This fall's presidential candidates discovered what investors have known for some time: Ohio's the place to be. Long recovered from its "Rust Belt" reputation, the Buckeye state's trio of "C" cities - Columbus, Cincinnati and Cleveland - have seen growth in industrial, retail and apartment building that ranges from the steady to the spectacular.

Industrial hot in Columbus

Nowhere in Ohio is that more true than in Columbus, which touts its "inland port" status, with good rail and highway access, in absence of water ports.

Donald S. Roberts, first vice president at CB Commercial in Columbus, says,Columbus, right now, is being targeted by ... every major investor. The reason is major markets are having trouble supplying the capital markets with enough product."

"The strength of Ohio is its proximity to the population base of the U.S.," Brian Trotier, vice president of Kensington Realty Advisors in Colurribus, agrees.

As more and more companies try to downsize, Trotier says, they are outsourcing logistics and transportation. This has led to "explosive growth" of distribution centers in Columbus. Part of it is location, he says, but part of it, too, must be credited to the presence of the Ricken-backer Air Industrial Park.

The availability of land inside and near the Interstate 270 outerbelt has allowed faster warehouse growth in this market than in Cleveland and Cincinnati, Trotier says. Its relatively flat topography also has helped.

Much of that growth in Columbus has been centered in communities along the I-270 outerbelt south of I-70, particularly in the Grove City area.

Pizzuti Inc.'s 500-acre, mixed-use Southpark industrial park has "millions" of square feet leased and room for another million sq. ft. of additional development. Dara Pizzuti, director of marketing and communications at Pizzuti, says that in the past year, two 400,000 sq. ft. buildings have gone up.

She describes Grove City as a community that is "business friendly, but (officials) definitely keep their community's best interests in mind."

Indianapolis-based Duke Realty Investments vestments has been involved in Grove City as well. Its SouthPointe development features two warehouse buildings totaling 600,000 sq. ft., says Duke's Columbus general manager, Don Hunter.

All but one of the spaces currently are occupied, Hunter says, and he has a letter in hand from the intended tenant of the final portion. Plans are in the works for a third 300,000 sq. ft. building in the spring.

CB Commercial recently was involved in the sale of 172,000 sq. ft. of space in the Grove City area to the Borders Books & Music. Scott L. Stubblefield, senior associate with CB Commercial of Columbus, says the former Syntex Labs building went for $4.7 million, or $28.50 per sq. ft.

On the west side of Columbus, CB reports that Sears Logistics was running out of space and was reluctant to renew its lease at the Crosswinds Boulevard site. CB's Roberts says the firm represented both buyer and seller in a deal to buy more land - 7.5 acres - west of the existing site. Another 300,000 sq. ft. brings the total occupied by Sears Logistics just over l million sq. ft. The sale closed this fall at $29.4million, or almost $29 per sq. ft.

At Rickenbacker International Airport, a former air base turned international airport-distribution center/foreign trade zone in Obetz, the development effort continues. The difference these days, says Randy Forister, real estate development manager for the Rickenbacker Port Authority, is that the airport's air capabilities are being accented, as well as its distribution center status.

In the immediate future, Forister says Circuit City is finishing construction on a 300,000 sq. ft. distribution facility, Daimler is completing construction on a 240,000 sq. ft. spec building, and Pizzuti is finishing its 340,000 sq. ft. building there.

CB Commercial research shows Columbus with a industrial vacancy rate for the third quarter of 1996, up from 6% for 1995. Columbus, third-quarter rate also is higher than Cincinnati's 2.3% for the same period but lower than the 9.2% for the Cleveland market in the third quarter.

Bill Carleton, executive vice president of Ohio Equities, says the warehouse market has slowed down a bit, suggesting that there has been a bit of the follow-the-leader building that's satiated the market for the moment. "Everybody went boom ... and the market went boom," he says.

Columbus office sees construction

The Columbus office market in the past year has seen substantial building, particularly along the north leg of I-270 in places like Tuttle Crossing, Polaris and Limited Chairman Leslie Wexner's Easton.

This fall, Banc One will move some "back-end" operations to Polaris Centers of Commerce, says Donald Kelley, a partner in NP Limited Partnership, Polaris developer. The 880,000 sq. ft. Banc One campus was to be occupied Nov. 1, he says. This is just the first of two phases for Banc One at Polaris, he says, with a total of 1.6 million sq. ft. planned.

