Apr
03

Columbia Office Market Slows

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OFFICE SPACE SUFFERS LETDOWN

March 03, 2008

Columbia’s office market slowed in the last half of 2007, just as the credit crunch took hold. Two-thirds of the region’s office growth came during the year’s first half.

Still offices ended up posting small increases in the amount of new space rented and occupancy, after a drop in 2006, according to two local firms, NAI and Grubb. Colliers reported a boost in office rentals in 2006, though its 2007 trends mimicked those cited by the other real estate firms.

The suburbs accounted for much of the metro area’s office growth, notably a new Lexington Medical Center office building and Pinnacle Point in Northeast Richland.

Downtown office space was stagnant as longtime tenant SCANA started to move some of its operations to its new corporate headquarters in Cayce.

Still, Columbia won a pair of national projects — a Staples operations center, near downtown Columbia; and Performance Food Group, which opened a back office complex in Lexington County. The two moves were unusual, the experts said, because the region does not attract many national firms to large office spaces.

Overall, Columbia’s office market has not added much square footage since 2004, NAI’s report said. “We’ve always moved slowly along,” said Ron Anderson, NAI’s vice president of research.

2008: SHUFFLING THE DECK

The office market shouldn’t shrink this year, but don’t expect any national tenants — at least until after the presidential election, said Ryan Hyler, director of research at Colliers Keenan.

“Companies are staying pretty cautious in expansions plans this year,” agreed Ben Johnson, research manager at Grubb & Ellis.

After that, office development should speed up.

A 19-story tower, planned for Main and Gervais streets, and the Center Vista project on Gervais, in the Vista, should bolster the office market in the near future. Both are scheduled to break ground this year.

“’09 and ’10 will be the years to watch,” Hyler said.

While Columbia should have enough top-class office space available by then, vacancies in less desirable, older space could balloon.

SCANA will vacate 450,000 square feet of space downtown by 2009. Also many tenants moving to the new office buildings will come from older downtown sites.

For example, the three new marquee tenants announced last week for the Main & Gervais tower — the McNair law firm, the Edens & Avant real estate company and National Bank of South Carolina — all are moving from other downtown office buildings.

Those moves could boost vacancies in older downtown office space to about 20 percent, Johnson said.

“You could see landlords slash prices, rents to fill space,” Ryler said. “$5 a square foot is better than zero a square foot.”

WILD CARD? INNOVISTA

Proposals for USC’s research park — from the school or private investors — could move forward this year, making new space available in the next year or so.

The project is expected to attract tenants from outside Columbia. But, once again, some occupants are expected to come from other downtown spots.

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http://www.thestate.com/business/story/334618.html

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