The Columbus multifamily market experienced a mix of stabilizing trends and challenges in 2024. While vacancy rates tightened to 8.2%, rent growth remained steady at 2.7%, supported by a slowdown in new supply. Despite a softening in high-end unit absorption, mid-priced units saw strong demand, driven by younger renters and job market strength. However, transaction volume declined, influenced by rising interest rates and slowing rent increases. Southern and Northeast Columbus were key demand drivers, with substantial absorption attributed to logistics and advanced manufacturing investments. The market outlook is cautiously optimistic, with a tighter supply and consistent demand likely to enhance stability in 2025.
Vacancy Rate: Improvement Through Strong Absorption: Vacancy rates tightened to 8.2% in 2024, reflecting a 30-basis-point decrease since late 2023. This improvement was supported by strong absorption and a slowdown in deliveries, particularly in mid-priced units.
Strong Absorption, Slower Supply: Columbus saw 6,103 units delivered and 5,859 units absorbed in the past year. Deliveries were 16% below pre-pandemic levels, while net absorption increased 17%, reflecting strong market performance.
Demand for Mid-Priced Units: Mid-priced (3-star) units saw significant demand, driven by younger renters and household formation. Despite doubling pre-pandemic absorption rates, vacancy for 3-star units hit a 20-year high of 8.0% due to increased supply.
High-End Units: High-end (4 & 5-star) units experienced a 110-basis-point drop in vacancy, reaching 9.4%. While net absorption lagged, fewer deliveries supported this decline, contrasting with previous record-level supply.
Rent Growth: Annual rent growth remained steady at 2.7%, outperforming the national average. Submarkets like Northeast Columbus led with growth of up to 4.1%, while Downtown Columbus faced temporary declines due to elevated vacancy rates.
Economic Outlook: Strength in Key Industries, Risks Remain: Columbus benefits from robust logistics, advanced manufacturing, and healthcare sectors. However, risks remain in retail-heavy sectors due to rising borrowing costs and potential reductions in consumer spending.
Transaction Volume Declining Sales Amid Higher Rates: Sales volume in the Columbus multifamily market totaled $618.7 million over the past year, with an average price per unit of $151,749. Rising borrowing costs contributed to a second consecutive quarterly decline in activity.
Deal Size Shift to Smaller Deals: Large transactions ($40M-$70M range) have significantly decreased. Only 3 deals over $40 million occurred in the past 12 months, marking an 80% drop from the previous year.
Buyer Profile: Private Buyers Fill the Gap: Private buyers dominated recent acquisitions, accounting for the majority of deals, as institutional investors retreated. Private equity funds contributed over 25% of transaction volume, highlighting their growing role.
Market Outlook: Optimism in a Tightening Market: With construction slowing and demand stabilizing, the Columbus multifamily market is expected to tighten further. Elevated interest rates will continue to impact new developments, presenting opportunities for value-add investments and sustained rent growth.
Data Source: Costar Group
