High Demand for Office Space Spurs Speculative Development

Key Takeaways

  • Vacancy rates declined to 10.45% at the end of the second quarter of 2014 from the first quarter vacancy rate of 11.12% and will continue to decrease throughout 2014.
  • Class A asking rental rates averaged $27.20 per square foot full service for the market. 
  • Average asking rental rates increased to $20.33 per square foot full service for the market.  
  • With vacancy rates trending downward, speculative development is necessary for future growth.  

Market Overview

The Charleston, South Carolina office market ended the second quarter of 2014 with positive absorption, lower vacancy rates and higher asking rental rates.  The market absorbed over 97,000 square feet of office space ending the second quarter with a vacancy rate of 10.45%.  Average asking rental rates were up to $20.33 per square foot full service for the market with Class A and B rental rates averaging $27.20 and $19.67 per square foot, respectively.  

Downtown Submarket

Downtown Charleston continued to attract tenants and receive heightened attention resulting in a vacancy rate of 7.49% at mid-year 2014, down from 9.41% at the end of the first quarter of 2014.  The high demand for Downtown office space resulted in vacancy rates below 10% for all classes of office space with Class A and B vacancy rates at 6.28% and 7.94%, respectively.  With quality available office space becoming increasingly difficult to find, the overall average asking rental rate was $29.05 per square foot full service at the end of the second quarter.  Asking rental rates for Class A and B office space averaged $34.51 and $26.89 per square foot full service, respectively. 

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