Named for explorer Christopher Columbus and celebrated as a state capital, Columbus is located in the center of Ohio on the Scioto River. It is the state's largest city (and the nation's 15th largest), with a variety of industries—including government, health care, finance, education, insurance, retail, technology, manufacturing, and distribution—making for a diverse, and generally strong, economy.
While many secondary markets experience peaks and valleys, the Columbus multifamily market resembles the stable primary markets typically found in coastal cities. Columbus has been the only city in the region to add jobs in recent years—primarily because it's home to the state government and Ohio State University, which is the largest university in the nation in terms of both campus size and student population. What's more, Columbus is the only city in Ohio whose population has increased in every Census since 1830, and it's the third fastest-growing MSA in the Midwest. Forbes magazine ranked the city as the 11th best for singles in 2006, placing Columbus higher than Los Angeles, San Diego, and Las Vegas, and just below Miami. All these accolades mean multifamily owners and operators in Columbus have many reasons to be positive.
RENTAL RECOUP With the fallout from the subprime crisis, many residents are returning to apartments, causing a decrease in vacancy rates. According to Columbus-based The Danter Co., vacancy is now at 7.9 percent, as compared to 8.7 percent last year. This is the lowest rate since 2001 when vacancy was at 6.8 percent, just before the abundance of subprime mortgages and the condo conversion craze boosted supply. Today, vacancies are lowest in the northwest section of the city at 5.6 percent, followed by 5.8 percent in the northeast, 8.9 percent in the southeast, and 12.8 percent in the southwest.
Property managers also have been happy with the recent rental growth, as median rates for all unit sizes increased 2.8 percent in the past 12 months. Rents for one-bedroom units in the city were up 2.5 percent from $513 to $526, and two-bedroom units were up 2.9 percent from $625 to $643. This is significant since, from 2002 to 2007, rents increased by only 1.7 percent in all over the five years.
One project continuing to have success is Arena Crossing Apartments, which currently is 96 percent occupied, with rents ranging from $735 to $1,975. The property is located in downtown Columbus in the Arena District, which is home to the NHL Columbus Bluejackets. The district is anchored by Nationwide Arena and is the premier office location in Columbus, having been developed with new restaurants, Class A office space, and numerous entertainment establishments new to Central Ohio.
Arena Crossing was completed in May 2004 by Columbus-based Slate Rock Construction Co. and is currently owned by Nationwide Realty Investors. “The property comprises two six-story buildings totaling 213,400 square feet of rentable residential space. There are 252 upscale apartments and townhomes. In addition, the development features a 400-space under-unit parking garage, an outdoor pool and spa, an on-site fitness center, private balconies, 24-hour secured access, and 24-hour maintenance service.
ROOM FOR DEVELOPMENT Fortunately for investors and owners, multifamily development in Columbus has been at a standstill, with fewer than 200 units coming online in 2007 after 5,000 units were delivered from 2003 to 2005. While there is a lot of land in Columbus, it's difficult to get approval for projects because city officials are meticulous when granting zoning approvals.
Looking to take advantage of the growing student population at Ohio State University, Edwards Cos., based in Columbus, recently completed development of Fisher Commons, a 120-unit, one- and two-bedroom community on the western edge of the campus that is marketed to graduate students at the Fisher School of Business. The community is close to parks, recreation facilities, shopping, and eclectic eateries. It contains many signature amenities and apartment features, including a 24-hour cyber café with wireless Internet, a lounge with flat screen televisions, group study areas, a DVD lending library, built-in computer workstations, full-size stackable washers and dryers, spacious walk-in closets, and garages with remote openers.
One local developer who believes in Columbus is Westerville, Ohio-based Triangle Real Estate Services, which was founded by Don Kenney in 1969. Since then, the company has developed more than 34,000 units in the Columbus area. Kenney has a system in place whereby he sells off 16-unit buildings in each of his communities and maintains management. The company presales all buildings, guaranteeing 100 percent occupancy at the time of completion and providing up to two free years of property management to each investor. Currently, he has approximately 520 units under construction in three communities—the Residences at Edgewater l, a 148-unit project off East Broad Street; Winchester Park, a 344-unit development in Canal Winchester, Ohio; and Prescott Place, a 120-unit property located on Executive Parkway in Westerville—with completion scheduled in 18 months. Each community built by Triangle Real Estate Services features membership to an athletic club, swimming pool, indoor theater, and party facilities.
“Our properties are very attractive to private investors—locally and from out of state,” Kenney says. “We provide them a seamless process to investing in a high-quality property that produces immediate cash flow.”