Office market activity decelerates
- Despite negative absorption and rising vacancy rates, the Columbia office market is still attractive due to the business climate, employment, regional investments and strong market drivers.
- The differential between rising construction costs and rental rates means it is not economically viable for new office development.
Stalled market activity
The Columbia office market is showing signs of sluggishness due to several varying market conditions. While the Columbia unemployment rate is still attractive at 3.1% as of December 2018, office-using job growth peaked at the end of 2016 through April of 2017, leaving the market flat. Also, a decreasing number of office-using jobs diminishes the need for office space. Therefore, instead of tenants in the market demanding expansion space, they have a desire to downsize as office-using jobs decrease. Also, with the continual rise of construction costs as a deterring factor, the cost to construct a new office building does not provide the returns to entice investors. The rental rate required of a newly constructed office building would need to be much higher than current market rental rates. While this may seem like Columbia is headed for an inevitable downturn, that is not the case. High quality space is still in short supply and owners will continue to try to raise market rental rates. The Columbia economy is still robust, and there is a significant supply of capital investment within the region. The University of South Carolina is a strong downtown market driver and employee provider, and the cost of living in Columbia is lower than the United States average.
Download the full report
For more information, including the market summary statistics, download the full research report.Download report