Despite continued job losses and a weak economy, the Columbia office market rebounded in the latter half of 2003. Overall occupancies reached 85.1% at the end of 2003, up from 84.2% at the end of the second quarter of this year. Class C properties experienced the largest increase in occupancies, from 84.9% at mid-year to 86.4% at the end of the year. Meanwhile, Class A properties had the highest occupancy rate, at 87.5%, fueled by increasing occupancies in Class A buildings in the CBD.
However, overall, the suburban markets saw a decline in Class A occupancies to 78.7% from 82.7%, as a result of new construction being placed on the market. Going forward, occupancies are expected to continue rising, as tenants are responding to recent economic news and demand for space is rapidly increasing, especially in the CBD.
Absorption for the entire market was positive in the second half of 2003, after being negative in the first half of 2003. Demand was strongest in the CBD and Northeast submarkets. However, the suburban markets experienced negative absorption over the past six months.
Speculative construction declined over the past year, with Meridian being the largest speculative office project underway. Most projects that are under construction or in the planning phase are small, ranging from 5,000 square feet to 10,000 SF. Meridian will be the first large, speculative project added to the CBD in over 10 years.
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