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2019 Q3 Office Charleston Report

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Tight Charleston office vacancy prior to new construction deliveries

Key Takeaways

  • Despite 107,921 square feet of new suburban construction deliveries, the overall Charleston office market absorbed 284,129 square feet.
  • The overall vacancy rate dropped from 12.20% last quarter to 10.36% this quarter.
  • Rental rates in the upper and lower peninsula are expected to rise due to demand and building upgrades. The rental rates during the third quarter of 2019 averaged $24.72 per square foot in the lower peninsula and $17.72 per square foot in the upper peninsula.

Two distinct development types in the peninsula

There are two distinctive types of office development occurring within the Charleston peninsula. The upper peninsula office development has a modern feel with a live-work-play option catering to the Millennial and Gen Z population. High tech businesses tend to locate in this region due to quality amenities and technology-focused suites. The rental rates are trending upward within the upper peninsula due to limited supply, upgraded features and convenience of location. This region has a low vacancy rate and absorption is expected to continue to be positive through 2019.

The lower peninsula development differs from the upper because it has a historic flare that is distinctly Charleston. The buildings have extraordinary characteristics unique to each tenant. In response to increased demand, owners are upgrading amenities and interiors within the lower peninsula office buildings while maintaining its unique southern charm. Due to amenity upgrades coupled with historic appeal, the rental rates in the lower peninsula are predicted to rise in the coming quarters. 

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2019 Q3 Office Charleston Report

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