Office Market Review
The Columbia, South Carolina office market continued to experience strong activity during the second half of 1994 as it did during the first half of the year. Absorption of office space during all of 1994 totaled approximately 300,000 square feet, of which more than 60 percent occurred during the first six months of the year. The slowing of absorption during the second half of the year was a result of improved occupancy rates. Certain segments of the office market are now characterized as "tight." Office space absorption during 1994 was attributed to the continuing expansion of both state government and private sector tenants. Absorption was also enhanced by a positive influx of new corporate relocations to the metropolitan Columbia area.
The overall occupancy rate for the Columbia market, as of December 1994, was 89 percent of approximately 9.5 million square feet of office space. The St. Andrews submarket continued to be the leader by sustaining the highest occupancy at 95 percent. Details of all submarkets are noted on the reverse of this report in the "Market Spotlight." The improving occupancy rates in the Columbia market are directly attributable to strong leasing activity in the Class B and Class C office markets as well as tenant expansions in the Class A market. Larger tenants in Class A buildings continue to expand, forcing smaller tenants into Class B buildings. This cycle should be ongoing during the first half of 1995. It is estimated that the Columbia office market will absorb space during 1995 at approximately 60 percent of the 1994 level, or about 175,000 square feet. The increased occupancy will tend to pressure rental rates upward by three to five percent during the year. The lack of available space and expansion space may soon be a problem facing tenants in the market during 1995.
Office/Showroom (Flex) Space
The office/showroom market, commonly referred to as "flex" space, continued on the same positive absorption trend during the second half of 1994 as it performed in the first half of the year. The majority of flex space in Columbia is located within nine properties totaling approximately 644,500 square feet. As of December 1994, the occupancy rate for the flex market had improved to 88 percent, similar to the office market occupancy rate. Of the total flex market, 65 percent is located in Northeast Columbia with an occupancy rate of 90 percent.
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