The Columbia, South Carolina medical office market is changing dramatically due to the volume of new construction which is presently occurring and that which was completed during the past twelve months. As of June 30, 1998, the medical office market in Columbia was comprised of approximately 780,000 square feet of space. As of June 30, 1999, the market contained a total of 1,225,000 square feet of completed space or space nearing completion. This is an increase of 445,000 square feet of medical office space or an expansion of the market by 57%.
The medical office market in Columbia is predominantly controlled by the four major hospitals operating within the Columbia metropolitan area. The four hospitals include Lexington Medical Center, Providence Hospital and The Palmetto Health Alliance which is comprised of Palmetto Baptist Medical Center and Palmetto Richland Memorial Hospital. The increase of 445,000 square feet of space is directly attributable to the expansion of each of these hospitals to accommodate physician practice growth and the development of medical office space to support the satellite operations of each hospital.
The total occupancy of the 1.225 million square foot medical office market as of June 30, 1999 was 86.49% inclusive of the pre-leasing of new medical office space currently under construction. This level of occupancy is impressive given the fact the occupancy rate as of June 30, 1998 was 86.61 % and over 445,000 square feet of space has been introduced to the market during this twelve month period. However, it is important to note that some of this space is being occupied as administrative space for the hospitals. The vacancy rate of 13.51 % indicates there is a total of 165,450 square feet of space currently available within the market.
Average rental rates for medical office space have continued to increase during the past twelve months, as new, higher quality medical space with better amenities is being leased at rates higher than existing space. Additionally, many existing buildings have managed to increase their base rental rates during the past twelve months. During the coming twelve months, rental rates are not anticipated to increase further due to the amount of available space within the market. One type of medical office space which may contradict this observation will be the older medical office space which may experience some degree of renovation that will permit further increases in rental rates.
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