The Columbia, SC office market continues to make strides with positive absorption of 35,827 square feet in the third quarter of 2006, bringing year-to-date absorption to 52,453 square feet. The market finished the third quarter at 81.2% occupied. Although the market experienced positive absorption over this period, space formerly classified as sublease space is now classified as vacant space, rather than sublease space, bringing net occupancy down slightly from mid-year levels.
The job market in Columbia grew slightly by 0.5% in the first three quarters of 2006. This lackluster performance in this sector of the Columbia economy can be attributed as cause for slow office absorption throughout the region. Although absorption has not been as high as in previous years, the number of service providing jobs increased by 0.58% during this same period, explaining the small amount of positive absorption that the market has experienced. Key sectors influencing the office market include professional and business occupations, which decreased by 0.67%. The financial sector also experienced a decline of 0.36%, while information and government employment increased by 4.92% and 0.25% respectively.
In September 2006, SCANA Corporation announced that it would be relocating its corporate headquarters from Columbia’s Main Street, to a new campus style setting in Cayce. SCANA currently occupies an estimated 450,000 square feet in the Palmetto Center in the 1400 block of Main Street. The Palmetto Center was a 1983 cornerstone office tower development accompanied by a Marriott Hotel and conference facility. SCANA is expected to move from Main Street by the end of 2009, which means an immediate drop of 10 percentage points in market occupancy in 2009. To put this in perspective, the CBD averages an annual absorption rate of 50,000 to 100, 000 square feet per year. The introduction of 450,000 square feet to the market will add a five to nine year supply of space to the CBD market.
As of September 30, 2006, the Central Business District stands at 87.8% occupied. There have been small amounts of positive absorption over the past three quarters, but rental rates and occupancy rates appear to be flattening with the lack of new job creation in downtown Columbia. As existing companies have expanded in Columbia, it appears as though they are expanding within their current space or adding smaller spaces in an effort to reduce occupancy expenses. Absorption has also been curbed due to productivity increases which have eliminated the need to add to the existing workforce.
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