The Columbia, South Carolina office market posted positive levels of absorption over the first half of 2006, although not at levels needed to sustain a growing market. The total market absorbed 17,836 square feet in the past six months; whereas market absorption for the previous twelve months was at a much stronger 96,613 square feet. Even with weakened demand, quoted rental rates averaged higher at mid-year 2006 than six months earlier, increasing from $13.80 per square foot to $14.25 per square foot. Many landlords are asking for increased rates given rapid increases in operating expenses.
As the national economy continued to grow, posting a 5.3% increase in the first quarter of 2006, Columbia’s economy remained relatively flat. From December 2005 to May of 2006 the Columbia economy experienced a decrease in employment. Relative to the state’s 1.9% job growth during this period, the Columbia region experienced a reduction of 500 jobs.
Employment sectors with the greatest effect on the office market have experienced slight declines thus far in 2006, helping to explain the lackluster performance of the office market. The service economy as a whole downsized by 1,300 jobs from December 2005 to May 2006. Key sectors within this category include financial services, decreased by 700 jobs; state government, decreased by 500 jobs; and information technology, which posted positive gains of 300 new jobs over this period.
The slight constriction of the employment base could be attributed to seasonal or cyclical downsizing within the varying economic sectors, but the Class A market, which is often used as an indicator of the overall market, trended down slightly over the first six months of 2006 as well, with negative absorption of 16,122 square feet. There was little activity in many Class A buildings across the market. This, coupled with a few larger tenants giving up space, resulted in negative absorption. Quoted rental rates surpassed $19.00 per square foot for the first time, posting an average quoted rent of $19.09 per square foot across the market. While the average quoted rent is impeded by newer buildings in the market, the median rent was $18.00 per square foot, up from $17.50 per square foot at year-end 2005.
Download the full report
For more information, including the market summary statistics, download the full research report.Download report