Columbus Ohio Multifamily Market Analysis Q3 2023

The Columbus apartment market is currently experiencing a period of shifting dynamics. While demand showed some acceleration in the second quarter of 2023, it’s struggling to keep pace with the elevated level of deliveries. This imbalance has led to an increase in vacancy rates and a deceleration in rent growth. However, Columbus remains a region of interest to multifamily investors, thanks to its robust population growth and major corporate investments.

  • Small 2 & 3 Star assets dominate recent trading.
  • Only a few deals exceeded $20 million in the first half of the year.
  • Dublin is a highly sought-after rental community with strong market activity.
  • The largest deal in 2023 was Sycamore Ridge in Dublin, sold for around $53 million. Sycamore Ridge consists of 35 two-story garden-style buildings with a 94% occupancy rate at the time of sale.
  • In May, Sawmill Ridge in Dublin traded for $29 million.  The pricing on the Sawmill Ridge deal was about 19% below similar properties in 2021 and early 2022, at $151,000/unit.
  • The top sale outside of Dublin was the Townhomes at Bexley, closing at $23.5 million in May at a 6.67% cap rate.
  • Economic uncertainty and softening market fundamentals may impact deal volume for the remainder of the year.
  • Many private investors delayed asset acquisitions in the first half of 2023, contributing to weak quarterly volumes.
  • The Columbus apartment market is experiencing a slowdown in demand and an excess of deliveries.
  • Supply has surpassed demand for five consecutive quarters.
  • Net absorption in Columbus over the past year was 1,600 units, significantly below pre-pandemic levels.
  • Vacancy rates increased by more than 200 basis points year over year, reaching 7.1%.
  • Downtown Columbus has seen a surge in demand, with 2.8% of submarket inventory representing annual demand.
  • Rent growth in Columbus is decelerating but remains higher than the national average, with 3.6% growth compared to the national rate of 2.3% in the first half of 2023.
  • Construction of apartments in Columbus has been near-record levels, with over 10,000 units underway, but it’s expected to slow by 2025.
  • Investment activity in the market has decreased significantly in the first half of 2023, with just over $120 million in transactions.  Just 50 properties traded hands during that time, half of the average number of deals over the same period in the past five years.
  • Population growth and major company investments in Columbus support a positive outlook for the multifamily market.
  • Housing needs in the region could reach 19,000 units per year based on historical data and job growth.
  • A slowdown in construction in the years ahead may lead to tighter market conditions in the future.

Source: Costar Group