Sentiments are clearly positive for real estate in 2014 according to national and local trend data.  Business prospects are up and equity is more available.  For sale housing is in recovery, especially for the single family home.

The 2014 Real Estate Trends in Central Ohio were presented to ULI members and guests November 20 at the Porter Wright offices.  Both national and local data (bulleted below) is promising.  “Overall, things are more positive than last year,” summarized Presenter Jung Kim, Columbus 2020.  “The hope is back.  Opportunity is visible and achievable.”—Interview participant

Panelist discussion

Central Ohio real estate market trends were discussed by a panel of local industry leaders.  These included:  Matt Stavroff, President, Stavroff Interests Inc., Michael Simpson, Vice President of Brokerage, NAI Ohio Equities, and Tom Carter, President, Real Estate Development Advisors.  The discussion was moderated by Robert Vogt, Partner, Vogt Santer Insights.

On the question of how city governments should respond to developers, Carter and Simpson shared positive experiences working with the cities of Worthington, Columbus, Whitehall and Bexley.  In contrast, Stavroff expressed some concern: “Compared to 1992, we spend more time lobbying government officials than serving our clients.  We need to get better at serving the customer.”

On the question of what kinds of programs governments can create to help with aging areas, the panel as a whole didn’t think much could be done unless a specific improvement like a bridge would need to be created.  “You’ve got to fix the schools,” Carter stated.  Simpson brought up the point that sometimes values have to fall to create opportunity.

The panelists also discussed Hollywood Casino Columbus’ impact on the West Side of Columbus.  They agreed that the impact on real estate has not been positive so far.  “There has not been a boomerang effect,” Simpson stated. “Maybe the benefit is just the tax benefit.  There has not been a single McDonald’s, etc. built around it.”

The panel also discussed apartment building downtown, cautioning that this is an area that could be overbuilt.  Vogt stated, “I see a coming together of demographics.  Generation Y in their 20s and 30s and baby boomers are both going towards apartments.  I see it as still growing at a rapid rate.”

Panelists also agreed that an upcoming trend may be for smaller, 2,000-square foot homes.

To help fix problems in Columbus, panelists agreed that a solution has to start with Columbus schools.  Franklinton is showing promise as a new hot neighborhood.

National Trends

Trends from the national 2014 Real Estate Trends report include:

• The top five issues for real estate in 2014 include job growth, interest rates, income and wage growth, construction costs, and vacancy rates.
• The top business prospects by industry include commercial/ multifamily developers, real estate broker, and residential homebuilders.  The single family home builder is now third in this category.  “Things are looking brighter for the single family home,” Kim stated.
• Equity is expected to be more available and foreign capital will be coming in—more so than REITS.
• In the category of debt availability, securitized lenders/CMBS, commercial banks, and insurance companies are at the top.
• For underwriting standards, “the standards are less rigorous in 2014 than in previous years.  Expect this to loosen up capital,” Kim stated.
• Prospects in the commercial/ multifamily sector show warehousing/industry on top, followed by moderate income apartments and limited service hotels.  The suburban office sectors was at the bottom, showing signs of continued struggles.
• For residential prospects, in town housing along with senior housing was strong with golf course/ leisure at the bottom.
• Niche sector prospects include urban/mixed use properties and mixed use town centers.
• Industry is strong because of e-commerce, re-shoring of manufacturing, and the Panama Canal expansion as drivers of industrial space.
• “The multifamily boom may be coming to an end, but there is still strength in moderate-income apartments,” Kim stated.

Central Ohio Trends

Locally, Central Ohio trends are on par with national trends for positive growth.  Kim reported local results from an online survey that was administered by the ULI to key leaders in real estate development.  There were 74 respondents from professional service firms, private developers and others.  Most of the respondents came from the office, retail, and rental housing sectors.

Central Ohio submarkets and hot topics

• New Albany is still #1, followed by Polaris, Dublin, Easton and downtown.  All are going up in terms of prospects.
• The north side of Columbus grew a lot, and people are finding opportunity there.
• Dublin shows office opportunity.
• Downtown Columbus now seems well established and not just a niche.
• Easton still has a lot of available land for office development.
• How does Central Ohio compare to the national trends? “Central Ohio is performing well, showing moderate growth,” Kim stated.  Central Ohio’s greatest need according to survey respondents is in economic growth (56%) and better public transportation.
• Public Private Partnerships (PPPs)
• 84% of survey respondents believe that large scale, site specific PPPs are becoming more common.  Most thought the private sector will take on a greater role.

The complete report can be found here.

-Authored by Mellody Melville, Freelance Writer, Bexley