The Columbia office market has recently experienced a significant increase in vacancy but is fairing relatively well compared to other markets across the United States. Many cities across the country have been hit hard with massive amounts of vacant office space, including sublease space. Nationally, corporations began scaling back in the second quarter in an effort to reduce expenses and conserve resources.
The 10.5 million square feet of multi-tenant office space within the Columbia market enjoyed unprecedented strengthening during the last three years. At the end of 2000, the market had reached an all time high occupancy level of 93.0%. Absorption had climbed to over 200,000 square feet in each of the last three years, yet the first half of 2001 brought a sudden shift in market conditions. Mergers and downsizing created significant amounts of excess space. The result in Columbia was an immediate availability of large amounts of sublease or excess space during the first six months of the year. However, this phenomenon has not had an overwhelming negative effect on the market as a whole.
As of June 30, 2001, the overall occupancy rate of the Columbia market was at 91.8%. This rate has declined slightly from year end 2000 due in part to several newly constructed buildings being added to the overall inventory. The occupancy rate of class A space within the Columbia market at mid-year 2001 is 91.7%, a decrease from 94.2% at year end 2000. However, when sublease space is added to the availability category, the overall occupancy rate decreases to 86.6%.
Central Business District
Columbia’s central business district has been extremely active during the past two years. This trend continued during the first half of 2001, as several new office buildings have been added to the inventory. These spaces include newly constructed buildings as well as buildings which are corporately owned but have now been transformed into multi-tenant office buildings. The total inventory of space within the CBD has increased to over 4.4 million square feet. The overall occupancy rate of the CBD at mid-year 2001 was 92.6%. However, with large amounts of sublease space being available due to corporate mergers and down-sizing, there is an additional 150,000 square feet of vacant multi-tenant sublease space available, lowering the actual occupancy to 88.7%. As of mid-year 2001, the class A market was 91.7% occupied. Leasing activity is strong in the CBD, however, additional vacant or new space being placed on the market at this time could severely damage the position of the CBD as one of the stronger and most active markets in Columbia.
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