Foresight 2024 - 5th Edition

2024 | 5TH EDITION

FORESIGHT ANNUAL COLUMBUS OFFICE TENANT REPORT PRESENTED BY COLLIERS | COLUMBUS

TENANT BEHAVIOR AFFECTING THE OFFICE MARKET - p. 6 WHERE ARE BUSINESSES RELOCATING? - p. 12 TOP WORKPLACE TRENDS - p. 18 WHAT CAN WE EXPECT IN 2024? - p. 23

Annual Columbus Office Tenant Report | 1

OUR PURPOSE At Colliers | Columbus, we help accelerate our clients’ success, specializing in industrial, office, retail and investment properties.

Services provided within these specialties include leasing, disposition, tenant and buyer representation, corporate services, property management, facility services, construction management, development, valuation and consultation, in order to add value for our clients.

2 | Annual Columbus Office Tenant Report

TABLE OF CONTENTS

2024

prediction

Look for this icon throughout for insight on 2024 predictions.

Tenant Behavior & Case Studies

06

Interview: From the Market Experts

10

Tenant Migration: Where Are Businesses Relocating?

12

Top Workplace Trends in 2024

18

Interview: Tenant Insights with

Mitsubishi International Food Ingredients

20

What’s to Come What We Can Expect in 2024

23

WHAT’S INSIDE? As the Columbus office market has begun picking up momentum, companies are looking for new ways to accommodate their employees’ changing needs, whether that means downsizing their office spaces or implementing new ways in which they collaborate. As a result, the Columbus office market is evolving, with businesses and real estate professionals working together to find the best path forward. In this report we will explore workplace trends, case studies in tenant behavior, tenant migration patterns, interviews with industry leaders and predictions for what’s to come in Columbus office space in 2024.

Annual Columbus Office Tenant Report | 3

ABOUT THE AUTHORS Reach out to our team with any questions, or for the inside scoop!

Email: columbus@colliers.com

COLLIN FITZGERALD Research Manager Collin leads the research team, working in partnership with all departments at Colliers | Columbus, inculding brokerage, client services, real estate management services, construction and development. He is responsible for understanding emerging trends and helping clients harness the insight to make decisions for their business. Collin combines market data and his commercial real estate expertise with forwardthinking to deliver reports to help clients respond to current conditions and plan for the future.

BROOKE FERMAN Research Analyst Brooke specializes in research capabilities, providing support for the Colliers | Columbus team and their clients. She is responsible for executing data reports, maintaining a commercial property database, reporting quarterly trends, performing data analysis and utilizing statistical information to predict future behavior in the market.

4 | Annual Columbus Office Tenant Report

“

Central Ohio is a wonderful place to be!

The diverse and growing Columbus economy has continued to be attractive to employers and employees.

- Paul Krimm CSM, MBA President, Colliers | Columbus

“

Annual Columbus Office Tenant Report | 5

TENANT BEHAVIOR CASE STUDIES

&

“

This is what we’re passionate about, this is what we do really well. We identify these office buildings which are candidly functionally obsolete and we breathe new life into them.

- Phil Aftuck The Bernstein Companies Columbus Dispatch

“

6 | Annual Columbus Office Tenant Report

The Trend: office conversions The workplace is in one of its biggest evolutions in decades, with less office space necessary and higher quality space valued. During this time, property owners with vacancy rates below 50% have fewer options to stay competitive in the market. Several conversions have been reported, as many developers have decided to repurpose aging office buildings into apartments as the

remote and/or hybrid work trend has increased vacancy rates for commercial space across American cities.

In addition to conversions, there are also numerous building owners who have started upgrading their amenities, common areas and office spaces in their Class B buildings to attract more tenants looking for quality space.

Case Study #1: CONTINENTAL CENTRE Bernstein Cos., who purchased the Continental Centre in 2021 for $11.9 million, announced in 2023 that they will convert the historic 26-floor building into apartments, with retail spaces on the ground floor. Phil Aftuck, Director of Investments for Bernstein Cos., stated that the building works particularly well for conversion due to its abundance of windows and floor plate structure.

With conversions becoming more common, along with the housing crisis that many cities are facing, developers are receiving tax credits for conversion projects.

