The Charleston office market has slightly improved during the first six months of 2002, relative to the lethargic activity during 2001. Charleston has been positively impacted by increased activity in SPAWAR defense spending, tourism and economic development successes in the region. It appears that the middle of 2002 is the turning point for the office market in Charleston, with anticipation for new growth and speculative development starting again.
Occupancy rates for the 6.2 million square feet of multi-tenant office space for the Greater Charleston market improved slightly during the first half of 2002, with the overall vacancy rate at 15.8%, down from 17.01% at year-end 2001. However, this vacancy level is generally healthy compared to other southeastern cities.
Class A space in Charleston totals 2.4 million square feet. The vacancy rate of Class A space at mid-year 2002 was 17.4%, a slight decrease from 18.3% at year-end 2001. Although this is a substantially higher vacancy than in prior years, corporations and local firms are taking advantage of the vacancy and moving up to quality projects, while receiving aggressive concessions and lease terms.
The Downtown Charleston market performed reasonably well during the first half of 2002, in spite of the ongoing construction of three significant build-to-suits in the Downtown market. The vacancy rate as of mid-year 2002 is 10.8%, one of the historical high vacancy rates for the past six years, but down from 12.0% at year-end 2001.
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