Columbia Office Market Begins 2016 with a Modest Slowdown
- The Columbia, SC office market experienced a modest slowdown in activity during the first quarter of 2016 but still posted a slight increase in occupancy.
- Asking rental rates increased slightly during the first quarter.
- Construction is limited to two projects in the Central Business District. Both are expected to be completed during the second quarter of 2016.
- Limited options for quality space and stagnant employment contributed to a slow quarter.
Limited Options for Quality Space Hinder Activity
The Columbia, SC office market has few options for tenants seeking quality, large blocks of contiguous space. The vacancy rate for the office market declined slightly to 15.7% during the first quarter of 2016 and was down from 17.6% one year ago. Less than 350,000 square feet of Class A office space remain vacant in the market, reflected in the low vacancy rate of 11.3%. Given the scarcity of available space, leasing velocity during the first quarter of 2016 was limited to lease signings of smaller space. The lack of available space is actually creating a void of leasing opportunities.
The Central Business District (CBD) and St. Andrews submarkets are the market’s two focal points. While the CBD is traditionally popular for occupiers, the St. Andrews submarket is gaining popularity due to its close proximity to the CBD, greater options for space and more affordable occupancy costs with free parking.
The total vacancy rate for CBD office space was 10.1% at the end of the first quarter of 2016, holding steady over the previous quarter but down from 11.6% one year ago. Class A and B space is in greatest demand in the CBD contributing to vacancy rates of 10.5% and 8.2%, respectively.
St. Andrews has shown the greatest improvement over the past two years compared to other suburban submarkets. The first quarter vacancy rate was 20.2%, down from 28.0% in 2013. The submarket is home to recently renovated office space that is successfully attracting tenants. Additionally, the St. Andrews submarket is the only suburban submarket that contains a majority of its inventory in true office parks. As space continues to be absorbed in the submarket, an opportunity will exist for landlords in other suburban submarkets such as Northeast Columbia and Cayce/West Columbia to attract tenants who cannot find suitable options in St. Andrews.
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