Bernstein Cos. received a $10 million tax credit for this project, which will cost over $100 million.

ADDRESS

150 E Gay St

SIZE

477,477 SF

Case Study #2: 7575 HUNTINGTON PARK DR Tempus Realty Partners purchased the 129,826 SF building in 2021 for $7 million and decided to turn around the Class B building, investing $2 million into renovations. The investment went toward revitalizing the lobby and adding a new amenity floor, transforming it into a Class A building. They also converted it from a single-user building to a multi-tenant building. With a goal of attracting tenants to a newly renovated suburban office building, the upgrades have allowed building ownership and management to begin leasing the vacant tenant spaces.

ADDRESS

SIZE

7575 Huntington Park Dr

Sources: Columbus Business First, GlobeSt, Costar

129,826 SF

Annual Columbus Office Tenant Report | 7

The Trend: Workplace reintegration This strategic initiative marks a significant milestone, as businesses navigate the complexities of returning to physical office spaces. With a focus on fostering collaboration, enhancing productivity and revitalizing corporate culture, workplace reintegration represents a pivotal opportunity for companies to adapt to the ever-changing landscape of modern work environments.

Between hybrid, flexible and decentralized, employees want a hybrid approach to work.

Recent research conducted by IWG says that six in ten workers want to return to the office when employers allow it. However, the report also states that half of them would leave their jobs if required to work five days a week in the office. Another study by Addeco shows 74% of people now want a mix of office-based and remote working. They want to spend 51% of their working time at the office and 49% working remotely.

This year, 90% of companies plan to implement return-

to-office policies by the end of 2024, according to an August 2023 report from Resume Builder. While some companies are taking the approach to decrease their portfolio size to adjust to their new employee schedules of hybrid work, many companies are using new performance metrics such as utilization rates and employee sentiment instead of older metrics, like square feet per seat, to make space decisions. Companies are also looking towards ergonomic decisions to improve productivity. The Washington State Department of Labor and Industries found a 25% increase in productivity from implementing ergonomic solutions at work after their review of 250 ergonomic case studies. Some of the solutions are adjustable chairs and desks to help with posture or workplace environment solutions such as lighting that causes less glare, temperature regulation and noise control. This is leading to new-looking office spaces with open concepts and more collaborative spaces.

Case Study #1: HUNTINGTON BANK Huntington Bank was one of the first larger companies in Columbus to start a major shift of bringing employees back to the office. In 2023, they started the year by asking workers to come in to the office at least three days per week. They were quoted saying they wanted other Columbus companies to follow their same approach. CEO Steve Steinour said, “The Columbus Partnership has made downtown vitality a priority, and success is essential or more than a dozen years of work by downtown employers and planners could be lost.” Huntington is facilitating the return of its employees to the office, recognizing that this move not only enhances their well-being, but also contributes to the vitality of the city and fosters collaboration with neighboring businesses.

ADDRESS

17 S. High St

SIZE

45,221 SF

CURRENT # OF EMPLOYEES

20,000+ total, with 3,645 in Central Ohio.

Case Study #2: NATIONWIDE INSURANCE During the height of the pandemic, Nationwide initially went fully remote before starting to plan their next steps to return to the office. They made the decision to renovate and reimagine their office space, with modifications that included an open and flexible floor plan where employees could connect and additional amenities, such as an updated fitness center filled with natural light. They also created more welcoming space for visitors while providing private space where employees could make a phone call or work independently. Kieran Sherry, Senior Vice President, Corporate Real Estate for Nationwide said, “It’s really geared mostly toward the hybrid population. They do spend time in the office. They do want to bring people together. They want to bring their teams together. They want an opportunity to have an experience in the space.”

ADDRESS

One Nationwide Plaza

SIZE

993,335 SF

CURRENT # OF EMPLOYEES

26,000+ total, with 11,000 in Central Ohio.

Sources: Columbus Dispatch, Columbus Business first, Nationwide Insurance, CNBC, Costar

WHAT’S IN STORE FOR 2024?

2024

prediction

MAJOR TENANTS IN 2024 At the time of this publication, there were over 10 tenants in the market requiring 20,000 square feet or more.

