The Greater Charleston Office Market experienced another solid year of overall growth, with some activity occurring in the new office product that was delivered in 2004 but most of the activity occurring among existing facilities. Growth in 2004 was more of a growth in occupancy than an increase in market inventory The combined activity created significant absorption in the Class “A” market of 272,616 square feet of space, with the remainder of the market absorbing 593,607 square feet of space for a total absorption of 866,223 square feet of office space for the year. The positive net absorption helped to fill a significant amount of newly developed property, to solidify occupancy and create financial stability among existing buildings, and to enhance values of properties sold during the year.
Steady expansion by legal, financial and insurance sectors kept the Downtown Charleston office market busy with leasing activity. Large lease transactions in the fourth quarter involving these types of institutional tenants moving to new Class “A” projects helped bolster the success of 100 Calhoun Street and kick off the expansion of the Charleston Gateway Building. Rental rates firmed up during the year and continued to increase through the fourth quarter. Sales activity in the market was limited only by the amount of quality properties that were made available. Sales prices for multi-tenant office buildings hit a new high of $298 per square foot in the Downtown Charleston Market with Bank of America Place selling for $43 million. The market should continue to tighten and see rental rates climb, with only the Charleston Gateway expansion planning to break ground in 2005 and rental rates for any other new developments projected at over $30 per square foot.
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