Office Market Remains Stable
The office market in Columbia, South Carolina’s central business district maintained stable occupancy during the third quarter of 2008 with occupancy rates near 87%. The financial crisis in the national economy has had little impact on the Columbia office market, with the exception of a limited number of financial-sector tenants that have scaled back, including IndyMac Bank, which vacated its space on Main Street after being placed into conservatorship by the FDIC in July 2008. On an even more positive note, Columbia’s suburban office market absorbed approximately 80,000 square feet of space during the third quarter of 2008.
Average asking rental rates continued to increase during the third quarter of 2008, predominately in Class B and Class C properties, welcome news to owners of office properties. Rental rates in the central business district for Class B and Class C office space average $16.12 per square foot and $13.03 per square foot, respectively, at mid-year 2008. During the third quarter, asking rents increased in some buildings by as much as $0.50 per square foot. An increase in Class B and Class C rental rates signals that demand is tightening for this space and that office users in the Columbia market are becoming more value conscious.
Job creation in the Columbia market has remained strong during the third quarter, contrasting what has occurred in the national market. In August 2008, the service-based sector of the economy added 1,400 new jobs, representing a 0.40% increase.
Construction has commenced on the new Main & Gervais office tower. Holder Properties is developing the 19-story, $60 million project, which will be anchored and by McNair Law Firm, Edens & Avant and NBSC. The three anchors and Holder Properties will all have ownership in the development. When completed in 2009, these firms will relocate from a range of Class A and B office and retail space within the CBD, creating opportunities for other firms to move into the Main Street office market.
The City of Columbia began construction on the second phase of the Main Street streetscaping project during the third quarter of 2008. This beautification project of the 1500 and 1600 blocks of Main Street has garnered the attention of investors and developers who are now looking for the next phase of commercial construction in Columbia.
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