Renew, redevelop or sublease are the options Columbia tenants face
- As the market tightens, tenants will renew their current leases or redevelop unconventional space.
- No new construction has been announced in Columbia, and will not be until rental rates rise considerably.
- Investment sales reached a record high this year, with six major office buildings traded to investors from January 2017 through October 2017.
2017 Market Recap
The overall market vacancy rate in Columbia has fluctuated over the last four quarters but landed at the same vacancy rate as of this time last year. The market average full service rental rate decreased slightly from $16.44 at the end of the fourth quarter last year to $15.71 per square foot for the fourth quarter of this year. The overall market absorption year-over-year is -34,857 square feet, while the Central Business District had a lower rate of absorption of -7,622 square feet and the suburban market absorbed 16,179 square feet. Throughout this year, several of the buildings in the market traded, including most of the largest in the Central Business District.
Landlords are focused on retaining their current tenants by renewing leases early, upfitting common area spaces and upgrading building amenities. As market availabilities dwindle, the office market rental rates are simultaneously declining due to the lack of quality office space remaining to lease. This lack of quality space will continue to drive tenants to search for redevelopment options within non-traditional buildings and may eventually spur the construction of a new building. Columbia has already seen a few successful conversions with tenants such as the United Way, which purchased three industrial buildings and repurposed them into an office campus setting at 1818 Blanding Street, and the Boudreaux Group, who now occupies the second floor of the redeveloped Powell Furniture building located at 1519 Sumter Street. This repurposing of buildings in a market where new construction is not feasible in the near future is a lucrative option for owners and developers looking to maximize the revenue of their investment.
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