Upgrades needed to raise rent for remaining vacant office space

Key Takeaways

  • With no significant construction in the Columbia pipeline, vacancy rates are expected to continue to decline.
  • Because the available vacant space is of lower quality, overall weighted asking rental rates are predicted to fall.

2018 Market Recap

The overall market vacancy rate decreased from 11.65% during the fourth quarter of last year to 10.81% during the fourth quarter of 2018, due to the delivery of one occupied build-to-suit suburban office building. The office also market absorbed 198,068 square feet during 2018. The Class A quoted rental rates are lower than they were one year ago due to the lack of quality Class A spaces remaining; however, the overall average market rental rates have risen from $16.73 per square foot during the fourth quarter of last year to $17.31 per square foot this year.  

Market Conditions

The Columbia office market has approximately 16.21 million square feet within eight submarkets. While there are no buildings currently under construction within the market, one 30,000-square-foot office delivered during the fourth quarter of 2018; however, three buildings are proposed that, if completed, will add 105,500 square feet of offices in Columbia. The Columbia market activity was steady during the fourth quarter of 2018. The overall net absorption was 35,355 square feet and, from the third quarter of 2018, the market vacancy dropped five basis points to 10.62% this quarter. The overall average weighted rental rate in Columbia was $17.31 per square foot and the Class A average weighted rental rate was $20.68 per square foot.

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