Over half of these large users are financial, healthcare, insurance and technology companies, so we predict these industries to steer activity in 2024.

Of those 10 tenants, 5 are looking for over 30,000 square feet of space in the Central Business District (CBD), Dublin, East and Hilliard. We foresee multiple large leases will be signed in suburban submarkets this year, specifically on the West side of the Columbus market. Despite the low sales volume at the end of the year, there are a few undisclosed users’ plans to purchase office properties in 2024, some due to potential investment on foreclosed properties whose debt has matured while others are tenants looking to buy new space.

Annual Columbus Office Tenant Report | 9

From The Market Experts Grant Horton, Brokerage Associate (left) Taylor Fanté, CCIM, Vice President (right) Are most tenants looking in one market or multiple? What is their determining factor in choosing a location?

With office availability at 22% and 1.8M SF of sublease on the market, there are plenty of great opportunities out there and many companies will consider multiple submarkets to find the right space. A location typically needs to be easily accessible to employees and clients, but also in a building or neighborhood that offers desirable amenities. For companies that are looking for the newest and best spaces, exciting developments are being constructed all over the city in areas including Upper Arlington, Dublin, Easton, and Franklinton. In these cases, it’s common to see two properties in two different corners of the city competing for the same tenant, especially when the property is part of a lively and walkable neighborhood with restaurants, bars, shopping, and other amenities that attract employees to the office.

- TF Have you noticed any trends relating to lease terms or financials such as lease rates or TI? Construction costs continue to be a challenge, especially considering the large amount of secondgeneration space available needing improvements.

Move-in ready and updated space is increasingly popular with tenants looking to avoid build-out processes that can be long and intensive. When it comes to some of our more challenging vacancies, we have been successful in pre-finishing suites on a speculative basis to win deals. Sometimes a little bit goes a long way and upgrading the lighting, flooring, and paint can transform a suite so that tenants can envision themselves operating out of the space.

Landlords are also coming to the table with higher tenant improvement allowances and rent abatements to compete for tenants, which helps bolster occupancy, but also decreases net effective rents.

- TF

Taylor Fanté, CCIM and Grant Horton are members of the Office Services Group at Colliers | Columbus. They specialize in the leasing and sale of office space in Central Ohio. Owners, investors, and tenants rely on them and their office brokerage team for thorough market knowledge and honest advice to help create solutions for their real estate needs. Their concentration on the office market provides them with extensive knowledge on tenant behavior and current trends.

New mixed-use developments continue to lead activity in the office sector. What are other landlords doing to compete with these properties?

We’re seeing many owners invest in expanding amenity packages and modernizing lobbies and common areas to remain competitive in today’s market. Some are adding new amenities, including anything from outdoor workspaces enabled with wi-fi to lounge space in the lobby to full-scale amenity floors. For example, 65 E State is undergoing lobby renovations and converting a floorplate into a tenant lounge that will offer a variety of spaces to work and socialize with high-top tables, booths, café and soft seating options, private conference rooms for meetings, a training facility, fitness center, and a golf-simulator.

- TF What do you predict will be the next big trend in space design for office users?

I anticipate wellness-centric and employee-focused design along with an emphasis on sustainability, collaboration, and inclusivity. As companies whose employees work from home return to physical office space after a period of remote work, it is going to be imperative that office space is designed with the employee in mind. An increased focus on employee well-being is crucial to creating a productive workspace.

Tenants can benefit from a collaborative, inclusive layout, I also believe it will be a ‘key’ to a seamless shift back into in-person, human-to-human work, and a driver of recruiting top-tier talent.

- GH

“

Office space in 2024 is uniquely positioned to provide great opportunities to tenants searching for it.

Landlords are competing for a limited number of deals in the market. This is a time when landlords are creatively finding solutions for prospective tenants to win deals. Landlords also have unique opportunities to sell their buildings as we anticipate interest rates to decline after their peak last year and new properties coming to market in 2024. 2024 is slated to be a great year in the office market!

Where do you see the working-from-home trend going in 2024 and how will it affect office space, tenants and landlords?

The trend seen over the last few years is that smaller regional companies were able to retain their workforce and remain in the office, while larger corporations allowed for more flexible work-from-home options and have now either re-entered in-person work or are considering coming back to the office. In short, work-from-home is here to stay – but in what capacity?

