Several sectors of the central Ohio economy are gearing up for a big 2018.
Getting from point A to point B promises to become a lot more interesting in central Ohio in 2018. And once you arrive at destinations including Easton, the Short North and Polaris, count on finding more to see and do.
That's what Columbus CEO learned from business sector leaders in transit and technology, hospitality and housing in a roundup of predictions and expectations for what developments, trends and challenges the local economy will deliver in the New Year. Here is the view from the crystal balls we gazed into across the region.
Transit and mobility promise to be among the most dynamic sectors of the next 12 months and beyond.
For starters, COTA buses are about to go much faster, at least along the new CMAX route between Polaris and Downtown via Cleveland Ave. beginning Jan. 1.
Fifteen new CMAX buses fueled by cleaner-burning, compressed natural gas will run about 20 percent faster than previous routes, with buses available every 10 minutes during rush hour.
COTA's first Bus Rapid Transit line is aimed not only at attracting more riders—an estimated 20 percent increase over five years—but also attracting new development along the Cleveland Avenue corridor, including areas such as the Milo-Grogan neighborhood and Westerville's Weststar Place development.
The $48.65 million project is funded largely with a $37.5 million federal Department of Transportation grant.
CMAX buses will get a boost along the route by using new traffic signal priority technology. “Going down the street we have devices on the buses that will essentially allow us to, I don't want to use the word ‘preempt,' but it keeps the buses moving on a particularly rapid schedule,” explains Emile Williams, acting COTA CEO.
“What that does is help the buses to stay on that high frequency (of) every-10-minutes service in the peak periods. With CMAX, we'll also see some customer amenities. We already have Wi-Fi so riders can use devices on board. We'll also incorporate our new fare boxes and some neat features that we'll probably introduce in 2018,” Williams adds.
Then by June, 45,000 people who live or work Downtown will be eligible for free COTA passes for service anywhere the buses travel, thanks to creative financing that combines self-assessments by 550 property owners with passes purchased by some employers, a bit of corporate fundraising and in-kind services from the Mid-Ohio Regional Planning Commission.
“Something to this scale has not been done in the United States with the private sector and the public section making transit free for employees like this,” says MORPC Executive Director William Murdock.
He sees the advantages going far beyond improving transportation. “If we are able to encourage people to use transit more Downtown, that could allow Downtown building owners an easier chance to lease their buildings because we have some vacancy Downtown. It could reduce the number of parking spaces needed Downtown, and we all know that parking is very tight and expensive Downtown,” Murdock says.
“The hope is that this program can move maybe 5 percent or more of the Downtown workforce to use transit, which would free up thousands of spaces. … It's not just a program for people who live Downtown; most of the people are people who don't live Downtown and are from all over the region. … It will make transit feel like CBUS (COTA's Downtown circulator) does to everybody who rides it for free Downtown. It'll make it just as easy,” Murdock adds.
And don't even get Murdock started on tube transit, better known as Hyperloop One.
“The more we learn about it, the more viable we think the technology is. In addition to working on the traditional transportation that we work on here at MORPC, we also want to make sure that central Ohio is positioned for something big like this,” Murdock says.
“The Columbus region has the unique chance to evaluate Hyperloop as a possible technology. This is connecting regions together with really fast technology that Elon Musk birthed but is being worked on by a number of companies around the globe,” he explains.
“The short of it is MORPC and the Columbus Partnership and some partners from Chicago to Columbus to Pittsburgh pitched that corridor as part of the Hyperloop One Global Challenge, which was a challenge to solicit corridors where this technology should be investigated and implemented. We were one of 2,600 corridors suggested and one of 10 that were selected as the global challenge winners, which means we've won the right to work directly with Hyperloop One to investigate the feasibility of the Hyperloop technology here in central Ohio,” Murdock says.
Putting travelers in pods that speed through a tube, Hyperloop is expected to move “six or seven hundred miles an hour and that would reduce travel time to Pittsburgh on the ground to under 20 minutes and Chicago to under a half an hour,” he adds.
“The possibilities for freight or people become fun to talk about, and as the technology is being honed, it would be really impactful for our economy. That's going to be a highlight for us next year as we're beginning to work with Hyperloop One on that technology.”
The 10 corridors winning the global competition “get to work directly on feasibility and implementation strategies,” Murdock says. The work in 2018 is on a study to “look at the real possibilities of the technology and how it might work in central Ohio.”
