For the Greater Charleston Office Market, past predictions do come true. In previous reports, we anticipated that office vacancies would go lower and rents would rise. From the 4th Quarter of 2004, the overall office vacancy has decreased from 12.94% to 9.18% and the overall Class “A” office market rental rate has increased from $20.11 per square foot annually to $20.81. In addition, a recently published national report by Colliers International indicated that The Charleston region is one of the top ten job growth markets in the United States. With these trends and indicators, now is the time to grow the market. The current relative shortage of office space should give rise to new development in the area: however, the combination of lender pre-leasing requirements, increasing costs of land and construction and continued population growth will drive rental rates higher.
“Consistent” is the best way to describe the Downtown Charleston office market. It continues to absorb existing product while adding new projects to the growing office base. Limited new developments being brought on line are the 68,000 square foot 100 Calhoun Street Building and the 40,000 square foot expansion of 40 Calhoun Street. For the near future, the vacancy will remain stable at 10.16% overall but will lower over the next 15 months. The conversion of “B” and “C” office properties to residential condos is diminishing the supply of office product, and the long lead-time for approvals for downtown developments will further keep vacancies stabilized and put pressure on rents. The current top of the market for quoted office rents is pushing $30.00 per square foot on an annual full service basis, with an average Class “A” rate of $25.33 and an overall average rate of $21.23.
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