Charleston Office Vacancy Hits Lowest Level in Over a Decade
- Rental rates reach new record highs as vacancy rate continues downward trend.
- The tightest office market Charleston has seen since 2002.
- Downtown development embraces the growing tech industry.
- Construction activity is on the rise throughout the market.
- Suburban residential growth to drive the future office market.
2015 is off to a great start for the Charleston, South Carolina office market, which experienced positive absorption, declining vacancy rates and record high rental rates during the first quarter of the year. Tightening market conditions and a limited inventory of existing quality space is attributing to top rental rates, which averaged $22.15 per square foot per year for the overall market at the end of the quarter. Asking rental rates increased 7% in just one year and are expected to further increase as demand for office space continues to grow and new supply delivers to the market. Class A and B asking rates for the market averaged $27.34 and $21.59, respectively, at the end of the first quarter.
The total vacancy rate for the overall market was down to 10.2% at the end of the quarter, the lowest rate the market has seen in over 10 years, when the vacancy rate was 11.1%. The first quarter rate is down from 11.5% at year-end 2014 and 11.3% a year ago. Large blocks of contiguous quality office space are growing increasingly scarce, while the demand for such space remains strong throughout the market. Tenants are finding themselves competing for space as extremely high occupancy rates and a lack of options influence their decision making. The apparent need for new supply is motivating build-to-suit and speculative construction, which remains limited, but will likely pick up in the future.
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