The first quarter of 2007 proved to be very active for the office market in Columbia, South Carolina. After a rapid expansion during the last half of 2006, wherein the entire market absorbed 191,000 square feet, the market continued this course of growth from January 2007 to March 2007 by absorbing an additional 100,000 square feet; a very strong quarter in many respects.
While the market saw a steady expansion over the past several years, the level of activity experienced during the first quarter of 2007 is exciting due to new national tenants entering and fueling the growth of the market. New tenants such as Staples and Total Carolina Care, a subsidiary of Centene Corporation, are among others who leased space in Columbia. Staples will occupy 75,000 square feet at Fontaine Business Center in the Northeast submarket, and the Centene Subsidiary will occupy space in 1441 Main Street in the Central Business District
The University of South Carolina also landed its first tenant in Innovista’s Horizon Center. Duck Creek Technologies, which currently occupies space in the Carolina Research Park on Farrow Road, announced that it will expand and employ 200 people in the new research campus upon completion of the facility in 2008.
With the level of activity recently experienced, asking rental rates continued to increase over the first quarter of 2007. In the Central Business District, Class A & B space continued to tighten, and an increased demand gave landlords cause to turn away from lower-rent deals that would have been accepted 12 months earlier. With limited options for larger blocks of space, we expect average rental rates to continue to rise in the CBD during 2007, especially as the Class A market tightens significantly.
The suburban office markets remained strong during the first quarter, with the majority of growth occurring in the Northeast sector. New developments in the suburbs were primarily limited to office condominiums, which are a divergence away from the traditional multi-tenant office market in Columbia. Several small office condominium projects were announced or developed in the previous months, including projects along Highway 378, Old Cherokee Road and Pisgah Church Road in Lexington, as well as on Clemson Road and Hardscrabble Road in the Northeast and Kennerly Road in the Northwest. Owner occupied buildings also continued to emerge as a favorable economy and low interest rates provide encouragement for some business owners to construct their own buildings.
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