The Columbia, South Carolina, office market experienced an unexpected decline in occupancy during the first six months of 1997. This surprising turnabout was a reversal of positive trends reported during the prior two years. Overall occupancy in the Columbia office market declined to 89.4% as of June 30, 1997, down from 90.0% at December 31, 1996. The results represent a reduction of actual occupied space of approximately 35,000 square feet. Comparatively, absorption in 1995 was over 82,000 square feet while 1996 was a banner year with an indicated increase in occupancy of 200,000 square feet.
The Columbia market is composed of the Central Business District (CBD) and four submarkets and includes approximately 9.5 million square feet. Of the 9.5 million square feet, 3.2 million square feet are categorized as Class A space, of which 91.7% is occupied.
The strongest markets within the Columbia area are the Cayce/West Columbia market with an occupancy level of 94.4%, the St. Andrews market at 91.8% and the Northeast market at 91.0%, The St. Andrews and Northeast areas are particularly strong to have maintained occupancy levels over 90.0% for the past twelve months with the addition of new office buildings in those areas. The weakest area in Columbia continues to be the Forest Acres market which declined from 85.0% to 83.9%. A detailed review of each submarket can be found in the Market Spotlight section of this report.
Despite the decline in occupancy levels in certain submarkets, the market in general should rebound during the second half of 1997. Office leasing activity is extremely strong with many relocations and expansions taking place. Tenants will continue to have difficulty locating available blocks of office space in excess of 5,000 square feet, except in the newer Class A buildings. Rental rates in the Columbia market will continue to edge slightly higher due to the higher occupancy levels in certain submarkets.
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