Columbus Ohio Multifamily Market Analysis Q4 2023

The Columbus multifamily real estate market faces a nuanced landscape as it heads into 2024. Despite a record-setting delivery of approximately 6,400 units this year, demand falls short, reflecting a trend seen nationally. Vacancy rates in Columbus are on the rise, particularly in the 3 Star sector, impacted by supply additions and escalating prices. Construction activity, hovering near record levels, is expected to elevate vacancy further over the next 12 months, presenting challenges for the market. Interestingly, the buyer profile is shifting away from institutional investors and developers to individual buyers while rent growth returns to pre-pandemic levels, positioning Columbus as one of the top markets in the country for rent growth.

• Columbus’s investment activity in 2024 is muted, with sales volume in 23Q3 at just over $60 million, the weakest since 2020.
• Sales volume represents only 29% of the average third quarter volume in the three years prior to the pandemic.
• Institutional investors’ activity was nonexistent in 2023, with a shift in buyer profile from developers and private REITs to individual buyers.
• Small 2 and 3 Star assets are predominant in recent deals, with few exceeding $20 million, concentrated in Columbus’ northern suburbs.
• Dublin is a sought-after community, hosting some of the market’s top trades, including Sycamore Ridge, which sold for $53 million in 23Q1.
• Top deal in 23Q3 was a $33 million purchase of Prescott Place Apartments in Worthington by Preserve Partners in a 1031 exchange.
• Evidence of falling values in Columbus is seen in Pedcor Companies’ purchase of Sawmill Ridge for $29 million in 23Q2, 19% below similar properties pre-mid-2022.
• Economic uncertainty and softening market fundamentals are expected to continue, potentially impacting deal volumes for the rest of the year.
• Investors may remain on the sidelines amid price discovery, and the quality of assets trading contributes to weak quarterly volumes.

• Demand in Columbus’s multifamily market falls short of new supply in 2023, with deliveries reaching a record of 6,400 units, 33% above the pre-pandemic annual average.
• Net absorption since the start of the year totals 3,800 units, while vacancy in Columbus is rising faster than the U.S. average, increasing by 100 basis points compared to the national 50-basis-point rise.
• Vacancy rises fastest in the 3 Star sector due to supply additions and rising prices, while the 1 Star and 4 & 5 Star sectors remain mostly stable.
• Construction activity nears a record level, with deliveries expected to further increase vacancy over the next 12 months.
• Rent growth in Columbus returns to pre-pandemic levels, making it one of the top markets in the country, thanks to modest construction pipelines during the pandemic.
• Higher borrowing costs impact construction activity, leading to a slower pace of deliveries by 2025, but strong population and job growth, along with demand from Ohio State University, are expected to keep demand solid in the near term.

Source: Costar Group