Speculative Development Imperative for Future Office Market Growth
- Average asking rental rates for Class A space continued to increase to $27.52/SF full service, a record high.
- Vacancy rates continued to decrease to 11.12% at the end of the first quarter and will continue to trend downward throughout 2014.
- Four out of six suburban submarkets have a Class A vacancy rate under 6%.
- Tenant activity in downtown Charleston appears stationary, but this will change as planned redevelopments commence construction.
- Some construction is underway, however, the market needs more speculative development in order for continued growth.
First Quarter 2014 Recap
The Charleston office market continued to grow as reflected in the 85,753 SF of positive net absorption the market reported in the first quarter. Vacancy rates for the region decreased to 11.12 % from 11.97% at year-end 2013. Vacancy rates for Class A space plummeted to 6.75% from 9.29%, leaving very few options for tenants. Average asking rental rates for Class A space in Charleston reached a record high of $27.52/SF full service. New developments and construction are underway with over 241,000 SF under construction in the first quarter. However, more construction is imminent for the market to continue to grow.
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