gathered from multiple sources considered to be reliable. The information may contain errors or omissions and is presented without any warranty or representations as to its accuracy. cushmanwakefield.com 5