A 100,000 sq. ft. spec office building now being completed by Daimler Group is 40% leased. Daimler, NP Ltd. and Ohio Equities are developing a $24 million project called The Offices at Polaris. The 26-acre project will include the 100,000 sq. ft. building as well as a 120,000 sq. ft. spec building, along with a 50,000 sq. ft. build-to-suit. Lease rates are in the $12 to $15 per sq. ft. net range, all Class-A, Kelley says.

Also at the Polaris mixed-use development, Kelley says a 100-room Wingate Inn, the first in the Columbus market, is under construction and expected to open in the fall of 1997.

Duke's presence in the swelling Greater Columbus office market is also apparent. In late spring, Duke launched spec development of a 100,000 sq. ft. suburban office building on 37 acres at The Corporate Park at Tuttle Crossing. Duke paid $5.9 million for the land, which is zoned for about 550,000 sq. ft. of office development.

Hunter says the first 10 of the 11 buildings at Tuttle Crossing opened 100% leased. Lease rates have edged up there to about $13 triple net, Hunter says.

Columbus suburbs draw office interests

Bill Whipple, senior vice president of Mathews Click Bauman in Columbus, says the low vacancies and steady absorption of office development continue to draw investor interest in Columbus' suburban properties.

Indeed, while the supply of suburban office space has been growing in the Columbus market in the ISMOS, vacancy rates generally have been naffowing. CB Commercial's numbers show diat last year, with little movement in the base, vacancies dropped to 8.1%. The more dian one-half million sq. ft. added since then pushed the vacancy rate up to 8.7%, or about 850,000 sq. ft. vacant, at the close of the 1996 third quarter.

By comparison, suburban office bases in Cleveland and Cincinnati are higher, but so are the vacancy rates. Absorption also is in evidence in those cities, numbers. CB Commercial shows Cleveland's suburban office vacancy rate slipped from 12.6% at the end of 1995 to 10.1% at the end of the third quarter. Cincinnati's absorption rate was spared as the vacancy rate dropped from 14.5% at the end of 1995 to 10.6% at the close of the third quarter.

Average asking lease rates were similar in the northernmost two cities - $14.10 per sq. ft. in Columbus and $14.44 per sq. ft. in Cleveland. Cincinnati's average asking lease rate for suburban office was $12.57 per sq. ft., CB Commercial says.

CB Commercial was involved in the sale by Sentinel Real Estate of a 213,000 sq. ft. building at Officescape, a Westerville office park, for $10.9 million. Pizzuti is another name seen both in development and management of Columbus offices. Michael E. Young, executive vice president of Pizzuti Realty Inc., says the firm worked with Aldrich, Eastman & Waltch in buying Northwoods II, an office building in the far north Columbus market. When they bought it earlier in the '90s, it was 66% leased. In the years since, the occupancy has soared to 99% and, recently, the building was sold to Schroeder, New York, for $103 per sq. ft.

Downtown office in Columbus is seeing some movement, says Ohio Equities, Carleton. Downtown vacancy is very low," he says, but there is a decided lack of contiguous space of any size.

One project that is happening, Carleton says, is the 180,00 sq. ft. addition to the Fifth/Third building downtown. He indicated ground would be broken this fall by the developer Arshot Investments. The impetus was the desire of Fifth/Third, a Cincinnati-based regional bank, to expand, Carleton says.

CB Commercial's numbers show that the office base rose to 7.6 million sq. ft. at the end of third quarter 1996, with a vacancy rate of 8.7%.

Downtown office space there is cheaper, according to CB Commercial's numbers which reports the average lease rate in downtown Columbus at $12.57 per sq. ft., compared with Cleveland's $14.69 per sq. ft. and Cincinnati's $15.03 per sq,. ft.

Big box fuels Columbus retail

The retail market in Columbus continues to grow, fueled in great part by the growth of big-box retail around the Mall at Tuttle Crossing, an upscale mall being developed by Taubman Co. near Dublin, and by Wexner's Easton development.

Bob Mathias of CB Commercial in Columbus predicts the retail base will rise 10% by the end of 1997, up from the current base of 20 million sq. ft.

Most of the major retail development in the Columbus market is taking place in the suburbs. Duke's Hunter notes his company's"big-box" activity at Tuttle Crossing with the 150,000 sq. ft. Wal-Mart store, the 60,000 sq. ft. Best Buy electronics and appliance store, and a 40,000 sq. ft. furniture store for Lazarus.

Wexner's Easton development isn't as far along as the Tuttle Crossing effort but, like Tuttle, is being planned to offer substantial office as well as retail.

