2003 was exciting for the country with the capture of Saddam Hussein, a recovering stock market and the hope for a robust 2004 economy. Locally, the excitement resulted in growth in the office market and, despite a vacancy growth, an overall positive absorption of 401,415 square feet. Growth in the market was a combination of new speculative development, corporate build-to-suit activity and adaptive re-use of older facilities. The impact of the activity increased the overall vacancy rate to 18.65%. Among Class "A" properties the vacancy rate grew slightly to 14.92%. Rental rates, though dipping slightly from the 2002 levels have begun to stabilize and should rebound in 2004.
2003 was busy for Downtown Charleston with the completion and occupancy of three build-to-suit projects, the commencement of a fourth project and the planning for two additional buildings. The year also saw increased leasing activity driven by expansions of law firms and an influx of professional service tenants pursuing contracts with captive insurance companies. The combined activity resulted in a negative absorption overall and among Class "A" properties of 7,822 and 75,171 square feet respectively. Total inventory grew to 1,890,204 square feet, and vacancy grew to 247,764 square feet or 13.27%. Increased vacancy, predominately in Class "A" buildings, will be short lived as rental rates stabilize, leasing activity remains strong and new product is limited. Rental rates should rise in 2004 on the strength of demand for Class "A" space, including The Peoples Building.
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