Record-Setting Year for Charleston Office Market

Key Takeaways

  • 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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