Many companies have adopted a hybrid model, having employees work 1-2 days at home and 3-4 days in the office. Companies that have shifted back into in-person work are seeing the benefits of increased collaboration, increased speed, and efficiencies, as well as identifying and tackling problems as they arise.

Although many tenants are returning to the office there is still a large portion that will ride out workfrom-home as long as they can.

Landlords will have to be innovative by providing enticing, creative solutions that attract tenants to their buildings and lead to new deals being signed. Tenants must consider what their goals of being in the office are and how a specific building can best position them to achieve those goals. Are they experiencing rapid growth and need lower-cost office space in a highvacancy building with expansion rights? Or are they an established Fortune 500 looking to obtain Class A office space in a building full of amenities to attract top-tier talent? Identifying what position a company is in and not only showing them suites that work but buildings that align with their goals will be more important than ever.

- GH

“

- Grant Horton

Brokerage Associate, Colliers | Columbus

Conversions in office space are trending. How does this affect landlords?

Not every older building is going to be a good candidate for office-to-residential conversions. For the properties that have become obsolete enough and fit the structural characteristics needed to split the floorplates up into smaller units, converting into residential and mixed-use may be the best option if the numbers work. Capitol Square has many office buildings that were built in the 70s and 80s and several interesting adaptive reuse projects are happening right now. For example, the PNC Building is getting a major overhaul from a 24-story office tower into a mixed-use tower that will add 100+ residential units, ground floor retail, restaurants, 170K SF of upgraded office, a public park, and outdoor green spaces. These types of projects improve the health of the office market by removing some of the least functional space from the market and boost the overall economy by adding much-needed housing stock and other amenities downtown.

- TF

TENANT MIGRATION Where are Businesses Relocating?

Tenants are consistently relocating their office space to better fit their needs. By using a points system based on signed square feet, we are able to track where office users are coming and going throughout the city. We also analyzed each of these transactions in detail to compile statistics, identify trends and make predictions for future tenant behavior. Keep reading to find out more information on tenant migration in the Columbus office market.

2022 Leases Signed - 54 Signed SF - 209,269 SF Average TI - $19.23 Average Term - 47 months

2022 Total:

2023 Total:

Leases Signed - 265 Signed SF - 1,533,523 SF Average TI - $19.89 Average Term - 52.5 months

Leases Signed - 266 Signed SF - 1,635,499 SF Average TI - $23.09 Average Term - 53 months

Healthcare and Law replaced Financial Services and Non-Profit from 2022.

Highest Average Term Length (in months)

by Submarket: 62

63

71

months

months

months

Polaris

The first three quarters of 2023 had an encouraging start as number of leases signed reached 208, a 6.5% increase from 2022, but activity slowed in the last quarter with 58 leases signed, down 17% from 2022. Tenant improvement (TI) allowance increased year-over-year as we are still seeing a trend of higher TI for construction costs and landlords giving more incentives, while average lease term remained around the same from 2022.

68

months

North Central

Q4

Leases Signed - 58 Signed SF - 351,507 SF Average TI - $24.07 Average Term - 57 months

63

months

Education

Q3

Leases Signed - 75 Signed SF - 361,391 SF Average TI - $21.48 Average Term - 46 months

59

months

Easton

Leases Signed - 70 Signed SF - 345,941 SF Average TI - $17.68 Average Term - 56 months

Q2

Leases Signed - 66 Signed SF - 559,151 SF Average TI - $20.62 Average Term - 53 months

Highest Average Term Length (in months)

by Industry:

Law

Leases Signed - 69 Signed SF - 476,944 SF Average TI - $22.77 Average Term - 53 months

Q1

Leases Signed - 67 Signed SF - 363,450 SF Average TI - $27.37 Average Term - 57 months

Lease Length:

Healthcare

Leases Signed - 72 Signed SF - 501,369 SF Average TI - $19.90 Average Term - 54 months

2023

Polaris remained in the top three while Easton and North Central replaced Arlington/ Grandview and Hilliard from 2022.

The number of leases signed stayed consistent from 2022 to 2023, while the total square feet signed increased by 6.3%. Average TI allowances did increase, while average term length remained around the same.

