Columbia’s office market felt the effects of the COVID-19 pandemic during the fourth quarter of 2021, with the continuing work-from-home trend and rising construction costs contributing to negative absorption.
A fourth-quarter analysis by Colliers International’s Columbia office found 218,787 square feet of negative absorption, fueled by staff of major office users continuing to work remotely. Vacancy rose in the fourth quarter to 15.5%, up from 14% in the third quarter and 13.9% in the fourth quarter of 2020, according to the report (.pdf).
Total inventory remained at 14.5 million square feet, unchanged from both the third quarter of 2021 and the fourth quarter of 2020. The market saw no new supply, with 75,000 square feet remaining under construction from the third quarter of 2021, according to the report.
Available office space is difficult to sublease, the report found, as it is either too large or expensive to subdivide. Rising construction costs also make upfitting existing space a challenge.
“It is unlikely that this dynamic will substantially change until new product is delivered or older buildings with large amounts of vacancy have sufficient capital invested in them to make them competitive,” the report said.
Class A rents increased to $21.68 per square foot in the fourth quarter, up from $21.44 in the third quarter and $21.36 in the fourth quarter of 2020. Class A rents in Columbia’s central business district remained stable at $23.65 per square foot.