Of the 10 corridors, other US routes are in Texas, the Rocky Mountains, and Florida. Two each are in India and the United Kingdom, with one each in Mexico and Canada. “There will be a couple of corridors that will receive the technology first, and so if anything next year we're working really assertively to make sure we're positioned to be one of those first corridors where it would be deployed,” Murdock says.
Construction may be a couple of years away but Murdock says, “Just like the Hyperloop itself, their process is moving very fast, and we're moving really quickly, too, to make sure we're staying in front.”
While COTA's BRT is implemented and the Hyperloop is studied, a big study of five transportation corridors is underway with support from COTA, MORPC, the city of Columbus, several suburbs, the Columbus Partnership and the Urban Land Institute.
The targeted corridors are intentionally very different in order to offer diverse perspectives on high-capacity transportation options as the Columbus region gains a million residents by 2050.
The analysis seeks to answer whether mass transit makes sense for economic development as the region grows.
“We're not getting into the type of transit, whether it's light rail or buses or something else. We're more focused on is there a need for mass transit to move a lot of people to make development feasible, to improve congestion, to provide more options for people,” Murdock says. “What's especially neat is you have all the major entities in town who are working in this space, aligned and looking at that question together. … We'll be diving into the details and some outreach efforts over the next 12 months.”
Williams is also excited about the breadth of support for the corridor analysis.
“We shared our NextGen study (completed in 2017) with the team that was developing the specifications with the corridor analysis to make sure there was alignment. We didn't want to be doing something by ourselves. We wanted to be highly collaborative with this process,” Williams says.
As the corridor analysis develops a vision, “the cheerleading should come from outside COTA. That should be a community conversation to develop the best solution for mobility in our region. I'm encouraged to see we have partners from the city of Columbus, the ULI, and some other partners from our suburban districts in addition to COTA really looking to see how we can impact mobility in our region. That's where you get the best solution,” he adds.
Count shopping center developer Yaromir Steiner, who also chairs ULI, as another who has high expectations for the corridor analysis. He likes that it is being pursued collaboratively. “That is, we think first and we think collectively, not in silos, and then based on that, we'll decide what the policy is.”
But Steiner is especially excited that “we got lucky, because our internal dissensions and discussions and the financial model, all those reasons, we never built any transit, much transit. The timing is perfect because the technological revolution that is happening, if we had done something a few years ago, we'd have missed it. We'd have gone probably with conventional, traditional thinking about transit.”
If the study points to a need for mass transit, the new sharing economy and emerging technology “will allow us to build one of the best systems of tomorrow in the nation rather than building one of the best last systems of the past. I really hope that our timing is good. The study will establish does mass transit make economic sense,” Steiner says.
Meanwhile, Steiner is building some best systems of tomorrow in retail at his flagship mall, Easton Town Center.
“Easton is the lab of the future of brick and mortar retail with a strong dose of technology which might not be visible to the customer,” Steiner says.
In 2018, Easton plans to open two new-concept stores to allow “pure play” retailers who currently exist just online and in catalogues to explore a brick-and-mortar future. Steiner hopes to have one incubator space ready as early as May to allow a test of four to six months “with a whole panoply of services which means that all they will have to bring will be their merchandise. We'll be able to provide all the technological infrastructure, the connection to their web page, the employees to do the sales, PR, interactions in the community and so forth.
“So if you would like to experiment in middle America to see if your concept can be converted to brick and mortar or a hybrid concept brick and mortar and online, this is a place you would be able to test your ideas and make sure that they function before taking the leap,” he says. Technological amenities would include AV systems for ordering and video display as well as retail analytics with “all the technical information a retailer needs in a store to determine what sells, what doesn't sell.”
Steiner envisions Easton also using very high-capacity Wi-Fi and an app to offer customers the ability to locate and even reserve parking spots near a favorite store as they're driving to the mall. That may be two years away. He sees the enhanced Wi-Fi as a tool to gather information that allows the mall to customize its services and remove friction in the shopping experience.
That's also what retail and restaurant consultants Denny Gerdeman and Brian Shafley, founder and CEO, respectively, of Chute Gerdeman, see in their company's work.
On the fashion side of retail, customer services is becoming the differentiator, Gerdeman says, with shoppers depending on stores to be their wardrobe consultant. “Most people, quite honestly, have a hard time dressing themselves and if you can become a trusted advisor to that customer, you have a loyal brand advocate then,” he says.
Consumers today “want something extra, something added value that makes them feel like they're making a smart decision. They're not going to waste money on just buying stuff. They're going to spend their money on making good decisions and buying the right things,” Gerdeman says.
