Seven months of shopping from home has led to a surge in central Ohio warehouse construction, putting the region on track for a record amount of new distribution space.
Central Ohio is on track for a record amount of new warehouse space this year, driven in part by a surge of consumers shopping from home during the coronavirus pandemic.
Through the first half of the year, 5.8 million square feet of new industrial space opened in central Ohio and another 8.8 million square feet is under construction, according to the commercial real estate firm Cushman & Wakefield.
Together, that’s the equivalent of 80 new Walmart stores or 21 new Nationwide Arenas.
Depending on how many of the warehouses open in the next few months, central Ohio is likely to see a record amount of new warehouse space for the year, said Jason Tolliver, the head of industrial research for Cushman & Wakefield.
One reason: COVID-19.
“E-commerce is driving all the growth we’re seeing in the industrial market, nationally and in Columbus,” Tolliver said. “The big difference is how we shop and what we expect in terms of home delivery. It’s a totally different world than what we saw before the pandemic.”
Central Ohio has long been a distribution hub. With nearly 270 million square feet of logistical and industrial space, the region is the 11th largest distribution center in the U.S., according to Cushman & Wakefield.
The past few years have dramatically accelerated that growth, as warehouses, typically ranging from 200,000 to more than 1 million square feet and standing 40 feet high, popped up throughout the Columbus area.
Much of the construction has been around Rickenbacker International Airport near Lockbourne, which remains the hub of central Ohio’s logistics industry. But warehouses are rising throughout central Ohio, especially in industrial parks in Etna Township in Licking County and West Jefferson in Madison County.
Some of the warehouses are occupied by well-known companies such as Amazon and Kohl’s, which both leased huge warehouses this year.
But most of the companies behind central Ohio’s warehouse boom are not household names.
They are real estate developers such as Xebec, which is building the first of six warehouses planned near Rickenbacker; Hillwood, which just opened the first of several warehouses in a 232-acre development in West Jefferson; CRG, which built the Kohl’s warehouse in Etna Township and has two warehouses under construction there and near Rickenbacker; CT Realty, which has started on the first phase of up to 5.7 million square feet of new warehouse space near Rickenbacker; and Excel, which is building 3.8 million square feet of warehouse space in a 230-acre development in Obetz.
What’s striking about the developments is that they are almost all being built “on spec” without tenants.
VanTrust Real Estate just finished its sixth central Ohio warehouse. It is building another, in New Albany, and last week announced the start of a 1 million-square-foot building in a new 900-acre industrial development in Commercial Point in Pickaway County, the first major industrial park to expand the Rickenbacker area west of Route 23.
All eight VanTrust buildings were constructed without tenants, but Andy Weeks, executive vice president in VanTrust’s Columbus office, is confident they will be filled.
“Leasing activity for these types of buildings is just as strong, if not stronger, than before the pandemic,” Weeks said. “Since the middle of summer we’ve seen a rapid acceleration of demand.”
Consumer goods are filling a lot of the space, as home-bound customers head online instead of to the store. But, as Weeks and commercial real estate broker Jeff Lyons noted, central Ohio warehouses are holding many other items.
“We’re seeing demand all across the board,” said Lyons, with CBRE. “Everything from home goods to the construction industry, auto, food, you name it.”
Lyons, for example, leased a new 324,000-square-foot warehouse near Rickenbacker in May to the Japanese cosmetics company Shiseido Americas Corp., which needed to expand beyond its existing space next door.
A few months earlier, VanTrust leased a similarly sized new building in New Albany to Hims & Hers, an online health and wellness company, for its mail-order pharmacy center.
Weeks and Lyons say developers are forced to build warehouses before leases are signed because tenants typically need space fast.
“What’s changed is just how quickly companies need space,” Lyons said. “When you look at the pent-up demand we’re experiencing, it’s hard for some companies to keep up with the growth. They want the space in 30 to 60 days, when it used to be six to nine months.”
Him & Hers planned to hire 500 workers for its New Albany distribution center, illustrating the importance of the industry to the central Ohio economy.
According to the regional economic-development group One Columbus, almost 84,000 central Ohio workers are employed in the logistics industry, getting items from planes, trains and trucks to businesses and consumers, often with a layover in a warehouse.
Just last week, Amazon announced that it is looking for 2,600 central Ohio workers, many of them to handle warehouse goods.
Experts say central Ohioans should expect to see a lot more warehouses built next year and beyond.
“Overall, the industrial market is doing very, very well,” Lyons said. “We’re attracting the whole gamut the user, the investor and the developer. … For the foreseeable future, we’re going to be seeing a high level of growth.”