TI Allowance*: Highest Average TI Allowance by Industry: Law

$33.60

Insurance

$31.67

Healthcare

$27.64

Law, Insurance and Healthcare replaced Non-Profit, Financial Services and Education from 2022.

Highest Average TI Allowance by Submarket: CBD

$38.05

East

$32.44

Polaris

$32.73

CBD and Polaris remained in the top three while East replaced Arlington/Grandview from 2022. * The TI (tenant improvement) allowance is the amount that the landlord will spend for the tenant to build out their space.

Leased Square Feet: Highest Total SF Signed by Industry:

Healthcare

Business Services

Law

398,508 SF

210,404 SF

151,370 SF

Business Services remained in the top three while Healthcare and Law replaced Technology and Retail from 2022.

Highest Total SF Signed by Submarket:

Dublin

CBD

Worthington

537,808 SF

337,294 SF

251,355 SF

CBD and Dublin remained in the top three while Worthington replaced Westerville from 2022.

TENANT MIGRATION HEAT MAP Represents the number of tenants that were new to the submarket

Dublin | 101 points 19 tenants (125,859 SF) 47 tenants (323,108 SF) 1 tenant (4,329 SF)

Polaris | 41 points 10 tenants (102,705 SF) 12 tenants (69,230 SF) 0 tenants (0 SF)

Represents the number of tenants that moved within the submarket

Worthington | 71 points 13 tenants (84,943 SF) 43 tenants (257,626 SF) 4 tenants (24,491 SF)

Westerville | 27 points 8 tenants (34,329 SF) 17 tenants (90,810 SF) 6 tenants (58,828 SF)

Gahanna/Airport | 16 points

Arlington/Grandview | 8 points

7 tenants (25,049 SF) 6 tenants (24,126 SF) 0 tenants (0 SF)

4 tenants (17,373 SF) 6 tenants (26,082 SF) 6 tenants (24,154 SF)

Represents the number of tenants that left the submarket

CBD | 69 points 9 tenants (28,135 SF) 36 tenants (315,513 SF) 3 tenants (6,393 SF)

East | 17 points 4 tenants (7,068 SF) 10 tenants (44,020 SF) 0 tenants (0 SF)

Hilliard | 8 points 6 tenants (28,513 SF) 1 tenant (3,565 SF) 0 tenants (0 SF)

New Albany | 1 point

Powell | 0 points

1 tenant (2,667 SF) 2 tenants (5,695 SF) 2 tenants (4,857 SF)

0 tenants (0 SF) 0 tenants (0 SF) 0 tenants (0 SF)

0 tenants (0 SF) 0 tenant (0 SF) 1 tenant (2,626 SF)

Southeast | -2 point

North Central | -2 points

Southwest | -1 point 1 tenant (1,800 SF) 1 tenant (5,000 SF) 1 tenant (21,987 SF)

0 tenants (0 SF) 0 tenants (0 SF) 1 tenant (6,266 SF)

Easton | -6 points 0 tenants (0 SF) 1 tenant (7,914 SF) 5 tenants (24,244 SF)

Delaware | -1 point

0 tenants (0 SF) 1 tenant (8,931 SF) 2 tenants (16,952 SF)

Delaware

Powell Polaris

Worthington Dublin

Westerville New Albany Arlington/ Grandview

North Central

Easton

Gahanna/ Airport

Hilliard

CBD

East

Southwest Southeast

50,000 SF and up ..............................5 points 20,000 SF to 49,999 SF...................... 4 points 10,000 SF to 19,999 SF.......................3 points 5,000 SF to 9,999 SF.......................... 2 points 0 SF to 4,999 SF................................. 1 point 0 SF to -4,999 SF................................ -1 point -5,000 SF to -9,999 SF....................... -2 points -10,000 SF to -19,999 SF....................-3 points -20,000 SF to -49,999 SF................... -4 points -50,000 SF and below ........................-5 points

Red represents movement to the submarket, while blue represents movement from the submarket.

-

+

Migration Key

Arrows represent trending tenant movement Represents the hottest submarket of 2023

DEEP DIVE: TENANT MIGRATION TRENDS From 2023

Over half of the tenants that vacated space in Dublin signed for space elsewhere in Dublin.