His assessment is consistent with the view of Jami Dewolf, chief marketing officer for Alliance Data, that retail “is in the midst of true transformation” and that successful stores will be those that use data to personalize customer service. Alliance provides credit card services and data analytics for many retail brands.
“In 2018 and beyond, customer expectations for speed and transparency will only continue to grow. The customer's ‘always on' connectivity, access to data and streamlined experiences in other facets of their life influence how they will interact and what they expect from brands,” Dewolf says.
“Data will continue to empower brands to know and service customers unlike ever before,” she says. “Winning brands leading with a customer-first mentality and streamlining customer experiences across channels win their customers' hearts by creating effortless interactions that are meaningful.”
And it's not just high-end retailers using multiple channels to make shopping easier.
“Walmart of all people is doing something where they have this tower within their store. You shop online or on your mobile device and you go to the store and it's already been picked for you,” Gerdeman says. “You wave your cell phone or they give you a passcode; you punch in the passcode and your product is delivered in a bag to you and you can just walk out the store. You don't have to spend that hassle, the pain part, of running up and down the aisles trying to find something.”
For central Ohio in 2018, “I do think that idea of frictionless shopping will start to happen in our stores in various ways,” Shafley says. He cites Amazon Go, which was tested in 2017 in Seattle and is reported to be ready to roll out elsewhere, as the example. Customers go into a store, pick up what they want and a mobile app charges them as they leave, bypassing checkout lines and cashiers. “Convenience stores are going to be all over that idea,” he says.
“I think there's going to be a tipping point in the coming year with e-commerce at the grocery store where people will become really comfortable with the idea of ordering a lot, not all of their grocery list, on their device. A lot of these shopping tools that Kroger and Giant Eagle and all the rest of them are developing are going to be frictionless,” Shafley says.
And as more grocery purchases are moving online—especially those prepackaged items in the middle of the store—“a lot of the middle part of the grocery store will shrink because people are buying more of that online, (to) pick up in the store, but they're going to fill that area with more experiential things, restaurants or food theater of some sort,” he says.
Food theater is already established in the restaurant industry, says Gerdeman.
“People take photos of their food when they are sitting at a restaurant. The restaurant industry realizes this adds about 10 percent more time to the average time a diner stays in their restaurants simply because they're playing with their phone and taking photographs and sending emails to Facebook or their friends. It's just a phenomenon that's going on. Food is entertainment now,” he says.
One of Columbus' top restaurateurs, Cameron Mitchell, says he's “bullish on the central Ohio restaurant economy.” Cameron Mitchell Restaurants is planning to open two new restaurants in the spring—the Avenue Steak Tavern in Dublin and a new deli concept, Harvey and Ed's, in the Short North. “And then we have another yet-to-be named concept we're still working on across the street in the Short North in 2019.”
As he continues adding restaurants in Columbus, Mitchell notes, “The city's going to continue to expand and we've got an exciting year next year. The convention business is up with the renovation and the new (Greater Columbus) Convention Center finally being open for business. The women's final four is coming next year. There's just a lot of stuff, a lot of activity, in Columbus; very vibrant.”
It will be an especially meaningful year for CMR as the national restaurant chain celebrates 25 years in business.
“It's a highlight for our company to not only just open one restaurant and have it open for 25 years but to take that one restaurant and grow into a leading national upscale hospitality company is very exciting and thrilling,” Mitchell says.
“It's going to be much bigger than just one day, next Oct. 5, 2018. That will certainly be the pinnacle of it and a busy day,” Mitchell says, but an internal committee has already been meeting to plan celebrations.
The restaurant industry continues to face headwinds of increased competition and labor shortages, but Mitchell welcomes an influx of new concepts as “good for the overall marketplace” and says the challenges are “overshadowed by the strength of the marketplace and the vibrancy of our Columbus community.”
Along with restaurant growth, 2018 also brings construction of new hotel beds to central Ohio. Within the area around the convention center, more than 450 new rooms will be readied for arrival in early 2019. They include a 168-room Canopy by Hilton across from the convention center, a 118-room Moxy by Marriott on the former Haiku restaurant site and a 171-room Graduate Hotel in the old Bollinger Tower, according to Experience Columbus.
Beyond the urban core, the new Renaissance Columbus Westerville-Polaris Hotel will open this spring, bringing 222 rooms to the underserved Westerville area.
