The Columbia, South Carolina office market maintained its strength garnered over recent years, yet it failed to live up to the expectations of many owners and leasing agents. Occupancy levels declined during the first six months of the year followed by a strong rebound during the second half of the year. Overall occupancy finished in virtually the same position as the beginning of the year. Occupancy in the Columbia office market as of December 31, 1997 was 89.6%, a slight decline from 90.0% on December 31, 1996. Comparatively, there was positive absorption in 1996 of over 200,000 square feet and 85,000 square feet during 1995.
The Columbia office market is composed of the Central Business District (CBD) and four submarkets which total approximately 9.5 million square feet. One-third of the market can be categorized as Class A· space. The occupancy rate for Class A space at year end 1997 was 93.0% compared to 92.4% at year end 1996 and 91.8% at year end 1995.
The strongest market within the Columbia area is the Cayce/West Columbia market with an occupancy level of 97.8%. The Northeast market has an occupancy level of 92.8%, surpassing St. Andrews as the second most occupied market in the Columbia area. The weakest market in Columbia continues to be the Forest Acres market which declined to 83.8%. A detailed review of each submarket can be found in the Market Spotlight section of this report.
Despite the slight decline in occupancy, there were a number of positive indicators in the market. Office leasing activity was particularly strong during the fourth quarter of 1997 which will result in increased occupancy levels during 1998. During 1997 Class A occupancies increased, confirming the strength of the corporate market in Columbia. The area continues to experience new construction of office buildings on a very selective basis. This controlled expansion of office properties will allow rental rates to continue to increase while occupancy levels strengthen in 1998, creating a much tighter market.
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