All tenants in the Polaris submarket whose leases expired in 2023 stayed in the Polaris submarket.

1/2

of the largest leases signed in 2023 were signed by Healthcare, Government and Logistics/ Transportation tenants.

Over half of tenants that vacated space in CBD signed for space elsewhere in CBD. 40% of new tenants that entered the market in 2023 leased space in CBD or Dublin.

1/4

of tenants that left space in the Arlington/ Grandview submarket migrated to Hilliard.

1/3

tenants that leased their first Central 1/4 ofOhio location did so in Dublin.

of tenants that signed in CBD were in the Law industry.

The most popular submarket for Law tenants was the CBD. The most popular submarket for Engineering/Manufacturing tenants was Worthington.

The most popular submarket for Business Services tenants was Dublin. leases with the longest lease terms were signed by 1/2 ofHealthcare tenants.

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51%

of leases signed with the highest TI allowances were tenants in the Business Services and Healthcare industries.

71%

of leases over 5 years were signed in CBD, Dublin, Polaris or Worthington.

2024

WHAT TO LOOK FOR IN 2024 Predictions in Tenant Behavior

TI Allowance:

Lease Term:

prediction

Average TI allowance will likely continue climbing toward $30 PSF due to a few factors. The current dynamic office market requires spaces to shift from traditional office spaces and toward tenants’ needs.

Nearly 35% of current tenants are from two of the three leading TI allowance industries, Healthcare and Law, and due to market demand, these will continue to grow.

The average lease term length for 2024 is likely to remain under 5 years. Influenced by the shorter, more flexible leases that are becomming more common in the postpandemic office sector, tenants are also more willing to move around to downsize space or be nearer to better amenities.

Leased SF:

Industry:

The office market can anticipate a steady pace of activity throughout 2024.

Education, Finance and Healthcare companies will have a major effect on the office sector in 2024.

The number of tenants in the market fluctuated over the past year. There were 140 tenants at the start of 2023, decreasing to 116 in August 2023 before ending the year at 114 in December 2023.

With the number of tenants in the market remaining steady between 110-130 tenants through the second half of 2023, we predict that activity will continue to remain steady around 125 tenants in the market in 2024.

These industry types account for nearly 1/3 of tenants currently in the market and over 394,000 SF collectively.

Of the largest tenants in the market (looking for 20,000 SF or more), most of them are in these industries.

Migration Prediction 1: Over the past 12 months demand in the Northwest/West has increased by 19%. We predict that a large portion of leases in 2024 will occur specifically in the Dublin submarket.

27

tenants representing 252,000 total SF are searching in Dublin.

3

tenants representing 30,000 SF and above are searching in Dublin and Hilliard.

1

tenant representing 30,000 total SF is searching in Hilliard.

Migration Prediction 2: There will be continued demand in the CBD in 2024, with tenants currently in the CBD moving within the submarket and new tenants entering the CBD from other submarkets.

18

tenants representing 238,000 total SF are searching in the CBD. Annual Columbus Office Tenant Report | 17

2024

prediction

workplace trends in 2024

The way we work has been changing rapidly in recent years, with the pandemic and technology being the driving forces behind these shifts. The structure and way traditional 9-to-5 jobs are being performed has changed over the past few years due to the hybrid model. It’s essential for employers to adapt to these trends to improve their company culture, retain employees and avoid complacency in the workplace. Looking ahead to 2024, we can expect to see even further development of these trends, which will continue to shape the future of work.

Trend 1: Right Sizing Office space

Trend 2: employee experience

These anticipated trends are closely linked to tenants adapting to hybrid or new working situations. Due to the adaptation of a hybrid workforce by many companies, efficiency is the key when it comes to their office space. As a result, tenants will display caution regarding suite sizes, focusing on the practicality and flexibility of the space instead. Additionally, companies will downsize the amount of space needed, eliminating unnecessary space, and reducing expenses. Many major companies in Central Ohio are following this trend. L Brands has been exploring options to rightsize their office space to adapt to changing workplace dynamics. With a focus on flexibility and efficiency, they are reassessing their office layouts and square footage requirements to support a hybrid work model and enhance employee collaboration. In addition, Huntington Bank, based in Columbus, has been strategically right-sizing its office space to reflect shifting employee work preferences and optimize operational efficiency. By consolidating office locations and implementing flexible work policies, Huntington aims to create a more agile and cost-effective workplace environment.

