Why Should Investors Consider Office Properties in Columbus?
Columbus, Ohio presents a nuanced office market that rewards informed investors with the right financing strategy. While office vacancy nationally remains elevated following the remote work shift, Columbus has demonstrated resilience that distinguishes it from many peer cities. The market recorded its third consecutive quarter of positive absorption in Q4 2025, totaling over 100,000 square feet, and vacancy declined to 20.0% from 21.4% earlier in the year. For investors pursuing office loans in Columbus, the market offers value-oriented acquisition opportunities alongside improving fundamentals.
Columbus benefits from a diversified employer base that includes Nationwide Insurance (headquartered downtown), JPMorgan Chase (one of the city's largest private employers), Ohio State University, and a growing technology sector energized by Intel's $20 billion semiconductor investment in Licking County. State government offices provide a stable baseline of office demand that insulates the market from the sharper swings seen in purely private-sector markets.
The flight to quality continues to shape the Columbus office landscape. Class A buildings absorbed 395,814 square feet in 2025, outperforming Class B absorption by more than 300%. This trend creates opportunities for both trophy asset investors and value-add operators who can reposition older buildings to meet modern tenant expectations.
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What Are the Current Columbus Office Market Fundamentals?
Understanding the market's statistical profile helps borrowers and investors structure their office acquisition and permanent financing strategies effectively.
Overall vacancy stands at approximately 20.0% as of Q4 2025, down 50 basis points from the prior quarter but still well above the 20-year average of 15.7%. The market is expected to continue gradual vacancy compression through 2026, with gains concentrated in well-located, amenity-rich properties.
Class A asking rents average $25.51 per square foot, maintaining a 7.8% premium over Class B properties. The Easton submarket commands some of the highest rents in the metro at $25.04 per square foot, driven by its mixed-use amenity environment. Dublin and the Arlington/Grandview corridor have emerged as suburban leasing leaders, attracting tenants with walkable environments and modern building amenities.
Net absorption turned positive for the year, a meaningful shift from the negative absorption that characterized 2022 through 2024. This stabilization suggests the market is finding its floor, and properties that attract tenants today are likely to benefit as conditions continue to improve.
Which Columbus Submarkets Are Strongest for Office Investment?
Columbus office performance varies significantly by submarket, and selecting the right location is critical to both investment performance and loan terms.
Downtown Columbus benefits from Nationwide's corporate headquarters, state government offices, and growing residential density that supports mixed-use development. The Arena District and Scioto Mile improvements have enhanced the downtown environment, making it more attractive to employers seeking to recruit younger talent. Office properties with modern amenities and walkability score best with tenants and lenders alike.
Dublin has emerged as a suburban leasing leader, driven by the Bridge Street District's walkable mixed-use environment and proximity to affluent residential communities. Corporate tenants including Cardinal Health and Wendy's International anchor the submarket, and recent leasing momentum suggests continued demand growth.
Easton commands premium rents driven by its mixed-use retail, dining, and entertainment environment. Office tenants benefit from the built-in amenity package that Easton provides, reducing the need for individual building investments in tenant amenities.
Polaris serves major corporate tenants along the I-71 corridor north of the city. The submarket offers a suburban office environment with access to retail and hotel amenities, making it attractive for companies that need meeting facilities and client-facing locations.
Short North and Grandview/Arlington represent emerging creative office submarkets where smaller, boutique tenants seek character space in walkable urban settings. These properties often trade at premium price points per square foot but attract tenants willing to pay higher rents for the environment.
What Types of Office Loans Are Available in Columbus?
The Columbus office lending market offers several financing structures, though lenders apply more scrutiny to office properties than to multifamily or industrial assets given the sector's elevated vacancy.
Conventional Bank Loans from local and regional banks remain the most common financing source for stabilized office properties in Columbus. Terms typically include 5 to 10 year fixed rates, 20 to 25 year amortization, and LTV ratios of 65% to 75%. Banks with local market knowledge (Huntington, Fifth Third, KeyBank) often provide the most competitive terms.
