Recently, developer Thrive Cos. announced it was eliminating office space from its planned West Bend mixed-use development at 2474 McKinley Ave. While the project will continue to move forward with approximately 750 apartment units, retail space and a large public park, the planned 20,000 square feet of office space has been removed.

The decision generated conversation about the future of office development in Central Ohio, but it also highlighted an important distinction that is often overlooked: the challenges of building new office space are not the same as the health of the office market itself.

Recent coverage of the project rightly focused on the financial pressures facing new office development. In testimony to the City of Columbus, Thrive stated that maintaining the office component would "destabilize the financial viability of the project." Those challenges are real. Rising construction costs, elevated financing costs and inflation have fundamentally changed the economics of new office projects.

But those pressures shouldn't be mistaken for a weakening office market.

The broader market tells a different story.

As of the second quarter of 2026, office projects under construction account for just 0.2% of Columbus' total office inventory. In other words, nearly the entire market consists of existing office buildings, where leasing decisions are driven far more by tenant demand than by today's construction costs for new developments.

And demand remains healthy.

Office vacancy declined 140 basis points in the second quarter to 9%, well below the national average of 13.9%. At the same time, annual rent growth reached 2.2%, outpacing the national average of 1.5%. Those are not the indicators of a market in decline. Instead, they reflect a market that has continued to stabilize while many peer markets are still working through elevated vacancy.

What has changed is how tenants evaluate their options.

Companies still want quality office environments, but many are finding that quality doesn't have to mean brand-new construction.

According to NAI Ohio Equities Executive Managing Director Matt Gregory, the economics have shifted dramatically. Ten to fifteen years ago, moving from an existing Class A building into newly constructed office space typically meant an increase of roughly 10-15% in occupancy costs. Today, that premium is often closer to 50%.

Tenant improvement packages have evolved as well. Where landlords once routinely covered the full cost of tenant improvements, today's contributions more commonly cover one-half to two-thirds of the total project cost. Those changes have made newly constructed office space significantly more expensive for many occupiers.

As a result, many companies are experiencing what Gregory describes as a "graduation effect." Rather than paying the premium associated with new construction, many tenants are moving into well-located second-generation Class A and high-quality Class B+ buildings that offer modern amenities, updated finishes and greater value. They are still upgrading their workplace experience—they're simply doing so differently than they might have ten years ago.

This shift also helps explain why rent appreciation has accelerated. For years, Columbus experienced relatively modest rent growth, supported by low inflation and historically low interest rates. More recently, market demand combined with higher construction and operating costs has brought rental rates more in line with comparable markets across the country.

It's also important not to draw broad conclusions from individual development decisions.

Some of Central Ohio's most successful mixed-use projects continue to demonstrate that office remains an important ingredient when supported by the right location, tenant base and long-term vision. The projects generating the most interest today tend to be those in premier locations with the scale and critical mass to become truly transformational destinations. Bridge Park in Dublin is one example, where office has helped create a vibrant district that combines employment, housing, retail, hospitality and entertainment.

That same trend can be seen in other transformational developments across Central Ohio. RockBridge’s Merchant Building in Downtown Columbus, which will include the city’s first true luxury hotel, and Crawford Hoying’s planned redevelopment in Worthington both combine premier Class A office space with high-quality hospitality, residential, retail and public gathering spaces to create vibrant mixed-use destinations.

Rather than moving away from office altogether, these projects reflect continued confidence that thoughtfully integrated, high-quality office space remains an important ingredient in Central Ohio’s evolving mixed-use landscape, creating destinations where people want to work, live and gather. They also reinforce a broader market reality: demand for high-quality office space remains strongest in premier, amenity-rich environments where office is part of a broader destination—not simply a standalone building.

The takeaway isn't that office demand has disappeared. It's that the economics of developing new office space have changed dramatically. While those realities may lead some developers to adjust individual projects, they shouldn't be interpreted as a referendum on the broader office market.

The data tells a more nuanced story. Central Ohio's office market continues to benefit from healthy demand, strong occupancy fundamentals and steady rent growth. Office isn’t disappearing—it’s becoming more selective. The winners will be projects that combine the right economics, the right location and the right vision to create places where companies genuinely want to be.