Organizations understand that the employee experience is key to developing retention and job satisfaction. Companies are looking for creative and resourceful ways to offer in-person collaboration and participation, especially as a lot of organizations have adopted a hybrid work model. Some examples include creating inviting common spaces, adding creative amenities, or hosting building events such as weekly food trucks or lobby festivities. Many offices are now being designed for collaboration with open think areas to allow employees and clients a richer experience.

Organizations are creating office environments that support work/life balance, employee wellness, personal growth, and professional development in hopes to retain employees and make sure they are satisfied with their workspace.

“

The current workplace trends create a need for experienced professionals assisting throughout the construction process, now more than ever. Designing and constructing for value and efficiency will enable opportunities for tenants and landlords to capitalize in the market.”

“

- Trey Hafer Senior Project Manager, Colliers | Columbus

trend 3: Sustainable working practices Another anticipated workplace trend in 2024 will be the implementation of sustainable workplace practices. Many tenants value the reduction of environmental impact in the workplace, opting for more sustainable practices by encouraging waste reduction, recycling and re-use of resources. This trend also includes educating property owners on improved cost-saving opportunities, including opting for more natural lighting in tenant workspaces, therefore decreasing demand for artificial light and saving on electricity costs.

trend 4: multi-functional workspaces With more companies returning to the office on a full-time or hybrid basis, we will see a shift towards traditional offices or private ‘pods’ for noise reduction in lieu of open office concept throughout. For companies that are still mostly remote or heavy hybrid, we expect more ‘hot-desking’, where employees claim a different open workspace every day rather than maintaining an assigned seat. Lastly, we anticipate increased rearrangeable workplace furniture, such as easy-to-maneuver tables and chairs.

trend 5: AI Technology Artificial intelligence (AI), particularly Generative AI (GenAI), is revolutionizing workplaces and business alike. Some AI tools are as simple as occupancy sensors that detect the presence of people in a room/area and adjust lighting, temperature and ventilation accordingly. Gen AI tools are rapidly advancing to provide efficient solutions for most tasks and fields of work. Despite the advancement of AI, there are limitations that will still require human intervention, innovation and creativity.

These expected trends focus on workplace changes that impact the way we conduct business and our day-to-day workplace interactions. These trends will also assist companies in modifying their work environments to attract and retain top talent that may otherwise be lost to businesses that have adapted to the evolving workplace.

Annual Columbus Office Tenant Report | 19

TENANT INSIGHTS

mark herd

Vice President of Logistics, Mitsubishi International Food Ingredients Mitsubishi International Food Ingredients recently signed a 14,196 SF lease at 5475 Rings Road in Dublin, leaving a 11,000 SF space at another building in the Dublin submarket.

Can you give us a brief overview of what Mitsubishi International Food Ingredients does and what your specific role looks like?

Mitsubishi International Food Ingredients is a food company/distributor that sells ingredients to food and pharmaceutical companies throughout North America.

As Vice President of Logistics, I am responsible for MIFI’s supply chain, which involves 18 warehouses, transportation companies that make our deliveries and ocean freight.

What factors influenced your decision to move offices and expand your office footprint from 11,000 SF to 14,000 SF? The simple answer is – because we could.

The existing office space at Atrium II (our new location) allowed for the cut off to occur at 14k and for our new office to flow better. This expansion will allow our projected growth over the next 5 years through both organic growth and acquisitions.

What drew you to keep your office in the Dublin area?

There are multiple reasons for having the office in Dublin. The business was originally part of the Ashland Distribution group in Dublin and many of our current employees came over to MIFI from Ashland. They were used to going to work here in Dublin so it made sense.

As we reviewed the places that our employees live, Dublin was a central location with easy freeway access.

20 | Annual Columbus Office Tenant Report

Additionally, we hold several large meetings per year, and Dublin provides both hotels and restaurants to meet our needs.

What were you looking for in a space?

