NAI Ohio Equities’ 2023 Predictions for the Central Ohio Commercial Real Estate Market

It’s been an eventful year in commercial real estate as the recovery drove record-level activity, and now, with activity slowing as a result of interest rate increases intended to temper inflation. As we look forward to next year, our market experts share their insights on what you can expect as we head into 2023.

Interest Rates

Uncertainty around interest rates will continue to affect decision making for the first half of 2023. After reaching record lows of around 3.5%, and then climbing to the highs of about 6.5% during 2022, interest rates will begin to stabilize in 2023 and return to a midway point of about 5%.

Construction Cost

In general, labor and materials for construction projects will be more difficult to obtain. Rising costs will limit new construction in the retail sector, and in the office market, rising construction costs will cause rates to increase as landlords cover tenant improvements.

Speculative Development

In the industrial market, expect far fewer speculative warehouse construction starts this coming year. In the office market, speculative development will continue to be limited, with the exception of some office within mixed-use developments.

Vacancy Rates

Office vacancy rates will decline despite some larger tenants giving back space because speculative construction has been down the past three years.

Lease Rates

In the industrial market, expect lease rates to finally take a breather and the rate of increases to slow during the first half of the year. The flight-to-quality in the office market coupled with rising construction costs will cause lease rates to increase for more attractive spaces and as landlords must cover tenant improvements.

Market Activity

Due to interest rate increases, owner occupant sales will continue to outpace investment sales as investors aren’t able to justify the lower cash flow or meet the lender required debt service coverage ratio. Owner occupants will be more successful in obtaining financing since lenders will be looking at the cash flow of their business rather than the cash flow of the building.

Intel Development

Expect the Central Ohio Area to be somewhat insulated from any expected economic downturn due to the Intel project. Additionally, the Central Ohio market should expect at least two major employers announce that they will open offices within close proximity of Intel.


Warehouse demand will return to a more historical pace versus the frenzy of the last two years. Office demand will continue for the most desirable submarkets and asset classes.

Meet Our Experts

Matt Gregory, SIOR, CCIM

Matt Gregory is Senior VP of the Office Brokerage Group and one of NAI Ohio Equities’ Top Producers. Matt has completed more than $600 million in transactions.

Curt Berlin, SIOR

Curt Berlin is a founding member of the Industrial Property Team and one of NAI Ohio Equities’ Top Producers. Curt has been involved in commercial real estate for more than 30 years.

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