Q2 2012 Charleston, South Carolina Office Market Trends

CRE Resources

View our Charleston, South Carolina Submarket Map

Q2 2012 Charleston, South Carolina Office Market Trends


While “somewhat flat,” in the words of Cushman & Wakefield, the market continues to make gradual progress. With no new supply delivered, Reis put net absorption for the first half of 2012 in this small 7.6-million-square-foot market at 12,000 square feet (the total for the second quarter was 13,000). July-August followed with 21,000 more. Vacancy ended the latest quarter at 17.4%, down 10 basis points for the quarter and year-over-year (but down 80 since the third quarter of last year). By the end of August the rate had slipped to 17.1%. Rent growth has been running at about 1.0% per year since 2011 with little change expected for 2012. At $21.19 psf and $17.12 psf, asking and effective averages for the latest quarter were up 0.1% each from the quarter before and were up 0.3% and 0.4% since year-end 2011. Gains of a penny followed for each rate over the next two months.

Construction of competitive general purpose, multi-tenant office space remains limited. The 263,000 square feet that completed all told in 2011 were dominated by the 200,000-square-foot second phase of Remount Business Park in the North Charleston submarket. Two leases signed in May brought total occupancy in the park’s first two buildings to 90%, Venture One Real Estate LLC reported at the time. Plans for build-out call for 400,000 square feet. The 77,000-square-foot Building 3 is expected to break ground by year-end this source reports. “The park is designed to satisfy the office and flex space requirements of military customers, North Charleston Port Terminal service providers, high-tech vendors, and general office tenants—all of which are attracted to single-story space close to the interstate highway system.”

Reis expects 95,000 square feet to complete market-wide all told in 2012. The 15,000-square-foot Carolina One office building delivered in North Charleston in July; a December completion is scheduled for the 80,000- square-foot Faber Pointe building in the same town. Two projects, both in the Peninsula submarket, are under construction for post-2012 delivery. An October 2013 finish is anticipated for 25,000 square feet of office space at the Cigar Factory mixed-use development at 701 E. Bay Street; Holder Properties’ speculative 45,000-square-foot 174 Meeting Street project broke ground in July in the Peninsula submarket. Including tenant improvement allowances, the developer reports a rental rate of $29.00 psf triple net.

Reis expects the year’s portion of new supply to result in a small increase in the vacancy rate by year-end. Gains of 0.9% and 1.1% are projected for the asking and effective average rents for the year. Marked improvements in demand, occupancy, and rent growth are expected for 2013. Development should be active but prudent.