Confidence remains strong for Downtown Columbus residential projects
In 2014, Brad DeHays decided to take on a real estate project that no other developer had pursued over a span of 40 years. He saw the Columbus Municipal Light Plant, originally constructed in the late 1890s, as an opportunity for his real estate development group to expand its footprint in the hot downtown Columbus office market.
At the time, the three-building structure at the west end of Nationwide Boulevard had been vacant since the city of Columbus stopped operating the coal-burning power plant in 1977. Surely, the founder of Connect Real Estate thought, a renovated structure that preserved the building’s unique features would be a draw for creative companies that wanted to make bold statements about their brands.
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It didn’t take long for DeHays to be proven right.
With renovation of a 1903 portion of the structure complete in 2019, Garth’s Auctioneers & Appraisers opened a 16,000-square-foot showroom in the building and Red Architecture & Design took 9,000 square feet for its office. In early 2020, work began to renovate an adjacent seven-story structure that will have 35,000 square feet of office space plus a parking structure.
Three months later, Covid-19 began washing across the country, prompting businesses to rapidly shift to remote work. Suddenly, Downtown Columbus became a ghost town. Not only did DeHays have new office space to lease, he also had a parking structure to fill.
“Major employers not being downtown puts a huge strain on retail, on hotels, but also on the parking assets Downtown,” DeHays says. “Until all the major employers return and business travel starts to pick up, that trend is going to continue.”
DeHays considers Connect Real Estate and its partners on the project, Schiff Capital Group and GBX Group, fortunate, though. While they’re not rolling in parking dough, they have leased 23,000 square feet in the building that will open in the late spring.
“We are comfortable in leasing and maintaining smaller-footprint offices,” DeHays says. “We would not be looking to enter new projects where speculative office space would be above 10,000 square feet until Covid-19 is behind us.”
Residential stays hot
The Capital Crossroads Special Improvement District keeps a master list of downtown projects that are completed, under construction and proposed. Through October, 11 projects were completed, the bulk of them mixed-use residential and retail. The 29 projects under construction mostly include a mix of office, office/retail and retail/residential. The 44 projects that are proposed are dominated by residential but also include office, transportation, parks and retail.
The pace of development over the past three or four years is much higher on average than what the city has seen over the previous 15 years, says Marc Conte, acting executive director of Capital Crossroads and Discovery Special Improvement Districts.
“When I travel to other cities, especially cities of our size, I feel like our Downtown is probably five years behind everybody else,” Conte says. The increased residential activity is good news for a region that needs more housing to keep up with population growth, he says.
Developer Brett Kaufman, CEO of Kaufman Development, says apartment buildings are still viable at the higher rents the city has been seeing in recent years. He’s going full steam ahead with residential projects like the mixed-use building on the site of an International Brotherhood of Electrical Workers post in the Short North and his Gravity 2.0 project in Franklinton.
“The long-term future of Columbus residential remains very strong,” Kaufman said in an email response to questions. “We are seeing huge growth from companies like CoverMyMeds, Root (Insurance), Olive and others. Covid has certainly impacted everyone, but residential has been steady and will continue to be strong for the foreseeable future.”
Rob Vogt of the market analysis firm Vogt Strategic Insights says despite Covid-19, “aggregate absorption of new units has remained fairly strong in the region. However, because of the amount of product released recently, especially in and near Downtown, rent incentives are more common.” The pandemic, he says, also has caused a slowdown in roommates looking for two-bedroom units, but this is likely true across the country.
What about hotels?
Hotels have been hit hard by the pandemic, and just a handful of the proposed projects on Capital Crossroads’ master list include a hospitality component. Projects that got underway before the pandemic include the expansion of Hilton Columbus Downtown to 1,000 rooms and the new AC by Marriott, Moxy, Graduate and Canopy hotels.
Columbus-based Rockbridge, which arranges investments in hotels and is a partner in or outright owner of 76 hotels, is moving forward with its first two Columbus projects—two hotels on the Scioto Peninsula and one on the site of the North Market parking lot. The Peninsula project, which broke ground in September, is one of the city’s most ambitious visions in recent years with plans for 2 million square feet of offices, 1,800 residences, 200,000 square feet of retail space and 400 hotel rooms.
Rockbridge CEO Jim Merkel expects the Scioto Peninsula hotel to break ground in late 2020 or early 2021. Groundbreaking hasn’t been announced for the North Market site, but the project is moving forward.
The population growth trajectory of the city, thoughtful growth strategies by city leaders and the opportunity to be a part of two signature projects have Merkel bullish about his company being a part of Downtown Columbus’ future.
“With hospitality, you will see a slowdown over the coming years,” he says. “But the best sponsors and owners, the best projects will move forward. From our perspective, you don’t look at the here and now. You’re looking at what has created value for us consistently. Our job is to change with an ever-changing world and deliver the product and experiences that people will eventually seek out again.”
Laura Newpoff is a freelance writer.