Office Market Marks Q1 2015 with Construction and Growth
- The Columbia, South Carolina office market continues to see significantly higher rental rates and tighter vacancy than previous quarters. Occupancy is on the rise and large blocks of contiguous vacant Class A and B office space remain scarce throughout the market.
- The University of South Carolina and Holder Properties broke ground on USC’s Center for Applied Innovation, located at Assembly and Blossom Streets.
- Employment levels in the Columbia, SC MSA are reaching record highs as the unemployment rate remains low at 6.1%. Office-using employment surpasses pre-recession levels.
2015 is off to a great start following a year full of expansion announcements, historical rent growth and substantially declining vacancy rates. Asking rental rates in the market continued to increase during the first three months of 2015, averaging $16.20 per square foot per year, up from $16.15 at year-end 2014 and $15.57 one year ago. Rental rates are rapidly climbing, increasing 8% in just two years. High occupancy and growing competitiveness among prospective tenants is providing landlords a competitive edge, allowing them to raise rental rates to levels never before seen in the market.
Despite slow leasing velocity in the first quarter, the total vacancy rate was down to 17.2% for the Columbia, SC office market from 17.3% at year-end 2014 and 17.5% a year ago. Slow leasing volume during the first quarter of 2015 is attributable to the lack of available space in the market. Class A office space is in low supply throughout the market and large contiguous blocks of quality office space are becoming increasingly difficult to find. With a Class A total vacancy rate of 13.6% and less than 430,000 square feet of Class A space remaining available in the market, rental rates are holding steady at a record high rate of $19.42 per square foot per year. However, rental rates are forecasted to escalate in the remaining quarters of 2015.
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