CBD Success has Positive Impact on Suburban Office Market
The office market in Columbia, SC ended another successful quarter with the market’s overall vacancy rate dipping just below 20% after two years. Absorbing over 59,000 square feet during the second quarter of 2013, the market vacancy was reduced to 19.71%, 64 basis points lower than the previous quarter. As anticipated, Columbia’s Central Business District (CBD) experienced further tightening in available space achieving a low vacancy rate of 12.55% compared to last quarter’s 13.31%. With quality space in the CBD becoming increasingly difficult to find, a spillover effect occurred in the suburban submarket as tenants looked for alternative space in the suburbs yielding positive absorption for the second quarter. The overall suburban market’s vacancy rate dropped 51 basis points to 26.18% during the second quarter. Overall average rental rates declined slightly to $14.63 per square foot per year (PSF) for the Columbia office market. Overall class A average rental rates spiked to $18.64 PSF, class B rates remained steady at $15.40 PSF and class C rates declined to $12.90 PSF. The decline in class C average asking rates is a result of the poor quality of available class C space primarily in the suburban markets.
Columbia’s Central Business District (CBD), with a total vacancy rate of 12.5%, 76 basis points lower than the previous quarter and 4.19 percentage points lower than it was a year ago, continues to drive the Columbia office market. Overall CBD average rental rates increased to $16.95 PSF from $16.43 PSF, a 3.16% increase, during the second quarter of 2013. Available class A and B space is limited having vacancy rates of only 8.99% and 10.46%, respectively. The tightening of class A space is reflected in asking rental rates which averaged $20.52 PSF at the end of the second quarter, 25 cents higher than last quarter’s average. This is a 5.8% increase from the mid-year 2012 average rental rate of $19.39. Class B rates remained steady at $16.77 PSF while class C average rates increased to $14.28 PSF.
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