The Renaissance Westerville is being developed by Concord Hospitality in partnership with Continental Building Company, notes Scott Starek, general manager of the new hotel. He says the two companies will also open a dual-branded Springhill Suites and TownePlace Suites by Marriott with 262 combined rooms at Easton in late 2018.
The rooms are needed as Experience Columbus forecasts a 17 percent increase in tourism for the city in the coming year with 28 citywide conventions on tap, helping to “raise our profile as a national meetings, convention and tradeshow destination,” says Executive Director Brian Ross. COSI's new Dinosaur Gallery and the Scott's Miracle-Gro Foundation Children's Garden at Franklin Park Conservatory will help attract more family visits to the city, he says.
Sports travel is also big and getting bigger in Columbus, notes Linda Logan, executive director of the Greater Columbus Sports Commission. The NCAA Women's Final Four basketball tournament that Columbus hosts this spring is “the largest and most prestigious collegiate event we've ever held here and the entire nation will be watching,” Logan says.
“It's our coming out party as a premier sports destination because of the tremendous amount of exposure it will bring to the city. … This event will greatly strengthen our resume and enhance our ability to attract more and larger sporting events.”As the sports commission's brand campaign proclaims “Columbus Has No Offseason,” 2018 will also see the Columbus Clippers celebrate the 10thAnniversary of Huntington Park and play host to the Triple-A Baseball All-Star and National Championship games.
Population growth in central Ohio continues to fuel housing construction, including rental properties.
One of the area's prolific developers, Schottenstein Real Estate Group, has four high-end suburban projects being built or planned in 2018 from Powell to north of Polaris, says President Brian Schottenstein. The company had earlier announced and then backed away from plans for a 23-acre Arena District project of condos, apartments and hotels and now views the Downtown multifamily market as getting “oversaturated,” Schottenstein says.
The group will focus in 2018 on building communities with amenities and finishes “that compete with single family homes targeting empty nesters and young professionals.” Its projects include:Powell Grand Communities, 308 ranch homes, suites, and townhomes at Sawmill Parkway and Seldom Seen Road. Northlake Summit, 252 rental units at I-71 and Routes 36/37 near the Tanger Outlet Mall. Jerome Grand, a mixed-use project with 300 apartments and townhomes east of Route 33 and north of Post Rd. in Jerome Township. A 45-acre development of age-restricted and market-rate housing at Home Road and Route 23.
For less affluent renters and buyers, the Affordable Housing Alliance of Central Ohio is leading the charge in 2018 for more inexpensive housing options.
Bruce Luecke, president and CEO of Alliance member Homeport, says 54,000 local households have income of $30,000 or less but are paying more than half of that on housing. “There's definitely a focus on how we bite into that and start to make some progress and reduce that number,” Luecke says.
Proposed strategies include development and acquisition of affordable properties as well as rehabilitation and preservation of existing homes to help keep neighborhoods stable.
“Third and probably the most debated, and this is still being discussed, is there some level of rental assistance to be used very strategically? So for individuals who may be in job-training programs, is there a year or two of rental assistance that can help them get through that and then break through the income barrier? That's one that's still being reviewed and looked at,” Luecke says.
There is also growing need for workforce housing. “These are individuals who wouldn't qualify under a tax credit-type situation. They're making maybe $35,000 a year up to $75,000 a year—good strong jobs. But the cost of housing is rising at twice what the income growth is, so there's a middle ground that's becoming larger and this is an area which we're spending a lot of time looking at and would hope to have a couple projects underway next year to start to meet the needs of that marketplace also,” Luecke says.
Data and Technology
In the dynamic world of wireless, 2018 will mark movement toward what is anticipated to be scary-fast next-generation 5G communications.
Verizon will launch more 4G features for faster speeds as stepping stones to the much-anticipated 5G systems, says Verizon's Great Lakes Market spokesman Steve Van Dinter, laying the groundwork “for our next generation network.” As Verizon begins rolling out 5G technology in a few cities in 2018, it will “open the door for countless new and revolutionary applications, and ignite the Internet of Things era,” he says.
Similarly, AT&T Ohio in 2018 “will be paving the way for the use of ‘small cell' technology,” says President Adam Grzybicki. With data usage growth of 250,000 percent in 10 years and as 5G wireless technology is being developed, deploying small cell, micro wireless facilities far smaller than traditional cell towers “lets us do more with the existing towers in our cities—faster download speeds and improved call quality among other things,” Grzybicki says.
“Small cell deployments will also assist with another big priority of ours in 2018, the FirstNet communications network,” Grzybicki says. “Through a public-private partnership with FirstNet, AT&T will build, operate and maintain a highly secure wireless broadband communications network for Ohio's public safety community at no cost to the state. This network will drive innovation and create an entire system of modernized devices, apps and tools for first responders.”
