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Report forecasts continued rise in rental rates, driven by job growth

Staff Report //January 16, 2018//

Report forecasts continued rise in rental rates, driven by job growth

Staff Report //January 16, 2018//

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A fourth-quarter report (.pdf) provided by Newmark Wilson Kibler indicates continued job growth will keep driving rental rates for office space in Columbia’s central business district and suburban markets.

According to the report, rent averages are at an all-time high at $20.14 per square foot, with Class A leasing as high as $21.57 per square foot. Class A vacancy also rose, from 10.6% in the previous quarter to 11%.

Rental rates also rose for Class B and Class C office space. The vacancy rate increased incrementally for Class B space, from 8.1% to 8.2%, and dropped from 6.4% to 5.6% for Class C space.

Alyse Cousins, marketing and research director for Wilson Kibler, credited the rise to job growth in Columbia. The report says job growth in the state should rise by 2.1% in 2018 and predicts a 12.4% growth in Columbia by 2024.

Total market summary of the central business district showed no change in total inventory in the fourth quarter of 2017, as it remained at 19.3 million square feet. The vacancy rate finished at 8.4%, slightly up from last quarter’s 8.2%.

Quarterly net absorption was -36,493 at the end of the current quarter, down from 11,071 in the prior quarter. Quarterly net absorption is the difference between tenant move-ins and move-outs.

Average asking rent dropped from $17.17 to $17.08.

The central business district had the most total inventory, at 7.2 million square feet, and the highest total asking rent, at $20.14 per square foot. It had a total availability rate of 11.2%.

In suburban markets, St. Andrews showed the second-most total inventory, with 3.4 million square feet, and a quarterly absorption rate of 20,502 square feet. Year to date, St. Andrews has seen its absorption rate grow to more than 113,000 square feet.

The lowest total inventory was in Lexington, with approximately 530,000 square feet. Total asking rent was also the lowest, at $11.09 per square foot.

Industrial market report

A separate report (.pdf) analyzing the industrial market showed a surge in capital investment for Richland County in 2017 fueling that segment’s growth. Currently, rates are at $4 per square foot, the highest since 2009. Industrial rates are at $3.84 per square foot, and flex rates come in at $5.15 per square foot.

Projects that helped raise numbers this year included:

  • Trane’s Killian Road plant investing $96 million in its existing project and doubling its workforce.
  • China Jushi’s second-phase project for its $300 million plant.
  • Hengshi investing $11.1 million to move into an 111,000-square-foot facility at Pineview Industrial Park.
  • Woodfield Systems USA moving into a 39,000-square-foot facility at 200 Business Park Blvd.
  • Ritedose Pharmaceuticals’ expansion into a $10 million facility in Northeast Columbia.

A summary of the central business district showed a total inventory of 60.3 million square feet, up slightly from last quarter’s 60.1 million square feet. Vacancy rates are at 8.1%, up from 7.5% last quarter.

A submarket breakdown showed Cayce/West Columbia with the highest total inventory, at 16 million square feet, with a total vacancy rate of 4.3% and a total asking rent of $4.09 per square foot.

The second-largest inventory was in southeast Columbia, at close to 13 million square feet. The total vacancy rate stood at 11.7%, with total asking rent at $3.08.

Saluda County had the least inventory, at 587,731 square feet and an asking rent of $1.95 per square foot.