Record-Setting Year for Charleston Office Market
- Vacancy rates in the Charleston, South Carolina office market are at historical lows and rental rates are rising as landlords maintain control of the market.
- Office-using employment is growing and is at an all-time high with 70,300 jobs in August 2015.
- Demand for office space is strong, contributing to declining vacancy rates, soaring rental rates and capital investments.
- Construction activity is gaining momentum with several projects under construction and in the pipeline.
Tightest Market in Over a Decade
Companies are expanding quickly in the Charleston, South Carolina office market, contributing to positive net absorption and the tightest market in over a decade. Occupancy in the Charleston, South Carolina office market continued along its upward path through 2015, ending the year with a total vacancy rate of 7.8%, the market’s lowest vacancy rate in over 10 years. The vacancy rate is down from 9.4% the previous quarter and 11.7% one year ago.
The “flight-to-quality” trend that began several years ago is contributing to significant declines in Class A vacancy. At the end of the fourth quarter of 2015, the Class A vacancy rate for the market was 6.7%, down from 9.8% one year ago and 14.5% in 2010. Less than 325,000 square feet of Class A space remain vacant in the market with virtually no large blocks of contiguous space available for lease. As a result, tenants are finding themselves competing for space and oftentimes limited by the space they occupy.
Downtown Charleston remains the focal point of the market and ended 2015 with a total vacancy rate of 6.4%, down from 8.8% one year ago. New leasing velocity for Class A Downtown space has been limited given the few available options for quality space. Less than 60,000 square feet of Class A space remain vacant downtown contributing to a Class A vacancy rate of 5.4%. Class B and C vacancy rates were 7.8% and 4.9% at year-end.
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