While telecommunications speed up, early-stage capital for tech startups is drying up, says Tom Walker, president and CEO of Rev1 Ventures. “We recently estimated that our IT-focused companies alone will need $100 million in new capital over the next five years. That's going to continue to be a challenge and needs to be on the mind of leaders across our region,” he says.
Talent is also a big concern. Rev1 continues to promote diversity while working to attract “new and boomerang talent to town,” Walker says. “We look specifically at how we can not only attract diverse leadership to our portfolio, but provide access to entrepreneurship as a career path for more diverse and underserved member of our community.”
Where early stage companies will see substantial growth potential is where they can offer disruptive technologies for established industries, Walker predicts. “Leaders in insurance, banking, healthcare and other fields are assessing the competitive landscape as well as looking for technologies and partnerships to help them ensure a long-term competitive advantage,” he says.
Matt Armstead, executive director of financial accelerator Fintech71, shares Walker's view of the potential for growth in industry-shaking approaches.
“Retail, insurance and financial services startups will see more collaborative opportunities. We will see more innovation and partnering between startups and big companies in the strongest market sectors Columbus has been traditionally known for; in fact, we are already seeing it with Fintech71 and its strategic partnerships with banks and insurance companies across the state,” Armstead says.
Blockchain, artificial intelligence and immersive augmented and virtual reality are the platforms powering the next wave of disruption, Armstead says. “These technologies will create more transparency; they will decentralize the need for existing forms of governance/compliance resulting in highly trusted experiences that will disrupt the status quo in almost every industry,” he says.
“The big exit for CoverMyMeds is evidence that we are carving the way to become a hot startup city that has the making for a few more potential unicorns.”
Nationwide CEO Steve Rasmussen also sees disruption on the horizon with more empowered consumers and tech innovation.
“In financial services, changing regulation and customer-partner expectations for greater personalization and simplicity will continue to reshape the industry forcing product providers to innovate. In property and casualty, growth in the millennial population and emerging technologies will have a significant impact on traditional business models,” Rasmussen says.
Nationwide expects modest economic growth to encourage housing and auto purchases and resulting demand for homeowners, renters, auto and commercial insurance while upward trends in long-term interest rates will ease pressure on insurance products that offer guaranteed returns, he adds.
Sue Zazon, president of Huntington Bank's Central Ohio Region, foresees “a fantastic time to be doing business and growing in the Midwest and central Ohio in particular.” She cites a strong manufacturing base, infrastructure growth and consumer and business confidence as positives along with “a great deal of entrepreneurship.”
Zazon says, “Given all of this, small business lending will continue to be a key priority at Huntington as we look to continue to help those businesses who are the drivers of job growth and continued economic recovery. Beyond that, we'll remain focused on innovating and finding new ways to set Huntington apart appealing to and delivering on our customers' desires for simplicity, fairness, value and transparency.”
Kenny McDonald looks across all sectors of the region and sizes up “a very positive 2018.” The chief economic officer of Columbus 2020 concedes, “Given my role, that sounds self-serving, but I do think we're going to have as good a year as we've had the last few years.”
The technology disruption across all sectors bears watching, he cautions. “It is really starting to take hold so we need to carefully monitor how it's both creating jobs as well as maybe disrupting some of our basic employment.”
McDonald adds, “Two things I would expect in 2018 to continue to accelerate are global investment—it now makes up more than 50 percent of our pipeline—and technology-oriented investment. … It can be logistics, it can be manufacturing, it can be IT, but technology and global companies are the ones that are sort of the drivers of everything right now.”
He expects the year will bring “lots of growth but we'll have lots of disruption at the same time. We need to be ready to work really hard to take advantage of these opportunities and manage the challenges.”
Local economy guru Bill Lafayette is readying his annual “Blue Chip Economic Forecast” for the Columbus Metropolitan Club in early January.
The Columbus MSA is virtually at what many would call full employment, Lafayette says, with a seasonally adjusted average unemployment rate of 4.0 percent. As national employment growth slowed in 2017, the local economy “still managed, the way it looks now, to outperform the national average nicely once again,” he says.
As national predictions call for further labor tightening and more job openings, Lafayette says, “I would certainly expect the same sort of thing around here. The nice thing is that our population growth is greater than the national average, which makes things somewhat better here than they are elsewhere.”
Mary Yost is the editor.