CMBS Loans serve larger office assets ($3 million and above) with established tenancy and long remaining lease terms. These non-recourse loans offer fixed rates for 5 to 10 years, but lenders have become more selective about office properties, often requiring lower LTV and higher DSCR than for other property types.
SBA 504 Loans are an excellent option for owner-occupied office buildings, offering up to 90% financing with below-market fixed rates for up to 25 years. Professional firms (law offices, medical practices, accounting firms) frequently use SBA programs to purchase their office space. Learn about SBA loan options.
Bridge Loans fund acquisitions of vacant or underperforming office buildings that need repositioning or conversion. Terms run 12 to 36 months with interest-only payments. Explore bridge financing for value-add office strategies.
Permanent Loans with longer terms and lower rates are available for well-leased, stabilized office properties with strong tenant credit. Learn more about permanent financing programs.
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How Do Lenders Underwrite Office Properties in Columbus?
Office loan underwriting has become more rigorous since 2020, reflecting the sector's elevated risk profile. Lenders apply conservative assumptions and closely evaluate several key factors.
Occupancy and Lease Rollover are the primary concerns. Lenders typically require a minimum of 80% to 85% occupancy for permanent financing, with careful attention to when leases expire. A property with 85% occupancy but 40% of leases expiring within two years presents rollover risk that lenders price into the terms.
Tenant Credit Quality drives underwriting favorably or unfavorably. Properties with investment-grade tenants (government agencies, Fortune 500 companies, national professional firms) on long-term leases receive the best terms. Multi-tenant properties with smaller, local tenants face more conservative underwriting.
Building Class and Amenities increasingly matter as tenants demand flight-to-quality features. Buildings with modern HVAC systems, collaborative common areas, fitness facilities, outdoor space, and ample parking receive stronger lender interest. Older Class B and C buildings without these features face tougher underwriting.
Debt Service Coverage Ratio requirements for office properties typically range from 1.30x to 1.50x, higher than the 1.20x to 1.25x standard for multifamily. This higher threshold reflects the greater income volatility and rollover risk inherent in office properties.
Environmental and Condition Reports are standard, including Phase I environmental assessments, property condition assessments, and appraisals. Older office buildings may require additional testing for asbestos, lead paint, or underground storage tanks.
What Interest Rates Apply to Columbus Office Loans?
Office loan rates in Columbus reflect both broader interest rate conditions and the risk premium lenders assign to the office sector.
Conventional bank loans for well-leased Class A office properties price between 6.00% and 7.50%, depending on leverage, tenant quality, and remaining lease term. SBA 504 loans for owner-occupied buildings offer the most competitive rates, typically 5.25% to 6.75% for the CDC portion. Bridge loans for vacant or transitional office properties range from 8.00% to 11.50%, reflecting the higher risk and uncertainty.
The elevated vacancy environment in Columbus means lenders are pricing office loans 25 to 75 basis points higher than comparable multifamily or industrial loans. Borrowers with strong tenant credit, long remaining lease terms, and lower leverage can negotiate within the lower end of these ranges.
What Is the Office-to-Residential Conversion Opportunity in Columbus?
The mismatch between excess office supply and strong residential demand has created a growing market for office-to-residential conversions in Downtown Columbus and the Arena District.
Older office buildings with obsolete floor plates, high vacancy, and deferred maintenance are prime candidates for conversion. The conversion process typically involves bridge financing for acquisition and pre-development, followed by construction financing for the conversion itself. The resulting residential product benefits from Columbus's strong apartment demand and population growth.
Key considerations for conversion projects include floor plate depth (ideal widths of 60 to 75 feet for residential conversion), structural capacity for residential loads, window configuration and natural light access, and zoning compatibility. Buildings that do not meet these criteria may be better suited for demolition and ground-up residential construction.
Columbus city officials have expressed support for downtown residential conversion, and tax incentive programs may be available for qualifying projects. Investors considering this strategy should engage with the city's development office early in the planning process.
What Are the Risks of Office Investment in Columbus?