Were you looking for an open office for collaboration, private offices and meeting rooms, or a mixture of all of the above?

To be honest, we were looking for an upgrade from our previous space. We wanted a building with some ‘WOW factor’ for our employees. A place that they would be proud to bring suppliers, customers and their family to. We wanted an office space that was open and had space to grow. It also needed to have areas for the employees to huddle or take breaks. We were also looking and hoping for some new amenities, such as a gym and a café.

In your opinion, do you think we will see a major shift back to employers bringing employees back into the office or will the current hybrid and work from home trends continue to grow.

That is a difficult question. Majority of the data states that employees are more productive in an office setting. With that being said, I think MIFI will continue to provide a hybrid work environment. We are finding that during the interview process the “Work From Home” flexibility is important to new candidates.

How many people are working in the office at a time? Do you feel like your new office space will help team members work more cohesively?

We have anywhere from 35-40 employees in the office on any given day. The new office allows for training of new employees, a great amount of space in the kitchen for celebrations and huddle rooms if you need to have a quiet conversation on the phone. We now have room for the employees to take breaks together and work on fun projects. We even have a “jig saw puzzle” table that employees stop by on their breaks and work on the puzzle of the week.

What was most important for your employees when choosing office space?

The key for our employees has been the open view of the windows. We get a lot of sunlight, which everyone enjoys. We even have plants in the office now.

Why is it so important for your company to be innovative leaders, deliver beyond expectations and operate to meet the highest standards?

Our customers have many choices of who can service their ingredients needs.

We need to be able to provide them with new and innovative ingredients for their future products, along with providing seamless service. Our customers’ time is very limited and many have cut back on staff, so we need to provide them with the path of least resistance.

Where do you see your company in 3-5 years?

We will continue to be a leader in the ingredients marketplace for food and pharmaceuticals. Within that time frame, MIFI will have expanded through acquisitions that fix our model for growth.

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We wanted a building with some ‘WOW factor’ for our employees. A place that they would be proud to bring suppliers, customers and their family to.

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- Mark Herd Mitsubishi International Food Ingredients

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I think the hybrid model will continue to become the standard as time passes.

There may be different requirements for various roles and teams, but many employees have come to value and expect the flexibility that hybrid work offers, even if it is just one or two days per week.

As leases continue to expire, companies will most likely continue to trade-up for higher quality modernized buildings with amenities that attract employees to the office.

- Taylor Fanté CCIM Vice President, Colliers | Columbus

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2024

prediction

WHAT’S TO COME As technology continues to advance and remote and hybrid work becomes more common, the future of office space in the Columbus market is evolving. While traditional office spaces may not be as in-demand as they once were, there is still a need for collaborative workspaces and shared office spaces. We expect TI to continue to increase as more tenants require major changes to how their office spaces will function moving forward.

Building owners are receiving increased pressure from debtors, especially Class B and C buildings with high vacancy, as they are starting to struggle to keep up with payments with the decrease in revenue.

This year will be extremely informative as we see how owners handle this challenge. In addition, 2024 will bring more understanding to which buildings are being converted to help the housing crisis, which will ultimately decrease the vacancy rate in the market. Over the past year there has been an increase in the demand for move-in ready spaces, which in turn has created a significant decrease in the amount of sublease space. We are seeing this trend often in the suburban submarkets as more companies turn their sights to suburban buildings with more amenities surrounding the buildings, along with lower asking rates.

Shared office spaces and flexible workspaces are also becoming increasingly popular. These spaces allow companies to rent out office space on a shortterm basis, giving them the flexibility to scale up or down as needed. This trend is expected to continue, with a projected 13% annual growth rate for flexible workspaces in the Columbus market through 2024. However, it’s important to note that traditional office spaces are not obsolete. While some companies have shifted towards remote work, there are still many industries that require in-person collaboration and meetings, as well as a newer trend of companies starting to require employees to come into the office. As a result, there continues to be a demand for office space in some capacity as we continue to see a positive trend in leasing velocity that we predict will continue throughout 2024.

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FORESIGHT CONTACT OUR TEAM TODAY: Colliers Greater Columbus Region Two Miranova Place | Suite 900 Columbus, OH 43215 +1 614 436 9800