2008 Office Market Overview – Columbia, SC
January 7, 2009
Metropolitan Columbia had more than 11.7 million square feet of multitenant office space as of December 2008. Since 2003, this inventory expanded by 6% or about 458,000 square feet of space. As of December 2008, one 190,000 square foot building was under construction by Holder Properties in the 1200 block of Main. Additionally, there were several hundred thousand square feet of office space planned Downtown – most incorporated into the University of South Carolina Research campus located south of Gervais Street along the Assembly Street corridor.
Major Inventory Changes
In 2008, only one significant building was added. Frazier Development added 60,000 of professional space to their campus at 3225 Sunset in West Columbia.
Office Building Overview
Over the last year, the supply of office building inventory was virtually unchanged with one small multitenant building opened. In early 2010, a new 190,000 square foot building developed by Holder Properties will open on the 1200 block of Main Street. With the impending departure of SCANA from the Palmetto Center in 2009, this should create many opportunities for tenants prepared to occupy second and third generation space in Class B buildings. This will also increase pressure on Class C properties that are no longer competitive and account for the majority of vacant space in the market.
Occupancy in office buildings increased slightly over the last year from 84.9% to 85.2% with a net absorption of 40,324 square feet.
Overall rents in the market ranged from $12 to $21.50 per square foot with the most expensive space Downtown (CBD).
Downtown vs. Suburban
The Downtown (CBD) submarket saw net negative absorption of 47,000 square feet and overall occupancy decreasing to 87.1% Overall, positive absorption of Class A space was noted at the expense of lower quality buildings.
Occupancy in the suburbs increased from 81% to 83% during 2008 with absorption of 87,849 square feet.
Asking rents in Downtown (CBD) Class A buildings ranged from $17.50 to $21.50. Asking rents in Class B buildings ranged from $14.00 to $16.00. In the suburban markets asking rents ranged from $17.00 to $20.00 for Class A buildings and from $14.00 to $17.00 for Class B buildings.
Downtown (CBD) Submarket
Occupancy in Class A office space Downtown increased in 2008 with 42,964 square feet absorbed. Concessions were scarce as large blocks of space are nonexistent and landlords adjusted their rents upward.
Class B buildings saw occupancy fall slightly from 84.2% to 81.3% with a net negative absorption of 26,878 square feet. Rents in these buildings have stabilized; however, concessions are likely to increase with the addition of several large blocks of space in 2008 and the anticipation of SCANA’s departure to a suburban corporate campus this year.
Class C buildings had a net negative absorption of 63,611 square feet as tenants upgraded to higher quality spaces . This class of buildings is likely to see continued occupancy pressure over the next several years.
Suburban Submarkets
The St. Andrews/Irmo submarket is the largest suburban market in the Columbia area with 1.8 million square feet of space or about 21% of the entire market. Occupancy increased from 78.7% to 80% over the last year with absorption of 35,000 square feet.
The Forest Drive/Devine Street submarket includes 812,000 square feet of space. Most buildings in this market are a minimum of 20 years old. Nonetheless, it remains a desirable suburban market because of its proximity to the established in-town neighborhoods. Occupancy in the market decreased to 88.3% with 2,181 square feet of net negative absorbed.
The Northeast Richland/North Columbia submarket includes 912,733 square feet in the fastest growing residential area in Columbia. Occupancy increased to 86.8% with the absorption of 49,623 square feet.
Professional Buildings & Call Centers
Occupancy increased in this class of building from 82.8% to 88.5% during 2008 with absorption of 102,645 square feet.
Medical Buildings
There is about 1.68 million square feet of multitenant medical office space in the Columbia market. In 2008, occupancy decreased slightly from 84.3% to 83.2% with net negative absorption of about 18,112 square feet.
Flexible (Flex) Buildings
The supply of flex buildings has remained constant since 2000 at almost 600,000 square feet. In 2008 this segment saw net negative absorption of 19,818 square feet. Occupancy decreased to 78.1%.