On the office side, M/I Homes became the first tenant in The Oval, a 65-acre office park at Easton, occupying 92,000 sq. ft. of a 130,000 sq. ft. building. National mortgage lender Chase Manhattan Mortgage Corp. also intends to take up residence at Easton, having committed to a $35 million, 240,000 sq. ft. building that is to be ready for occupancy in 1998. Chase's move is expected to relocate 1,000 central Ohio jobs and add 600 more.

Also, a Wal-Mart/Sam's Club combination already is open on the northern edge of the Easton development, and more retail is on the way. Easton Market is to be a 900,000 sq. ft. strip center. Easton Market will be followed by Easton Town Center, a 500,000 sq. ft. entertainment-focused development, in 1998. Plans call for a 1 million sq. ft., multilevel enclosed mall in 2000 or so.

Industrial heats up in Cincinnati

Like Columbus, the Cincinnati market is an active one.

"The [industrial] market is extremely busy. We are going to have our best year ever," says Neil Sundermann of Cincinnati Commercial Realtors.

The Northern Kentucky portion of the market isextremely strong," says Jeff Tulloch, vice president and general manager for Duke, which purchased 135 acres of land zoned industrial near the Cincinnati Metropolitan Airport for $4 million.

Cincinnati suburban office stays busy

This fall, Duke bought 400,000 sq. ft. of Class-A office space in the Blue Ash area of suburban Cincinnati, the company's first entry into that submarket, which the company pegged at 1.9 million sq. ft. in size. The properties include the 180,000 sq. ft. West Lake Center at the 217,000 sq. ft. Lake Forest Plaza. They were 85% leased at the time of purchase.

"With limited construction and low Class-A vacancy rates in the Blue Ash submarket," Tulloch says,we are very enthused about the short-and long-term investment."

Downtown office looking better

Tulloch says downtown Cincinnati is still a "tenants market." Class-A space has a vacancy rate of between 8% and 9%, he says. Class-B office space, however, is available, and the rates show it. Tulloch says Class-B has a 20%- plus vacancy rate and is commanding "very low rates" of $12.50 per sq. ft. or so gross.

One of the projects to watch in downtown Cincinnati, Tulloch says, will be Fountain Square West. But he says, he does not expect to see new building until the Class-B office market "tightens and reproves itself."

On the office side, Wayne Hach, executive vice president of Cincinnati Commercial Realtors, says vacancy rates had not dropped to the point to support new building - until recently. But even so, "developers will be careful to control the supply," Hach says.

Sundermann reports overall vacancy is less than 5%, in the Cincinnati industrial market.

Cleveland's industrial still active

In the north, Cleveland continues to grow, though not with the same kind of high-profile projects as in the recent Rock and Roll Hall of Fame, Jacobs Field and Gund Arena.

On the industrial side, David Browning finds the market "active" though, interestingly, he thinks the low unemployment rate could limit what might be seen as a natural progression southward to the far-flung suburbs. That's not to say, though, that there isn't plenty of activity or the need for even more.

Brownimg, who heads CB Commercial's Cleveland office, says the industrial vacancy rate is greater than 9%, but much of it he called "functionally obsolete."

More than 4 million sq. ft. of new construction has taken place in each of the past three years, he says, but that represents a drop in the bucket when the bucket contains 300 million sq. ft.

One of the biggest corridors of industrial activity, Browning says, is the Aurora-Streetsboro area near the Ohio Turnpike. He estimates 150 acres of land have been absorbed by multiple projects, mostly by local builders, including Geis Construction and Curtis-Layer Contractors. Among specific projects, he notes Chrysler's expansion of its distribution facility by about 300,000 sq. ft.

Most of the industrial activity, he says, is "build-to-suit driven," but there is some spec activity in the office-warehouse category.

The development sprawl south may hit a roadblock, though. Browning says with the jobless rate at about 5%, employees are hard to find en masse away from the major population centers.That will take the edge off ... suburban development," or it could push companies into surrounding cities in northeastem Ohio, such as Canton and Youngstown, he says.

A new player in the market emerged in February as Duke Realty acquired Ross Farro Enterprises Inc., a Cleveland-based real estate company. In the move, Duke gained more than one-half million sq. ft. of Class-A suburban office space located in the Rockside Road corridor. Duke reports that as of September the space was 100% leased, and that sub-market had a vacancy rate of less than 3%.

Perhaps not surprisingly, Duke chose the coffidor for its first development since entering the market. The project is a 70,000 sq. ft. office building called Freedom Square III.

