Vacancy Drops to 3.33% in Charleston’s CBD
Vacancy continued to decrease in Downtown Charleston leaving tenants few options and competing for what space is available.
The Charleston office market has steadily improved over the past two years with the end of the third quarter continuing the trend. Vacancy decreased, rental rates increased and net absorption was positive for the overall market at the end of the third quarter. Overall market vacancy is now at 13.62% vacant, and has trended downward from 17.42% in 2010. These indicators demonstrate not only a recovered market, but a healthy one, and also a market that is in need of buildings if it wants to continue on this improvement trend. Charleston’s economy and future outlook look positive. Announcements of numerous company relocations and expansions, the delivery of Boeing’s first Dreamliner and subsequent plans to expand, the area’s increased home prices, and earning a No. 1 ranking as a top destination in the world are all good news for the Charleston area.
Class A space simply doesn’t exist in Downtown Charleston. At the end of the third quarter, vacancy was 3.33%, down from 5.20% at the mid-year mark. Class A vacancy in Downtown remains tight due to the lack of delivered product over the last few years, but a limited supply of land and high land prices delay any new development that is much needed in Charleston’s CBD. Tenant’s are competing for space, paying a premium and are driving average asking rents higher; now at $30.61 per square foot full service, up $0.52 from the end of the second quarter. Asking rental rates for new construction Downtown continues to climb. 174 Meeting Street, currently the only building Downtown under construction, is asking $37.00 per square foot full service. Any new construction starting next year could have asking rates upwards of $40.00 per square full service. Net absorption Downtown was positive at the end of the third quarter. Notable lease transactions include the leasing of 9,211 square feet to The History Press at 645 Meeting Street.
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