Charleston Office Market Shows Mild Upturn

July 28, 2008

By Katy Stech – The Post and Courier

Across the country, slow-selling homes have led to empty offices as the commercial real estate market reflects the economic downturn.

But thanks to the Charleston area’s growth and diversified economy, the local market has been somewhat sheltered from the pain.

New statistics from Colliers Keenan of Charleston found the amount of empty office space — called the vacancy rate — has actually decreased slightly during the past six months. The areawide vacancy rate at the end of the second quarter weighed in at 11.5 percent, about 2.3 percent less than the rate at the beginning of the year.

Principal Peter Fennelly said he hasn’t seen office rents fall suddenly, either, another sign of the market’s health.

The double-digit rate is still too high for many developers to begin new projects. Many prefer the vacancy rate to be less than 10 percent when beginning construction of more office space, Fennelly said.

“If you’re doing this business that I do, you’re watching it closely,” he said.

In other parts of the country, office vacancy rates have grown as real estate-related firms close or downsize. Parts of California are hurting because many mortgage companies set up offices there.

While some new space has become available for that reason locally, Charleston’s office space is tied more closely to development, Fennelly explained. The vacancy rate can change quickly when new office buildings open, which is what might have happened at the end of last year.

Other market-stabilizing factors are the area’s diversified economy and the fact developers don’t build skyscrapers that add large amounts of office space to the market at one time, he said.


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