Downtown office sees action

Not all the activity in the office market in Cleveland has been in the suburbs. Brian Hurtuk, senior vice president of Cleveland developer Amsdell Cos., says his company is working on developing an 80-acre, $200 million suburban-style office park near the Cleveland Hopkins International Airport. "The city embraced it very aggressively," he says.

The most talked-about move in the Cleveland office market this past year may have been the sale of the BP America building downtown to Equity Office Properties of Chicago. CB brought in other tenants and turned the 1.25 million sq. ft. property into a multitenant building.

Such firms as Arthur Andersen and Price Waterhouse have become BP building tenants and so did LTV Steel. Chandler Converse, executive vice president of The Galbreath Co. in Cleveland, says it represented LTV in leasing 237,000 sq. ft. there as its headquarters.

Converse characterizes Galbreath's year aspretty busy... the markets have been terrific. There's a lot of money chasing product."

Suburban office gets interesting project

Some more office product is going to hit the market, but what makes one development in suburban Independence interesting is not so much the project as who's behind it.

Electric utility, Centerior Energy Corp., has issued a call for development proposals of 65 acres next to its own building.

Jim Sielicki, Centerior spokesman, says Independence is a "good market for offices," and the parcel could hold as much as 1 million sq. ft. of new development.

High activity in Cleveland retail

On the retail side, stores keep popping up all around Cleveland.

"There's unabated big-box activity" in the marketplace, says CB Commercial's Cleveland retail specialist, Don Sassano.

The big event this fall, he says, has been the opening of the Jacobs Group's new mall in Strongsville. He says there was in excess of 2 million sq. ft., and it was expected the mall would open at 100% occupancy, with four major retailers as anchors, including Sears and JCPenney.

Another major Project nearby is The Strip in Canton, an 800,000 sq. ft. power center. Sassano says The Strip was strategically located by developer Robert L. Start one freeway exit north of the dominant mall in the area, Belden Village Mall.

The Strip brings to the marketplace new tenants, including Steinmart and Baby Superstore.It,s a power center to the Nth degree," Sassano says.

How much more retail activity will the market bear? Sassano says another six or eight centers are planned, contingent upon rezonings in the Cleveland market.

"There's not enough space where everyone wants to be," which is in the Mayfield Road/I-271 corridor, so developers create mega centers in other places and "create their own trade areas," Sassano says.

Retail vacancy in the marketplace among centers of 50,000 sq. ft. and larger, excluding freestanding stores, is about 7% to 8%, he says, a little higher than in the recent past. Sassano expects that won't change much, even with all the building.

Apartments active throughout Ohio

Observers find the apartment markets healthy and, for the most part, active in Columbus, Cleveland and Cincinnati.

Trotier of Kensington Realty Advisors says local apartment rents per sq. ft. are "all over the place" from the high $0.50 per sq. ft. into the $0.80 per sq. ft. range. "All of those can be fair rents," depending on location, Trotier says.

Kenneth Danter, president of The Danter Co. in Columbus, says that statistics show growth in rent, in construction and in variety of product.

Danter's numbers for the Columbus market show an overall apartment vacancy rate in 1996 of 3.8%, with median rent for a one-bedroom apartment at $410. In Cleveland, the market is a little tighter, with overall vacancy pegged at 3% and a one-bedroom unit renting for $465. The situation is similar in Cincinnati, where the overall vacancy rate is 3.1%, and median rent for a one-bed-room unit is $395.

Danter's numbers show that there is opportunity in the Ohio apartment market, but a problem, he says, is the phenomenon of activity generating more activity, which results in overbuilding. "We don't go through boom-bust cycles" like other markets, he says.

The Cleveland market has a population base of close to 2 million people, Danter says, and some low vacancy rates. He points out much of the apartment product is older, but built well. A few people own a lot of the product, and manage it well, and thus are able to continue to see rent increases.

Danter describes Cleveland as a"steady, sound market" that now is seeing some development in the downtown Flats area. One factor that is limiting apartment development in Cleveland, as elsewhere in Ohio, is the difficulty inherent in getting land zoned for multifamily, he says.

Danter says Columbus is "really an active market," noting healthy growth in employment and population. There has been steady growth in the number of apartment units, thanks to developers such as Casto, as well as Hallmark and the Triangle Co.

Danter says developers have had success with PUDS, planned-unit developments, which blend a lot of uses into a single-development concept. The area also is a tough one to get apartment zoning through, he says, and there hasnot been as much building as they certainly could support."