Prudent investors and their lenders must account for the specific risks facing the Columbus office market.
Remote and Hybrid Work continues to reduce per-employee space requirements. While Columbus has benefited from a relative return-to-office trend compared to coastal cities, many tenants are renewing at smaller footprints. This structural shift means the market may not return to pre-2020 vacancy levels for several years.
Tenant Concentration Risk can affect individual properties. Losing a major tenant in a market with 20% vacancy creates a challenging re-leasing environment. Lenders evaluate tenant rollover schedules carefully and may require reserves or escrows for properties with near-term lease expirations.
Capital Expenditure Requirements for older office buildings can be substantial. Upgrading HVAC, elevator, and life safety systems to meet modern standards requires significant investment that affects both returns and loan proceeds.
Suburban Office Obsolescence affects certain corridors where aging office parks face competition from newer mixed-use environments. Properties in these locations may require repositioning or alternative-use strategies to maintain value.
Despite these risks, Columbus office properties in the right locations with the right tenant profiles continue to generate stable cash flow and qualify for competitive permanent financing.
What Should Borrowers Prepare for a Columbus Office Loan Application?
A thorough loan package demonstrates market knowledge and borrower capability, leading to better terms and faster closing.
Detailed Rent Roll and Lease Abstracts showing tenant names, lease terms, rental rates, escalation schedules, renewal options, tenant improvement allowances, and any free rent or concessions. Office leases are typically more complex than multifamily leases, so thorough documentation is essential.
Trailing 12-Month Operating Statements showing gross revenue, vacancy and credit losses, operating expenses (separately identifying controllable and non-controllable expenses), and net operating income.
Tenant Financial Information for major tenants (those occupying 20% or more of the building). This may include financial statements, credit reports, or corporate credit ratings.
Capital Expenditure History and Budget showing recent building improvements and planned future investments. Lenders want assurance that the property is being maintained to competitive standards.
Market Comparable Analysis demonstrating the property's competitive position in terms of rents, occupancy, and amenities relative to comparable buildings in the submarket.
Contact Clear House Lending to discuss office loan options for your Columbus property.
Frequently Asked Questions
What cap rates are Columbus office properties trading at?
Cap rates for Columbus office properties vary significantly by class and location. Class A properties in Downtown and prime suburban locations (Dublin, Easton) trade at 7.0% to 8.5%. Class B suburban office properties trade at 8.5% to 10.5%. These cap rates are 150 to 250 basis points higher than multifamily, reflecting the office sector's elevated risk profile.
Can I get financing for a partially vacant office building?
Yes, but the options depend on the occupancy level. Properties with 70% to 80% occupancy may qualify for conventional bank loans at lower leverage (60% to 65% LTV). Properties below 70% occupancy typically require bridge financing until occupancy improves. Some lenders offer lease-up bridge programs specifically designed for office buildings in transition.
Is it better to buy or lease office space in Columbus?
For businesses planning to stay in Columbus long-term (10+ years), purchasing with an SBA 504 loan often makes financial sense. The fixed rate, 90% financing, and equity building can provide a lower effective cost of occupancy than leasing. Professional firms with stable space needs are particularly well-suited for ownership. However, businesses expecting rapid growth or uncertain space requirements may prefer the flexibility of leasing.
How does remote work affect Columbus office loan underwriting?
Lenders now scrutinize tenant industry mix and work-from-home vulnerability more closely. Properties with government tenants, healthcare companies, and other office-dependent industries receive more favorable treatment than those leased primarily to tech or financial services firms with high remote work adoption. Longer remaining lease terms also mitigate remote work risk from a lending perspective.
What is the typical lease term for office space in Columbus?
New office leases in Columbus typically run 5 to 10 years for larger tenants (10,000+ square feet) and 3 to 5 years for smaller tenants. Renewal options of one or two additional 5-year terms are standard. Lease escalations of 2% to 3% annually are common. Tenant improvement allowances for new leases typically range from $30 to $60 per square foot depending on the building class and lease term.