Strong demand will absorb new construction
- Due to high demand, absorption will continue to be positive; however, due to new construction growth, the vacancy rate is expected to rise in the next few quarters.
- Charleston overall market rental rates are higher relative to the last quarter and are expected to rise as new office construction is completed.
- As the suburban office demand increases, so do the rental rates. Suburban rental rates rose to $22.56 per square foot this quarter.
2018 Market Recap
Throughout 2018, the vacancy rate in Charleston continues to rise quarter-over-quarter. The rise is vacancy is most likely due to 11 office buildings delivering to the market throughout 2018 that totaled 433,024 square feet of new construction. Therefore, the Charleston office market also posted a net negative absorption of 77,251 square feet. This negative absorption and rise in vacancy rate is not an indication of a weak office market; however, it will take a few quarters for the demand to catch up to the supply. The overall average weighted rental rate in Charleston is also lower than it was this time last year; however, as high-quality space continues to be delivered to the market, that rental rate is expected to increase with the quality of office space being offered.
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