Rising occupancy and rental rates in Charleston, South Carolina have continued to set new records, a recently released report from Colliers International indicated.
The report said the market's success can be attributed to several factors, including a vibrant economy, growing tech industry, educated labor force and increasing popularity. Occupancy in the Charleston office market continued along its upward path through the second quarter of 2015, which ended with a vacancy rate of 9.8 percent -- the market’s lowest since 2002.
"Tenants are finding themselves competing for space and are oftentimes limited by the space they occupy preventing expansion," the report said.
The city's central business district (CBD) continues to be a focal point of the market for both investors and high-profile tenants interested in prime visibility. The CBD vacancy rate was at 11.5 percent as of July 15.
The suburban submarkets experienced the most activity throughout the second quarter of 2015. The report indicated "some tenants are choosing to locate in the suburban submarkets taking advantage of free parking, closer proximity to employees, more options for space and lower rental rates than the CBD."
Rising occupancy rates have led to fast-increasing rental rates, which are at record-setting levels. Tenants are competing for space, which means landlords can raise rents -- and get their asking prices.
Asking rental rates for the overall market averaged $22.59 per square foot per year at mid-year 2015, increasing from $22.10 at the end of the first quarter of 2015 and $20.38 one year ago. Asking rental rates for CBD office space averaged $30.11 per square foot per year at mid-year 2015, up from the first quarter average of $29.86.
Suburban asking rental rates averaged $20.61 per square foot per year at mid-year 2015. Class A and B asking rental rates averaged $25.79 and $19.82, respectively.
Charleston’s suburban vacancy rate ranks second behind Nashville, Tennessee, which reported a vacancy rate of 2.9 percent.
Demand for office space is strong throughout the market, far exceeding what is available. Construction activity is picking up; but even upon completion, availability is expected to fall short.
Office-using employment makes up 21.5 percent of total non-agricultural employment in the Charleston-North Charleston market. As of May, office-using employment was at an all-time high with 70,700 jobs, a gain of 13,800 jobs since the recent recession.
As 2015 continues, it is expected that vacancies in Charleston will continue to decline.
For the complete report, visit www.colliers.com.